#AI #Grok: What is your initial reaction to the following way for a Eurozone sovereign to restructure its debt?

I asked Grok:

"A way for way too indebted Eurozone sovereign, unable to service its debts without imposing severe sufferings on its inhabitants, is to abandon the euro and offer in payment, to all of its creditors, long term bonds denominated in their old currency at a very low interest rate, and which shall immediately come due, if any of its new public indebtedness exceeds e.g., 30% of GDP."

In a very brief way, keep it to about 200 words, what is your initial reaction to that?

 

Grok answered:

This proposal is a bold, unilateral debt restructuring tactic that echoes historical defaults like Argentina's but tailored to the Eurozone's constraints. By exiting the euro and issuing long-term, low-interest bonds in a depreciated national currency (e.g., a "new drachma" for Greece), the sovereign could effectively haircut debts through inflation and devaluation, easing servicing without immediate austerity. The clawback clause—accelerating repayment if new debt tops 30% of GDP—adds a fiscal discipline mechanism, potentially restoring creditor confidence by signaling commitment to restraint.

 

However, it's fraught with risks: Eurozone treaties prohibit currency exits without broader fallout, inviting legal battles, capital controls, and ECB retaliation. Creditors (often foreign banks and funds) would suffer massive losses, possibly triggering systemic contagion. Domestically, hyperinflation, bank runs, and social unrest could ensue, exacerbating the "severe sufferings" it aims to avoid. Politically, it's a nuclear option—feasible only in extremis, like a Grexit scenario, but likely to isolate the country further from EU support.

 

Overall, ingenious in theory for desperate cases, but practically a high-stakes gamble that could backfire spectacularly. Better pursued via negotiated relief than shock therapy.

 

I asked: What if many other Eurozone sovereigns in similar situation would also jump to take up that idea?

 

Grok answered:

If multiple Eurozone sovereigns—such as Italy (debt-to-GDP 140%), Greece (160%), Spain (110%), and Portugal (100%)—simultaneously adopted this exit strategy amid 2025's elevated debt levels (euro area average 87.4% of GDP ) and ECB warnings of fiscal risks, it would likely trigger a full monetary union collapse.A domino effect would ensue: Mass devaluations of new national currencies could inflate away debts but spark hyperinflation, bank runs, and capital flight across the bloc. Creditors, facing trillions in losses on euro-denominated bonds, would dump assets, freezing credit markets and causing systemic bank failures. The ECB's balance sheet, bloated from past interventions, might implode without unified fiscal backing.

 

Politically, it could fracture the EU: Northern states like Germany might impose barriers or exit themselves, while southern unrest boils over. Globally, this would rival 2008, slashing trade, spiking unemployment, and risking recession—Eurozone GDP is ~$15T. The 30% GDP debt cap clause offers illusory discipline, easily bypassed in chaos.In essence, a collective "Grexit-plus" would be economic Armageddon, far worse than isolated cases, potentially ending the euro experiment and reshaping global finance. 

 

Negotiated reforms remain preferable to this suicidal pact.

 

I asked: What type of “Negotiated reforms” do you envision and with whom should it be negotiated?

Grok answered: 

Negotiated reforms for indebted Eurozone sovereigns should build on the EU's new economic governance framework, effective since April 2024, emphasizing sustainable debt paths and growth-oriented policies. Key types include:

 

Fiscal consolidation with flexibility: Implementing net expenditure rules and medium-term fiscal-structural plans to reduce debt below 60% GDP (or stabilize high-debt ratios), while allowing buffers for investments in green/digital transitions and resilience. 

 

Structural reforms: Labor market liberalization, pension adjustments, and productivity-boosting measures to enhance growth potential, often conditioned on EU funding access.

 

Debt relief tools: Extended maturities and grace periods via the European Stability Mechanism (ESM), or innovative instruments like GDP-linked bonds and Eurobonds ("blue bonds") for joint issuance up to 25% of euro area GDP, promoting fiscal integration without full mutualization. 

 

Negotiations should occur multilaterally through the Eurogroup (eurozone finance ministers) for peer review of budgetary plans, the European Commission for assessments and enforcement, and the European Council for high-level political buy-in. The ECB would coordinate monetary support, while bilateral talks with creditor nations (e.g., Germany, France) ensure consensus. For external legitimacy, involve the IMF in debt sustainability analyses, especially for countries like Greece or Italy. This collaborative approach, as seen in 2025 budgetary discussions, avoids contagion while fostering unity.

