It’s not everyday that I wake up to the smell of £250,000.
So, when I saw what was on offer this morning create an orderly plan for countries to exit the euro and win just shy of US$400,000 I started to think of my options.
But what would be my plan? Is an exit from the euro even viable?
Some background: Lord Wolfson, CEO of retailer Next, announced the Wolfson Economics Prize, the second largest economics cash prize next to the Nobel, to be awarded to the person who comes up with the least painful way for European nations to disentangle themselves from the European Monetary Union, which unites 17 nations under a single currency.
For the past few months, we’ve been told by economists, finance ministers and politicians that such a move would be disastrous. Legally, we know that no one country can leave. The treaties governing the eurozone have no provisions for a member leaving of its own volition or being expelled by others, so this would need to be revised.
But if all the countries united to exit the euro the consequences would still be dire. If cash is moved from one country exiting the eurozone to one that’s staying, a run on banks could become runs on entire countries. And then what happens if, for example, you live in Greece and your wages are changed into new drachma, while your mortgage with a Portuguese bank is in euros?
Lord Wolfson says the award is necessary, because European leaders could not openly debate contingency plans for the end of the single currency. “It would be seen as a white flag and could itself trigger a collapse of the euro,” he noted.
I agree with the good Lord. Governments haven’t been discussing an exit as an option. That’s because it isn’t one.
This isn’t a failure of economists – after all they have the best minds working with them. It’s a failure of politicians.
I for one will not be applying. I would dread to go down in history as the person who bought the single currency to its knees. Imagine the headline: “Portugueezer brings down the euro!”
For now, I have only one thesis – there isn’t a solution. This prize is unwinnable. There is no such thing as an "orderly" exit strategy.
Surely, Lord Wolfson knows he has set an impossible question.
Anyone who disagrees or has a better plan – please let me know.
I’ll double the money and write you a cheque myself.