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When The Head Of The European Central Bank Lies To Zero Hedge On The Record: Presenting Europe's "Plan Z"
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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You really have to have a strong stomach to sit down and listen to these fucks vomit up unintelligible horseshit for such lengthy periods of time. I take off my hat to those analysts who can listen to enough of it to find something clear to expose and dispute with sound economic arguments. These club members are crooks, period. The unintelligible nonsense they chat is purposed to glaze sheeple over. I don't waste time absorbing what they say, they only excel at fabricating horseshit and integrated systems designed to transfer other peoples wealth to their club members.
this next "crisis" is badly needed, they want to srcew the whole thing a bit tighter. You have either war or financial crisis to box through cuttings on all levels and expanding power.
It's not Draghi speeking here - Draghis No-Plan-B-Rhetoric is nothing else but the usual convention of speach regarding the Euro.
The Origin of this convention delivered Miss Merkel and her Finance Minister Wolfgang Schäuble. Every German knows that endless cassette - the Euro is "alternativos" (without any alternative).
"When everything is a lie, only the truth is a lie."
Just like the the "no Belgium taper."
indeed!
It is a Pyrrhic Victory to prove that officials were lying. That is better than not being able to prove they were lying. However, nothing changes after that, since they keep on lying and keep on getting away with lying. That is so much the case that it is practically impossible to imagine a situation where the lies stopped. The entire foundation of the current economic system is the FRAUD of making "money" out of nothing as debts. EVERYTHING IS BASED ON LIES. Therefore, nobody significant can stop lying, since their lies are what support everything else. It is interesting when some superficial layer of those lies gets to be proven was a lie, but nothing changes, because for things to change, the entire system, BASED ON LIES, would have to change, which is impossible to imagine, as well as practically impossible politics.
Instead, we are going to continue to get more and bigger frauds, piled on top of previous frauds, for as far as that can go, until the whole system finally goes through psychotic breakdowns. That will NOT be the emergence of more honesty, but rather, merely that the lies got so astronomically large, that they finally collapsed into crazy chaos under their own weight ... but still, almost nobody is going to officially admit any more radical truths about that. Instead, they will surely resort to different layers of lies, whichever might happen to still be standing, after some of the greater superstructure of lies had fallen during its relative collapses into crazy chaos.
The basic axioms which would be necessary for an honest discussion of political economy would require admitting that money is measurement backed by murder, or that the debt controls depended upon the death controls. An honest discussion of political economy would have to take place inside of an honest discussion of human ecology. That would require the sublime paradoxes of the participants in such an honest discussion of politics collectively admitting that human realities were always organized systems of lies, operating robberies. An honest discussion of the established systems would have to be based on recognizing how the history of success in warfare was based on deceits, that was then the basis upon which was built economic success based on frauds.
It appears practically impossible for public politics to become more honest about itself, since it would have to admit that everything that had been happening, and was happening, had been based upon systems of legalized lies, backed by legalized violence, which had finally collapsed into crazy chaos because backing up lies with violence never made those lies become true, but only drove society as a whole to become more criminally insane and psychotic. However, there is virtually zero chance of that kind of change in the debates about political economy, much less human ecology, to happen. The established systems main participants are the established systems, and their controlled opposition groups, who are BOTH almost totally dominated by professional liars and immaculate hypocrites, whose personal success was based on being able to operate within the larger systems of deceits and frauds, which were always the foundations of what was controlling civilization.
It is amusing to see Zero Hedge able to prove that they they were lied to by public officials. However, there continues to be zero chance that that will change anything. To actually change things would require moving outside of the frame of reference that BOTH the established systems, and their controlled oppositions groups, were always operating within, namely, "success" based on deceits and frauds, whereby FRAUD WAS THE FOUNDATION UPON WHICH EVERYTHING ELSE HAD ALWAYS BEEN BUILT!
"While we certainly enjoyed the realization that the fine gentlemen at the ECB read Zero Hedge on a regular basis..."
they use to.
now, with you're being one of the few remaining, those fine gentlemen pay much less attention.
sad, but accurate.
:)
p.s.
great article.
:)
Is Greece going to default?