 I asked: Do the Eurozone authorities have sufficient credibility to pull this off?

 

The Eurozone authorities—primarily the European Commission, ECB, Eurogroup, and European Council—have garnered moderate credibility in implementing the new economic governance framework, but it's insufficient to guarantee unhindered success in pulling off comprehensive negotiated reforms for indebted sovereigns as of August 2025. 

 

On the positive side, the framework's entry into force in April 2024, coupled with the approval of initial Medium-Term Fiscal Structural Plans (MTFSPs) in early 2025, demonstrates procedural progress and coordinated fiscal stances. Eurogroup statements highlight stabilizing debt at ~90% of GDP, near-target inflation, and growth acceleration, bolstering perceptions of effective debt management. The ECB's role in monetary support and the European Fiscal Board's assessments further enhance institutional legitimacy. 

 

However, challenges undermine full credibility: Analyses criticize lax enforcement, with high-debt countries like Italy exploiting flexibilities for loosening rather than consolidation, risking moral hazard and austerity entrenchment. Political divergences among member states, limited investment carve-outs, and geopolitical pressures could erode trust if compliance falters. Historical ECB interventions during crises have empowered it but also sparked credibility debates over fiscal dominance. In sum, while foundational steps build optimism, sustained credibility hinges on rigorous enforcement and growth outcomes—early signs are promising, but vulnerabilities persist, potentially requiring IMF involvement for added assurance. 

 

I said: Thanks! Enough for today.

 

It answered: You're welcome! Feel free to dive back in anytime—I'm here whenever you're ready. Have a great day!

PS. One of the main difficulties lies in that the Euro adoption did not include one word about what any of the Eurozone sovereigns had to do in order to leave the Euro.

Note: The answers are copied exactly from those given to me by ChatGPT and Grok

Here my many other questions to ChatGPT and Grok on bank regulations

#AI #ChatGPT: What is your initial reaction to the following way for a Eurozone sovereign to restructure its debt?

I asked ChatGPT:

"A way for way too indebted Eurozone sovereign, unable to service its debts without imposing severe sufferings on its inhabitants, is to abandon the euro and offer in payment, to all of its creditors, long term bonds denominated in their old currency at a very low interest rate, and which shall immediately come due, if any of its new public indebtedness exceeds e.g., 30% of GDP.

In a very brief way, keep it to about 200 words, what is your initial reaction to that?"

ChatGPT answered:

"Your proposal is intriguing because it combines three strong elements: restructuring, national monetary autonomy, and a hard rule to reassure creditors.

Exiting the euro would restore the debtor country’s ability to issue in its own currency, which allows regaining monetary flexibility. Converting outstanding debts into long-term local-currency bonds at very low rates effectively forces a deep restructuring—creditors accept real losses up front but gain protection from future fiscal excess through the trigger clause. The automatic maturity acceleration if new debt exceeds 30% of GDP is clever: it ties the government’s hands and signals seriousness about discipline, while offering creditors a credible enforcement mechanism.

But there are heavy challenges. The legal mechanics of redenominating euro liabilities could spark endless litigation, especially with foreign-law bonds. Creditors may fear the trigger clause could itself generate instability, encouraging speculative attacks to test fiscal limits. Domestically, abandoning the euro risks bank runs, capital flight, and collapse in confidence—requiring capital controls and strong political resolve. And in the wider Eurozone, such a precedent might invite contagion, making the ECB and EU institutions resist fiercely.

So: conceptually elegant, but politically and operationally very hard to execute without huge disruption.

Would you like me to sketch how creditors might realistically respond?"

I said: If briefly. please do

ChatGPT said:

Most creditors would see your plan as a forced restructuring, but reactions would differ:

Official creditors (IMF, EU institutions) might resist, since accepting redenomination weakens the euro project and sets a precedent. They’d likely push for continued euro membership and conditional relief instead.

Private creditors (banks, funds) would likely accept if the alternative is outright default. The long-term, low-rate bonds give them a claim, and the 30% debt cap provides some assurance of discipline—though they’d price in currency devaluation risks.

Vulture/distressed funds could litigate, especially if contracts are under foreign law, but many might buy in at a discount and gamble on eventual recovery.

In short: reluctant acceptance from private markets, legal challenges from holdouts, and strong opposition from official Eurozone actors.

I said:

What if many other Eurozone sovereigns in similar situation would also jump to take up that idea?

