Varoufakis is a hero to the international working class. His most recent book before this one is also excellent.
At least he tried, for sure.
That's sort of my problem with him though. I don't think of him as either a hero, or a jerk, or a guy doing his job, but simply an idiot. He was trying to bluff with a hand that everyone knew was empty, and of course it didn't work.
Stathis Kouvelakis, a member of Syriza's Left Platform faction that later split from the party, had this criticism [1] about both Varoufakis and his successor Tsakalotos (another economics professor), which I think has some truth to it:
Tsakalotos said he was very disappointed by the low level of the discussion. In the interview to the New Statesman, Varoufakis says very similar things about his own experience, although his style is clearly more confrontational than Tsakalotos's. From this it is quite clear that these people were expecting the confrontation with the EU to happen along the lines of an academic conference when you go with a nice paper and you expect a kind of nice counter-paper to be presented. I think this is telling about what the Left is about today. The Left is filled with lots of people who are well-meaning, but who are totally impotent on the field of real politics.
[1] https://www.jacobinmag.com/2015/07/tsipras-varoufakis-kouvel...
This is telling about what the Euroarea is about today.
I suppose, at least it's a good thing if those naive professors, now that they are not so naive, explain the rest of citizens how the system really works.
That's very poor understanding of what he did. What he said was we won't accept any more loans that we can't pay back and requested a sort of new deal for Greece which of course, included a large debt haircut.
He was never pro-Grexit. He was arguing that even throwing Greece out of the common currency was impossible, etc.
I understand that his way of doing things might confuse some people, but if you take the time to read/watch his interview his thinking is crystal clear: He wants to change the EU from within not disintegrate it. In fact he is trying to save the EU from itself (e.g. Brussels) by democratising the processes (e.g. add mics and records to Eurogrops, etc.).
Plus, I the ECB effectively closed the GR banks he had a plan of putting the ECB (Mario Draghi) against the Bundesbank. His own party kept him down stripping on of his only weapon by re-assuring the ECB behind his back that they'll not allowing him to use it. His plan was very clever.
And here is, I think, the problem. In general people don't take the time, and that's OK, but then they have not problem in having a strong opinion, that they read in some interested media.
My advice to the people so inclined is: check some of Varoufakis (and others) youtube interviews. Read a little about what is going on.
Check, for instance, how Spain was allowed to spend without consequences above the deficit limits just before the elections.
Check how, in the same way there is a limit to deficits in the treaties, there is a limit in surplus that Germany don't feel it has to respect.
Or just think how it's impossible that everybody is in surplus at the same time.
Or how all integrated monetary areas have deficit and surplus regions and that is OK because they have some way to compensate the unbalances.
For example if you read the picture The Economist paints around him, as opposed to Dijsselbloem (Dutch Minister of Finance) who is technically several orders of magnitude inferior is astonishing.
Varoufakis said that when he went to the US, at the beginning of his tenure, someone (Larry Summers?) told him that he'll be the victim of an organised campaign of character assassination by Brussels. I found this claim a tiny bit far-fetched, but on the other hand, the amount of false claims the established media kept throwing at him is amazing.
I came across ppl who thought Varoufakis as a buffoon like Trump, Boris Johnson, etc. and other political figures who can't put two words together. V is not like that at all, he is a intellectual beast, with a surprising ability to simplify rather complex ideas.
He had a plan (allegedly it was a Plan B) for the exit of the Euro if Brussels (actually Berlin) continue with the craziness. The Greek primer minister decided not to continue with the plan and he resigned as finance minister.
The primer minister could be accused of cowardice, but we have to understand that Greece was threaded with the shut down of its financial system in what, in the opinion of a lot of people, was an illegal movement by the ECB (1). It was a really difficult decision.
If it wasn't for the group of clowns that constitute the current government and gave him the keys to the economy, nobody would give a flying fuck about what he says. He's a second rate economist at best.
By doing what, exactly? The country was bankrupt. In such a situation, the only sensible thing to do is default. Instead, Greece will be a 3rd world country with almost no public assets, and mass unemployment for decades.
Regaining competitiveness through decades of internal devaluation is, to me, far less preferable than default. What Greece was given was like Versailles on steroids.
