Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

It was in early 2012 that top-secret planning began for the eventuality of a Grexit.4 Work on the so-called Plan Z would continue until August 2012, when it was finally stopped by Berlin. It was stopped because the upshot of the planning exercises was always the same. It would likely be ruinous for Greece, and the ramifications of Grexit for the rest of Europe were entirely unpredictable. They were unpredictable because Europe still had not built an adequate shield to protect the other fragile eurozone members from the fallout from a Greek bankruptcy. It was to reinforce and extend that inadequate safety net that the Europeans were applying to the G20 to support an expanded IMF facility. But the G20’s answer was clear. The rest of the world would regard Grexit as a failure not just of Greece, but also on the part of the larger European states that pretended to global standing as members of the G20. On February 19, 2012, Japan and China, in a rare show of unity, declared that they were willing to back the appeal for increased IMF funding, but only if the Europeans raised the cap on the ESM stability mechanism, to which the Bundestag was clinging.5 The Europeans must help themselves first.