Why Europe should fear Fine Gael-like ‘reasonableness’ much, much more than it fears Syriza

The establishment view in Europe is that the problem is too much debt (by profligate countries like Greece) and, therefore, that the solution must involve (a) austerity and (b) structural reforms (which increase the competitiveness of the weaker states). The problem, however, is that the establishment view is profoundly mistaken and, as a result, the proposed treatment poisons the patient. If this is so, Europe (and the world) have a lot more to fear from the ‘reasonableness’ of political parties like Fine Gael et al than from the ‘ultra-leftists’ of Syriza.

The other day, the Irish voted in favour of a hideous impossibility: They voted in favour of the EU’s fiscal compact which specifies that which is both impossible to attain and catastrophic if it is attained. What was that? The pledge by member-states that “general government budgets shall be balanced or in surplus”, that “the annual structural deficit must not exceed 0.5 percent of GDP”, that if “government debt exceeds the 60% reference level” it will be reduced “at an average rate of one twentieth (5%) per year as a benchmark” and that, failing all this, “the EU’s highest court will be able to fine a country”; a penalty equivalent to up to 0.1% of GDP”.

Suppose that every European citizen adopts the fiscal compact as her or his guiding principle and puts its implementation above all else in life. If Spain, Italy, Portugal, Ireland, France, Greece, Germany etc. (i.e. countries with debt well above 60% of GDP) were to reduce their debt by the specified 5% per annum, this would mean that all these nations should turn an average 2.8% primary deficit to something akin to 6% primary surplus. Suppose we could do it (which,  of course, we cannot). Were we to succeed in this endeavour, the result would be a very deep recession equal to at least -4.5% in terms of average Eurozone-wide ‘growth’. In a period when a banking crisis is in full swing, the Periphery is in free fall, US growth is tittering of the verge, China is slowing down etc., engineering such a recession via this piece of ‘legislation’ is the macroeconomic equivalent of committing suicide.

So, why did the Fine Gael-led Dublin government push so powerfully in favour of this piece of crippling idiocy? And why did the smart, decent Irish voters said Yes, despite their tradition of saying No to euro-silliness? The answer is simple: They were blackmailed. Ireland’s voters were told: Vote No and the flow of money from the troika will cease. And so they voted Yes, even though I suspect that no government minister, no rank and file Fine Gael or Labour Party member, no man or woman on the street believes that the Fiscal Compact they voted for makes sense. 

Similarly in Greece today. Voters are being bombarded by the media with precisely the same dilemma: If you vote for Syriza, as opposed to one of the pro-bailout parties, the money flow from the troika will cease and then all hell will break loose. Indeed, the same scenario is played out all over the place. In Spain, the hapless government of Mr Rajoy speaks out against Eurobonds so as to stay on the ‘right’ side of Mrs Merkel in the hope that Spanish banks will be kept afloat without an ignominious inclusion in the EFSF-ESM fold. Italy’s Mr Monti is invoking the Greeks to vote for ‘reasonable’ parties even though he knows full well that this sort of ‘reasonableness’ involves policies that constitute cruel, unusual and ineffective punishment. And so on.

For two years now I have been arguing that Europe is being quickmarched, sequentially (one country after the next) off the cliff of competitive austerity – without any winners standing at the end of this gruesome process. Something must end this madness. There must be a circuit-breaker. Ireland could have been that circuit-breaker, with a resounding No to the idiotic Fiscal Pact. It did not happen. On the one hand, the fear that Ireland will be frozen out of the ESM and, on the other hand, the elevation of the troika’s ‘model prisoner’ image (for the Irish) onto the Pantheon of Irish virtues, saw to it that madness (in the form of a Yes vote to a Compact that everyone knows to be daft) prevailed. Greece is the next hope that Reason may manage to score a belated victory.

If on 17th June Greeks voted like the Irish did last week (that is, against their reasoning and guided by fear and blackmail), the Eurozone will become history, with terrible consequences for the global economy. This is not the case of the Philosopher Kings blackmailing the plebs to do what is right. This is the case of ‘madmen in authority’, to quote Keynes, who are not only steering the vessel toward the rocks but who are, in the process, punching holes in the life vests that may carry us to safety once the shipwreck is complete. Consider what they are telling the Greek people: They are saying that Greece, to remain in the Eurozone, must,

(a)  carry on borrowing from the EFSF at 4% (and thus adding to Greece’s public debt) in order to pay the ECB (which will be making a 20% profit from these payments, courtesy of the fact that it had previously bought Greece’s bonds at a 20% to 30% discount)

(b)  reduce public spending by 12 billion euros in order to be ‘allowed’ to borrow for the benefit of bolstering the ECB’s profits from these transactions involving bankrupt Greece.

If the Devil wanted to guarantee that Greece is pushed out of the Eurozone, he and his evil handmaidens could not make up the above, satanic, scenario. Meanwhile, the same happens in Spain, where the government is forced to borrow money (at nearly 7%) it can hardly raise in order to shore up banks that are borrowing from the ECB (at 1%) to lend to the Spanish government at (7%) so that the latter can… bail them out. Not even the sickest of minds could make this up!

To conclude, Europe’s peoples are being marched into a catastrophe. They know that this is their predicament. They can see their march is leading them off a mighty cliff. But they are too afraid to veer off, in case there are beaten back into line, in case they get lost in the woods, for reasons that sheep know best. However, the only way this hideous march can end is if someone summons up the courage and does it. And steps out, showing the others that this march can stop and must stop – for everyone’s benefit. Who is that someone? We, Europeans, do not have many options. As I wrote above, the Irish people had a chance but did not take it. In two weeks, the Greeks have their chance. Voting for Syriza would offer us (and by ‘us’ I mean all Europeans) a chance of this circuit-breaker. A chance to say: Enough! Time to change course in order to save the Eurozone, so as to prevent the Great Postmodern Depression which lurks once the euro-system fragments formally. 

Should we be afraid of Syriza’s ‘ultra-leftism’? My answer is a resounding No. I recommend that (even those who have Greek amongst their languages) you do not read their manifesto. It is not worth the paper it is written on. While replete with good intentions, it is hort on detail, full of promises that cannot, and will not be fulfilled (the greatest one is that austerity will be cancelled), a hotchpotch of  policies that are neither here nor there. Just ignore it. Syriza is a party that had to progress, within weeks, from a fringe political agglomeration struggling to get into Parliament (at around the 4% mark) to a major party that may have to form government in a few short weeks. It is, in important ways, a ‘work in progress’; and so is its unappetising Manifesto. No, the reason it is safe to take a gamble on Syriza is threefold:

First, because it is probably the only party that ‘gets it’; that understands (a) that Greece must stay in the Eurozone (despite the latter’s obvious failures), and (b) that the Eurozone will not survive unless someone forces Europe to put an immediate halt on this “march off the cliff of competitive austerity”. 

Secondly, because the small team of political economists that will negotiate on Syriza’s behalf are good. moderate people with a decent grasp of the grim reality that Greece and the Eurozone are facing (and, no, I am not part of that team – but I know the ones I am referring to).

Thirdly, because, in any case, a vote for Syriza is not going to establish a purely Syriza government. No party, including Syriza, will be in a position to form a government outright. So, the question is whether Europe is better off with a government in Athens which includes Syriza as a pivot or one which is supported by discredited pro-bailout parties, with Syriza leading from the opposition benches. I have no doubt whatsoever that Europe’s interests are best served by the first option.[1]


[1] On a humourful note, perhaps we can even enlist the Fiscal Compact as a reason to support a Syriza-based government! One of the Compact’s articles, after all, says that member-states agree to take the necessary actions and measures, which are essential to the good functioning of the euro area in pursuit of the objectives of fostering competitiveness, promoting employment, contributing further to the sustainability of public finances and reinforcing financial stability.” Well, all this, at least in my estimation, requires saying No to the ‘bailout’ logic and, thus, Yes to the Syriza’s line of argument…

245 thoughts on “Why Europe should fear Fine Gael-like ‘reasonableness’ much, much more than it fears Syriza

  1. Pingback: Yanis compares the Greek election to the Irish vote on the Fiscal Treaty – Smart Taxes Network

  2. I have found the discussion here most thought provoking and will try to contribute my two cents. 
    Arguments from both sides have been well articulated with truths (or truisms) well presented and leading to a vicious cycle of seemingly correct but contradicting points.

    Let me disclose that I am Greek, living and working on the US. I have never considered myself socialist/communist or capitalist but have implicitly subscribed to capitalism, up until now.

    The problem is in my opinion both larger and, at least in theory, simpler.

    Resources are finite but the hunger for “prosperity” is ever increasing. When this is combined with the capitalist system where money is seen as abstract with no connection to a product (e.g. as is the case with the stock market, interest rates, or any case where capital surplus is expected out of nothing as when a commodity is bought for $x and sold as is for $x+y), then we are led to the following:
    For one to have more someone else needs to have less. If both want more they form an alliance and identify a third to suffer. If an entire country wants more they need to identify another that will suffer. If more countries want more, they need to create alliances (nato, G8, EU) and find other countries (in Asia, Africa, etc.) to provide for them (in the form of labor and buyers not of production). 
    Currently, all the world has woken up so there is nowhere for the capitalistic pyramid scheme to go and it turns on itself with collapse being the unavoidable outcome. This collapse can either bring down the pyramid scheme through changes in the ways we think and act or the world as a whole if greed stops us from changing.

    Ironically, combining Marx’s ideas from Der Kapital with the moral ethical values supported by most longstanding world religions and philosophies may have the answer. Proletariat dictatorships already messed this up big time in the 20th century. Couldn’t we try this one more time while removing the greed for power and the fear of opposition?

    • @ Pantelis Vassilakis
      “Resources are finite but the hunger for “prosperity” is ever increasing. When this is combined with the capitalist system where money is seen as abstract with no connection to a product ….., then we are led to the following: For one to have more someone else needs to have less.”

      Sounds interesting. Problem is, however, that you’d have to identify a causation. Up to now, industrialization more or less has been a win-win-situation, and more so in the capitalist system than in the flawed socialism. Obviously this cannot go on forever, because, like you said, resources are finite. Now in theory this fact by itself could already have counteracted productivity gains, so that our economy might have turned from a win-win-mechanism into a win-lose system. But you wouldn’t need any extra factor – capitalist money-hunting – to explain the situation. (And if you feel you do, you’d have to explain in detail what causes what.)

      You are right, however, that there is quite a widespread feeling that countries (like Germany) can only expand their economy at the expense of other countries.
      Now while it is obviously true that a trade surplus of the one country logically entails a trade deficit of another one, the question is why they should not both be able to raise their exports, and at the same time both have a balanced trade balance (through time). After all, world trade has expanded enormously in the last decades, without a crisis. So you would think that somehow, in the past, things must have evened out. But why exactly have they gone wrong at this point?

      Underconsumption might be an explanation (and this theory has, in fact, already been used to explain for the Great Depression 1929 ff.).
      I have commented on that in another blog (http://kantooseconomics.com/2012/06/11/%CE%B3%CE%B5%CF%81%CE%BC%CE%B1%CE%BD%CE%AF%CE%B1-%CE%BF-%CE%BD%CE%AD%CE%BF%CF%82-%CE%B5%CF%87%CE%B8%CF%81%CF%8C%CF%82-%CF%84%CE%B7%CF%82-%CE%B5%CE%BB%CE%BB%CE%AC%CE%B4%CE%B1%CF%82-yet-another-respon/#comment-7994) and will repeat the relevant part of my commentary here:

      Adam Smith has taught us that a market-economy is a win-win-mechanism.
      But when you claim that “there cannot be an economic boom without somebody else running a deficit” (like it has been said about Germany), you’re considering it a win-lose arrangement. You are, by the logic implications of your thinking, challenging the very foundation of our economic thinking.

      Therefore it is insufficient for the savants to say “The German taxpayer should foot the bill” (or give the alternative inflationist answer: “the money owners should pay”).

      If you make a political demand like that, you better come up with a theoretical foundation.

      If you are not willing to simply accept the demand that the (German, Chinese …) taxpayer have to finance the trade surplus of their countries (by simply giving their tax-money away to the countries with a trade deficit), you will ask questions like:

      1) Who is the winner/loser in that game? The gains (in paper money) from this game were private; if the taxpyers are supposed to pay for it, the bill is to be footed by them.
      2) Can that go on forever, as logically it would have to? Because it would involve a constant money transfer from the taxpayer to the capital owners.
      And above all:
      3) How come the surplus countries have not imported more, and thereby benefited in real welfare instead of illusionist paper money? (I. e.: why didn’t we see a win-win-situation).

      To me, the only working hypothesis that would confirm the “winlosionist” view would be underconsumption.
      The (money-)”rich” (not just the billionaires, but even the Chinese, German and also American workers saving for their old age) save more than they spend (consume). This would not be a problem if the surplus money would find its way into productive investments for the real economy. However, investment opportunities seem to be limited (as already Keynes had expected would happen). Consequently, the savings will have to go somewhere else.

      In the olden days, the money (gold) would have been stored under the bed, maybe. These days, we have a financial system that operates more or less independently from the real economy (which you may have been referring to when talking about a “capitalist system where money is seen as abstract with no connection to a product”). So nowadays this might be were the (from the savers’ point of view:) surplus money goes – and doesn’t come back.
      Question is: How can that be? How come this system, that doesn’t produce anything, is yielding profits for the participants? Are the paper profits generated by ever fresh “savers”-funds coming into the financial “economy”? Or is there some hidden mechanism by which the central banks feed the system and generate “profits” for the participants?

      Anyway: If it is true that money is being diverted at a large scale from the productive economy, it is of course missing there (like blood being constantly drained from a body) and this fact would account for a ‘winlosionist’ scenario (‘you can only gain if somebody else loses’).

      To counteract the negative effect that the money-drainage would have for a balanced (World-)economy, you’d have to find ways to reduce the accumulation of money (reduce saving). In my opinion, this could be done
      - Through taxation,
      - Through inflation (pump ever fresh money into the system to replace what has been sifted off from the real economy into the realm of pure finance)
      - And, in financing old age pensions, through a return to (or an establishment of) PAY-GO financing (German: Umlagefinanzierung) instead of capital funding (German: Kapitaldeckungsverfahren). [Interestingly enough, even Ben Bernanke has suggested in a speech some years ago that the Chinese government should establish a public old-age insurance as a means to reduce Chinese savings surplus. What he didn’t say (didn’t even think of, and from an American point of view wouldn’t even want to think of) was that a complete surplus reduction requires a Paygo financing of pensions, as opposed to capital funding.]

      Alternatively (and maybe preferably), you might improve conditions for investment. (You could also use taxation to invest in fields like education. This is highly profitable for society as a whole, but of course not for a capitalist investor. However (and that is one of the reasons why I have little confidence in the Modest Proposal of our host Yanis Varoufakis) “investments” of this kind should be tax-financed, not credit-financed.

      Sorry my English is not perfect, but hopefully you (and other readers) will nevertheless understand what I mean.

    • The modest proposal is not the ultimate solution by far. It wasn’t designed for that. Only a step using the already established frames of the system as it functions to bring a broader balance. All society needs reform. Now after all this delaying ,it may be too late for the MP anyway.

      In a debt-based system the crisis is inherent. Noone escapes it. It can only be delayed. There is no exact cause for any crisis for there is no absolute linearity. The broader cause is the whole system by itself ,since it serves only one purpose. The redistribution of wealth between “easy money” and “hard money” ,those that control the creation and quantity of money and those that work and produce wealth (the users ,those in need of the currency).

      Every war in the past was faught for the control of the issuance of money. When you have hard money there is no crisis except when certain someones (“easy money”) create it to seize control of the creation of money. Then with “easy money” you may have what many want to call fast progress ,but this is at the expence of others since there is no balance kept for the rhythm of production and for the “rebirth” of the earth herself.

      In other words ,the progress the so called civilized world has seen wouldn’t have existed.
      But in reality that is a lie too. Because if the rhythm of production was evened out all over the globe with respect to beings and nature in general ,progress would have been superior.

      The only deep reason all these problems exist today is the will of certain individuals to have power and technology years ahead of the mainstream. It is all about having the final advantage.

    • You see ,one can argue that since the problem is rhythm then austerity is good now. It pauses the system. Yes ,but it is too late. Austerity by itself is not the problem. It is the broader system and now it is the use of austerity independently in a global recession to contain the already created crisis (the crisis is a must in a debt – based system).
      But this use of austerity is stupid as well. The MP if used from the beginning would have been an asset for the “bad guys” as well.

