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EUROPEAN PARLIAMENT PRESIDENT JERZY BUZEK


To:               The Right Honorable European Parliament President Jerzy Buzek

From:            Athinarayanan Sanjeevraja

RE:               Eurobonds

Suggestions:  

Good morning President. German Chancellor Angela Merkel insisting that introducing Euro-zone wide government bonds wouldn’t solve the current debt crisis but I kept on insisting introducing Eurobonds will solve the current debt crisis since June 2011. I also wrote to Spiegel Online in the month of June 2011, saying that Europe should move to the Eurobond fund, guarantee AAA rated Euro-zone countries will not pay any higher rates then they do now, if they want to borrow, by allowing them to take the difference out of the fund while other European countries such as PIIGS would borrow at the normal rate likely around 4% allowing them lower rates than normal and AAA rated countries the same rates they receive now. Putting in Eurobonds to try to reduce the interest pressure on PIIGS borrowing would solve the underlying problem. I believe this is to be the best option.

Mr. President, individual countries would not really be able to issue Eurobonds. That would make them even more dependent on creditworthy members like Germany and France. For instance, when I buy Eurobonds, I don’t worry or care about the public finances of individual EU states. In addition I’ll have no longer deal with individual countries.   I want European Union to be integrated enough to issue Eurobonds but Germany do not want to really integrate. Germany has benefited from the EU. Germany has benefited from the Euro. German exporters have enjoyed boon from the common currency. Indeed Germany wants to continue the European projects. Germany will have to negotiate some sort of transfer union that would involve Eurobonds and some form of European economic governance. Germany has to understand that PIIGS countries cannot leave the Euro. The cost would be far too high for them and their currency would devalue wiping clean all middle class savings.

Mr. President, Eurobonds would be underwritten by not Germany but the central fiscal institution in Brussels. I hope that you’ll start issuing Eurobonds to resolve the current debt crisis.

Thank you very much for your kind attention Mr. President.

Sincerely,

Athinarayanan Sanjeevraja.

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