ChatGPT said:

If several Eurozone sovereigns were to adopt this strategy simultaneously, the effects would be profound:

Markets: Confidence in the euro would collapse, since investors would anticipate mass redenominations and restructurings. Euro-denominated sovereign debt could rapidly lose its safe-haven status.

Banking systems: Banks heavily exposed to sovereign bonds would face sudden losses, forcing recapitalizations or nationalizations. Cross-border exposures would spread the crisis.

Political cohesion: The euro project itself would be at risk. A wave of exits and unilateral restructurings could trigger fragmentation, pushing surviving members either to deepen integration or let the eurozone unravel.

Creditors’ stance: If many governments acted together, creditors would have less bargaining power. Faced with a “take-it-or-leave-it” collective restructuring, many investors might accept, since litigating multiple countries at once would be impractical.

In short: one country doing it is disruptive but survivable; many doing it would likely mark the effective end of the euro as a common currency, unless the core (Germany, France, the Netherlands) rushed to create a tighter fiscal union around themselves.

Would you like me to sketch what kind of new monetary order could realistically emerge if that domino effect happened?

I said: Another day. Thanks

ChatGPT said: Anytime — I’ll be ready when you want to revisit it. Thanks!

Note: The answers are copied exactly from those given to me by ChatGPT and Grok

Here my many other questions to ChatGPT and Grok on bank regulations

A brief comment on Joseph E. Stiglitz “The EURO: How a common currency threatens the future of Europe”

Professor Stiglitz correctly describes many of the challenges the Euro poses, most of which were known from get-go twenty years ago, like the problem derived from having fixed exchange rates within the Eurozone.

In the introduction to the paperback edition, Stiglitz also briefly brings forward something that should have been understood but seems to have been much ignored. That is that although the Euro is for most purposes the domestic currency in the Eurozone, it is de facto not a truly domestic currency for any of its sovereigns, since none of these have the right to individually print the Euros it wants or needs. Without that right, the Eurozone’s sovereigns’ debts are all, de facto, denominated in a quasi-foreign currency.

But what the book does not mention, is what came afterwards, I do not know exactly where and when; something that here and there is referred to, in hush voices, as Sovereign Debt Privileges. These translate into that the EU authorities (European Commission?), for the purpose of the risk weighted capital requirements for banks, assigned all Eurozone nations an insane 0% risk weight. 

That distortion in favor of Eurozone’s sovereign’s accesses to bank credit has impeded the markets from sending the correct market signals with respect to the interest rates for each sovereign.

One of the consequences of this has been the tragedy of Greece. Especially since Greece was then forced up to pay up basically on its own for this EU mistake, so as to bail out German, French and other Eurozone banks. What a Banana Union!

As for Professors Stiglitz opinions on Brexit I might resume those I my own words as “If there's a Remain there might not be a EU in which to remain”, something that would be very sad as EU was, and still can be, a very beautiful dream.

But let me be clear. I do not hold the EU authorities as solely responsible for the consequences of their 0% risk weighing of the Eurozone Sovereigns. Already in 2011, in a post titled “Who did the Eurozone in?” I argued that the extraordinary low risk weights that the Basel Committee assigned to sovereign debt when compared to what it assigned to the private sectors would end in tears. (And that goes not only for the Eurozone)

Here’s the moment it struck me that if Brexit falls apart, there might not be a EU for Britain to remain in.

It’s now twenty years since the Euro was introduced, more in order to strengthen a union than the result of a union. As I wrote in an Op-Ed at that time, it brought on important challenges to its 19 sovereigns. First it meant giving up the escape valve of being able to adjust their currency to their individual economic needs and realities, and second, much less noticed, also by me, was that they would hence be taking on debts in a currency that de facto was not denominated in their own domestic (printable) currency.

To face those challenges required the Eurozone to extend much more the Euro mutuality to other areas, like to monetary and fiscal policies. In that respect there’s no doubt that way to little has been done.

For more than a decade I thought the Eurozone applied Basel Committee’s Basel II standardized credit rating dependent risk weights in order to set the capital requirements for banks, when lending to sovereigns. I never approved of that because I considered those risk weight way too statist, tilting bank-lending way too much in favor of the sovereign and against the citizen... and that should do the Eurozone in. 

But then, by mid 2017, I found out that it was all so much worse. EU authorities, most probably the European Commission, I really do not know who and when, assigned all Eurozone sovereigns a 0% risk weight, even though none of these can print euros on their own.