      Austerity now is not used as a mechanism to bring global balance. It is used as a delayed mechanism of covering up the truth of the basic function of the system (fast progress by redistribution). So then you think. “Oh ,the problems are too complex ,that is why there is hunger elsewhere while we live better.” BS.

      The complexity of economy is just a smokescreen.
      This is immoral for everybody.

      Since now austerity was used at the wrong time and made things worst ,maybe just maybe ,we all have the chance to change the whole system.

      Maybe.

    • Cangrande and Demetri
      Thank you for your well articulated commentary. I will focus here on cangrande’s post with an effort to add (in my opinion) to those by Demetri and to my original post.
      It appears to me that the capitalist appropriation of industrialization can only be seen as win-win from within a closed system (those controlling production), which needs the “outside” in order to be fed. Stating that, under capitalism, trade balance is possible for all assumes
      a) equal distribution of natural resources and means of production (untrue) b) honest/ethical/altruistic attitude by those in power (untrue in most cases especially under the temptation for abuse of “abstract” money within capitalism), and c) a supply/demand based market reflecting true use value and need/appreciation (untrue within the capitalist “free” (stock) market).
      With the “free” (stock)market being the pinnacle of and stranglehold against any success of humanity within capitalism, our “hunger” for prosperity, which is natural, is reduced into a pyramid scheme (sorry for repeating myself). Capitalist markets survive and thrive on the sale to others of a promise for profit through resale of that promise to future others. When all you sell is a promise of wealth through resale of that promise to others, the last one to buy will have nowhere to go but back to the sellers, who can only go back to their sellers and so on until we reach the world credit crisis we are experiencing. Moreover, if the substance under these promises is “air” (i.e. money without any tangible commodity for which it stands) then everyone ends up being cheated, from the first to the last seller. The problem in capitalism is that the first seller is so far removed in time from the last one, who is stuck with no-one to sell to, and so used to this system being a superficial win-win that has a very hard time understanding that the prosperity they have been experiencing was neither real nor their earned right (feelings overwhelmingly present to advanced capitalist societies i.e. first sellers of the promise of a promise….).
      Under its capitalistic form, industrialization has as a practical objective not the betterment of the human condition and the improvement of quality of life through creation of products/services but the accumulation of abstract wealth (money). The easiest chosen path to achieve this is through reducing the unit cost of all products the “industry” creates and perpetually increasing the net gain from sale. This leads to
      a) a search for increasingly cheaper labor that can only be found outside each single self-contained capitalistic bubble (a city, a country, an alliance), where workers will be willing to work for less than us because they do not have access to natural resources and means of production, or power to acquire these through colonization/war/slavery/pure-numbers or any of the many other means historically used to accumulate power.
      b) perpetual increase of the number of identical units produced which always grow so much to require buyers from outside the bubble; most of these buyers end up being the cheap laborers in (a) because they, by definition, do not have the resources to produce what we produce (otherwise they would not be laboring for us for so low wages).
      c) demand manipulated by supply of already cheaply produced units in search for a buyer and profit rather than need or true life-betterment objectives (I’m sure you can figure numerous examples of this).
      Then, the source of our wealth becomes the cheap labor and purchasing power of those who have less. But how can they buy if they have less? Well, that’s where the (high-interest and enslaving) loans from the rich to the poor come in and the cycle/one-way-spiral of wealth accumulation on one end and dept accumulation on the other begins, making it more difficult for both to escape the black hole they are being progressively dragged in because, eventually, some debtors will explode rather than crash under the weight. Actually, lenders do their best to stop the debtors from crashing because they represent the oil greasing the a-c machine of abstract wealth generation described earlier. So they keep stuffing it with a pressure that when released the explosion can only be all-catastrophic.
      So, new, even higher interest loans (Troika lends Greek banks at low rates but they lend to the Greek government and therefore people at 5-7 times that rate, with all these profits oiling the abstract money accumulation machine) are given to pay the interest on old loans while the people are asked to drop their quality of life to sub-human levels to pay the interest on the new loans. All the while the debt is continuously increasing while the people are continuously impoverished.
      Most of these loans originate of course in tax payer money of the lender countries, as all other profits are always re-capitalized in the capitalist pyramid scheme. So, everyone is taken for a fool. The “wealthy” public of the lending countries and the “poor” public of the borrowing countries, with nothing gained since the wealthy public’s taxpayer money leave them but never reach the public of the borrowing country.
      This is a perverse way to live and act. As perverse as buying a share of a stock, sitting back and looking at its price, waiting for it to go up in order to sell (I’ve done it) with absolutely no understanding of or interest for the products/services the relevant company produces and with exchange values that have very very little (if any) connection to use values, labor that has gone in the product, current or future need, etc. etc.
      It is equally perverse when those in power (e.g. Greek government) show no ethics or morals and use (external and internal) money to their personal ends, either by embezzling it or by offering portion of it to buy votes through overgrown and non-merit based public sectors, so they can keep embezzling.
      It is equally perverse when those in power (e.g. Troika etc.) do anything they can at any cost to anyone to remain at the receiving end of the capitalist pyramid, turning the blind eye on abuses by other powers as long as they serve their short term surplus-value-generation goals.
      It is sad, somehow perverse, but understandable when a people grows weary of doing their part (paying taxes, working hard, helping their neighbor, etc. etc.) because they have experienced decades with lack of ethics, honesty, social responsibility, and appreciation of merit by those who they have put in power.
      While these people carry part of the responsibility for electing such governments in power they are also victims of those (outside powers) who tart up a corpse to appear good, useful, and the “only” choice, simply because it will serve their interests and regardless of the black hole it will eventually pull us in, all of us.
      I am aware that I am not yet offering a clear answer for a way forward. This post has been long enough so I’ll go back to work and return later, by when I still may not have a better answer than my original generalization: stop ignoring the perversion that capitalist “free” markets have made a “natural” part of our life; stop acting as the ignorant who flashes the toilet and thinks that the waste magically disappears; look to Marx for the logistics and to world religions/philosophies for the ethics and start anew.

    • Much as I disagree with you, Pantelis Vassilakis, your contributions are stimulating me to be more precise about my thinking.
      And if, before or in the following text, I may sound somewhat aggressive, it’s not supposed to be offensive to you, but a challenge to reconsider your (plural: you and any reader of the text) preconceived opinions.

      Folks are geared to “know” everything. Rather than admit we (in general discourse and, it seems to me, even in the “science” of economics – but not normally in the natural sciences) don’t know this or that, we concoct an “explanation”.

      The plague in the Middle Ages was “explained” by human sin (http://www.guardian.co.uk/commentisfree/2012/jun/07/euro-scot-free-black-rat-eurozone). This is (to us today) obviously nonsense. It makes you feel like you “know” the cause, but doesn’t give you the slightest help in fighting the plague.

      The malaria disease was formerly assumed to come from “mal aria” (ital. for “bad air”) (http://en.wikipedia.org/wiki/History_of_malaria). The idea of “bad air” was connected with swamps and insofar was derived from the correct observation that this disease is more common in swamp-areas than elsewhere.
      It did have some value because, while not establishing a direct causal chain of events, it was still true the you could, by and large, avoid the disease by avoiding (or draining) the swamps.

      And it was a starting point for later finding out that mosquito-bites were the “cause” of this disease. But even this “explanation” is unsatisfactory. While it is certainly true, it is incomplete. It helps you in that it shows you a way of fighting the disease when you have not drained the swamps: you simply kill the mosquitoes (DDT).

      But when the mosquito that bites you has come from a puddle, than this “explanation” will be insufficient to cure you. You may find a drug, by accidence, that helps (like so many primitive tribes have found for so many diseases). But in general a “solution” will require a scientific analysis that (hopefully) will lead you to the fact that it is not the mosquito as such, but a microorganism on (or in – I’m not familiar with and not interested in these details) the mosquito that does the harm. But even that is not an “explanation” that enables you to cure the disease: You need to know exactly what this microorganism does to your body, in order to develop an antidote.

      You are giving a “bad air”-type explanation for the current economic problems: capitalism is a swamp for you, which we simply need to drain, and everything is fine.

      Know would you personally want to trade your life with that of a king 200 years ago? Would you personally prefer to live in North Korea, or even Cuba, instead of the “capitalist” USA?
      And what, do you think, would you (or I) be there? You think that system does have enough surplus resources to support people working at a university, writing papers about music? Nothing negative implied about what you are doing, but you should be aware (just as I as an old age pensioner am) that we are consuming what other people produce. Nobody needs your knowledge (or mine) to construct a Volkswagen. But you (and, hypothetically, I) would like to have a Volkswagen.

      Unless you have an extended basis of productivity, we both would be working in the coal mines (North Korea) or the sugar cane plantations (cuba).

      If the “swamp” turns out the Nile-river-farm irrigation system in Egypt, you’re simply dead, if you drain these mosquito-hotbeds.

      What you describe is not “capitalism” as such, only certain aspects of it.
      And what is wrong with you now accumulating stock, and selling it in your old age to live from the money?
      What is wrong with a “speculator” buying next year’s grain in winter at a fixed price? The farmer gets the money he needs to pay his helpers (or fuel for his harvesting machine) and the “speculator” makes a profit – or takes a loss, if prices in summer turn out to be lower. This is (besides giving him cash rightawy) an insurance for the farmer that he will sell at a certain price. In that respect, he might also pay a fee to the “speculator”, who would then have to pay the farmer the difference, if prices in summer were lower than contracted.

      So a lot of things that you decry as evil are (or can be) very meaningful economic institutions. Before you know in detail how the mechanism works (what the microorganism does to your body), it is not very wise to cut off your arm when you’ve gotten bit by a mosquito. It may not even have had/transmitted the disease to you, or the “poison” may already have gone beyond your arm.

      Capitalism is about efficiency:
      - in production, that you produce as much as possible with as little work as possible (surplus workers should then ideally work in another factory that needs them)
      - but also in distribution. An even distribution is not necessarily a good distribution; if everybody consumes their money, nobody has a surplus to invest it. So (at least historically) an uneven distribution was justified, in that it gave some people the spare money to invest in firms, machines, railroads etc.
      Something may have gone wrong, these days, in distribution. But I would still prefer the exact mechanism to be identified, before trying to straighten things out. If you don’t (and implement, e. g., Marxism), you have a good chance of ending up worse, even a lot worse, than now.

      Marxism has been shown to be flawed in several historical experiments.
      And it is not that the implementation went wrong: Marxism can be shown to be flawed already on theoretical grounds. Basically, Marxism rests on the assumption that there is a way to objectively determine what we “need”. Do I “need” your papers to feed my face? Obviously not. On the other hand, since (like Demetri once correctly stated) “everything is connected with everything”, they might still, in whatever hidden and circuitous ways, contribute to the progress of mankind. But there is no way of determining such a result in advance. In fact, they might just as well not be helpful. But since nobody can know that in advance, we just have to try it out. And for that, you have to live in an “affluent” society, where people produce enough so that they can share their material production with you.

      Also, this affluence in no way is dependent on other people or peoples to be poor. Yes, people do starve in Bangladesh. But this was no different in the past: when the crops where poor, when they got destroyed by torrential rainfalls etc., people had to starve, because in the olden days you could not store the grain etc. very long.
      Only these days, an efficient government could store enough food for the people to survive inspite of poor crops, or buy the grain from the USA.
      Plus nowadays there are a lot more folks living in Bangladesh than formerly. While the Chinese have strictly limited their population, other peoples are “eating up” the increasing productivity by an increased population. That’s not the fault of capitalism – as (semi-)”capitalist” China teaches us.

      And also religion doesn’t necessarily help. The (formerly much larger) Vatican State in Central Italy was religious, and institutions like the monasteries would feed the poor. But that also stifled their incentive to work. It reduced many people (and their attitude) the the state of spoiled brats, that expect everything from the parents, and nothing from their own work.
      I’m not say religion and ethics are bad. They are good, when and insofar as they help you to establish well-working institutions, and the “lets-go-do-it” attitude in people. They can also be bad, when they foster a more fatalist attitude, where you expect your bread to fall from heaven, instead of making it with your own hands.

      Well, my posting is too long already. Hope you’ll read it anyway. And ideally even find more “food for thought” ;-).

    • cangrande,

      As an educator and academic, I do fully agree that it is very important to support statements and explanation based on as much information as possible rather than concocting them. In this spirit, looking through my website in any meaningful way would have revealed that, like all professors in teaching rather than research institutions, I am not paid to publish the peer reviewed articles I do publish. It is quite easy and would take little time to discover the things I contribute to society for a living but your time would be better spent carefully addressing the following resources that would allow for a better grasp the history, bases, and underlying assumptions of the theories and philosophies we are discussing.

      Jean-Jacques Rousseau’s “The Social Contract” (1762) and “Discourse on the Origin of Inequality (1754) for conceptual bases/assumptions behind Marx’s work in Das Kapital (1867).
      Adam Smith’s “Wealth of Nations” (1776) for the first, wonderful formal outline of capitalism and its pros/cons and some caveats to avoid the cons
      John Keyne’s “The General Theory of Employment, Interest, and Money” (1936) and Milton Freidman’s and Anna Schwartz’s “A Monetary History of the United States: 1867-1960” (1963) for two conflicting attempts (deficit increase vs. austerity as means to address credit crises and recessions) to correct the dead end that capitalism is leading us to if A. Smith’s caveats and assumptions are not satisfied.

      At the end of the day, all systems will fail if the individual lacks integrity, work ethic, behavioral ethics and morals, sense of altruism, and “love thy neighbor” attitude, qualities that my previous comments on world philosophies/religions were alluding to (and not to organized religions, which have all too often been behind humanity’s biggest atrocities). It is just that abuse of all kind seems to be easier excused and disguised as “freedom” in capitalism rather than in socialism, especially under the capitalist motto you cite as efficiency: “… produce as much as possible with as little work as possible.” History is filled with examples of abuse supported by this motto, which is way older than Capitalism and has supported slavery of some sort or another from the ancient times to the present.
      I thank you for the discussion so far. I will not be contributing any more.

    • cangrande

      Nice post.

      Here is the correct mechanism.

      Government issues currency.
      The currency issued is debt-free government notes.
      The amount of currency issued is based on the amount of population.

      So ,enough currency to go around ,currency connected with true wealth production ,stable prices ,no inflation and no defaltion.

      Here is the “modern” mechanism.

      Rights for the issuance of money have been passed to private corporations called Central Banks. THEY ARE PRIVATE CORPORATIONS.
      Currency is being issued only as debt when the government sells bonds.
      The central bank is buying the bonds by printing new money (now electronically). The government then owes. The government can take the loan from the central banks because it has agreed to back the loan with the taxes of the citizens. Also commercial banks get money from the central banks by giving them their own bonds.

      The commercial banks then use the fractional reserve system to create even more money. They have the right to give 10 times more loans than they truelly have wealth.
      So 10% of the money is created by central banks and 90% more from the commercial banks.

      This is a debt-based system.

      The banksters always give loans with high interest and flood the market with currency. Now we have inflation but because they take into account the fractional reserve system ,the numbers show that we do not. Yet again as time passes life gets more expensive and quality decreases.

      During the so called boom phase of the business cycle ,money gets created ,spending increases ,people get loans ,investment increases ,economy booms. Then debt reaches high levels.
      All money is debt. In order to repay ,new money must be created as debt. So more money into the market.

      The banksters then decide to withdraw the money from the market.
      This is the bust phase of the business cycle. Since money gets scarce ,people can not repay their loans and they lose their labour. Taxes increase ,hunger ,pain etc. Baksters get all the wealth.

      Every crisis is man-made. There is no natural business cycle. Those that control the supply of money and issuance of money only as debt ,control the lives of people.

      In this system you advance production by issuing more money than natural production truelly supports. You need more resoursces. But in order to get the resources cheap ,someone must owe you. Here is were the BIS ,IMF etc comes in. They give high loans to resource rich countries that can not be repayed. They get the resources. Your life gets better. Other’s life gets worst.

      It is the perfect manipulative system.

      How can it be corrected.

      Governments take back the right to issue money.
      They issue debt-free government notes.
      The issuance is based on amount of population.
      They rhythm of production is more natural for eveyrbody.
      Nobody owes. No high taxes ,even not taxes at all.

      HISTORICALLY PROVEN. Even today there are places that use this system. They never have problems.
      Ancient Greeks ,the first American colonies and many many many many more.

      Do not get fooled now.

