When The Head Of The European Central Bank Lies To Zero Hedge On The Record: Presenting Europe's "Plan Z"

Tyler Durden's picture

Who can possibly forget the following exchange from April 2013 in which a very simple question was asked: so simple that apparently nobody else in the very serious media had ever even considered it.

Scott Solano, DPA: Mr Draghi, I've got a couple of question from the viewers at Zero Hedge, and one of them goes like this: say the situation in Greece or Spain deteriorates even further, and they want to or are forced to step out of the Eurozone, is there a plan in place so that the markets don't basically collapse? Is there some kind of structural system, structural safety net, especially in the area of derivatives? And the second questions is: you spoke earlier about the Emergency Liquidity Assistance, and what would have happened to the ELA in Cyprus, the approximately €10 billion, if the country had decided to leave the Eurozone?


Mario Draghi, ECB: Well you really are asking questions that are so hypothetical that I don't have an answer to them. Well, I may have a partial answer. These questions are formulated by people who vastly underestimate what the Euro means for the Europeans, for the Euro area. They vastly underestimate the amount of political capital that has been invested in the Euro. And so they keep on asking questions like: "If the Euro breaks down, and if a country leaves the Euro, it's not like a sliding door. It's a very important thing. It's a project in the European Union. That's why you have a very hard time asking people like me "what would happened if." No Plan B.


Secondly, I think the ECB has shown its determination to fight any redenomination risk. And OMT with its precise rules and acting within its mandate, is there to this purpose. So that's the answer to the first question.


The second question was about the ELA, but again it's related to "if Cyprus leaves"  and again we don't have that in mind, so.... No Plan B.

The full exchange takes place 57 minutes 45 seconds into the clip below:


While we certainly enjoyed the realization that the fine gentlemen at the ECB read Zero Hedge on a regular basis, we were left wanting because Mario Draghi's response did not seem rational: after all these are the so-called smartest people in the room - for them to have zero contingency plan would be simply idiotic. Which also explained why it had to be Zero Hedge who posed that question to Draghi: apparently the answer was so "clear" to everyone else (as was the preposterous idea that someone would even ask it), that it never dawned on any of the other fawning, institutional "reporters" at the ECB's monthly press conference.

We are happy to report that Zero Hedge is the first media outlet that Mario Draghi has very publicly, officially, and on the record, lied to.

Because as we learned overnight, Europe most certainly had a "plan in place so that the markets don't basically collapse." Only it wasn't as Margio Draghi called it, Plan B.

It was a different letter of the alphabet.

Thanks to the FT's Peter Spiegel we now know that just over a year ago, in order to preserve the myth that Europe's power echelons are so "confident" with the Eurozone staying together they did not even consider a break up as a potential outcome, Draghi explicitly and on the record lied.

Presenting Europe's Plan Z.

What is Plan Z? 

Unbeknown to almost the entire Greek political establishment,  a small group of EU and International Monetary Fund officials had been working clandestinely for months preparing for a collapse of Greece’s banks. Their secret blueprint, known as “Plan Z”, was a detailed script of how to reconstruct Greece’s economic and financial infrastructure if it were to leave the euro.


The plan was drawn up by about two dozen officials in small teams at the European Commission in Brussels, the European Central Bank in Frankfurt and the IMF in Washington. Officials who worked on the previously undisclosed plan insisted it was not a road map to force Greece out of the euro – quite the opposite. “Grexit”, they feared, would wreak havoc in European financial markets, causing bank runs in other teetering eurozone economies and raising questions of which country would be forced out next.


But by early 2012, many of those same officials believed it was irresponsible not to prepare for a Greek exit. “We always said: it’s our aim to keep them inside,” said one participant. “Is the probability zero that they leave? No. If you are on the board of a company and you only have a 10 per cent probability for such an event, you prepare yourself.”

But...  what about all that bullshit about "political capital that has been invested"? Apparently, the "political capital" was not nearly enough, if not in 2013 but over a year earlier, Europe was already preparing to pull the cord.