And to make it worse, it's going to happen again, and again. I'd say we're due another club-med crisis any moment now. http://www.zerohedge.com/news/2017-02-26/european-debt-bomb-...
And all to save a few German and French banks, because politicians feared the results of telling them "you wanted to play in the casino and you lost, now the money is gone" after Lehmann.
The origin is that banks can lend money without any risk. End of story.
Banks get interest for various reasons - one reason is risk of not seeing the money again and that has to be a real risk or banks will just lend money without thinking twice.
By the way, how injecting money in the hands of a chosen handful and taking it from a country to try to pay back can make a viable and competitive economy?
If fact, I think that, as the data show, it's in the same league of 'Trickle-down economics'.
By what mechanism? Each round of cuts drives up unemployment and poverty, and cutting expenses hasn't solved the deficit because trashing the economy has destroyed tax revenues.
The first few rounds were rationalization, but they were too little too late. At this point the deep restructuring that's still needed is unapproachable - it's too slow and too unpopular, and the economy is already too weak. The recent cuts haven't been sensible and structural, they've been deadline-beating short-term moves to unlock a new tranche.
Germany gains from this, certainly, but by making an example of Greece. It deters other high-debt Euro nations from getting into the same state, but it's not moving Greece closer to functionality.
No, it hasn't. The "primary surplus' doesn't include any debt repayments.
Furthermore, you can't just default on the debt just by saying so. There's a naivety among mostly Greeks that just by going back to drachma and defaulting on our debt will magically solve all of our problems. In a country that imports pretty much everything that would be catastrophic.
Varoufakis never came up with a plan. He admitted that there was no substantial alternative about converting into drachma. All that he did was playing bluff for six month, dragging a whole nation under his ideology. Then he moved on to greener pastures, not giving a fuck about the havoc he wrecked with his actions.
He can act as a smart-ass all he wants in his books, but we were here and we experienced first hand the results of his reign. Once we get rid of this charade of imbeciles that act as the government, he and many of his former colleagues will end up in jail for their actions. There he will have plenty of time to write memoirs.
Well thinking from a trader perspective, by defaulting and going back to the drachma (and leaving the EU), Greece would have more flexibility wrt what goods they can import and from where compared to now with all the restrictions on trading that being within the EU imposes.
Combine that with land access to the rest of Europe, I can imagine a prosperous almost black market for such goods that would provide much needed inflows of capital to the Greek economy (outside of selling junk sovereign bonds and hoping pensioners die faster).
At the same time other countries which are not on the brink of collapse are prepared to face an eventual break up of the Euro (e.g. LePen winning the elections in France) and the only who doesn't have a plan, and God forbid it comes up with one, is Greece...
Just because some of us don't agree with defaulting it doesn't mean we're in the elite or we're serving some agenda. Please, you can do better than that.
You're confusing Varoufakis with Leventis. Varoufakis, to this day, is always put under unjustifiable strain by the Greek media.
As far as your previous post, it's so mis-informed and ill-conceived, that the fact that you have a right to vote in my country scares the shit out of me.
> Just because some of us don't agree with defaulting it doesn't mean we're in the elite or we're serving some agenda. Please, you can do better than that.
Of course I can, but you're a .NET developer! So I'm not sure you could follow through even if I did :-P
ps. Jokes apart, I understand there are many different opinions in a democracy and I respect that. Let's agree that we disagree...
Sure, only people who agree with you should vote. I find it quite ironic that this comes from someone who supports a leftist government.
As for being misinformed, you could provide something useful to the conversation by arguing with facts. Because all you've done so far is attacking me personally. Isn't it his fault that we have capital controls enforced? Six months before he took charge the banks were open and working just fine.
Pretty much how it is everywhere wrt having an actual discussion of practical options on the table (setting aside juicy ad revenue) that might not favor those whose social economic status puts their heads first in line on the not so metaphorical guillotines at some point ;)
I think the citizens of Greece should take page out of the Victoria Nuland play book.
