Sunday, 25 September 2011
G20 sources finally conceded that it is now a question of when, not if, Greece will default. And in the face of this hideous storm what did they come up with? A deadline. In fact, that’s not quite it: they set themselves a deadline to come up with a timetable. You couldn’t make it up. Euro leaders have been given six weeks to devise a legal framework to implement measures which, if they are lucky, may have a fighting chance of saving the euro.
Of course, if ever there were a bunch of people you could count on to miss a deadline like this, it is the eurozone’s ministers. It is their prevarication throughout the recent crisis – whether over addressing their public finances, recapitalising their banks or addressing the rot at the heart of the single currency – which has left us where we are today.
Having tried to coerce them through economic rationale and behind-the-scenes exhortation, ministers from outside the eurozone are finally losing patience. Tim Geithner’s unprecedented visit to the Ecofin summit in Poland last weekend was precisely what it looked like: a desperate bid to shame the euro finance ministers into coming up with a deal. And behind the scenes in Washington over the past few days frustration has turned to anger.
Ministers are now privately conceding that Greece is bound to default – though Portugal and Ireland may survive. They are quietly preparing their economies for even more financial turmoil and readying themselves for what could conceivably be a repeat of 2008. And they are losing faith in the capacity of the Europeans to resolve their own problems.
Plan B: Flood the markets
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