Wall Street Journal
January 5, 2012
Europe: The year is new, but the politics of the crisis already seem a tiny bit old.
In an interview with Kathimerini published Jan. 1, George Provopoulos, the head of Greece's central bank, said that returning to the drachma would be "real hell." Abandoning the euro would mean that "progress achieved over decades would be wiped out." Greece's standard of living would plummet, he said, as the new national currency lost perhaps 70% of its value right away.
Athens wasn't impressed by the guesswork. Mr. Provopoulos hadn't even said Greece ought to quit the euro. He earned the Greek government's rebuke just for broaching the thought. "There is no reason to cause panic by saying that we will return to the drachma," a spokesman told Greek radio on Monday. "We can avoid it with serious and systematic work."
"Panic" is the great unmentionable in Europe these days. Fear of market panic keeps policy makers up at night because panic, the wisdom goes, is the opposite of normal market behavior. Panics are triggered at the drop of a hat and can bring the whole house down.
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