I could not believe it. That meant that European banks could hold sovereign debt, of for instance Greece, against no capital at all. How could something crazy like that happen? That basically doomed the Euro. What would have happened with USA if it had done the same thing with its 50 states?

How on earth can it now get out of that corner it has been painted into, especially when Europeans sing their national anthems with so much more emotion than EU’s anthem, Beethoven’s Schiller’s “Ode to Joy”

And that’s the moment it struck me that if Brexit falls apart, there might not be a EU for Britain to remain in.

My November 1998 Op-Ed "Burning the bridges in Europe"

PS. When Greece fell into the trap then EU authorities had it sign a Versailles type treaty.

Bank regulators behave like the scarer employed at the energy-producing factory Monsters, Inc.

The idea of requiring banks to hold less capital (equity) against what is perceived, decreed or concocted as safe, like sovereigns, the AAArisktocracy and residential houses, than against what is perceived as risky, like SMEs and entrepreneurs, is absolutely cuckoo.

That means that when banks try to maximize their risk adjusted return on equity they can multiply (leverage) many times more the perceived net risk adjusted margins received from “the safe” than those received from “the risky”. As a result clearly, sooner or later, the safe are going to get too much bank credit (causing financial instability) and the risky have, immediately, less access to it (causing a weakening of the real economy). 

Anyone who can as regulators did in Basel II, assign a 20% risk weight to what is AAA rated, and to which therefore dangerously excessive exposures could be created, and 150% to what is made so innocuous to our banking systems by being rated below BB-, always reminds me of those in Monsters, Inc. who run scared of the children. I wish they stopped finding energy in the screams of SMEs and start using their laughter instead.

“We need a people’s Fed”. Yes, we sure do! Assigning 0% risk weight to the sovereign and 100% to any unrated citizen is pure statist ideology driven discrimination in favor of government bureaucrats and against the people. But perhaps the activists depicted are not into that kind of arguments. 

PS. Those in Monsters Inc. finally figured it out. Our bank regulators in the Basel Committee and the Financial Stability Board have yet to do so, even 10 years after that 2008 crisis, which was caused exclusively by excessive exposures to what was perceived, decreed of concocted as safe, like AAA rated securities and loans to sovereigns like Greece 😩

Bank regulators’ statist 0% risk weight of sovereign, turn governments into credit spoiled filthy-rich brats that will end up defaulting

If banks need to hold much less capital when lending to the sovereign than when lending to anyone else; and thereby makes it easier for the sovereign to offer banks an attractive risk adjusted return, banks will lend and governments will borrow, way too much. It is doomed to end badly.

That is what the 0% risk weight of sovereign when setting the capital requirements does. It is a shameless and dangerous regulatory subsidy of government debt which statist regulators justify based on “sovereigns can always print money”, which as we all know is precisely one of the major risks with sovereigns.

And too many experts, most, are not even aware of that regulatory subsidy, and often refer to government debt setting the risk-free rate, as if nothing had happened.

For instance, way to often we read a reputable financial commentator opining that the sovereign should take advantage of the very low rates in order to take on some needed infrastructure projects that will also provide jobs while they last. No consideration at all is given to the fact that government debt, if it does not help generate the economic growth required for its repayment is a de facto tax on future generations. Those who seem to be most in need of tax-cuts are the unborn. Why not think of them too President Trump?

What would happen if we want to retire our deposits in a bank that is overextended in loans to an overextended sovereign? Have the sovereign print money? Like any Venezuelan central bank?

This 0% risk weighting started in 1988 with the Basel Accord. During the almost 600 years of previous banking there was nothing of that sort of distortion. Imagine what financier Templar Grand Master Jacques de Molay, burned in 1307 by Phillip IV, would have to say about that 0% risk-weight. 

But what to we do now? If we imposed on banks the same capital requirements for lending to the sovereign than when lending to the citizen, which is how it should be in order for banks to allocate credit efficiently, that would create so large new capital requirements it could bring the whole ordinary bank credit function to a halt.

Let us suppose we want banks to hold 10% in capital against all assets. One alternative would be to lower the current capital requirement for banks to each banks’ current average capital, and let it thereafter build up little by little… with no dividends for quite sometime... or allowing banks to hold on to whatever current 0% risk weighted sovereign debt they have against no capital, but strictly imposing the new capital requirements on any new purchases of it.

