My good friend Kiron Sarkar sent me this FT article tonight, along with the note I'll share below. I read the piece and agree. Remember, I said three years ago that Ireland would not pay those loans back? This is the beginning of nonpayment, but the ending will be in about 25 years, when no one will care. Clever way to paper that over. You have to stand back and just drop your jaw over such brazen hubris and legal maneuvering. Let me quote from the article before I show you Kiron’s comment:

“This is monetary financing for all intents and purposes. The whole structure of this agreement is so convoluted that newspapers do not report all the relevant details. As always, convolution has a purpose. It renders legal what would otherwise not be, and it allows for obfuscation.

"In this case, the purpose of obfuscation would be to hide what would otherwise be a contradictory message. You cannot admit publicly in the creditor countries that monetary financing is taking place – this is sacrilege. But then this is what it takes to save Ireland from a debt trap. It was then considered the best strategy to put back the debt repayment by a generation or two.”

And from Kiron:

"This is a great article. In addition, I agree with Mr Munchau: it is the only solution for the EZ. It is clearly monetary financing, which will get the Germans all excited. However, post the September German elections – whoever wins – the pressure to consider such schemes will be immense.

"Clearly, none of us are in favour of monetary financing, but when there is no other solution, well...

"This and other schemes are why I believe the euro will weaken materially in due course – one of my big potential plays."