      In EU you need the deficit of others and the resources.
      You give loans and transfers ,you decrease their production ,you take projects in this country by bribes ,all money return to you anyway ,and then you say there is a problem. You increase the debt by “bailout”. The debt can not be repaid. The citizens must burden the weight. You also gain legitimacy by convincing everybody that it is the citizens fault ,an immature entire nation that expects everything from others. You say that in order for this nation to gain competitiveness ,austerity is needed. In this way the supply of money decreases. Less money ,no repayment of loans. Then you take the true wealth of this country. When you succeed ,you restart the cycle by increasing the amount of money.

      The problems of the southern nations are not nearly enough for the crisis. This crisis is based not so much on the individual sovereign debt but the overleverage of the banks ,which now instead of taking their losses ,they roll over their bad debts to the sovereigns.

      What i say has nothing to do with politically left or right or whatever.

      I am not playing it absolute and smart for me by saying all these.
      IT IS WHAT IT IS. HUNDREDS OF YEARS.

      cangrande ,you do not pay your taxes for anyone else than the banksters.

      Simply ,we do not want to. And instead of you understanding we also do this for you ,you support the criminals.

      Once more history will show that the Greeks tried to show you the way and you didn’t understand a thing.

    • “I will not be contributing [to the discussion] any more.”
      You are right: After a while, the mutual arguments become repetitive.

      Of course I didn’t mean that you are not making a valuable contribution to your field of research.
      All I was trying to do was to caution against decrying capitalism, when in fact it is the economic basis for a society, which enables you (or me …) to do what you want to do.

      A subsistence economy simply cannot support any artists, teachers, researchers etc. Everyone has to work in the fields – putting their noses to the grindstone, so to speak.

      Still, I’m willing to agree that capitalism is bad. If you agree, that alas, we haven’t managed to create a better economic framework so far ;-) .

      “At the end of the day, all systems will fail if the individual lacks integrity, work ethic, behavioral ethics and morals, sense of altruism, and “love thy neighbor” attitude …”.

      That sure is true, it’s an interplay between institutions and individual values and behavior. “Good” institutions as such are no guarantee for success.
      On the other hand, no amount of altruism, idealism etc. will be able to overcome the drawbacks of a fundamentally wrong institutional framework.
      Communism cannot work well, not matter how “good” or “unselfish” the people are.
      One example: IBM grossly misjudged the possibilities of an operating system for computers, when years ago it had the chance to invest in Microsoft.
      In a communist regime, “IBM” would have been the ministry of economics, and their word would have been the end of any OS development.
      Operating, however, in a capitalist society, Microsoft managed to convince other people (with enough spare money) to invest.

      “… your time would be better spent carefully addressing the following resources that would allow for a better grasp the history, bases, and underlying assumptions of the theories and philosophies we are discussing.”
      Quite frankly, I haven’t read any of the books that you recommend and which, of course, have greatly influenced the course of our civilization. But what they have to say is partly outdated, some of it proved wrong, and all of (right and wrong) it is still incorporated in the present day discourse. When you learn geometry today, you don’t normally read any texts by Euclid (unless you want to write about the history of geometry).

      “….. abuse of all kind seems to be easier excused and disguised as “freedom” in capitalism rather than in socialism, especially under the capitalist motto you cite as efficiency: “… produce as much as possible with as little work as possible.” History is filled with examples of abuse supported by this motto, which is way older than Capitalism and has supported slavery of some sort or another from the ancient times to the present.”

      What abuse do you mean? Stalin has starved millions of farmers, so did Mao Tse Tung. None of them a capitalist.
      Slavery, well: I don’t know how that social institution originated (in antiquity). But efficiency certainly wasn’t the reason.
      A slave-based economy is not very efficient: It’s easier to motivate poeple with a carrot, than with a stick. There is no fundamental reason why ancient Rome could not have been built by free workers (or semi-slaves, like the farmers in the Middle Ages).
      Slavery is not about efficient production, slavery is about skimming off as much as possible from other people’s labor.
      Capitalists do the same, but they do more: They try to get a higher yield from their workers. Not with a whip, but with machinery (or a more efficient work-flow, like Fordism). And the carrot of better pay for a higher production. So unlike a slave the worker, too, benefits from increased efficiency. (Whether he gets his “due” share is another question.)

      Well, enough said. Something obviously went wrong in the last decades in the world economy. It would be nice to know exactly what it was. On the other hand, not all problems of individuals and countries can be blamed on “the” crisis.

      Thank you too for this very inspiring debate!

    • Interesting opinion, Demetri, but not fully convincing to me.

      While it’s nice for
      “the Greeks … [trying] to show … [me] the way”,
      I’d rather not see Germany go the way Greece has gone.

      “… you do not pay your taxes for anyone else than the banksters. Simply ,we do not want to. And instead of you understanding we also do this for you ,you support the criminals.”

      No: you just want jobs from the government, but not pay taxes. And the money for your deficit spending comes (at the moment) from MY pocket. And all of that you’re doing for me?
      Demetri: Thank you ever so much, but I’m afraid that this is a lot more altruism than I can stomach!

    • cangrande

      I am not trying to convince you about anything.
      It is obvious the blame game is preferable.

      Especially now that as time passes the truth comes forth.

      http://coppolacomment.blogspot.gr/2012/06/real-bailout.html

      http://graphics.thomsonreuters.com/11/07/EZ_BNKEXP0711_SB.html

      http://www.ecb.int/mopo/liq/html/index.en.html

      http://www.bbc.co.uk/news/business-18460638

      http://www.openeurope.org.uk/Content/Documents/PDFs/ecbandtheeuro.pdf

      I too will not participate in this debate anymore.
      All the best.

  3. Pingback: Help Is Not on the Way « Multiplier Effect

  4. Pingback: Programma di governo di Syriza – Se Tsipras perde, l’eurozona è spacciata e noi con lei « Verso un Mondo Nuovo

  5. Κύριε Βαρουφάκη,
    με όλο το σεβασμό αλλά διαβάζοντας προσεχτικά το κείμενο είναι πλέον ξεκάθαρο ότι στηρίζεται και ανοιχτά το Σύριζα, χωρίς καμία αμφιβολία. θεωρείται ότι αυτό συνάδει με το προφίλ ενός ακαδημαϊκού οικονομολόγου που οφείλει να κάνει οικονομικές αναλύσεις και όχι-κατα τη γνώμη μου- πολιτικές τοποθετήσεις?. Δικαιωμά σας βέβαια-ως Έλληνας πολίτης- αλλά ταυτόχρονα όταν παρατίθεται ένα επιστημονικό κείμενο (όπως αυτό θέλω να πιστεύω, ανεξάρτητα από το εαν δεν έχει βιβλιογραφίες) καλό είναι ο συγγραφέας να αποκαλύπτει στον αναγνώστη την όποια “σχέση” έχει με το “προϊόν” που “εμπορεύεται”…και νομίζω ότι είμαι αρκετά σαφής σε αυτό που λέω. όπως άλλωστε ένας επιστημονας σε μια δημοσίευση σε περιοδικό αναφέρει οτι έχει “εμπορικά συμφέροντα” από το προϊον που προτείνει…Δεν θέλω όμως να αφήσω άλλες αιχμές καλοπροαίρετη κριτική κάνω……Κατά τη γνώμη μου ο στόχος της διεθνούς κερδοσκοπiας (η οποία και κρίβεται από πισω από την κρίση-Funds) είναι η υποτίμηση του ευρώ και κυρίως του δολλαρίου με σκοπό να δημιουργηθεί αδιέξοδο…”Λύση” στο αδιέξοδο αυτό θα δώσει το “New world order του Soros”…Κλείνοντας λοιπόν το δίλλημα αυτών των εκλογών δεν είναι ευρώ ή δραχμή (στη δραχμή θα καταλήξουμε) αλλά αν θέλουμε Καπιταλισμό (με την καλή έννοια του όρου) ή προτιμούμε την “νέα Σοσιαλδημοκρατική διΙΚΤΑΤΟΡΙΑ

    • Δεν έχω καμία σχέση με το “προϊόν”. Αυτό δεν σημαίνει ότι δεν έχω άποψη. Την οποία και καταθέτω. Χωρίς να κρύβεται τίποτα από πίσω.

  6. Dear Yanis,
    since we are discussing SYRIZA; could you please explain their notion of or attitude towards enterpreneurship?
    The new hysteria against SYRIZA is that it hates enterpreneurship and will stop more or less all efforts to participate the *greek* private sector in public sector projects. Is this true? Loot at that:

    http://www.kathimerini.gr/4dcgi/_w_articles_kathpolitics_1_07/06/2012_445744

    I know, the newspaper is somewhat biased, but still. Please tell us about the internals of SYRIZA you know so well of. I think there are a lot of enterpreneurs out there, I want to regard myself as one of them, who have sense of responsibility for the overall system and want to know, if there our going to be the new scapegoats of a leftish government.

    (Well haven’t they been the same with all previous governments… point given, but the about SYRIZA still stands…)

  7. Pingback: Levy your myths on Greece « Greek Left Review

  8. Pingback: Το οικονομικό μοντέλο του Τεντιμποϊσμού. « ekapitalistis

  9. Airetikos

    A short answer to your long question: Muslim radicals have long beards to express their strong belief to their god. Some radicals in the West have short or long beards to display their ‘godless’ revolutionary passion and intelligence. But their passion is misplaced as it would be more fecund in the boudoir than in the affairs of politics; and their intelligence is superficial as it lacks depth.
    As to other birds of a feather flock together…who ‘warbled’ on me, it is prudent to keep silent.

  10. Pingback: מדוע אירופה צריכה לפחד ממפלגות "הגיוניות" יותר מאשר ממפלגות רדיקליות

    • Dear Harry Zepidis
      This sounds terribly and is a worrying phenomenon (not limited to Tunisia, unfortunately).
      However, though I believe there should be some discussion about it, this blog does not seem to be the perfect place?
      After all, this is all centered around Economics in general and the financial crisis and Greece in particular.

    • harryzepidis

      Man ,my guts turned upside down and inside out.

      No worries ,Usa and Eu will rectify the situation. And then we wake up.

    • @demetris As we are talking about democracy and economy , how it could happen elsewhere? Where is UN ? Is this needless in our civilized world?

    • harryzepidis

      Good questions.
      I am one of those that say there is no such thing as civilized world.
      There is technology but not human advancement.

      This is my answer and i know is a really bad answer. Is a really bad reality also.

  11. Κύριε Βαρουφάκη . παρακολουθώ τις απόψεις σας πάνω από 1 χρόνο. Εάν μπορούσατε να τις δημοσιεύατε και στα Ελληνικά θα ήταν ευχής έργον.

  12. @Klaus Kastner June 5, 2012 at 15:57 #

    I am sorry since this thread is rather long, still I have to comment on this comment:

    “anna v

    “I think what gets often
    overlooked is that, to this day, Greece as a country has really not had to live under a real financial crisis. A real financial crisis is when external funding stops; period; no more cash; nada. ”

    Dear Klaus,

    Are you with your goods? ( εισαι στα καλά σου;) as we say in Greek.

    A real financial crisis for Greece? I will tell you of one.

    I am 72 years old, old enough to remember the end of WWII where we payed with billion drachmas for one egg. Where people were dying of hunger and were gathered in trucks and buried in common graves.

    During the occupation my father kept rabbits on the roof terrace in a suburb of Athens, and planted tomatoes and aubergines etc. People would jump the fence and steal anything growing in the garden, even flower bulbs, thinking they were onions. After work in a flour mill ( he was payed in flour and thus we survived) he would go fishing so that his kids could have some fish for supper.

    A boy in the neighborhood died of “premature growth”, he became a teen ager and there was not enough food for his flesh to grow as fast as his bones, and the bones perforated his flesh and he died of gangrene.

    A neighboring old lady who visited my grandmothers and was treated to as much broth (from flour) as she wanted went home and died of a perforated stomach because she had been starving, giving her rations to her grandchildren, and my grandmothers did not know it.

    The anecdotal stories are numberless, but if this were not a dire economic crisis, what is one?

    And it got better very slowly due to the civil war until 1949.

    Please do not insult us like this.

    Yes, we have bred a generation that is all rights and no obligations, it is our fault, but do not generalize about Greece as a whole.

    • Sorry, I did not refer to Greece’s entire history. I referred to the period since 2009. If that wasn’t made clear enough, I apologize. But I insist that since 2009 there hasn’t been a real financial crisis because money in very substantial amounts kept flowing into Greece (about 100 BEUR in 2010-11) and by that I do not mean the money which flowed into Greece to pay off foreign creditors. I mean the money which allowed Greece to spend about 2.500 Euros for imports for every 1.000 Euros which it exported (even through to the 1st quarter of 2012).

    • Klaus

      With the stupidity of these leaders the global collapse is not far away.

      For anyone will know how stupid they were accusing Greece ,when Santa Claus comes with demolition equipment.

    • @Klaus Kastner

      OK, it was not clear.

      “I mean the money which allowed Greece to spend about 2.500 Euros for imports for every 1.000 Euros which it exported (even through to the 1st quarter of 2012).”

      I live in the Athens area and here for sure there is something like 50% diminution in most activities, shopping, traffic even. Whole rows of shops are out of business.

      Are you counting in tourism and naval affairs in “exports” ?

    • @anna v

      The links below might help you to understand my argumentation. The first one shows the current account deficit Jan-Mar 2012; the second one the deficit 2001-10.

      http://klauskastner.blogspot.gr/2012/05/greeces-current-account-jan-mar-2012.html

      http://klauskastner.blogspot.gr/2011/11/greece-current-account-and-foreign-debt.html

      From these figures it is clear that if Greece does not want to degenerate into a turn-table of money where foreign capital is sent to Greece so that Greece can import everything it needs – if Greece doesn’t want this, it needs to take control over its own future. The emphasis will have to be on domestic value generation (i. e. a “buy-Greek-products” move) and probably some controls to make sure that Greek financial capital doesn’t continue to leave the country.

      In have most sincere respect for the things you mentioned in your previous comment. In consideration of this, let me say the following: this blog and particularly some of the commentators are very one-sided. I sense a fascination in presenting Greece as the victim of other powers with evil intentions. Obviously, I have no evidence to prove that this is not so. I would only argue that at this stage of our civilization we ought to be beyond a mindset which suggests that one part of the civilized world is “out to get” the other part. That, to me, is immature. It is also totally contrary to the spirit of the Enlightenment which is a pillar of our Judeo-Christian inheritage, namely “man’s emergence from his self-imposed immaturity. Immaturity is the inability to use one’s understanding without guidance from another. This immaturity is self-imposed when its cause lies not in lack of understanding, but in lack of resolve and courage to use it without guidance from another. Have courage to use your own understanding! — that is the motto of Enlightenment!” And, I should add, the Central European philosophers of Enlightenment derived their thoughts from what ancient Greeks had taught.

      So I don’t understand for the life of me why a people whose ancestors gave all these great philosophies to the world; whose forefathers demonstrated a resistance to evil invaders from the North at costs which you have described in your previous comment – I don’t understand for the life of me why such a people would today consider themselves more or less the victims of the powers that be.

      Why can such a people not say things like the following: we don’t want to be recipients of good deeds from others forever! We don’t want a living standard which depends on the fact that others fund it! To make a cute statement: we want to produce our own toothpaste instead of importing it from Brazil! Our country and people have enough competitive advantages to assure that, if we use them smartly, we can support our living standard on our own! And so forth…

      That, to me, would be the attitude that would provide for a positive future perspective for Greeks. I see this attitude in so many Greeks whom I have gotten to know: be they university students who are eager to make a contribution to their country; be they the young generation who does not want to emigrate just to have a decent living standard; be that the generation of parents who do not want to see that their children have to emigrate to have a decent living standard.

      Where I don’t see this attitude at all is in Greek leadership, and by that I don’t only mean politicians. Instead, I mean all those who by the power of their backgrounds, their education, their role in society, etc. could lead the people into a positive direction. Instead, I see many pied pipers around who pursue their own agenda, sometimes with motives which I don’t understand. But certainly the whole country and the future of the next generation of Greeks do not seem to be part of their agenda!

    • Klaus

      “we don’t want to be recipients of good deeds from others forever! We don’t want a living standard which depends on the fact that others fund it! To make a cute statement: we want to produce our own toothpaste instead of importing it from Brazil! Our country and people have enough competitive advantages to assure that, if we use them smartly, we can support our living standard on our own! And so forth…”

      That is exactly what we are saying!!!!

