Financial stability beyond Greece: making the most of the European Stabilisation Mechanism

Mayer is chief economist with Deutsche Bank London.

In his seminal work on international financial crises, Larry Summers wrote that policy-makers facing a crisis tend to go through a process reminiscent of the five stages of grief. The process starts with denial that a crisis could be taking place. This is followed by anger, with a tendency to assign blame (speculators, rating agencies, etc.). Third, there is the bargaining (with the markets, seen as potential saviors). Fourth comes despair, leading eventually to the decision to call for help (IMF, EU). It is finally only in the fifth stage – acceptance – that the way is opened to a credible plan.