Here are the highlights of Plan Z's creation:

With most of the world’s economic leadership flying to Los Cabos, Mexico, for the annual Group of 20 summit the same weekend as the Greek vote, a small group of top EU officials stayed at their desks in case Plan Z had to be activated. They were led by Olli Rehn, EU economic commissioner, who cancelled his flight to Mexico to stay in Brussels. Mario Draghi, the European Central Bank chief, remained in Frankfurt and Jean-Claude Juncker, the Luxembourg prime minister who headed the eurogroup of finance ministers, was also on call.


When Grexit was first publicly broached during the November 2011 G20 summit in Cannes – where both Ms Merkel and host Nicolas Sarkozy, the French president, pushed for an in-or-out referendum in Greece – there had been no planning for an outcome in which Greece opted to leave.


Several senior officials said they were stunned Ms Merkel and Mr Sarkozy had aired the idea that the eurozone could be left voluntarily, something that had previously been vigorously denied. Even officials who had worked closely with the two said they were caught unawares.


“I fell off my chair,” said one who had participated in closed-door discussions with both leaders. “For the first time, instead of the word being expunged out of conversations, they were using it. I remember thinking then: we’re heading for trouble now.”

Who was tasked with creating the plan? Primarily, four men, one of whom reported directly to, you guessed it, Mario Draghi.

Work on Plan Z began in earnest in January 2012, largely overseen by four men. Jörg Asmussen, a German who had joined the ECB executive board that month, was assigned by Mr Draghi to head a Grexit task force within the central bank. Thomas Wieser, a long-time Austrian finance ministry official, was appointed permanent head of the “euro working group” of finance ministry deputies and helped co-ordinate work in Brussels with Mr Buti. And Poul Thomsen, a Dane who had headed the IMF’s Greek bailout team since the onset of the crisis, provided input from the fund in Washington.


Work took place in absolute secrecy: one can see why it was paramount for Draghi to lie.

Efforts to keep information from leaking from the small teams around the four men were extreme for the same reason Mr Trichet had banned such planning: public discovery could be enough to cause the kind of panic that would force them to put their plan into action.


According to one participant, no single Plan Z document was ever compiled and no emails were exchanged between participants about their work. “It was totally fire-walled even within [the institutions],” said the official. “Even between the teams there was fire-walling.” A decision was made not to involve Greek officials out of fear of leaks.


Their firewalls worked. During a dinner between José Manuel Barroso, the commission president, and Ms Merkel at the chancellery in Berlin less than two weeks before the Greek vote, Ms Merkel asked for reassurance from Mr Barroso that a plan was in place in case Greece rejected bailout conditions and Grexit ensued.

The firewalls worked so well not even the head of the ECB knew about it.

Sarcasm aside, what is truly pathetic is that while Zero Hedge was doing what it can to expose the truth, a truth which would (and still will because nothing in Europe has been fixed which will promptly be revealed when liquidity tsunami finally ebbs) cost Germans billions if not trillions, none other than German Chancellor Angela Merkel did everything in her power to keep it hidden and a secret from her own voters.

Their firewalls worked. During a dinner between José Manuel Barroso, the commission president, and Ms Merkel at the chancellery in Berlin less than two weeks before the Greek vote, Ms Merkel asked for reassurance from Mr Barroso that a plan was in place in case Greece rejected bailout conditions and Grexit ensued.


Mr Barroso acknowledged the plan’s existence and offered to show it to Ms Merkel but she said his word was enough, according to officials in the room. Under the German system, such documents can be requested by the Bundestag, and senior German officials were concerned they would be obliged to disclose such planning if they had it in writing.

And who knows what sheer chaos would erupt if the people of Europe's "democracies" were to know the actual truth for a change. As for Merkel, the bottom line was clear: "screw what the Germans want and think, the only thing that matters is my legacy"

The political discussion in Berlin surrounding Grexit was the most subjective. Many EU leaders who dealt directly with Ms Merkel say she has less sentimental attachment to the European project than did her Christian Democratic predecessors, such as Helmut Kohl and Konrad Adenauer. EU leaders attribute that to her pre-politics life in communist east Germany, where she moved as an infant and lived into adulthood.