    • @ Demetris:
      It doesn’t really matter of what you are SAYING (even if you genuinely believe it). Question is, whether you (plural) are going in the right direction, or even willing to try. And that, in Greece, is far from clear.
      The Troika program was not just about cuts: It was about deregulation etc. which would help the Greek economy.
      Looks to me though that in Greece they’re blaming the Troika for the fact that the Greek government implemented the cuts (which it had to, or else foreign taxpayers would have to send even more money), but not those elements which would, to a certain extent, have freed private business initiative in Greece.

      I’m absolutely floored when I read that Greece ranks # 100 or so on a Worldbank list of investor-friendly countries and then have an economist (!) like our host Prof. Varoufakis proclaim:
      “Some [reforms] are good and proper. The problem is that they are irrelevant to the the Crisis.” (http://yanisvaroufakis.eu/2012/06/03/why-europe-should-fear-fina-gail-like-reasonableness-much-much-more-than-it-fears-syriza/#comment-11224) [With the implication: All we need is lots more money, and everything will be fine.]

      Small wonder that with such an attitude Greece does a lot worse than Portugal, which is in a comparable jam, or Latvia, which took 3 years (with gigantic budget cuts!) but now (slowly) seems to be pulling out of the rut.

    • @Klaus
      Yes, it is good to buy Greek and a lot of people are doing that, but what you are not taking into account is that the EU destroyed a large part of our agriculture, made fishermen cut up their boats and gave money incentives which made us import garlic from China and sugar from we know not where. Globalization has not simplified this. I

      We used to produce all the sugar we needed, they made the farmers destroy the farms. They tried to entice farmers to cut down olive trees! Fortunately there is an emotional tie between a farmer and his/her olive trees and they did not succeed at that. We used to be self sufficient in wheat, too.

      Do you know that if you are a farmer you have to ask permission to change the cultivation of your field, for potatoes for example?

      There is a great craziness in all this centralized planning. Maybe they should have centralized tourism also, to balance for the lack of things to export from Greece. Make people from Germany take an obligatory vacation in Greece :) !!

    • anna v

      You have just made a very strong argument AGAINST further EU centralization. The idea of transfers like agricultural funds was to STRENGTHEN national sectors, and Greece has received huge agricultural transfers. If they achieved the opposite, soccer players would call that a self-goal. I am not familiar with the application of EU agricultural transfers in Greece but someone must have benefited from it. Who was is?

    • @Klaus Kastner

      Why do you think we have ended with a small population in agricultural work when it used to occupy 30% of the work force? The farmers lived the good life declaring produce and getting the subsidies too, sometimes even without produce, payed not to produce! The central -planning wanted us to buy sugar from abroad, for example.

      These farmers wanted a better life for their offspring, sent them to get a sort of degree and got them , with MP influence, some niche in civil service, and that is a better life than digging the fields and tending the goats and lambs. We got the 1 million illegal immigrants for this.

      There is a greek word for it, εκμαυλισμός, for which I cannot find an english translation: it means the gradual temptation and seduction of conscience so that people end up doing something they would not have desired to do to start with. It started with sexual connotations but it is now used for politics etc also.

      The abrading of conscience.

    • @Klaus

      It is actually unlawful (a serious breach of the EU Treaties) to promote national products as opposed to other EU countries’ products. What you Germans (sorry to be so explicit) fail to understand is that there are two sides to every coin (and rather more sides to economic “coins”!). Greece has obligations to the EU and the EU has obligations legal, political and moral to Greece.

      The last few years’ discourse from the Germans has been inappropriate and incorrect: everyone’s obligations are on the table here, not just Greece’s. If Germany wishes to destroy the EU then let them go ahead and do so. Doubtless another major war will ensue. What Greece cannot accept is being vilified and threatened with expulsion from the EU on purely technical grounds, When I (as a Brit) consider the charity that the Allied powers have shown to Germany and Austria in the last 65 years, my blood boils at the arrogant nationalism that is emerging in the unified Germany.

      Of course, any competent economist will concede the serious problems of Greece — and not only since 2008. This is trivial in comparison with the crimes of Germans and the way in which the current discourse is being shaped. Greece needs reform, it needs help, it needs advice, it needs outside pressure: what it does not need is another Nazi Germany taking over Europe.

    • Xenos (yours of June 10; 00:06)

      Let me – only for the sake of intellectual argument and not because I mean it – suggest the following.

      It is Britain who carries the greatest historic responsibility for helping Greece nowadays. If Britain had no so egotistically pursued national interests; if it hadn’t treated the will of very many Greeks with disdain; if it hadn’t sided with collaborators and artificial royalty instead of resistance fighters; etc. etc. – if Britain had not done all that, perhaps the ensuing split of Greek society along the front lines of ELAS/EDES would not have occured – a division which in one way or another I sense to this day (and which may be one of the reasons why the country cannot find a shared purpose). And perhaps you wish to look at the amounts which British banks benefited from rescue packages and compare it with what Britain contributed to them.

      If you think this line of argumentation is inappropriate then you have passed accurate judgment on what you should think of your own line or argumentation.

    • I think at least we can all agree that ,mostly because of geopolitical and historical reasons and now energy as well ,tiny Greece hasn’t stopped receiving hits. Noone really wanted Greece to have her old advantages. Greek traitors and foreign powers alike.

      It is ofcourse natural for us to not have trust and to want to change the old ways. And the old ways will certainly not change with the covering up of those that use and control this system.

  13. Answering to some (Greek) commentators:

    1) 4. Reich in Germany? Sure we have!
    If we had a democracy, like you in Greece do, instead of an all-party-one-opinion-rule (on bailouts for the Eurozone-countries, that is), Germany wouldn’t pay a cent. Not to the banks, and not to Greece, not directly, and not indirectly (via ECB-moneyprinting), not with conditions and (most certainly) not unconditionally.

    2) Merkel stupid? ‘Cause she is!
    Why? See no. 1) for the answer.

    3) No conditions? Perfect with me! (Reason see no. 1)

    4) Wrong reforms?
    Which ones do you mean: the financial ones that Greece did implement – or the structural reforms it was supposed to implement, but didn’t?
    And why doesn’t Greece on its own initiative pull through the right reforms? As you think would be?

    5) Wrong time?
    Fact is that Greece has partly been living on foreign credit. Private credit not being available any more for the Greek government, spending had (and has) to be cut.
    Unless, of course, you find some foreign taxpayers foolish enough to cough up the dough for Greek politicians to spend as they see fit. (Do you trust your own politicians? Then why should your creditors?)
    Alternative: Have the ECB print money for you and tell your fellow-Europeans, that you’re treating them to a free lunch. You’ll find countless folks that would believe you. (Before the inflation starts, that is.)
    Any other ideas? If so, tell us. (Realistic ideas, if possible.)

    • Ok then.

      When someone owes me money ,i’ll tell him to stop working so that he can pay me back.

      What? Not reasonable? Well ,that is the realistic idea of Merkel.

      Austerity only works when there is global growth. Period.

      1) Noone has real democracy. Printing money does not necessarily mean inflation and it is an obligation of the ECB. No country should have a say in this.

      3) Reforms with conditions. Logical condition ,not concession of sovereignty.

      4) Many structural reforms are impossible because the money do not go to Greece but back to Troika. Money laundering. Austerity itself does not allow reforms.

      5) Ofcourse. Austerity only works when there is global growth. Period.

      And cut this stuff about free lunch. There never was any. Not for the population that is. As for the politicians ,your own know better.

    • @ Demetris (http://yanisvaroufakis.eu/2012/06/03/why-europe-should-fear-fina-gail-like-reasonableness-much-much-more-than-it-fears-syriza/#comment-11528)

      “When someone owes me money ,i’ll tell him to stop working so that he can pay me back.
      What? Not reasonable? Well, that is the realistic idea of Merkel.”

      I’ve got a much better idea: Tell your creditor that he has to pay you lots more, if he wants his money back! Sounds great, no?

      Only that I, personally would not through more money down the drain in order to pay myself, i. e give ever larger amounts of “credit” to an insolvent creditor, simply to keep up the illusion that my old credits are beeing paid back.

      Austerity seems to have worked in Lettland, though.

      What exactly is the obligation of the ECB? I mean: how much do you feel are they obliged to print? And how and to whom is it to be distrubuted?

      “No country should have a say in this.” – Well,there are, I think, 17 member states of the Eurozone. Who send their representatives into the board of directors of the ECB. With equal voting rights.
      So which country do you think has a say over ECB performance?

      So which to you think are logical conditions, and which is concession of sovereignty?
      Have at least the logical conditions that the Greek government has agreed to undertake been fulfilled?

      Where do you need money to implement structural reforms? Like giving free access to taxi and transport licences?

    • cangrande

      “I’ve got a much better idea: Tell your creditor that he has to pay you lots more, if he wants his money back! Sounds great, no?”

      No it doesn’t. What you fail to undrstand is that the money that were coming as an investment plus the stealing plus the corrupted deals with the German and French companys at the beggining ,now come as bailout crap.

      They only needed to say that there is a crisis in Greece as hypocrites that they are.

      So in other words what changed is the use of the money.
      And the debt increased.

      Reforms they did well to ask. REFORMS ARE NEEDED.

      The capitalist system in its present form is debt-based. There is always debt. Do not be fooled. The use of the money changes.

      As for the ECB i should have said ,no country has a say as an overlord. Yes ,all countries have equal voting rights and Germany plays the master anyway.
      ECB should have acted as a central bank that it says it is.
      The money they already gave should have been used for the structural reforms not for paying back interest and capital of forced bailout money.

      Concession of sovereignty is giving up the country.
      Logical economic assurances is cash and certain assets that their giving away does not hurt the economy of Greece ,since everybody wants to help so much. No country ever must give the power and water companys.

      The Greek government is not Greek at all as it seems and we the people didn’t agree ,as you didn’t agree. So we agree.
      What has been fulfilled is all the cuts. There are no money for the organisational reforms ,which the Troika should have implemented first with a low interest loan by kicking the butts of the Greek politicians. The thing is ,they are their partners.

      Now we have become ,a money laundering mechanism. You should be glad the citizens do not want that.

      Free access to taxi and transport licences would be good. And let some Greeks shout.

    • “What you fail to understand is that the money that were coming as an investment plus the stealing plus the corrupted deals with the German and French companies at the beginning, now come as bailout crap.”

      a) I indeed fail to understand how investment money came as bailout crap.

      b) So most of the Greek problems came about by politicians stealing money and to corrupt foreign companies?
      No goodies given (jobs, tax deals …) to the Greek people by the parties? No tax evasion whatsoever?
      Small wonder than, that prof. Varoufakis tells us that reforms “are irrelevant to the the Crisis ” (http://yanisvaroufakis.eu/2012/06/03/why-europe-should-fear-fina-gail-like-reasonableness-much-much-more-than-it-fears-syriza/#comment-11224).
      Troika folks a bunch of idiots, no IMF-experience whatsoever from previous crisis in other countries?
      But then how to prevent further stealing by your politicians? If the country doesn’t want it’s decision making under “our” control, you’d have the same problems again (assuming that stealing was a main problem, which I don’t believe. Rather it was clientelism: giving goodies to the voters).

      “They only needed to say that there is a crisis in Greece as hypocrites that they are.”
      Perfect with me: No crisis in Greece, no need to rob us German taxpayers!

      “So in other words what changed is the use of the money.”
      That phrase is unintelligible to me – I don’t understand what you mean.

      “Reforms they did well to ask. REFORMS ARE NEEDED.”
      Then we should both agree (apart from the fact that I personally wouldn’t give ANY money): “We” certainly should not give (any) more money before the reforms that were agreed upon some two years ago now are implemented?

      “The capitalist system in its present form is debt-based. There is always debt. Do not be fooled. The use of the money changes.”
      All well and fine, but what has that to to with the fact that Greece wants to spend “MY” taxes?

      “… all countries have equal voting rights and Germany plays the master anyway. ECB should have acted as a central bank that it says it is.”
      And what in your opinion, is the duty of a central bank? Print money for Greece? (For the politicians to steal it?)

      “The money they already gave should have been used for the structural reforms not for paying back interest and capital of forced bailout money.”
      What you have forgotten or did’nt get, Demetris (and a lot of other folks, also here in Germany, have forgotten or don’t understand it either) is the fact that Greek ‘creative bookkeeping’ has ruined the confidence of the financial institutions in a number European state bonds.
      The idea of bailout-money for Greece [which in my opinion should never have been paid, but at any rate that was the political-economical rationale behind it] was to restore confidence in Eurozone state bonds. Therefore, it’s logical that most (but not all!) of the money had to go to the banks. Which nevertheless in the meantime have taken a huge cut, substantially reducing Greek debt. (Courtesy of the ill-famed Mrs. Merkel, by the way. But of course no reason for Greece to say “thanks”!)

      “Money for structural reforms”#
      What for, if your politicians (your opinion!) steal it anyway?
      Besides, and once again: Why do you need money e. g. in order to fire a bunch of superfluous state employees?

      “Concession of sovereignty is giving up the country. … No country ever must give the power and water companys.”
      Fine with me, if you respect my view that “no country ever must through billions of it’s own taxpayers money at foreign tax evaders and political thieves.”
      Under this arrangement, we could both perfectly agree.
      (Oh, and if you feel you absolutely need some extra money after all: Sell your power and water companies, before you ask for foreign tax money!)

      “Logical economic assurances is cash and certain assets that their giving away does not hurt the economy of Greece ,since everybody wants to help so much.”
      If there are any valuable Greek assets that you (Greece) is willing to split with: Why not sell them right away and make money which then you wouldn’t have to “borrow” from foreign taxpayers?

      “The Greek government is not Greek at all as it seems and we the people didn’t agree ,as you didn’t agree.”
      Fact is: Nobody disagreed when the politicians created jobs for them with the state bureaucracy. So your line of “it’s not our fault, it was them” doesn’t convince me.
      And besides: Prof. Varoufakis has previously informed us that you had a “vibrant democracy” in Greece. (http://yanisvaroufakis.eu/2011/06/12/the-greek-crisis-and-the-threat-to-political-liberalism-a-cautionary-tale-for-ireland-portugal-the-whole-of-europe/). Which of course, combined with (like another Greek commentator said) “fraudulent loans” gives me the impression that you have a perfect division of labour in Greece:
      - Vibrant democracy, if credit-money is to be spent
      - Fraudulent (and therefore null and void) loans when the creditors reclaim their money.

      Basically, what you want is to reap the benefits, but not pay for it. Now while that is not an attitude exclusively to be found in Greece, proud people like the Portuguese seem to have a deeper feeling of responsability for what their government has contracted.

      Of course I have no influence on how my government spends my taxmoney. But I’ll have to bear the consequences. While I hate Mrs. Merkel et al. for it, I still wouldn’t say: Not my decision, consequently not my debts.
      It’s my country, the politicians are my representatives, and I’ll have to bear the consequences of their deeds. Including paying back debt that the German government is now incurring for the benefit of Greece, or (much large sum – details see the contributions of Klaus Kastner) credit that the Bundesbank is giving to Greece.

      And before you bicker about sovereignty, and why this doesn’t work and that won’t work: give it a try, like hundreds of other people, aided by the IMF, had to do and have done before.
      Greece is not alone in the world, and it’s not the navel of the world, and in the other European countries people would highly appreciate if Greece would say “Yes we can” (and we’ll work hard for it), instead of: “Give us more money, or we won’t do anything”.

      “What has been fulfilled is all the cuts. There are no money for the organisational reforms, which the Troika should have implemented first with a low interest loan by kicking the butts of the Greek politicians.”
      Nope, not the Troika should have implemented the reforms: Greece should have done that! And which organisational reforms exactly do you need money for? Certainly not for the dismissal of superfluous state employees!

      You (not just you as a person, but Greece in general) constantly comes up with objections, rather than go about it and get it done! The Portuguese suffer a lot too, but (for all I know) not as much as in Greece, because they roll up their sleeves and try to get things going. Obviously, not so in Greece, which information I don’t only take from the German (and international) press, but also from the overall tone of commentaries like yours.

      “The thing is, they [Troika + Greek politicians] are their partners. Now we have become, a money laundering mechanism”.
      Well, if you think that is the case, and see no way of changing it: Why should I pour out MY money for that kind of system?
      [Besides: Doesn't really look like partnership to me, when the Greek government signs contracts it doesn't have the least intention of fulfilling.]

      “You should be glad the citizens do not want that.”
      I am, and since you feel the Greek people have no influence upon a crooked system like that, we should logically agree that Europe best stops sending more money to Greece.