I mean if I had means to be able to talk to the all the pensioners I would:
- advise them the reach out to any of there family/friends who have (decision making) roles in customs/commodity importers w/ decent import volumes from other EU countries
- work out a deal where they buy their materials from cheaper non "market economy status" places + flag them through while discontinuing imports from their northern neighbors (already profiting here, because cheaper)
- then pooling their funds and shorting companies/securities with the largest exposure to their non buying before earnings calls, and close out shorts soon after. (profiting on the other end, because why not? but you have to liquidate short positions before the ECB printing press comes to the rescue :P)
But I guess the consensus will be in favor of trying continue to squeeze blood from stone until there is none left. And when it gets that far, compared to the threat of cheaper citric acid, steal, etc imports hurting "blessed" EU suppliers, you'll have surplus kalashnikov's coming in from the ME, which I guess is even more profitable for traders ;)
yeah no, that would be equivalent to being kicked out the EU. Greece tried to use some leverage with refugees and got some money in return but that's all. Also, COSCO has already acquired the port of piraeus so there is an asian connection already.
Has there actually been any country that's been and/or in the process of being kicked out the EU (besides threats wielded in media and talked up for ad-views)?
How do you reconcile them willing to kick out Greece but trying to put a multi tens of billion euro bill on the UK for leaving the EU? Would Greece be demanded to pay a similar bill when kicked out and actually pay such? (We already know the ability for them to pay such a bill).
What about all the northern countries running a surplus to Greece, what would happen to those companies special positions due the trade restrictions in their favor?
I really doubt the folks in Brussels want at situation like that to happen, nor do I see them having absolute control over what comes in from customs, in every country, much less in any one in particular.
>Also, COSCO has already acquired the port of piraeus so there is an asian connection already.
Not really sure how to interpret what you mean by "asian connection". So having one state related shipping company from China, now satisfies all the demand for people trying to import into Europe from all over asia, as if every trader must some how just use that port/company? Besides, the issue isn't technically with shipping things, its actually having it cleared to leave the port to the buyer with the right paperwork.
The problem here was cashflow; defaulting might save you from more loan payments, although actually doing it is quite painful under international law (see Argentina). But Greece needed to take out further loans in order to meet immediate public funding needs - and defaulting would have prevented that, or made it much more expensive.
I've turned this over in my head a number of times. None of the options are particularly pleasant, but it's not a good idea to pretend that defaulting would have been trouble-free.
Obviously Greece needs a balanced budget for defaulting. Too bad it seems to be moving the other way.
I'm not sure it was possible - the deficit was too big to close without damaging the economy - but I suspect that leaning on international support while preparing an easy default might have been the best chance.
When politicians stay it's always "bah, bah, no one ever takes responsibility". Now, someone took responsibility and it's "bailing on Greece".
Yeah. Sure.
In Greece, I know of NO politician in 50 years, who retired promptly when his views and gov's views stopped being aligned.
So regarding Greece, that's a huge deal and gives him alone more credibility that the last 10 Greek governments put together.
* Jah-Rule on fyre festival: "this is not by fault but I take full responsibility"
* Hillary Clinton on losing election: "this is misogyny and fake news fault but I take full responsibility"
* Heather Bresch on Mylan price gouging: "The real fault is in the supply chain but I take full responsibility"
Maybe when dealing with an unsophisticated or under-informed borrower which the sovereign states in question are not.
When I take out a loan a bank usually asks for collateral but these loans to Greece are unsecured and not worth paying back. The banking system should have been left to fail but instead we live in this world where governments bailed them out. Capitalism for the poor and Socialism for the rich.
And not only that, I will be morally right. What amazing times we live.
Default is not a solution to repay a debt. You can choose to default, but you can't expect any credibility later. The message Varoufakis sent to Greeks was: "Let's just say we don't want to pay and everyone will forget about in a couple of years."
The only way to get financing is by debt restructuring. It has happened time and again. You'd be amazed how many countries defaulted the last century. I think Germany defaulted twice.
The solution he proposed to the EU was rejected and the next day was applied by the letter on Ukraine.
Plus being accused of talking macro-economics on a Eurogroup should be like accused of liking basketball at an NBA playoff game. But then again, if the room is full of politician, who don't understand the first thing about economics and just blindly execute, that's what happens.