Greek leaders meet: Europe shrugs

Tick-tock, tick-tock … the clock on the Greek crisis is running down for real. As I write, leaders of Greece's three main political parties are meeting with Prime Minister Lucas Papademos to agree on the terms of a harsh budget that will allow the country to qualify for its next bail-out from the EU.

The meeting has been scheduled and postponed often in the last four or five days. As I blogged on Friday, last autumn this would have had the markets in a tizzy. Now, they shrug. So do leading eurocrats in Brussels.

"It’s not the end of the world if someone leaves the euro zone," Neelie Kroes, the European Commission vice-president, told Dutch newspaper De Volkskrant. "It’s always said, if you let one nation go, or ask one to leave, the entire structure will collapse. But that is just not true."

Why the change of tune?

Willem Buiter, chief economist at Citigroup, has a blunt answer. "In early September 2011, we argued that the cost of Greek exit to the euro area and the rest of the world would be very high. We now consider these costs to be much lower because `exit fear contagion’ could be contained. Greek exit would therefore not lead to a full-scale break up of the euro area along the core-periphery divide."

I'm grateful to the Daily Telegraph's Ambrose Evans-Pritchard for pulling the above quotes together and for endorsing the view I have repeated here since Christmas that the European Central Bank's cheap loans have done what ECB chief Mario Draghi intended and provided confidence to the markets that, even if it is in an underhanded way, the ECB stands behind the euro. It is far from the end of the euro zone debt crisis but it has removed the volatility that could have made the crisis a catastrophe.