      “Free access to taxi and transport licences would be good. And let some Greeks shout.”
      And not the Troika’s fault, if not even this item has been implemented so far. Lower transportations cost should lower the price of food etc. in Greece. Of course there would still be hardship, but a little less.
      So rather than lament about how bad Mrs. Merkel and the stingy German taxpayers (like me) are: roll up your sleeves (or roll up your politicians’ sleeves) and do what can be done!

    • cangrande

      That is why we are trying to change the political system here cangrande.
      It doesn’t happen overnight.

    • cangrande

      No bailout deal means no more money from you.
      We the Greek people never agreed with the bailout as a parasitic mechanism.
      Do you understand that?

      And do not worry about your money because Germany has profited immensely from the crisis.

      Do worry in general because the real problem is the global debt – based system that comes to each end.

      Do worry that instead of you paying for your failed banks ,you want others to do it for you and you want them to say thanks as well.

      We gladly pay for our own problems.

    • cangrande

      It is once more amazing how you try to twist everything i said and add to it more than i said.

      When did i say that we the Greeks have no influence upon a crooked system? Or that we asked for your money?

      What are we trying to do with the elections cangrande?

      You are thinking everything too superficially and in the context of German media propaganda. Try to find out how the system functions first and then you will see where and how the problems of Greece fit.

      As for the creative bookkeeping it is common knowledge now to all that search for the truth ,that all the european leaders agreed upon it. And all the countries did it with Germany and France being the first.

      While we accept our mistakes ,you try again and again to avoid your own responsibilities for the export of unemployment in the periphery ,for the overleveraging of the banks ,especially German and French ,for the German scandals in Greece ,for the forced buying of third rate German millitary equipment and a number of other “nice” gifts from you.

      How about the deal to cut on production so the Geman exports can increase in Greece?
      Or is these the Greek population’s fault? Did we know back then? Did you?

      And still all of the above would be hidden if it weren’t for the real cause of the crisis.
      Why should we pay for your banksters? We should pay for our own.

      Just because the media slanders Greece ,doesn’t mean that Greece is the problem. Not any other sovereign for that matter. IT IS YOU AND ONLY YOU. Scapegoating Greece will not change the truth.

      And the professor knows exactly what he is talking about. As for the IMF and their experience ,they only know how to suck other people dry.

    • cangrande

      “Of course I have no influence on how my government spends my taxmoney.”

      You do not cangrande?
      It is called protesting. It is called bringing the government down and having elections cangrande.

      It is obvious that is you who expect others (in this case the Greeks) to exercise your citizen’s rights.

    • „No bailout deal means no more money from you. We the Greek people never agreed with the bailout as a parasitic mechanism. Do you understand that?“

      All I understand is that your arguments are inconsistent. Do you or don’t you have influence on your political system? Do you feel that Greece has an obligation to repay its debt or don’t you? Do you feel that you need even more money from “us” to pull the reforms through or don’t you?

      “And do not worry about your money because Germany has profited immensely from the crisis.”

      If I’m not asked to foot others‘ poeples‘ bills, then of course I’ve no reason to worry. But, like I said, your argument is inconsistent. And fact is, that Greece still runs a primary deficit, i. e. the Government is spending more money (not counting interest and debt retirement), than it collects in taxes. Who’s financing the deficit now, and who do you think will be paying that in the future? As for German profit from the crisis: Don’t rehash Greek media propaganda, give me the numbers, please! And don’t forget to subtract what money we had to pay, and how much we had to guarantee, for Ireland, Portugal, Greece (so far: with Spain, and possibly Italy and maybe even France still to come!). Profits? My ass!

      „Do worry in general because the real problem is the global debt – based system that comes to each end.“

      What do I make oft hat? How do you solve the „real problem“? What has this to do with the fact that Greece is ranking # 100 on the list of investor friendly countries? What about tax evasion? Looks to me like you (and Prof. Varoufakis) are trying to sweep the specific Greek problems under the rug of one big problem. Not that I doubt there must be a basic flaw in our present socio-economic design. But that doesn’t change the fact though that Greece needs money. Question is: whose money. And some shadowy allover problem should not be used as an excuse not to tackle any clearly visible specific problems. Even if you personally accept the necessity of reforms, it still looks to me like the Greek society as a whole („media propaganda“!) much too eagerly grabs on to notions of some world-problem in order to shirk the responsibility to implement urgent reforms for very specific problems, which are of a completely different nature than a possibly flawed design of our monetary system.

      „Do worry that instead of you paying for your failed banks ,“

      In fact, Germany did pay for failed banks, due to the US-housing-crisis. An insolvency of Greece would not endanger them. Possibly the French banks, who do hold larger amounts of Greek state bonds, might have a problem.

      „… you want others to do it for you and you want them to say thanks as well.“

      What do you mean by „you want others to pay for your (our) failed banks“? Do I want Greece to pay for them? Not me. I want Greece to default and let the banks take the hit. No money for Greece, and none to the banks. Like I’ve said from the very beginning. So please fight MY arguments, if you think you can, but not some scarecrow erected by Greek media propaganda.

      What are you referring to when you say „you want them to say thanks as well“? Normally, a debtor should feel an obligation to repay their debt. So if the creditors cut his debt (like the banks have done for Greece), it sure won‘t hurt to say „thank you“. If you consider this to be an unreasonable demand, you obviously think that the Greek indebtedness was all the fault of other people (the banks that gave you the credit, your politicians, the Germans that „forced“ you to buy their arms or bribed you to buy their equipment). And since it wasn’t your fault, but the fault of others, you don’t feel any obligation to pay the loans back to your creditors (nor say thanks when they „voluntarily“ – in reality thanks to Frau Merkel pressuring them – renounce a large part of the debt). Now while I realize perfectly well that Greece probably can’t pay, I very much despise the irresponsibility of blaming others for what eventually were YOUR (plural) decisions.

      „We gladly pay for our own problems.“

      Sorry Demetris, but this is not an honest statement. What is the blame in Greece against Frau Merkel about? You (plural) are accusing her of being responsible for the Greek budget cuts. Does she steal money from Greece? No: „she“ just doesn’t GIVE Greece as much money (from „my“ taxes!) as „you“ would like to have (and as many people in Greece even feel entitled to!). So don’t tell me that „you“ (plural) don’t want „our“ money!

      Even you as a person have told me before that the Troika should have given money to Greece to pay for the reforms! But no matter how self-contradictory your own statements may be: Your claim that „you“ don’t want (or need) „our“ money is simply contradicted by the data (cf. Klaus Kastners postings).

      „It is once more amazing how you try to twist everything I said and add to it more than i said. When did I say that we the Greeks have no influence upon a crooked system?“

      If you have influence, you should feel responsible for what has happened. But quite obviously, you don’t want to be responsible for the Greek state debt!

      „Or that we asked for your money?“

      You have a damn short memory: Did you or didn’t you say that Greece needs money to implement reforms? And where is it to come from: The gods? And what’s your (plural) grudge against Frau Merkel about, if not that you feel you don’t get enough money from her?

      „You are thinking everything too superficially and in the context of German media propaganda.“

      Saying that MY thinking is superficial is a rather amusing accusation coming from your part. Your arguments fly off in ten directions and are self-contradictory – but I’m the one who thinks superficially – ROFL!

      Love your „context of German media propaganda“! And what do I hear from you (which obviously IS based on GREEK media propaganda?): ‚Wasn’t our fault, that our politicians incurred the debt, we’re not responsible for it, in fact, we’re not responsible for anything, because our troubles result from German companies bribing our officials to buy German instead of other equipment, the Germans forced us to buy their arms, the Troika not giving us enough money, so us poor folks couldn’t implement the reforms we had agreed upon etc.‘. Now if that’s not Greek media propaganda (clearly geared to serve the interest of those groups that would lose their unjust privileges if reforms were pulled through, like state employees, tax evaders, corrupt politicians …) then I don’t know.

      „Try to find out how the system functions first and then you will see where and how the problems of Greece fit.“

      Meaning what? Nothing else than: „It wasn’t our fault, it’s the system that’s wrong“. You’re sure that this is not Greek media propaganda? ‚We don’t have to change, nothing wrong with us‘?

      Anyway: since you’re the thinker who goes deep below the surface of things: Have YOU found out how „the system“ works? How Greece’s problems are coming from „the system“? Do you think there’s no need for change in Greece (you’ve told me otherwise before!)?

      „While we accept our mistakes ,you try again and again to avoid your own responsibilities for the export of unemployment in the periphery ,for the overleveraging of the banks ,especially German and French ,for the German scandals in Greece ,for the forced buying of third rate German millitary equipment and a number of other “nice” gifts from you.“

      „export of unemployment in the periphery“: The European trade balance with the rest of the world is pretty much balanced. Which means, since Germany does indeed have a large export surplus, that other European countries must have a large trade deficit with non-European countries. The problem (may be in part, but cannot consist only of) South European countries importing to many German products; they must have imported too many goods from non-European countries too.

      “How about the deal to cut on production so the Geman exports can increase in Greece? Or is these the Greek population’s fault? Did we know back then? Did you?”

      I still don’t know anything about it, and until you give me specific details about this claim I will consider it to be Greek media propaganda. Did the Greek parliament ratify a treaty with Germany that Greece would cut its production? You‘re kidding!

      “Why should we pay for your banksters?”

      I’ve never asked you to pay for our banksters, nor has anybody else in Germany or any other country of the Eurozone. I just want you to stop criticizing our chancellor that she doesn’t give you all of MY tax money that you would enjoy to have (see above!).

      “We should pay for our own [banksters].”

      Indeed you should, but fact is: you don’t (and you can’t). Greek banks would default on the cut of Greek state bonds (not to speak of a possible default of the Greek state), were they not recapitalized with money from the other European taxpayers.

      “Just because the media slanders Greece, doesn’t mean that Greece is the problem. Not any other sovereign for that matter. IT IS YOU AND ONLY YOU. Scapegoating Greece will not change the truth.”

      So nothing’s got to change in Greece, right? Well, aren’t you twisting the truth a little, when you talk about Greece being scapegoated? And didn’t you tell me otherwise elsewhere? Why not try to get your arguments straight and consistent in themselves?

      “And the professor knows exactly what he is talking about.”

      Sure he does. Problem is that his ideas won’t work. Using public funds for investments hasn’t worked in the past in Greece. Where did all the money go, that Greece has received as a GIFT from the rest of Europe? Did it help to build any industrial basis? So why should more of the same (which is the essence of his Modest Proposal) be a solution? And besides: Even if it would work, some day: Who pays for the Greek budget deficit in the meantime? Any proposal that does not explicitly address problems like these is not, in my view, a serious contribution. Rather I perceive it as a cover-up job for the vested interest groups in Greece that profit from the present malpractices.

      “As for the IMF and their experience, they only know how to suck other people dry.”

      Nice to know that you’re the expert! So just throw the Troika out and live on your own: nothing wrong with me there!

      “ ‘Of course I have no influence on how my government spends my taxmoney.’ You do not cangrande? It is called protesting. It is called bringing the government down and having elections cangrande. It is obvious that is you who expect others (in this case the Greeks) to exercise your citizen’s rights.”

      Perfect: Then go ahead and change things in Greece, if you can. Truth is: You (singular) can’t. You (plural) can. Same holds true for Germany, in theory. Only that we don’t even have one single political party that is opposed to the bailouts. So who am I (singular and plural) going to vote for, if I don’t want my taxmoney to be spent for balancing other peoples’ state budgets? Nobody! That’s why I said that you in Greece have democracy, whereas we in Germany (in this respect) have indeed a “Fourth Reich”!

      Nevertheless: Whatever my fundamental opposition to any such transfers of my money may be: It sure won’t hurt if Greece starts to TRY AND FIND SOLUTIONS instead of blaming the many scapegoats that YOU have identified in your text (Banks, Germans, German companies, Greek politicians, German media, Frau Merkel, the IWF, the Troika …).

    • cangrande

      You still do not get it.

      There is nothing contradictory in saying that we do not want the bailout money as a parasitic mechanism. I said it is the use of money that changes.
      We DO need help. We DO need reforms. And we DO need capital support. With a plan that works.

      We DO have problems in Greece. We DO need change. We DO admit our own mistakes.

      You have to understand that by cutting everything during a global recession ,nothing is resolved. Everything gets worst.

      You also have to understand that everything is interconnected. Even in corruption. Corruption is everywhere. And if you do not agree with your politicians choices ,as we don’t ,then you fight against it.

      In a deficit country ,the deficit is the air with what this country breaths.
      You want for this country to cut spending enough so that she needs less deficit and still has enough air to breath? Even reform so she has a primary surplus? Even better. GOOD. ACCEPTED.

      But there is a limit. If you cut fast ,you cut air. If you cut fast and in a global recession ,you cut production as well. So ,no solution.
      Not even money for the reforms.
      This country will then have to sell everything. NOT ACCEPTED.

      As for your money ,you still fail to understand that capital flows. Everybody’s money leaves and is used in many different ways. One of these is investment. This is the most logical use. Haircut did things worst.

      You can not give money to a country to have it on life support just to delay the unavoidable by adding to its debt ,and especially for bailing out the banks and not the country itself. This is what we call ,throwing good money after bad.
      At the beginning ,the money could be used for investment ,not for covering the banks. Now things are even worst. So ,one sees ,that the plan was never to help a country.

      Let’s say that the deal was this: You will make all the reforms needed ,otherwise we won’t give money for investment. This is an accepted deal. Accepted.
      But the deal is this: You will make the reforms needed and we will give you enough money to pay the banks while you cut spending and production during a global recession. So no investment ,no growth ,just life support. As long as we cover our bankster friends. NOT ACCEPTED.

      What is this? Covering the banks on the backs of the citizens ,so they won’t be hit by the crisis? And while they do this ,the citizens of the surplus countries are covered more as well. At the end ,the problems will be more than paying money. People die here.

      Do you really think that there couldn’t be a good deal for all?

      A country has surplus regions and deficit regions. The EZ is like a country. If that country has problems (mismanagement of the euro structure) ,it can’t just press it’s deficit region to hide the broader bad truth behind the bad truth of the deficit region and in a way that those in the surplus region do not get practically affected at all.

      Whatever that country does to it’s deficit region ,the problem doesn’t go away. And it sure won’t go away by throwing good money after bad in the deficit region. We see the problem already in other countries.

      Sorry if you can not understand that. You just want to accept that everything is Greece’s fault.
      You like it or not ,we all share the blame. And especially those that control the capital flows. And it is not Greece.

      Also if you really feel that in Germany you do have a “fourth reich” and you see that as a fact ,a fact you do not like ,then i wish you the best.
      As we try to do something about it ,you should to.

      Also ,for the deal about cutting production ,you should find the eu treaties. I do not have the links handy. If anyone reads this and has the source ,please post the source. What i am refering to ,is not media propaganda. Everything got worst in the euro.

      And when i am refering to German media propaganda ,i am refering to the preconceived notion ,that the Greeks used you ,by being lazy ,by stealing your money ,by ALL avoiding taxes etc.. So what ever many say ,even you ,they try to fit every explanation to that preconceived notion.

      If you can not understand that this is too much to be true for a whole nation ,then i am sorry again.

    • @ Demetris

      „Do you really think that there couldn’t be a good deal for all?“
      Frankly: No, I don’t. You (plural) are (understandably) not really out for a good deal for ALL, you want a good deal for YOURSELVES. And people like Prof. Varoufakis deplorably help people like you (singular + plural) to live under the illusion that through some white magic the (assumed) interest of Greece to change as little as possible as slowly as possible can be made compatible with other peoples’ interest to pay as little as possible to foreign states. Problem is: When you’ve so far been living partly at other peoples’ expense (foreign credit) you’ll have to cut back when that funding stops – unless you find others stupid enough to pay for the standard of living you’ve gotten used to.

      What you refuse to see is that Greece has lived (pre-Troika, but at the moment still is living!) for a large part from foreign credits: from money, that you (plural) have not earned, money, that you promised to pay back but now refuse to pay back, claiming the loans were fraudulent, the money was stolen by your politicians etc. Which is, of course, on the whole just not true. Because if it were, then you wouldn’t need any foreign money now: it would be sufficient to make sure your politicians don’t steal any more. But while in reality they’ve probably taken their cut, the bulk of the foreign credits did go to the people in Greece, to YOU (plural).

      Basically what you (singular + plural) are saying is that
      a) It is the duty of all the other European taxpayers not just to help Greece, but to cough up whatever money you feel you need (and even feels entitled to)
      b) Greece didn’t receive any (net) money from Europe and
      c) All the money which ‚“we“ gave to the banks to pay for „your“ state debt should have gone to you.