At the same time, several officials said they had begun to sense the weight of history on her shoulders. Did she want to be the German chancellor who “potentially breaks up Europe, even though it’s not clear that would happen – but there’s a possibility?” said one German official


In mid-July, Ms Merkel left for her six-week summer break to weigh the advice. Although the chancellor was undecided, the cacophony of senior German politicians publicly calling for Greece to leave had reached a crescendo. “If Greece no longer meets its requirements, there can be no further payments,” Philipp Rösler, head of Ms Merkel’s junior coalition partner the Free Democratic party, said as he prepared for his own summer holiday. “For me, a Greek exit has long since lost its horrors.”

And then upon returning from vacation, she announced her verdict:

Ultimately, however, it would come down to Ms Merkel herself, and after six weeks of contemplation, the German chancellor returned to Berlin with her verdict. There would be no certainty for the scientist. A cautious politician by nature, she could not abide Grexit if none of her advisers could agree on its consequences.


“You all say: ‘Sorry, finally, we don’t know’; If you don’t know, then I won’t take this risk,” one adviser recalled her saying. “Her sense was: all these people, they might all be idiots, but they don’t know.”

What Merkel did know is that she was a career politician and she had to preserve her job or else the people would learn just how vastly they had been lied to. In other words, kick the can just so Merkel would get reelected the coming year, and her legacy would be preserved. As for Greece and the Eurozone? Well, nothing has been fixed, and Draghi managed to bluff the bond vigilantes under the table for a year or two, but the reality is that since 2012 Europe's debt has soared even more to even greater all time highs. And it is just a matter of time before it all collapses once again. Only this time the cost from Eurozone collapse to the German people will be far, far greater than it would have been even in 2012.

The rest of the story is largely known: details about Greek squabbling, all of which have for now had a happy ending as the epic global chase for yield has allowed even Greece to issue debt in the public markets. It has led the author, Peter Spiegel to state with full confidence that "Never again would Greece threaten the existence of the euro."

Oh but it will. Because as noted above, absolutely nothing that caused the European crisis in the first place has been resolved or fixed: there have been no reforms, no hard decisions, no changes in ruinous behavior - in fact it has all been kicked into the lap of the world's central bankers, from Bernanke to Yellen, to Draghi.

The same Draghi who history now has it, has his first official lie to the media on the record thanks to a blog that just happens to dare ask a question.

And while Merkel and her ilk may do everything in her power to usurp democracy and give power into the hands of a handful of drunk with power bureaucrats, we, hopefully not alone but the outlook is not so good, will continue to expose these central-planning charlatans, these naked emperors drunk on their own hubris, for the liars the really are.

Finally, the next time the Eurozone is on the verge of collapse and Grexit (followed by Spexit, exIt, and whatever) is on the frontburner again, the ECB will no longer have the luxury of lying that plans for a smaller, more compact Eurozone don't exist. Because as it turns out Europe's political capital, unlike Mario Draghi's bullshit, is very much finite.

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firstdivision's picture

How about asking the more important question to Draghi. More along the lines of the structured deals he did with Greece, while under the employment of GS, to hide debt off the books while Greece took on more and more debt

Pladizow's picture

"The last duty of a central banker is to tell the public the truth" - Alan Binder Federal Reserve Board Vice Chairman, Nightly Business Report 1994

Manthong's picture

Dear Mr. “GS Whatever It Takes Draghi”,

“They vastly underestimate the amount of political capital that has been invested in the Euro.”

You clowns won’t be the first or the last to invest vast amounts on a bad bet.

stacking12321's picture

dammit, tyler!

no auto-playing videos!

macholatte's picture


ZH as a “media outlet”?

And all this time I thought we were just a gaggle of geese.

At least according to Diane Feinstein nobody at ZH could possibly be a real journalist. But media outlet? 


May I never be complete.  May I never be content.  May I never be perfect.  Deliver me, Tyler, from being perfect and complete. 

