Friday, May 16, 2014

Plan Z --- A Scandal or a Light of Prudence?

Peter Spiegel of the FT published a most interesting series about How the Euro Was Saved. In Part II, he described how officials from the EU Commission, the ECB, the IMF and the Eurogroup worked literally behind closed doors and without written exchanges to prepare contingency plans for a possible Grexit (Plan Z).When reading it, one might be lead to be shocked by the secret dealings which took place beginning in early 2012. One might even think that conspirators had been at work there.

Personally, I was much relieved to read about Plan Z. From the beginning of Greece's external payments crisis, EU elites had hammered into the public that everything could be and was talked about except --- a possible Grexit. At some point, I started believing that story.

This is why I stated repeatedly that such a position was not only irresponsible but truly reckless. A Grexit could never be ruled out and as long as the possibility, however minute, of a Grexit remained, it was indefensible that leaders would not prepare any contingency plans for it. The US government always ruled out the possibility of an American default when the debt ceiling was approached but that did not prevent the US Treasury from assuring the public that, in the event a default could not be avoided, they would have contingency in place.

Thus, in restrospect I have to become a bit more mellow as regards my judgement as to what EU elites did or did not do during the peak of the crisis. By preparing Plan Z, they had obviously done the right and responsible thing. What Spiegel's series does not reveal is whether Greece on its own had also preprared contingency plans for a Grexit. I would hope they had, too.

1 comment:

  1. At that time a big Swiss newspaper published that the new Drachme money has been printed and delivered the Greek state.

    I have no doubt that it is shelved and ready for use in case of ...

    H. Trickler