      Fact is, however, that Greece DID receive net funds, over and beyond to what she had to repay to her creditors. (Plus a lot of money was sent to Greece by the ECB – not directly taken from the taxpayer. So “Troika” money is only the surface of what Greece has received!) But since you (plural) feel that it’s still not enough, people in Greece are saying (and thinking) „we didn’t get any help“, “they didn’t help us”. That’s just not true. But if you think that your fellow Europeans (and they all are paying to and for you, not just us Germans – which most people in Greece seem to forget) will come up with enough money to return Greece to its previous „credit“-financed standard of living, you are wrong. And such a demand is in itself, sorry to say that, simply brazen.

      „In a deficit country, the deficit is the air with what this country breathes.“
      You still do not get it, Demetris: When you have spent more money than you earn, sooner or later you have to cut back. If that causes hardship, get your government (which you claim you have influence upon) to distribute the burden more evenly. Why don’t you force them to go after the Greek tax evaders, instead of crying for foreign taxpayers to pick up your bills?

      „We DO admit our own mistakes.“
      All well and fine: but it’s not about ADMITTING anything, it’s about CHANGING things. And don’t keep repeating: ‘I can’t change my mistakes unless you give me (more) money’ – which is, in essence, what you’re telling me here. That is simply ridiculous, and in my opinion only a psychological pretext to continue with your old ways.
      Don’t make lofty plans for the whole of Europe, trying to sweep the specific Greek problems under the rug, like Prof. Varoufakis is doing (saying that reforms are nice, but not urgent): tackle the very specific problems in Greece, and do it now, instead of promising to do it in some distant future! Not because I want you to do it (I couldn’t care less!) but for your very own interest.

      „You have to understand that by cutting everything during a global recession, nothing is resolved. Everything gets worse.“
      What YOU don’t understand is that you can’t go on forever living at other peoples’ expense. Eventually, even stupid folks like the Germans (Finnish are not so dumb – http://yanisvaroufakis.eu/2012/06/07/solidarity-euro-style-finnish-loans-ecb-bond-purchases-efsf-tough-love-and-assorted-horror-stories-from-the-postmodern-euro-workhouse/) will revolt against their taxes being spent for foreign peoples’ wellbeing. Cuts are hard, no doubt. But on the other hand there is no, or at least not much, REAL acceptance (reflected in deeds, not words!) in Greece, that things must change. Too many people seem to put their trust in some nebulous schemes (like the Modest Proposal proposed by Prof. Varoufakis) for „Europe“.
      Psychologically, I can understand that: everybody prefers their own illusions (that it’s not really their fault, that it’s actually one big “European” problem etc.), to reality. But while common folks are like that all over the world, educated people like you should TAKE A LOOK AT THE FACTS: e. g. how much money has actually gone directly to Greece, and how much was used to pay YOUR debts back to the banks.

      Instead, you expect us to pay twice: Even more money to Greece, and at the same time (you don’t “expect” us to, but we would have to pay:) money to save our banks, because Greece cannot repay its debt. Don’t you think you’re expecting a little bit too much from your fellow Europeans? Basically, you (plural) don’t want to take ANY responsibility for the debt incurred by the Greek state.

      „This country will then have to sell everything. NOT ACCEPTED.“
      Electricity companies, and even some (few) waterworks here in Germany are privately owned. Why shouldn’t they be in Greece? If you don’t have a personal interest at stake (like being a worker in one of those companies) I conclude your statements are reflections of the public discussion in Greece, which believes it to be a matter of national pride for those companies to remain state owned. But why? Who benefits? First of all, the political parties: holding sway over those companies gives them clout to distribute favors to voters: jobs or others. You think that’s economically healthy? Did it ever occur to you, that „national pride“ might only be a pretext, a propaganda slogan, used by the old vested interest to rally you (plural) behind their flag? And that you (plural) will lose, not gain, if you fight, in effect, for their cause?
      Bluntly speaking, you (plural) are telling all your fellow Europeans (like me): „Sell your own houses (waterworks …) and give us the money, so that we can keep our property“.
      Did you (plural) ever give it one single thought as to how that might look from the outside, from „my“ point of view? How your fellow Europeans would just be thrilled with demands like that?

      „As for your money, you still fail to understand that capital flows. Everybody’s money leaves and is used in many different ways. One of these is investment. This is the most logical use.“
      Your first sentence is absolutely meaningless. Question is: Whose money flows where. I want my tax money to flow to German roads, universities etc. – not to Greek tax evaders, and not to people who crave other peoples’ money so that they can keep their property. You were talking about assets before, but there are no Greek assets that you (plural) are actually willing to sell. You want it all: Your assets plus my money. That certainly does not conform to my idea of European solidarity. Create the right conditions to attract private investment, and the money will come. If you don’t want to do that, don’t ask foreign taxpayers to help you.

      „Haircut did things worse.“
      Even complaining about debt reduction being granted to Greece, just to avoid having to say (or think) “thank you” to the banks? Or what, in your opinion, should have been done instead to (partly) relieve YOU (plural) of YOUR debt burden?

      „You also have to understand that everything is interconnected. Even in corruption. Corruption is everywhere.“
      More or less – and that’s where the difference is. In Greece, there simply is too much o fit.

      „At the beginning, the money could be used for investment, not for covering the banks. Now things are even worst. So, one sees, that the plan was never to help a country.“
      The plan was (part of it) that Greece should change in order to become attractive for investors – foreign and Greek. How come the rich in Greece themselves don’t invest in their own country? And how are foreigners supposed to invest, of a nationalist attitude in Greece doesn’t want to sell any assets to foreigners? Talking about Europe? BS: For you (plural) it’s about your country, and nothing else. Europe for you is just a cash cow to milk! You want to share my money, but not your property!
      Go get the reforms implemented, and don’t tell me you need money to remove legal restrictions hampering investment! Tax-funded investment is not the solution, because it will be politicized investment, and that is exactly what has been a problem for Greece before! You need (like anybody else) profitable investments, not more roads from nowhere to nowhere!

      „What is this? Covering the banks on the backs of the citizens, so they won’t be hit by the crisis?“
      Like I said: you want the money twice: We save our banks, giving them the money that Greece owes them, and still give that same amount once again to Greece. Clever idea!

      „A country has surplus regions and deficit regions. The EC is like a country. If that country has problems (mismanagement of the euro structure), it can’t just press it’s deficit region to hide the broader bad truth behind the bad truth of the deficit region and in a way that those in the surplus region do not get practically affected at all.“
      Nope, the EC is NOT like a country. If you felt the EC were your country, you wouldn’t say stuff like: „This country will then have to sell everything. NOT ACCEPTED.“ You’re saying that because you feel that GREECE is your country. Which I perfectly understand and agree with. But then please don’t try to fool me that you genuinely think that we’re all brethren of one country, when you are employing that argument only in order to extol money from your ‘brethren’! I’m not saying you’re a liar, Demetris, but you this argument is not intellectually honest. You make very little effort to argue consistently, instead you put forth in the respective context whatever seems to justify your claim to MY money, even if you say the exact contrary in the ‘next’ sentence.

      „Whatever that country does to its deficit region, the problem doesn’t go away.“
      Don’t sit on your fanny and wail about how „it ain’t gonna work, unless you give us lots more dough“! Go give it a try, damn! Why do you think you are special compared to the Irish or the Portuguese? People outside Greece are getting the impression that you don’t WANT the problems to go away, so that you can forever live on other peoples’ money. And they don’t like that – not just in Germany, but in all of Europe!

      „And it sure won’t go away by throwing good money after bad in the deficit region.“
      Right. So make sure that the money you actually DO get (which you tend to forget) is being used wisely, and make Greece an attractive place for private money to come in and be invested!

      „You just want to accept that everything is Greece’s fault. You like it or not, we all share the blame. And especially those that control the capital flows. And it is not Greece.“
      Fact is: (Pre-Troika) Credits were not forced upon Greece. The country itself had applied for them. And no matter by whose fault the problems originated (definitely not mine!): they have to be tackled NOW. No use to misuse the „we-all-must-share-the-blame“-argument as an excuse for Greek inactivity – which is what in effect you (plural) are doing!

      „Also, for the deal about cutting production, you should find the EU treaties. I do not have the links handy. If anyone reads this and has the source, please post the source. What I am referring to is not media propaganda. Everything got worse in the euro.“
      There IS NO „DEAL“ about cutting production other than in your fantasy – or in Greek media- and/or party-propaganda! What there has been (and what you – singular or plural – are getting mixed up) is that the money that Europe has been sending to Greece since 1980 or so [as a gift, trying to help!] has not been productively invested by the Greeks, but used as an easy source of income. Michalis Chrysochoidis, your former minister of economics, has said so in an interview to the German FAZ newspaper (http://www.faz.net/aktuell/politik/europaeische-union/griechischer-wirtschaftsminister-die-gesellschaft-ist-reifer-als-ihr-system-11642768.html), and surely he and/or others have said the same in Greece. He didn’t say “a deal” destroyed your economic activities; he explicitly said that European help (gifts, not credits!) wrecked productive industry etc. in Greece.
      Which obviously, with the common folks, got contorted into the notion of a „deal“ and then got directed (not surprisingly, when looking at Greek media and party propaganda – including many arguments by our host Prof.. Varoufakis!) exclusively against Germany.
      But what to expect from common folks, in Greece or elsewhere, when even an educated person (judging by your fluent English) like YOU, Demetris, doesn’t bother to get the facts straight?

      „And when I am referring to German media propaganda, I am referring to the preconceived notion, that the Greeks used you, by being lazy, by stealing your money, by ALL avoiding taxes etc.. So whatever many say, even you, they try to fit every explanation to that preconceived notion. If you cannot understand that this is too much to be true for a whole nation, then I am sorry again.“
      Of course I draw most information about Greece from the German media, but when you say (like I do sometimes about you) that my position does reflect any such propaganda, please tell me what PRECISELY it is that I have said, not what (in your opinion) the German news media do (or don’t) write.
      Nobody in their right mind is saying that ALL Greeks are tax-evaders, corrupt etc. Fact, however, seems to be that there is more of that stuff going on in Greece than anywhere else in Europe. Another fact is that Greece stubbornly refuses to implement reforms that the Irish, and even the Portuguese, had to swallow and did swallow. They’re having their problems too, but they’re not sitting on their butts saying: ‘Unless you give us lots more money, we won’t do a thing (other than cut pensions)’.

      In another blog (http://kantooseconomics.com/2012/05/31/no-diamonds-without-pressure-yanis-response-part-1/#comment-7811), a commentator „Dudi“ more or less phrased your position:
      „May I give an analogy that could illustrate Yanis position that “I can tell you dear reader that the severity of the cutbacks in Greece have reduced our society’s capacity to reform”… It’s like having an obese person. His life is in danger from his excessive weight and lack of physical exercise. Thus his cure is cut back on his caloric intake and start an intensive exercise program. However it seems the program in not properly balanced, they are cutting so much of his food (=calories) that the person starts to feel weak while at the gym ….. and can’t perform the maximum. Of course he doesn’t pass the physical exam after one month on the program and they order more cut-backs on his caloric intake and even more intensive exercise. By this point the person has trouble to even walk up the stairs to go to the gym… something has to give, for this person to lose weight at a healthy pace and get the benefits of the exercise. Right now we are losing the patient.“
      My answer to him is my answer to you in short:
      „Mind if I phrase your simile in a slightly different way? Like: “They” prescribed a mixture of sweet and bitter tasting pills, of which the patient decided unilaterally, that he would only swallow the sweeties.“
      And now you (plural) complain, that „our“ medicine made things even worse for you. I don’t see where that’s fair. But fairness or not: The REAL problem is that you (plural) delude yourselves, and thereby forego any chance for change. You are SAYING that you understand the problems, that you accept responsibility for them, but you don’t seem to be doing very much (of what you could do) to rectify them!

      Not that I really care what you (plural) do or don’t do: your country, your problems!
      I just don’t want my politicians to waste my money on foreign countries, and certainly not on what seem to be lost-causes. However, if (or as long as) they do so, I certainly do not blame YOU for it.

      On the other hand, if you (plural) don’t wake up to the realities of life (being that by and large everybody is responsible for their own fate), you’ll see a rude awakening one day. Read the commentaries of Klaus Kastner to find out how things could even get worse, and a lot worse, than what they are now.

    • cangrande

      Well then ,i am a bad bad Greek.

      No cangrande you look at the facts.

      What you refuse to see is that your country’s surplus is a direct consequence of the deficit of the gips.

      As i said you go ahead and study a bit of the mechanics of economy first.

      When i say that EZ is like a country i meant as an economy ,not that the countries are like family. Public sector ,private sector ,current account balance. A country has either one surplus and two deficits or two surpluses and one deficit.

      In EZ as one country ,Germany as a region has all three surpluses which ofcourse is possible only if another region supports the deficit.

      We are the deficit for your surplus.

      Now you have paid more from your taxpayer’s money for a policy that just does not work except for one purpose. To cover the banks and for your country to be exempt from the crisis.

      Your country would have paid anyway. But it wouldn’t have been taxpayer’s money. It would have been money from the profits of your businesses due to the deficit of the gips. You should be glad the crisis hasn’t hit you yet as much and ashamed that your government is using the periphery for your sake.

      And so you believe that you pay now your taxpayer’s money for the gips ,but you pay for the covering of your own country’s manipulation.

      You go ahead and believe what you want now.

    • @cangrande & Demetris

      Sitting on a beach in Chalkidiki, I have just read this ping-pong between cangrande and Demetris. Every student who has ever passed through Economics 101 knows, of course, that the facts support cangrande’s arguments (and Greek emotions the arguments of Demetris).

      Whether a professor grades cangrande with A or F depends whether the professor is dedicated to objective thought or pursues a hidden agenda.

      Let me remind everyone: the EU has been a transfer union from the start, transferring funds from richer to the poorer regions. The amounts transferred were to the poorer regions proportionally much greater than the Marshall Plan. Some countries have consistently been net payers (i.e. Germany) and others net receivers (i.e. Greece). Greece has been the second-largest recipient of EU-transfers, overtaken only by the four-times larger Spain.

      Furthermore, in 2001 (before the Euro), Greece had foreign debt of 121 BEUR. Today it is more than 400 BEUR higher. Foreign debt represents the amount of other countries’ savings transferred to Greece as loans.

      So wherever you look today in Greece: nice villages which were ghost villages 40 years ago; first-class highways which connect the coasts; Olympic glories (some of which are no longer glories); SUVs and cars which no longer have import duties; feta cheese from Denmark; etc. etc. – all of this is thanks to the above monies transferred to Greece. Not to Greece’s own value creation because that declined markedly during this period.

    • I’m not a priest, Demetris, eager to make you confess your sins.
      All I’m trying to achieve is for you (not just you as a person, but, more important, all potential readers of our dialogue) to take a realistic approach.

      Problems are different in each country: In Ireland it was the banks, in Spain a housing-crisis like in the USA.

      As for Greece (or the current-account-deficit countries in general), thank you for having directed my attention to a subject that is also being (self-critically) discussed here in Germany.
      Since it also fit into an (English-language) debate on a German blog (kantooseconomics.com/2012/06/11/γερμανία-ο-νέος-εχθρός-της-ελλάδας-yet-another-respon/), I have conceived my “answer” to you for that other blog and simply repeat it here:

      My discussion with “Demetris” in Varoufakis’ blog has led me to read the Wikipedia-article “Greek government-debt crisis” (http://en.wikipedia.org/wiki/Greek_government-debt_crisis).
      In a lengthy chapter this also deals with the criticism of Germany’s role (http://en.wikipedia.org/wiki/Greek_government-debt_crisis#Criticism_of_Germany.27s_role), which is by no means just a Greek specialty.
      Demetris himself is citing this http://media.economist.com/sites/default/files/110711krugman1-blog480.jpg Krugman-diagram of German current account surplus vs. South European deficit.

      Question is how to answer this criticism, which even in Germany is fairly common (Thomas Fricke – FTD – is to me the most prominent, but by no means only example).

      Klaus Kastner (http://klauskastner.blogspot.de/2011/12/myth-of-greeces-being-victim-of-germany.html) has shown that the direct influence of German export on the Greek calamities is rather limited (at least for the period 2007 passim).
      However, I could still conceive of (circuitous) mechanism of how German current account surpluses may have fed South European deficits. Simply stated (in reality it must be even more circuitous) it could be modeled like this:
      Germany has a surplus with, say, China. The German banks loan the money to Greece; Greece buys stuff from China. So China might run a deficit against Germany, while being even with the Eurozone on the whole.
      But now Greece would run a ‘detour-deficit’ with Germany.

