Dear Kantoos and Yanis,
After reading your interesting debate which lasted (lasts?) several months I felt the need to comment on some issues that I thought to be quite intriguing. What worries me more about Yanis proposals is not their rationale as a thought experiment but the outcome of their actual implementation in the real world. While I couldn't agree more with Point 1 of his Modest Proposal, I have serious doubts concerning the feasibility of Point 3. Yanis states that: "the EIB has a sterling record of financing, through its own bond issues, profitable investments and has a long list of shovel-ready potentially lucrative projects that could realize Europe’s New Deal".
First of all, if the EIB has that record it would be a shame to lose it due to an increase in investments of doubtful success just for the sake of increasing investment. If the EIB does indeed have those lucrative projects, as Yanis states, then I would assume that the projects are spread all over the EU and not just focused in the South. (The only reason the EIB would choose to have its majority of projects in the South would be increased returns on the funds invested, which, given the circumstances which currently affect the South, is not a very rational assumption). Of course I do acknowledge that even relatively small investments would be beneficial to the EU periphery. However, if the EIB is "obligated" to use more of its funds in periphery-based projects, the "sterling record" is bound to be lost and yet another institution within the EU will be under pressure.
What I have not yet seen in your debates (although to be honest I may have missed such a point) is a mention to the actual problems and drawbacks the South currently faces: bad institutions, property bubbles and productivity. Even though I am a South European, currently living in a Southern European country, I do believe that at some point a crisis is necessary. (See my post on Do we need a Crisis? for more on the subject). Would any one disagree that the subject of productivity is of the utmost importance in the South? Or would Yanis disagree that the Greek government had been overspending over the last 10-15 years and its finances were in need of major corrective measures? Or is Kantoos of the opinion that rapid austerity measures would not wreck havoc over the economy?
The only point I think we would all be in agreement would be that Greece should not exit the Euro.