Another tool that (thinking of my grandchildren) could be needed and effective is a haircut on all bank depositors, by forcing them receive some negotiable non-redeemable bank shares in lieu of money. (Perhaps those shares could even turn out to be a good investment for pension funds)

What Kurowski? Have you gone mad? No friends, just tell me how we otherwise stop governments, egged on by so many redistribution profiteers, from taking on subsidized debt?

PS. Be sure of it, currently Financial Communism reigns

PS. How far has the IMF has progressed researching the theme of this regulatory subsidy?

PS. The other sector that is being subsidized by low risk weights is that of residential mortgages. That will likewise signify we end up with plenty of houses for our children to live in the basements, but too few jobs for them to be able to buy their own upstairs.

PS. In 1988 when statist regulators assigned it a 0% risk weight, the US debt was $2.6 trillion. At end of 2017 it was US$20.2 trillion, and still 0% risk weighted. If it keeps on being 0% risk weighted, it is doomed to become 100% risky, just like what happened to Greece

PS. What to do? The regulators painted us all into a corner. The 0% risk weight of sovereigns will continue to dangerously doom the public debt safe-havens to become overpopulated by banks holding especially little capital. But any increase of that weight, will scare the shit out of markets.

PS. The only way to solve the 0% sovereign risk weight conundrum that I see, is to increase the leverage ratio applicable to all assets, until that level where the risk weighted capital requirement totally loses its significance.

PS. The same central bank technocrats who target a 2% inflation rate, which means that in 10 years our money will be worth about 22% less, are the ones who assign sovereigns a 0% risk weight. Why do we allow them to treat us with such statist contempt?

PS. Here is a current summary of why I know the risk weighted capital requirements for banks, is utter and dangerous nonsense.

Who should lead the Fed? There’s one initial and essential screening of the candidates.

Fact: Banks are allowed to leverage more with assets considered safe, like loans to sovereigns, the AAArisktocracy and mortgages, than with assets considered risky, like loans to SMEs and entrepreneurs.

So ask the candidates:

Does that mean “the safe” have even more and easier access to bank credit than usual and “the risky” have even less and on more expensive terms access to bank credit than usual?

If the answer is no, disqualify the candidate.

If the answer is yes, then ask: 

Do you think that might dangerously distort the allocation of bank credit to the real economy?

If the answer is no, disqualify the candidate.

If the answer is yes, then ask: 

In terms of what can pose the greatest risk to the bank system, would you agree with Basel II’s risk weights of 20% for what is rated AAA to AA and 150% for what is rated below BB-?

If the answer is yes, disqualify the candidate.

If the answer is no, then ask: 

Do you agree with a 0% risk weighting of sovereigns?

If the answer is yes, the candidate should be classified as an incurable statist and accordingly dismissed.

If the answer is no, you can then proceed with the rest of the tests.

Good luck!

PS. How many of those currently in the Board of Governors of the Federal Reserve System, would pass this test?

A simple but complex question from a humble Venezuelan economist to any outstanding Venezuelan international lawyer

The 1999 Constitution of the Bolivarian Republic ofVenezuela establishes:

"Article 12. Mining and hydrocarbon deposits, whatever their nature, existing in the national territory, under the territorial sea bed, in the exclusive economic zone and on the continental shelf, belong to the Republic, are the property of the Public domain and, therefore, inalienable and imprescriptible. "

Suppose a Revised Constitution would establish: "Article 12. Mining and hydrocarbon deposits, whatever their nature, existing in the national territory, under the territorial sea bed, in the exclusive economic zone and on the continental shelf, belong to Venezuelan citizens, as long as they live and, therefore, inalienable and imprescriptible."

Suppose also that the current PDVSA bankruptcy and all its assets are acquired by a PDVSA II or by any other national or foreign company that, on behalf of the citizens of Venezuela, has been entrusted to extract and market that oil providentially deposited in Venezuela. 

So then a tanker would be transporting, not the oil of a sovereign country, but the oil privately owned by millions of Venezuelan citizens.  My question to expert lawyers would then be:

Could the financiers of the Bolivarian Revolution of Venezuela, or old PDVSA, embargo that tanker? Could a tanker for instance belonging to ExxonMobil, be seized by creditors of the United States or the state of Texas in the event that any of the latter fail to meet financial obligations?

Of course, current Venezuela and Pdvsa creditors would claim before judges they always lent against estimated future oil revenues. But, can a government mortgage something that the constitution itself declares as inalienable?