      Problem is the tacit assumption (for another example of an unchallenged tacit assumption in the economic discourse see my Soros-posting – http://beltwild.blogspot.de/2012/06/wie-george-soros-in-seinem-vortrag.html) behind such blames (more precisely: such facts being turned into accusations).

      (Nearly?) always unspoken, the critics imply that “without the deficit, German economy would be at a lower level, German unemployment be higher”.
      While the academic discourse does have incorporated this narrative (Varoufakis for sure, but I guess also Paul Krugman etc.), science doesn’t seem (from what little I know about it) willing to reflect the deeper theoretical implications (and this is part of my intellectual frustration with contemporary economics).

      Adam Smith has taught us that a market-economy is a win-win-mechanism.
      But when you claim that “there cannot be an economic boom without somebody else running a deficit”, you’re considering it a win-lose arrangement. You are, by the logic implications of your thinking, challenging the very foundation of our economic thinking.

      So, all those savants are content to say “The German taxpayer should foot the bill” (or the alternative inflationist answer: the money owners should pay). None of them seems ambitious to look for a theoretical foundation for their political demands (or do they suspect the reason behind appearances, and just don’t want to come to the open with it?).
      However, those who refuse to be content with the “winlosionist” logic, will ask questions like:
      1) Who is the winner/loser in that game? The gains (in paper money) from this game were private; the bill is to be footed by the taxpayer.
      2) Can that go on forever, as logically it would have to?
      And above all:
      3) If the “winlosionist” assumption is true: How come the surplus countries have not imported more, and thereby benefited in real welfare instead of illusionist paper money? (I. e.: why didn’t we see a win-win-situation).

      The only logical answer I can find is underconsumption (and readers of my previous commentaries here who feel that this explanation is an obsession with me are cordially invited to come up with their own alternative working hypotheses).
      The (money-)”rich” (including Chinese – and also American – workers saving for their old age, and “Riester”-savers in Germany) neither consume nor invest all of their money.
      But that is what you need for a balanced (World-)economy.
      So you’d have to find ways to reduce the accumulation of money
      - Through taxation,
      - Through inflation
      - And, in financing old age pensions, a return to (or an establishment of) PAY-GO financing (Ger.: Umlagefinanzierung) instead of capital funding (Ger.: Kapitaldeckungsverfahren). Interestingly enough, Ben Bernanke himself has suggested in a speech some time ago that the Chinese government should establish a public old-age insurance as a means to reduce Chinese savings surplus. What he didn’t say (didn’t even think of, and from an American point of view wouldn’t even want to think of) was that a complete surplus reduction requires a Paygo financing of pensions.

      But whatever the theoretical conclusions of the winlosionist position may (turn out to) be: I DO NOT WANT MY TAX MONEY TO BE LAVISHED UPON OTHER PEOPLES! That’s not what I’ve been working for in my life! If you feel that there is a basic disequilibrium lurking behind our economic institutions as they are, please rectify it in ways that do not imply my money being wasted for other peoples!

    • cangrande

      I do not disagree with Klaus.
      As Klaus Kastner said above these transfers helped. But i certainly do not see them as a gift since i as a citizen didn’t see anything.
      Quality of life fell in Greece.

      You cangrande are not a priest for sure and i do not need you to point to me the mistakes of Greece.

      We have said again and again that the mistakes of Greece are true.
      And i for one want the changes.

      We have also said that the policies that are being followed now only worsten the situation and it has already been proven in the rest of the south. This is the natute of this debate.

      You do not want to have your taxpayer’s money to go to a lost cause ,i do not either.

      We disagree on the way. Do not get confused with that.

      I told you again and again that you try to support the policies of your government by constantly saying that we do not want the changes. WE DO ,but certainly not with a policy that already is proven wrong and that asks from the citizen to die for the mistakes of others.

      The changes will take place ,not by the same people who brought this.
      Again that is why we have the elections.

      We are not the guiney pigs of the elite. You want reforms? You do not defamate a whole nation and you certainly do not hide the truth about how exactly the money are used ,by Greek ,German ,other elite.

      You also do not ask full concession of sovereignty and only from the periphery to have austerity for all Europe’s corruption.

      Again ,we are willing to pay the legal debt. We do not want to escape it. But what they ask is for the periphery to cover everybody.

      There is nothing else i have to say really. Everybody (i hope) knows the dire straits we are in.

    • And not to forget. The debt in every country has become bigger with the so called bailouts.

      This leads nowhere. For noone. And it has nothing to do with Greece alone.

      Once more. While the reforms are needed for Greece and other nations ,now they are an excuse to cover everybody.

      The citizens of the periphery are asked to accept ,that they personally are responsible for the irresponsibility of the whole system and that they must now lose everything they have worked for.

      Sorry mate. NO. You should not want to cover for corruption everywhere. And you like it or not ,you want it or not ,most corruption in Greece was by German and French multinationals together with the Greek elite.

      You can not possibly ask those without power to give up their lives.
      Ask from those that have the power to reform themselves first.

    • Makis Voridis… For those who are not familiar with the Greek political scene, he is a person whose best man is Jean-Marie LePen himself (yes, the French ultra-nationalist extreme right-wing nut), who was roaming the streets of Athens in 1985 yielding impromptu axes and, in collaboration with the riot police, was attacking left-leaning people. He is now a prominent and very highly regarded (by the pro-bailout corporate media) member of pro-bailout party Nea Dimokratia (New Democracy). Before he joined New “Democracy”, he was (along with the other “gem” Adonis Georgiadis) a prominent member of extreme-right wing and antisemite party LA.O.S. (Popular Orthodox Rally), whose leader, Georgios Karatzaferis often flirted with the violent neonazi “Golden Dawn” group. And before his sting with LA.O.S., Mr. Voridis was the leader of a fringe extreme-right wing racist party.

      These are the people that are supported by the pro-bailout commentators here. I rest my case.

    • Herretic:

      Yes, Voridis has an ugly past. But the point here is about positions not the person.

      Stathakis has no photo of chasing fellow students with an ax, but despite his calm demeanor the economic positions he advocates are mostly incomplete and with very serious holes. One gets the impression listening to Stathakis that he is in charge of the topic because he is calm. But once you examine what he says there are serious gaps in his advocacy.

      Greece can not solve her most serious financial crisis though domestic amateurism. We have seen the damage done by the Merkel amateur is promoting the wrong solutions. Pilling up amateurism on top of amateurism is both ridiculous and a disaster.

      Obviously Voridis did not participate in this debate as a paragon of virtue. He did so as an attorney with certain ability for rhetoric. However Voridis is not the architect of ND’s economic and financial policies. He is just a mouthpiece. Stathakis on the other hand, and a small circle of other Syriza specialists, is the personification of Syriza’s economic policies. And unless you see it differently, I see a reasonable and calm man with an underlying “let’s make it as we go” economic policy.

      This is precisely the issue of substance we lack in our domestic politics. We tend to judge candidates as a beauty contest and immediately dismiss some one like a bunch of gossiping ladies who like to drink tea and bake cookies while they systematically dismember all members of society except themselves; “oh, let me tell you about so and so…did you know…?).

    • “………….who like to drink tea and bake cookies while they systematically dismember all members of society except themselves; “oh, let me tell you about so and so…did you know…?).”

      And do i have a story to tell you about Dean Plassaras….What?….He is here?…..Oh ,what a good man ,what a wonderful man…. :)

  14. Sign of Italy’s problems: it’s tax revenues for the first four months of the year were 3.5 billion euros short of expectations

    That’s austerity for you. An ever shrinking tax basis or the “chasing your tail” syndrom.

    • Exactly. There’s just no logic in austerity. Austerity is imposing heavier taxes on the masses (middle and lower classes) while lowering their incomes AND giving tax cuts to the super-rich.

      Whoever still supports austerity is simply incapable of the most basic arithmetic of the kind taught in elementary school. As for logic? It would be more plausible to expect Scientology nutjobs like Tom Cruise to be reasonable than it would be to have the same expectations from neoliberals and libertarians.

    • You guys just want ot live the life of the hard on the expense of the others.

      I am so fed up with that. If had to chose today between scenario A) where I make 10k per month and I have to give 2k to the PIFGIBS and B) where I make 7k a month, I would chose B! Just to annoy the PIFGIBS

    • @No EU D

      I wont even bother explaining to you why austerity is not working.It actually insults avg intelligence if one requires explanation over this.But i have to say that we already know that all you and your friends that hang here want, is “to annoy the PIFGIBS”

      We got the message already, in case you havent realised….

    • I don´t argue that austerity is working for me. In the contracts both parties agreed to deliverables. And many of the deliverables on the side of Greece were not delivered. While on the other side complied with their deliverables.

      You see this does not work. The only thing that works is that everybiody is responsible for his own house. Otherwise everybody is responsible for everything and this results into that noone is responsible for anything. This experiment is called socialism and was carried out in many countries in Eastern Europe and East Germany. In case you want to how it worked, please ask some of the people whi enjoyed the achievements of the workers paradise.

    • n eu d

      Germans know about hardship more than Greeks?
      HAHAHAHAHA.

    • Yes terrible. German exports to the Euro Zone were doen 3,6%.

      BUT they were up 10,3% to countries outside the EU. It is time to leave the sinking EZ ship!

  15. Let’s get something straight.

    Regarding present Greek politics, the correct position is to be: 100% anti-memoranda. Because the arbitrary austerity measures are flawed beyond reasonable doubt.

    How this position – which was originally developed and practiced by Samaras – has become now Tsipras’ new profession by default it’s an issue worth examining.

    The entire Syriza debate is now anti-memoranda based.

    If you accept the virginity thesis propagated by Syriza, in essence that since Syriza has never signed anything – even when asked – in support of the memoranda, then perhaps Syriza on the “innocense” basis is better equipped to lead Greece.

    But if you accept such “clean hands” thesis then maybe you wish to replace the national team of Greece in UEFA 2012 with the Kolopetinitsa football team (an imaginary small village in Greece), on the basis that Kolopetinitsa never lost an international game yet, and still expect the same or better result out of the Euro 2012 competition.

    Exactly, the argument has become that ridiculous and completely framed the wrong way. Because the correct framing is not whether Tsipras has the right positions or not (copied from others in many instances), but whether he can execute them and carry them through.

    • “But if you accept such “clean hands” thesis then maybe you wish to replace the national team of Greece in UEFA 2012 with the Kolopetinitsa football team (an imaginary small village in Greece), on the basis that Kolopetinitsa never lost an international game yet, and still expect the same or better result out of the Euro 2012 competition.”

      Not really.The equivalence of Samaras signing the memorandum, with Greece in UEFA 2012, is not a team that has lost before.Rather its a team that rigged a match for huge bet profits.So if you want Samaras even though he let the memorandum pass, you might aswell accept Juventus to play for Greece this summer…

      This example after all helped me realise the basis of your opinion.You simply consider Samaras as legit and the only reason he signed the memorandum was that there was no alternative choice…I respect that opinion,but i didnt really expect to hear something like that coming from someone who is younger than mid50s – early 60s, or who isnt part of the corrupt system. (and i suspect that you are neither that old nor corrupted).

    • “whether he can execute them and carry them through.”
      This is the basic question in choosing a political party in a vote. It is not enough to like the promises, one has to gauge whether the promises can be kept.

      The Tsipras patform promises a return to my pension income to 2009 levels! I am down 50% due to cuts and extra taxes, what an enticement.

      I do not believe anybody can deliver such promises.

      And to your previous question, of course we are down a hole increasing a debt that can never be payed, and that this is the Merkel stupidity. The point is that we are now in 2012. We should have rejected the memorandum in 2010, that was the time before the debt became like the monopoly game money, the gamble there was feasible because we have since then not only increased the debt but lost whatever productivity we had, irrevocably for the short term future.

      I believe that the reason we started an uncontrolled slide then, in 2010, is that we had a pusillanimous political leadership which were swayed by the specter that Greece would bring down the eurozone. The Merkel package, stupidity for our economy, bought time for the eurozone to secure our debt out of the markets in the central bank , no matter if it is growing. They can now face with much smaller risk, as they think, to throw us out, like την τρίχα απο το προζύμι.

      If we play their game to the end, the debt will beψομε monopoly money : if the eurozone holds they will probably make it a 100 year one , like τα δανεια της αγγλιας, if it dissolves we will pick up our pieces and go on.

    • Crossover:

      Don’t be so eager to paint Samaras as corrupt. He has been largely an outsider to the ND party, he never participated in any negotiations with the Troika, nor did he exercise any effective government during the Papademos transitional period. These are the facts.

      Trying to prove Samaras complicit by osmosis to me is an act of desperation. The only serious issue for the next election is this and only one person can deliver it. You guessed it who:

      Anna: You are right. As a pocket book issue the optimum time to have pulled what Tsipras is attempting now would have been early 2010.

    • Dean

      For me, its enough to see all the kolotoumpes that have taken place in ND during Samaras’ presidency.Hell the fact that he allowed A.Georgiadis join the party,alone,is enough for me.You ever seen what he has been saying about ND and Samaras when he was a member of LAOS ?You’re not expecting me to believe that he welcomed Georgiadis to ND for “the sake of saving the motherland”, are you ?And what about Dora ?
      Talking about acts of desperation,look no further…That man is desperate to have a chair at Maximou.
      90% of politicians have a tendency for kolotoumpes….It aint no damn coincidence that out of this 90%,its Samaras that is nicknamed Komanetsi…..

    • Yes, I think you fail to understand politics, Dean. Judge politicians by their actions, not by their words. Samaras has never been anti-memorandum, other than that he was unhappy to have been tainted through association with the government of the day and their signing of it. He also “signed” it, after making a big public fuss about how he opposed it. Now he is pretending that Tsipras is copying him – LOLOL.

      The fact is that Samaras is neither anti-memorandum nor pro-memorandum. He is essentially pro-Samaras. Nor is he patriotic or antipatriotic: Greece is merely a convenient (and the only) playground for these privileged morons (Papandreou, Samaras, Bakoyianni) to play out their games. They have no connection to the Greek people, other than through corruption and patronage.

      Of course, Samaras does have an older record. He is the politician who started the ridiculous nonsense about “ownership” of the name “Macedonia”. Given what a disaster this has turned out to be for both Greece and the country concerned, this should be enough to anyone to realise that the guy is a narcissistic moron who will do nothing for Greece.

  16. Dear Yanni,

    I wanted to contact you for a long time. I follow from time to time your blog and I read your book “Global Minotaur”. You have a talent to explain complex matters in simple words and you have helped me understand better the current financial crisis. For sharing your thoughts with us, I am thankful. However since I appreciate your intellectual capacity, I will be harsh in my criticism.

    I believe you make some serious mistakes in your political analysis. Your first mistake is narcissism. Blinded by your conviction for the correctness and soundness of your economic theory, you started believing that you are messenger of the only correct political solution. However economic theories do not change the world directly, they influence and are incorporated into political ideas and practices. Politics is the art of possible; it is about balance of power, making compromises, building coalitions, managing misconceptions, choosing the proper timing and not about correctness of economic ideas. At the moment we should agree that Europe’s leadership is not ready to change drastically and decisively its course of action. The Greek drama is not seen with sympathy by the average north European tax payer who pays for the Greek rescue packages. Our problems are not seen with sympathy even from our neighbors, who do not understand why we feel it unfair to become like Bulgaria or Romania. For them we have not been better than they forty years ago and they consider us lucky being in the western world. Europe’s problems might be deep, but if they are so weak to be black mailed by a Greek leftist group like Syriza, then this is probably not the proper sign to the financial markets. Last I would assume that the financial markets require something else than the implementation of the program of Syriza for Europe in order to stop betting on the collapse of euro.

    Your second mistake is myopia. You have focused so deeply into proposing a solution for the current European crisis that you forgot that this crisis will become history one way or another. There is nothing necessary wrong with this approach as long as you have remained an economist or a financial analyst. However when you are becoming a political person, then I would have higher expectations from you. If Europe applied your modest proposal and the crisis was over, would this mean the Greek problems would be over or we would be again the weakest link of euro zone in the next future crisis? Even if we do not have fiscal deficits because of some new/temporary European funds, does this mean that the trade deficits will automatically disappear? Do we need to reform our tax collection mechanism, our juridical system, our public services and improve our competitiveness? By focusing your approach what the other countries should do for us and not what we shall do for ourselves, you have provided an alibi to all of us that would prefer to blame someone else apart from ourselves.

