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Everyone seems to think the Irish government guaranteed all deposits. That's not what they did.

They guaranteed the entire balance sheet of the banks, from deposits to senior to junior debt to derivatives to whatever.

So bondholders had a government guarantee they didn't have before.

I'm not saying repeal the deposit guarantee. After all, depositors have always been and will always remain the most senior creditors of any regulated bank. No, I'm saying repeal the blanket guarantee of the entire unsecured debt of the Irish banks.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

by Migeru (migeru at eurotrib dot com) on Fri Feb 4th, 2011 at 05:32:28 PM EST
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