Would the world, knowing then that the oil revenues carried by the tanker would be delivered directly to millions of Venezuelans, the rightful owners of the oil, and which will help these to satisfy some basic human needs, like food and medicines ... allow that tanker to be embargoed in order to satisfy the cravings of a few speculating financiers?

Dear friends, our Venezuela has been ransacked. It is the obligation of every Venezuelan to seek to try to save our nation in any way we can. 

If expert lawyers respond to me with a "You’re crazy Kurowski, that’s not possible", then, shamelessly, I’ll try to find other ways.

And if that means governments’ of Venezuela will not get access to credit in the future, I would almost count that as a blessing.

And don’t tell me I did not warn the creditors before!

PS. This is loosely translated from here

Goldman Sachs’ Lloyd Blankfein should perhaps go to jail, for violating the FCPA, or be fired, for being too dumb

1. For years (decades) I've argued that any sovereign (and I really mean any sovereign) that has to pay something like 100-200% more in interest rates than that sovereign who at that time pays the least, in order to obtain finance, has not earned the right to take on public debt, and with that to mortgage its future generations of citizens. 

The current rate the US has to pay for 5-year money is about 2%.

2. There are plenty of persons currently in jail in the US because of acts committed against the Foreign Corrupt Practices Act (FCPA).

3. Goldman Sachs, has just handed over about US$800 million to the notoriously corrupt, criminal and human rights violating government of Venezuela, in order to obtain $2.8billion Venezuelan bonds paying a 12.75% interest rate, which if repaid would provide GS with about a 42% yearly return, 2.000% more than what US pays. Has it in fact not committed the mother of all corruptions acts punishable under the FCPA?

4. Of course, if Lloyd Blankfein, the chairman of Goldman Sachs, can see a 42% return for lending to a sovereign, and not conclude that something extremely corrupt and fishy is going on, then he should, as a minimum minimorum, instead be fired for being too dumb.

Many people have been arguing for decades for the need of a Sovereign Debt Rescheduling Mechanism (SDRM). I agree with that, but that must begin with classifying credits as bona-fide, doubtful, or outright odious. This specific Venezuela debt referred to here, clearly belongs to the latter, and should not be repaid.

PS. Venezuela, a nation with tremendous food and medicine shortages sells gas at less than US$ 2 cents a gallon. What else can I say?

PS. If the elites do not socially sanction those they should sanction, there will be no society left to sanction.

PS. Today June 27, 2017, Maduro, he who was financed by Goldman Sachs stated "If we don't win with votes we will win with our weapons".

PS. https://www.hrw.org/world-report/2017/country-chapters/venezuela

PS. Still, November 2018, and not the slightest sign of a "Sorry" from Lloyd Blankfein. Did he earn a big bonus for mistreating Venezuela? Are all those working in Goldman Sachs really proud of this?

Was it an accident or is it a statist setup?

In 1988, suddenly, without asking anybody, least us citizens, bank regulators, for the purpose of setting the capital requirements for banks, decreed the risk weight of the sovereign, the government, to be Zero Percent, while the risk weight for We the People was set at 100%.

Not having to hold capital against sovereign debt permits banks to lend to government at lower rates; which translates into a regulatory subsidy of government debt.

Then in response to the 2007-08 crisis, itself a result from distorting bank regulations, central banks launched quantitative easing, which basically meant injecting liquidity into the economy by purchasing government debt; and for example the Fed has ended up with about of US$ 4.5 trillion in government paper.

Much of the liquidity injected went to prop up real estate, bonds and shares, but a lot of it spilled over into more demand for government paper.

Naturally, interest rates for public debt fell, and many, like pension funds, in order to adjust for their liabilities, had to purchase even more public debt.

And while regulatory subsidies of public debt are kept in place, this vicious circle will continue.

And to top it up, too many “experts” now advance the argument that government should take advantage of these low interest rates, to launch infrastructure projects.

Let me be very clear about it, the fact that government might (artificially) even be paying a negative rate on its borrowings, does not mean it should borrow, because it is still very capable of investing those funds in projects yielding even more (real) negative rates.

I do not know how we got to this point, whether by accident or whether a set up by runaway statists. You tell me!

PS. When utilities were being privatized in South America, I often heard accusations in terms of “savage neo-liberalism”. Since these utilities were not adjudicated to whoever offered to serve us citizens the best and the cheapest, but to whoever offered to pay the government the most, a tax advance that left us with a huge bill to pay at private investment rates of return, to me those privatizations were much more an expression of sadist statism.