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If this political timetable can be delivered on time and if the economic policies deliver the expected benefits, then investors buying longer-dated euro-area government bonds will find the redemption monies are paid to them by a highly-integrated political entity. The economy of this entity will be far more competitive globally and its public finances will be far more prudent. But its debt levels will still be high - and vulnerable to any failure to deliver on the promises. Private Sector Involvement (PSI) cannot be airbrushed out of history so the bond market vigilantes have good reason to remain very vigilant – for profit or loss.
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