There are local elections in Greece this weekend. Polls show that Syriza will be the strongest party and stronger than ND and Pasok combined in most regions.
http://en.wikipedia.org/wiki/Greek_local_elections,_2014
In case Syriza wins the local elections there will new elections for the Greek Parliament, since the coalition of ND and Pasok will collapse.
This plan was prepared for the elections 2012 in Greece in case Syriza wins. Looks like the ECB leaked the plan deliberately to scare people potentially voting for Syriza.
And it looks like the Euro is more a political weapon than a currency.
Plan A B C I wonder what the plan is after plan Z ?
You hear that folks? We vastly, vastly underestimate what the Euro means for the European people. So European people.. Does having a common currency really mean that fucking much to you? You buy that your friends and loved ones will sacrifice decency and community to protect a bunch of bankers and officials? This is the Euro you been sold.
Talk it down bust it up and drive down the debt so low some ex-football player boasted about sitting on a small fortune while working at CNBC buying Spanish debt right at the bottom and continually trying to convince you that you can do it too? MARIO never had a restless night and neither do the Chinese or the oil sheiks in the early 70s? The only reason to consider a different plan is if its chaos and his mind seems clear LIKE ASK ME ABOUT GOLFING WITH YOUR PRESIDENT clear! You make up chaos in your head because you have too much spare time! CLEAR and powerful!
scary stuff
http://youtu.be/D61kfyYMZ_A
Geee Wally,
The "Head's" lie to everyone all the time, don't take it personally. You can't be in Politics if you have any affinity for truth.
Welcome to Modern Day llusion of Democracy.
People sponsored by the rich, make false promises to the masses to get elected. Distribute national wealth amongst themselves and their sponsors (Industrialists) and when that is not enough borrow money from rest of the world and continue the distribution process. The borrowed money has to be paid back by taxing the masses keeping in mind that tax rules are made such that the politicians and their sponsors pay minimum or no taxes.
End of political tenure, rinse and repeat till the whole system breaks down and the world wealth is cornered by a minuscule of the population.
www.marketoracle.co.uk/Article40231.html
Why would ANYONE presume that any politician is telling the truth ??????
"if you like your health insurance, you can keep your health insurance."
The only rational course is to presume, until proven otherwise, that every politician and banker is telling a LIE.
because Merkel is a socialist pig. She's been her entire life. And the euro is a piece of socialist garbage.
Nothing really new.
Medias in Germany don't work so bad: Most people know what a Grexit, change-reaktion or total breakdown of the Euro means. Also in numbers.
This is actually a VERY big deal.
The ONLY WORKING policy tool the central banks have at present is their "credibility".
If they are found to lie economic agents will begin to reformulate expectations of what to expect from central banks.
This is the thin end of the wedge (or one more nail in the coffin) for current monetary policy formulation.
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.
They vastly underestimate the amount of political capital that has been invested in the Euro. This is the answer to the question. There has to be no plan B becvause plan A includes already everything. If Greece is going to leave the Eurozone is irrelevant.
Stable money = stable society
stable society = trust in the future
trust in the future = accumulating savings
accumulating savings = capital available for investment be it public or private
investment = jobs
and so on
One only has to understand, that the basic idea was and still is to form a common market to bring Europe together so that future wars are not anymore a political option. The name of the union was: European Economic Community ECC what is now called the EU
The ECB is based on that principle its not designed as an entity to wield political influence but only for the purpose to safeguard the most important pillar of the EU, to safeguard the Euro.
Whether there is a country leaving the Eurozone or not is not the question. The question is another one. The question is always is there a common political will to stick to the Euro because the Euro has more advantages compared to the situation prior to the existence of the Euro.
And the answer is clear; The will to continue with the Euro is immense. Because, this is what holds everything together. The ECBs policy is under normal circumstances very clear but this are not normal circumstances. The ECB is now by its nature involved in a political fight. The Dollar system which is completely differerently structured as a private equity has declared war towards the Euro. This was the case already from the beginning but the situation is escalating more and more as weaker the US Dollar system is becoming. But its not the fault of the ECB that the Dollar is in trouble. This is US homemade.
Its a true war between the Fed and the ECB. The Fed is the executor of the will of the political and economical power elite of the US. The ECB is defending the "base" of the ECC or as it is called nowadays EU better Euroland since UK is not siding with the ECB.
