See also:
– European Leaders Admit Preparing For A Greek Default
– REPORT: Europe Working On A ‘Plan B’ If The Greek Government Blows It (Business Insider, June 27, 2011):
With the austerity vote potentially down to just a 1-vote cushion in the Greek parliament, the question suddenly becomes: What does Europe do if the vote fails, and therefore Greece becomes ineligible to receive further aide.
According to an article in today’s Financial Times Deutschland, a contingency plan is already being worked on.
Per our Google translated version it sounds like Plan B goes something like this: First, acknowledge that a vote failure would not represent instant bankruptcy. Perhaps some new deal could be worked out with conservative MPs to vote for something. That isn’t clear.
If that fails: ringfence Spain!
With Portugal and Ireland already out of the market (with government funded by the IMF for awhile), the focus then turns to the biggest country that’s in the market, and that’s obviously Spain. How you protect isn’t clear, but a country whose economy makes Greece the size of a gnat obviously becomes worry #1.
(via Megan Greene)