Rogoff: As easy as writing down debt!

I've been working through Kenneth Rogoff's solution to the ever-present and ongoing Eurozone problem of continued recession and depression, predicating it on the belief that, "There is no magic Keynesian bullet for the Eurozone’s woes."  How does he do that?  Well, he first proposes to write down massive amounts of debt.  Easy peasy, right?

Five thoughts:

• If you write down debt, you cut available credit at banks, forcing sovereign central banks to bail out those banks.  Rogoff says so, too.
• If Germans didn't like the idea of bailing out Southern Europe before, you can imagine what their reaction will be, if asked to cut their own spending and credit, to bail out Southern Europe.  The Germans will continue to point to the moral hazard of writing down debt.  This is where Rogoff seems to be at the opposite end of reality of where Germans stand on bailouts.
• Some people take bigger haircuts than others, when debt is written down.  Can you say Cypriot and Greek banks, redux?
• Writing down debt doesn't automatically allow a country to reboot from a clean slate.  You still have problems of a lack of demand -- a point that Keynes made about the need for monetary intervention -- and in reality, debt will continue to grow once again.  Rogoff knows this, and therefore proposes higher inflation for the North.
• Inflating the North as opposed to deflating the South, equalizes prices and wages -- Rogoff proposes halfway down his article.  But hey, using monetary policy to increase aggregate demand to pull out Europe from recession...why that's not Keynes at all!  ;)