Is there a market for Southern European debt incentivizing Southern Europe?

The textbook definition of markets is that participants are „atomic“. I think this is psychologically akin to saying that market participants cannot identify the culprit of pressures that come „from the market“. Pressures that come from sources well known and come from as few persons that it is possible to ask for solidarity and/or blackmail those persons (if anything bad is known about them) are not any more market pressure. After all, participants cannot anymore exert influence by the typicle market strategy of „exit“ (get rid of your (financial) interests by selling/leaving before others do) because it is well known to ayone _who_ is leaving and leaving is perceived as an hostile move by anyone who might be damaged (i.e. anyone but the entity that exits the market). Participants to the „market“ rather need to use the „voice“ strategy to exert influence if they are not to be crushed by all others. But the literature does not associate the voice strategy with markets at all, but rather with hierarchical organisations and politics. Anything resembling the voice strategy is not market pressure, it rather is poltical and/or hierarchical pressure. Therefore we cannot apply the analysis toolkit for markets if we speak of reform for Southern European governments concerning their budgets. The chance to let the market do its work was effectively lost at the latest when Northern Europe did (a) not avoid that the ECB bought as much of Southern debt that its balance sheet is at risk and that it owns a major part of Southern debt and (b) agreed to bail out Southern European countries on such a scale that anonymous investors now are at least as interested in Northern Europe paying Southern debt as they are in Southern Europe paying Southern debt.

I therefore conclude that the market -being non-existent- does not incentivize Southern European countries with regard to government debt and with regard to any reform that might alleviate the problem.

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