How can Prof Rogoff continue to ignore the difference between public debt and private debt based on money differences between a Euro using country and a sovereign issuer of/spender of its own currency (whether directly or through an entity like the Fed and no matter how accounted for)?

The article ignores that Germany's success is based on the PIIGS inability to devalue sufficiently and the Euro's excess devaluation based on a German benchmark.

Europe has 3 options which are not necessarily alternates:

1 Break up and revert to won currencies with devaluation and default

2. ECB effectively becoming joint fuding mechanism for the safety net at a harmonised level irrespective of it creating ECB accounting liabilities

3. writeoffs of public debt as well as private debt with banks failing and depositors and bond holders or the ECB taking losses after capital is wiped out

4. Full fiscal federation with high income entities suporting lower income individulas and families to a harmonised benchmark and guaranteeing a minimum infrastructure and services.



Ultimately the PIIGS problems were caused by the debt boom which was allowed under Basle rules for sovereign debt, the excess private debt being allowed to develop in unbalanced economise (eg through Spanish and Portugese real estate construction booms) and the bail out of banks by governments. Countries without a substantial investment base, without an abiilty to devalue because they are Euro issuers, with limited if any government deficit expendiutre and excess private debt will be basket cases for a generation without an external circuit breaker in our credit based economies based on banks creating money through credit as per Bank of england recent paper.

So in summary, I agree with much of what the good Professor says, but think it oversimplifies and is not braod enough.