May 24, 2012
To listen to European leaders lately, the debate about Greece’s exit from the euro zone is increasingly moving from “if” to “how.”
Policy makers and many economists continue to regard Greece’s departure as a doomsday situation that must be avoided at all costs, and there is clearly an element of brinkmanship in talk of a “Grexit.” But it has become clear in recent days that secret contingency planning has begun in case events spin out of control.
The German Bundesbank all but admitted as much on Wednesday when it said in a report that Greece’s exit would be difficult, but possible “with careful crisis management.” The cautious, data-driven economists at Germany’s central bank would not have made that statement without studying the issue thoroughly.
Jean-Claude Juncker, the prime minister of Luxembourg, said early Thursday in Brussels that keeping Greece in the euro zone was still the preferred plan. But he added, “We need to be armed for all eventualities.”
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