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Pass an emergency law saying that sovereign expenses will continue to be credited to the recipients accounts in Greek banks, who may then consider the least senior creditor's claims void in sufficient amount that the bank remains solvent. Essentially, the Greek sovereign would then first default on the sovereign debt, then default by proxy on its private sector debt.

Oh, and clamp down hard currency rationing before you begin.

If you really want to twist the knife, reorder creditor seniority by legal fiat to make - say - Deutche Bank the least senior creditor of all Greek banks. When they have no more DB interbank debt or bonds, proceed to the next major money Eurozone bank you believe is insolvent. If the ECB wants to play chicken with Greek civil society, let's see how many major Eurozone banks it's prepared to lose in the process.

Oh, and when you do it, make sure to widely publicise the amount of impairment of other €-zone banks' balance sheets. Of course, those numbers do not have to bear any but the most platonic relationship to the truth. If you can trigger a couple of bank runs with hostile rumour-mongering, then that's a fair enough payback for the ECB's attempts to murder your economy wholesale.

If you really want to have fun, void all non-bank private debt to individuals and other €-zone countries.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Apr 15th, 2011 at 04:00:49 PM EST
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