Why no EU plan for default or euro exit?

by John Dizard

Financial Times
February 12, 2012

We should be modest in assessing our performance
Prime Minister Mario Monti, speaking on February 9 about Europe’s crisis management

In the case of the eurocracy’s role in the Greek financial crisis, I would say very modest indeed. Actually, brutal, nearly parodic self-criticism of the sort displayed by out-of-favour officials during China’s Cultural Revolution of the mid-1960s would strike about the right tone. Not that we’ll get that.

The real problem, though, is that the euro area leadership seems to have learned little from the disastrous progress of the Greek insolvency proceedings. The latest “rescue” deal for the country has been greeted with disbelief by even the usual courtiers and publicists, yet there is continued insistence that this puts an end to the problem. Everyone can now get on with growth and structural reforms. Greece’s problems are unique and never to be repeated.

Political leaders and their vast staff organisations have set up yet more entities, such as the European Financial Stability Facility and the European Stability Mechanism, which provide yet more opportunities for careerists, and yet more confusion about who makes decisions. It would have been much more productive to come up with two sets of clear policies; one to deal with sovereign defaults within the eurozone, the other to provide for procedures for a member country to give up the euro as a national currency.

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