The basic message from the ECB is always very clear. 1. the Euro 2. the Euro and 3. the Euro whatever may come in our way.
So how comes that one falls into the trap of propaganda of the US and the UK that the existence of the Euro is under discussion. There simply was and never is a discussion because as Frau Merkel and other EU leaders said it on many occasions: There is no alternative to the Euro which would better suit to the needs of the overwhelming majority of Eurolands population. Be it a saver in Slovakia were the Euro is seen by more than 80 % as a good thing or in Greece where the Euro is the last anchor of stability. And the Greeks do know this. Imagine Greece without a stable currency that would really trigger a revolution.
Tell that to the family up there in Italy.
People on their 50s who are broken, their kids with panic attacks.
"Each day is so hard to live", they say.
Youth unemployement 42.80 percent in February of 2014.
trust in the future = accumulating savings
accumulating savings = capital available for investment be it public or private
investment = jobs
They're loosing the capital their parents acquired in 50 years of hard work; banks are taking it. "I thank god my father died already so he does not have to see our struggle, all their effort going down the toilet", they say to me.
No trust in the future, savings gone, no investments, no jobs. It has been going on for years now.
But what has this to do with the Euro ? Is it the fault of the Euro, that things can not continue forever. Things are changing with or without the Euro. Nothing stays as it is and sometimes the changes are abrupt but there is little what can be done when the time is ripe for changes.
I assume that at the next time this turd surfaces at a presstitute conference you will be there asking, Mr Druggy, why are you such a lying cunt?
Dragi told the truth there is no plan B......... but there is a plan Z.
Remember the hero of the Wizard of Oz is Toto, not any of the others. We need Toto to pull back the curtain
Since we are on a thread that looks at the time line of Draghi's takeover of ECB, this posting, as previous ones, highlights how important the Cannes Nov 2011 meeting was to establish Pax Americana's ---via GS Squid--hold over the Euro mess that allowed ejection of Papandreau and Berlu from Euro group and take over of Squid of the ECB show.
Sarko's role in that deal to nudge/convince Merkel; along with Obammy/Geithner bullying/cajoling in the corridors or at the table; was recognised by Obama.
As in his opening speech to the G20 gathering Obama said : Our JOINT history from Yorktown to Libya... to praise Sarko as America's friend like a son of Lafayette.
That remark has awesome connotations today. As what USA/France had done to Q-Daffy in Libya earlier that year, is now coming back to haunt them in : MENA, aka CAR/MAli/Nigeria/Syria/Ukraine/Yemen...and may spill over into Iran and further to South China Seas.
Its that joint Western Libya strategy that started that GLOBAL ball rolling to get Russia/China/Iran and other BRICS now to form the alternative power axis to Pax Americana today. And Obammy put hs finger on that nerve without understanding its unexpected consequences.
In fact the Cannes G20 meeting summarises the REAL conundrum facing the world today as the Antarctic melts in front of our eyes :
Our obsession with the financial crisis-- so highlighted in this G20 conclave, where they tried to solve the Greek/Italy problem in EZ and avoid Greek-exit signalling inevitable subsequent collapse of world monetary system-- is NOT the REAL CRISIS ahead of Mankind.
It is the rarified ENERgy< CRISIS which is looming ahead which is the real challenge to humanity.
As, in FACT, the last thirty years under Reaganista Logic have hid under the carpet THE HUGE AND ARTIFICIAL UNDER-EVALUATION OF FOSSIL FUELS THAT REAGANOMICS HOISTED ON THE WORLD --(WITH SAUD'S COMPLICITY)-- TO FUEL THE FINANCIALISTA PUMP OF RENTIER 1% WORLD ECONOMY that blossomed under financial derivatives and Zirp scamming and which is NOW READY TO HIT THE FIAT ASYMPTOTE.
That is the real conundrum facing the World that the Putin PUt will reveal in the coming years.
And the Cannes G20 opening speech confirmed that Sarko and Obammy were chums in raping Libya for the Pax Americana led Oligarchy.
It had AWESOME geopolitical consequences...like in Ukraine today!
Brilliant article, real journalism of the highest order.