~Chuck Palahniuk, Fight Club, Chapter 5


nope-1004's picture

Draghi = scum.  Scum sucking liar, bankster shill.  Sucking off of society with that "job" being a professional suit of nothingness.


ZerOhead's picture

" Scum scum scum go back to where you're from..."

(Fletch Lives 1989 KKK clip...)


nope-1004's picture

..... And he's the head of an impotent, immobile, fictitious "governing council".  LMFAO!   What a fcking farce these bankers are.... fairy dust and unicorn bullshit existence.



Headbanger's picture

There is a Plan B... 

It's called a war.

Tao 4 the Show's picture

Some people may have been thinking that way, but the variables are quickly making the transition to chaos space, that is, unpredictable. Russia and China are mixing it up a bit.

How would you like to be sitting on the Int. Space Station about now watching these guys throwing around sanctions while you are counting on the generosity of the other side for your ticket home?

Headbanger's picture

Oh I dunno... Maybe if the food up there isn't so bad and I had a year supply of good tequila (Don Julio 1942) .. and a hot Russian babe to conduct experiments of how weightlessness affects women's orgasms..

It could work for me.

Then again.. I'd like the peace and quiet too so I'd have to have my "man cave" capsule and a Space Harley when she gets on my nerves..

svayambhu108's picture

The tailers have a groupie, she adores him

Mistress Raindrop's picture

Bankers telling lies?  What a shock.  Bitches.

Rusty Shorts's picture

I like the way you think Headbanger.

new game's picture

plan zz top - rock til ya drop...

remain calm's picture

"I promise I won't cum in your mouth, trust me, it will never happen". Remain Calm

ziggy59's picture

He and his gang are worse than scum...
Im surprised when you look up EVIL, theres not a directory of all the assholes...

Irwin Fletcher's picture

ZH search bar + evil = a 71 page directory of scum scum scum

Hughing's picture

The most important quote during this Obamanation

Oldwood's picture

I can't believe anyone would be surprised that these asswipes would lie, especially the Tylers. I would be absolutely shocked if they were telling the truth. I think everyone knows they are lying, like we all know we are broke, we just don't want to hear about it and we will reward anyone who can be effective at making us believe the knowing lie. Just like we reward great actors with wealth and fame. "they made us believe!"

Greenskeeper_Carl's picture

No shit. But ZH sure has been on a roll these past few days. Very interesting to read about. Too bad no one that gets more widespread attention will touch any of this stuff, at least not in anything more than a superficial manner.

Buckaroo Banzai's picture

This is the kind of shit that happens when ideologues and megalomaniacs try to jam a square peg into a round hole.

No one in power is going to be satisfied until this train goes careering off the rails.

Pairadimes's picture

Too late. People like Draghi are just pretending to steer so the sheeple don't panic.

old naughty's picture

His backup-gear doesn't work and up ahead, the abyss. And he's pretending he can steer...

Save_America1st's picture

well, when all you've got is a hammer...etc. etc.

This guy is such a douche bag...I couldn't stand to listen to even 5 seconds of this fucker speak. 

That's like one of the sociopath weapons used against normal, good people.  Only scumbags can stand to listen to the shit that comes out of other scumbags face holes.

To good, decent people the scumbags all sound like nails on a fucking chalk board.  That's how they keep us from wanting to be around them or get into politics. 

Keeps the douche bag club exclusively for just the douche bags. 

I don't know how Nigel Farage keeps it up.  I know he's cool and he has to swim in the cess pool of the Euro douche bags every freakin' day.  At least he hammers on them non-stop and bashes them day in and day out with kick-ass speeches.

But sociopath douche bags don't give a fuck.  They just keep on going like fucking cockroaches.

vulcanraven's picture

Of course they don't give a fuck, these people are PAID to pretend to give a fuck. They put on a show for the rest of us day in and day out in order to prop up the illusion of giving a fuck but we all know the truth... they know who butters their bread so why would they want to make any serious moves that would jeapordize this cush lifestyle they are enjoying at our expense? 

Fuck career politicians.

To quote LOP:

"Roll the fucking guillotines, until then nothing changes." 

ATM's picture

No, this is all part of the plan to have a federalized Europe with power concentrated in a few people, just like inthe USA.

The Euro problem was designed so that the solution would be to Federalize. That's the goal. Can't have all these small little countries running around with thier own governments, languages and currency. That's a clusterfuck to control.

What you've got to do is create a shitstorm so big that people beg to be government by a large government that will save them.

Ghordius's picture

not quite. the EUR project is a pet of us moderate confederalists, who want to keep all the sovereign countries running around with their national governments, their national armies, their national police forces, etc... in confederate structures based on treaties, and the EU Council as "master of the treaties"

eu federalists are often opposed to the EUR project. eu federalists often moan that it might get in the way of their ambitions, and put too much emphasis on confederated structures like the ECB

fauxhammer's picture

"Its a project in the European Union"


I've never felt safe in the projects

CrashisOptimistic's picture

The real issue in this story is Greece's elections were largely determined by the theme of "NO ALTERNATIVE".

If you refuse the bailout terms all life ends in Greece.  So you must vote New Democracy/Pasok.

Clearly there was a fallback plan.  All along.

lakecity55's picture

!!! And, they had a Plan to create Zombie Nations if all elese failed!!!

Jaspergers's picture

Oh yeah, I remember the 57:57 DAFUQ guy lol

messystateofaffairs's picture

Banzai these are sociopaths you are spoofing, they don't get the sarcasm, they really believe they are superman. If they see this art it might encourage them. They're in bad enought shape already and we have to bear the consequences.

cocky roach's picture

Well that question certainly disturbed the otherwise constant flow of BS coming from the prince's mouth.

Great article Tylers. 

Jumbotron's picture

My reply to the post "From Rotchschild to Koch Industries: Meet the People who "fix" the price of gold." earlier on Zerohedge applies to this one as well.......


"Thanks to all the Tylers.  You have now proven to me beyond a metaphysical doubt I am a masochist.  Everytime I read some new expose by you guys (gals) I scream...."NO MORE....I CAN'T TAKE IT.....I WILL NEVER COME HERE AGAIN.....I DON'T NEED TO READ ANY MORE ABOUT THIS.....WHAT DIFFERENCE DOES IT MAKE NOW  !!!!!!!!!!!!!

.......and then I come back for more.

I'm such a little bitch.


Here's my new safety word........"CHRISTMAS"......ouch.....I SAID CHRISTMAS.....DAMMIT !!!!!"


Christmas......Christmas.......CHRISTMAS  !!!!!!    DAMMIT !!!!!!!


Atomizer's picture

Once your head is pulled out of the sand. We’ll give you water & food to eat. We might slap you around a bit and shout,” get the fuck up, we have work to do!”

Get over denying what you don’t want to accept as reality, I say this advice in kind words.. Make a difference, the problem is not going a way.

anonnn's picture

Mario Draghi 's early "knowledge" of EU's birthing is likely the of the spoonfed variety and the spoon was held by his mentors, or  perhaps "minders" is here apt.

The video link below is an incisive primer of the EU's parentage.  While frontman Draghi is experienced and slick, this backgrounder establishes his roots and public-relations skills as paid mouthpeice.  As well as vonRompey et al.


anonnn's picture

PS  There's a thread that runs from WW2 thru Marshall Plan, Dulles bros., McGeorge Bundy, Ford Foundation , 3-letter intel groups and neatly ties into Eu supernational structures thar became today's European Union .

Or it is all malevolent coinkydink.

free_lunch's picture

Steal this one: http://www.youtube.com/watch?v=hkCe43V3XFc


Includes: how the EU constitution was rejected by the european people, and how it was repacked and rebranded as the Lissabon treaty so it could be passed without referenda. That's democracy EU style!

Alea Iactaest's picture


Worth resurrecting a name from the past when you put out a hard-hitting piece worthy of being listed in the Tylers' Hall of Fame/Shame.

Stoploss's picture

The important takeaway is we are all Zerohedge, they can take away the access, or internet, but that will never ever kill the spirit, simply strengthen it.