    Your third mistake is political oversimplification and impatience. Apparently you do not consent with the program of Syriza, since you mention “that it is not worth the paper is written on”. You consider that you agree with Syriza since it is the only party that probably gets it; that we have to stay in euro zone otherwise Europe will collapse. I followed your economical analysis and I tend intuitively to agree with you that the cost of euro zone would be extremely high if Greece leaves the euro zone. However if Europe surrendered to the demands of a leftist party in a small country of the Euro zone, then this signal of weakness will result to its collapse anyway. You are pushing impatiently for a maximalist resolution when you know very well that Europe cannot make progress in big steps. Euro zone could collapse tomorrow or survive experiencing a deep recession because it delayed with the proper measures. On the other hand history is full of examples where once things took a wrong course of action they continued the same course due to inertia despite the opposite interests of all involved parties. Proposing to vote for a party (actually a group of parties) that does not have program since it was 5% till previous election and we are looking from them to save us or negotiate on our behalf sounds naive.

    At this moment we need leaders that I am afraid we do not have. Although change of the political system of our country is required, it seems that sooner or later (but within the year) we will bring to power a hybrid of a coalition of radical leftist parties with the deep PASOK of the trade unions that found political shelter in Syriza.
    May God help our country!

    • Spot on, Adam F.! This is the best comment I have ever read on this blog!

      “Do we need to reform our tax collection mechanism, our juridical system, our public services and improve our competitiveness? By focusing your approach what the other countries should do for us and not what we shall do for ourselves, you have provided an alibi to all of us that would prefer to blame someone else apart from ourselves.”

      That is exactly the point. I am less diplomatic than you: Professor Varoufakis is a shame for the Greek people because he offers them nothing but an illusion that everything is just fine as soon as Europe’s pays for Greece infinitelly without conditions. In the professor’s view, Greece is a victim of a mal-designed Euro but not of the Greek system itself. The professor is the kind of Greeks which stand for the Status Quo of a powerful, corrupted Greek state. Pro-reform, self-critical people like you on the other hand are Greece’s only hope! I wish you good luck and the very best!

    • tmk

      You are totally off.
      What the professor has said is that WHILE the malignancies in Greece (and any other country for that matter – including Germany) must be eradicated ,the origins of the crisis are found to the broader frames of the system.

      And this blog and the MP deals with that.

      But i guess you need to slander in order to come ahead.
      —————-
      —————-

      Adam F.

      “Do we need to reform our tax collection mechanism, our juridical system, our public services and improve our competitiveness? By focusing your approach what the other countries should do for us and not what we shall do for ourselves, you have provided an alibi to all of us that would prefer to blame someone else apart from ourselves. ”

      Ofcourse we need more reforms.
      You are presuming that the professor does not support the reforms ,because the MP talks about the EZ architecture.

      This is your problem and you provide an alibi to yourself if you make such presumptions.

      Shouldn’t the man do his work ,because certain people will misunderstand him?

    • Since most of y’all austerians like govt – person/household analogies i have one for you.
      Greece is a teen that doesnt know how to swim.Unacceptable for a 15 y.o. right?Well guess what,a Tsunami took place and now there’s water all around the damn place.

      Now lets see what you are claiming.You claim that its the teen’s inability to swim,that caused the Tsunami.Not only that,but now that the teen is about to get drowned if somebody doesnt help, you demand that he should learn to swim RIGHT NOW.

      Conclusion: Y’all should never work for the coast guard….

    • Demetris

      Regrettably, the world is so long on experts who offer solutions for the Eurozone’s crisis and Greece is so short on experts who offer solutions to Greece’s problems. One obviously needs both, but I wouldn’t leave the game of proposing solutions for Greece’s problems entirely up to Alexis Tsipras (who is, so far, the only one who has come up with a plan, a bad one perhaps but a plan how he would attack Greece’s problems!).

    • Klaus Kastner

      Yes ,indeed. Actually many of the reforms that have been asked are a MUST and we would love (i certainly would) if Troika wanted to help.

      Now ,if they hadn’t ask for concession of sovereignty and if they were coming in Greece to supervise the reforms and not the money laundering through austerity ,i would have washed their feet. Well ,i wouldn’t but you get my point.

      It is not like they wanted a good financial deal as well. This is economic terrorism. Either on purpose or by mistake.

      But i am saying again that reforms MUST take place.

      I wouldn’t mind seeing the organisational efficiency of the Germans turning upside down all the ministries in Greece. That would have done miracles to the relationship of the two countries. And let some Greeks -not so Greeks- shout.

      Unfortunately we know this is not the case.

      I am one of those that when i heard about reforms i said “YEAH ,FINALLY”.

      But little did i know about what was coming disguised as a deal for all.

  17. The simplest analogy of the status of Greece now is of the ski slope: We have lost our skis and are sliding down the slope; defaulting is a sure thing. The only choice we have is whether we will tumble down every which way breaking legs and hitting heads ( the Syriza choice) , or will sit on our bottom and slide down trying to keep all our faculties intact ( the ND choice) hoping that something may change in the EU in the meanwhile .

    • Unless Syriza gets outright majority (is that even possible?) , instead of sitting on your ass with ND you may indeed be i a much better position.
      Let’s say that Europe changes as you hope it might (in factSyriza might precipitate sucha change of course) and Syriza fails to take advantage of the new ircumstances, it would be very easy to have any other more “responsible” party to take them down.
      All in all, it’s a win-win situation whereas with ND you’d be still sliding down the hill.

  18. Κυριε Βαρουφάκη, you are totally underestimate the importance of structural reforms.
    For a society is a quality target to employ 190.000 teachers many of which earning only 600€ and working less! than 15 hours/week or 100.000 earning 1000€ (especially those of 600€)?
    In many european countries a teacher is not evaluated and is not working under a specific contract? In many Greek professions the net income is far higher compared to many european countries?
    Law firms, accountant offices in Greece demand more money for the same job compared to world wide firms in London or Paris.
    Today even a qualified surgeon earnings are less than 1400 € working even 50 hours ( without fakelaki) in hospital with nurses – patience analogy no less 1 to 30 but we prefer to employ 50.000 people working in very small munincipalities with a few working duties and scarce digital services.
    To the main point. The Greek crisis is not realated to European crisis at any case.
    Why those Irelanders decided to vote in favor of the idiotic Fiscal Pact as you say?
    People in Ireland understand the RULES of a very simplistic, but extremelly dangerous game.
    You have a clue about the importance of irish presence in US? The Americans stressed in many ways to Irish not to choose direct confrontation with Germans.
    Could they easily say no? Yes, but they don’t.
    Irish understand how Germans and some others europeans think.
    To put it simply Germans will behave us with huge stoniness in order to isolate us “as the bad examble”, if SYRIZA especially or ND try to change drastically huge parts of loan agreement.
    You tend to believe that eurozone will colapse if Greece exit europe.
    The Germans will prefer to loan Spain and Italy with 0.1% than to help us under our possible threats.
    This is THE reality.

    PS: Ireland with be back to markets by 2013 no matter what will happen to Greece.
    I hope your thoughts not to hide the belief that Greece will better perform without Euro!

    • Do you have any idea how much work is involved in the teaching process? For every hour taught, a teacher needs to work at least two hours beforehand at home (and no, s/he doesn’t get paid for it). I’m always amused by people who shoot off their mouths about stuff they clearly don’t know at all.

    • @ Αιρετικός I am also amused about the fact that in Greece only the Physics teacher teaches only physics and not chemistry, the history teacher only history and not Philology etc
      As Αιρετικός with “broad knowledge” of teaching process you probably know that Greek teachers are THE only without any kind of evaluation but only self evaluation.
      Does this happening in many other european countries?
      A comperative analysis with other countries will also prove to you that a German teacher works usually more than 45 hours/week not only in teaching process of course and he is preparing himself also for many hours without having 3 months vacations as many Greek teachers.
      After all this you prove my ignorance with one specific example or yours volatile ignorance?

    • MS

      Are you sure you are talking about Greece?I myself had a teacher that taught us both history and composition.Also another one who taught Physics and Geography….maybe you went to krifo sxolio ?

    • btw
      Theres a weekly amount of hrs each teacher must teach.I dont know the exact number but lets say its 30.If a teacher has enough classes at the school he teaches at in order to teach 30hrs of History then he will teach only history.If the school is small,he will teach both history and say grammar,in order to reach 30hrs.Sometimes if the school is very small,he might even have to teach at different schools during the week in order to reach 30hrs.

      So really, you dont know what you are talking about…

    • Two friends of mine the 1rst is teching physics in 2 different schools, the second only history, not his expertise philology lessons.

      How do you guess my school name was “kryfo sxolio” ???
      You caught me out! :)

      PS:I would be trully delighted if you knock my socks off, on whether our educators have a single- one- 1- process of evaluation of their performance in schools?

    • @MS

      My own father taught maths,physics and biology.And after studying and passing from SELETE (now called ASPETE) he also taught Informatics.
      I have no reason not to believe what you say about your friends.But i think i already gave an explanation about cases of people teaching just one course (see my comment about the weekly hours if you missed it).

      As for evaluation.There are some people that are called “school councelors” – σχολικοι συμβουλοι.In my lifetime as a student i happen
      to have seen them in action both in elementary and in highschool.They enter the class during the lessons and they examine the teacher’s performance.They also ask the students questions.I dont know if thats enough,but thats an examination mechanism, isnt it ?
      Then again, why you specify teachers ?? Most public servants dont even have the equivalent of the school councelor…which is INDEED a very bad thing.

  19. The ‘False Flag’ of reducing the economic solutions to a pro or anti austerity stance is exactly why there has been no progress. The following solutions are my personal suggestions, based on the needs of you and not the ‘system’ that pretends to serve you. The article has been read by over 3,500 people since I posted it yesterday.

    Please share and please comment, I need your feedback to help me develop my theories further.

    http://www.eamonnblaney.com/wordpress/blog/2012/06/04/radical-proposals-not-more-of-the-same-financial-guff/

  20. I live with the faint hope that Greece stands true to its “πονηρία”. I have this fantasy that the billions of euros given to us, were siphoned off to a “special Chinese account”. To be transferred back to us with a success fee from the Chinese for destroying the Euro & Germany.

    • HAHA. Are you nuts????

      While it is funny ,using just another trojan horse ,that would only serve to add another black page in our own history.

    • Exactly this is all about!! It is a gambling voting Syriza. However, risk reward suggest that take the bet. After all is like investing in a bear market without using derivatives (in a short position) because you are a stupid conventional-traditional investor instead acting like a cold blood player. No Fear to change and become a strong player!

    • The Chinese don’t need to encourage or pay anyone for destroying the euro, as the Germans are doing a fantastic job of that anyway.

      Sadly, neither Papandreou nor Papadimas had either the intelligence or the balls to do anything smart with the so-called bailout moneys. WYSIWYG with that, more or less — a bankrupt Greece plunged further into debt by imbeciles.

    • Yes I’m completely nuts! Of course that may be because I’m an electrical engineer & not an economist. Those guys running the show are too smart for their own good…Rule No.1 If you don’t understand “the deal” – don’t buy in. Clearly our guys (ie PASOK & ND) didn’t understand the deal. Greece get RID of them!

  21. Pingback: Irish Left Review · Why Europe should fear Fine Gael-like ‘reasonableness’ much, much more than it fears Syriza

  22. Dear Yiannis.. The circuit breaker theory is all well and good but after the circuit breaker has tripped what then…..Are you saying that if we vote for Syriza this will be the end of our problems.
    If we cannot balance the books we will always be in debt. We cannot balance the books unless we implement structural reforms, and become more competitive. We cannot become more competitive unless we are allowed to compete with the same rules as other economies (we certainly can’t compete with India and China for example where the unit cost of production is far lower) and we can’t compete with other European manufacturing countries because as we have no real manufacturing left and certainly cannot now reinstate a manufacturing economy as the start-up investment will never be recouped… We are therefore doomed whether we vote for Syriza or someone else. The question is do we want the doctor to pull the plug and put us out of our misery (the Syriza option) or do we want to stay on the drip feed in the hope that in the next 10 years the real problems that have caused the system to fail are dealt with. I am not an economist professor but it seems to me that the real problems have nothing to do with the chronic and systemic problems of Greece (which merely make matters worse) but may be the result of various factors such as 1. The different state of the various economies on a global scale which have made the older economies completely uncompetitive over a vast range of products (mainly low-tech), .2. The fact that money is no longer linked to gold (and the smart boys in the US have managed to dissipate the bad money throughout the global economy) 3. That we have now become so efficient in producing goods and material that we no longer need the labour levels needed in the past and that therefore vast populations throughout the world have become and will become redundant. 4. That the consumption model of capitalism is now beginning to fail.
    Fragiskos

  23. Yanis, a number of commentators on your blog live under the delusion that Greeks earn a lot of money and that the cost of living in Greece is somehow comparable to the cost of living in their own countries.

    Let me give some straight dope, because this has got to stop NOW.

    The highest pay a young person can expect to get (post-”bailout”) is about 580 euros/month (we’re talking full-time job here, something that’s becoming rarer than hen’s teeth). Quite a princely sum, eh?

    Assuming that the aforementioned young person is living on his/her own, this is what s/he will have to make do with. Let’s examine what s/he’ll have to spend it on:

    1. 300 euros/year fee for the “privilege” of being a “freelancer” that issues a receipt for each paycheck s/he gets (even if s/he is an employee of a company).

    2. If s/he is a “freelancer”, s/he will have to pay social security according to his/her profession and/or years of professional service, i.e. after s/he got his/her license to work (mind you, freelancers in Greece do NOT have the right to be considered unemployed, even if they haven’t been able to land a job in months). An engineer or architect that got his/her license 8 years ago pays 3,807 euros/year for social security – a social security that is entirely worthless, as the fund has no money in its coffers, because the pro-bailout parties regularly loot the social security funds to give the money to their bankster buddies. I know, because that’s what I paid last year.

    3. Let’s say our friend doesn’t have his/her own apartment and rents. The cheapest s/he can find in a relatively big town or city is 200 euros/month.

    4. If our friend has a vehicle, then consider the cost of fuel. Unleaded petrol costs between 1.6 to 1.8 euros/liter, depending on the region.

    5. Heating is a problem, too: even LPG is no longer that much cheaper than diesel (and heating diesel, according to the Troika’s diktats, will cost the same as vehicle diesel come September; that’s about 1.4 euros/liter). Fuel poverty (google it) has already made landfall in Greece and we’re talking Katrina-like landfall.

    6. Public transport tickets now cost almost 1 euro each. And in many regions, the ticket is not valid for 24 hours, but instead is valid only for one route.

    7. Groceries and everything you buy at a supermarket costs at least 50% more (and in most cases they’re 100-200% more expensive – thank the Free Market and the cartels) than in other European countries.

    8. The privatized and overpriced telecommunications/internet services have a fixed cost of at least 20 euros/month (we’re talking about land lines, AFTER the 23% VAT has been added to the equation). And don’t get me started on the other carriers: they all lease lines from OTE (the “Greek” telecom provider which is now a Deutsche Telekom subsidiary) and their service is piss-poor.

    9. How about electricity? We’re talking about at least 30 euros/month. Oh, and that’s without the added bonus of the property tax.

    10. For extra enjoyment, add whatever new, “urgent”, “emergency” (or whatever you might want to call them) taxes the Troika might think it needs to keep itself in finery.

    Now do the math and tell me if this is sustainable. Oh, and that’s before our friend has to do his/her taxes… And tell that to a certain perma-tanned “lady” who chose a profession that gives her an obscene income that becomes even more obscene when you consider that (a) she doesn’t help countries, but instead serves a gang of fraudsters, (b) she pays no income tax AT ALL.

    And as for the nazi-like “collective responsibility” way of thinking that has reared its ugly head in “civilized” countries like Germany (remember March & November 1933), need I remind them that ordinary people like me don’t have any say at all in how things are run and that the “representative democracy” is basically a scam that installs a 4-year mini dictatorship that is accountable to no one at all?

    • Regarding the cost of telephony I mentioned earlier: I mentioned the fixed costs, not the additional costs that will result from calls to services and networks that are not part of the package.

    • You claim: “need I remind them that ordinary people like me don’t have any say at all in how things are run and that the “representative democracy” is basically a scam that installs a 4-year mini dictatorship that is accountable to no one at all?”

      This way of seeing things does not help.

      The communist East of Europe managed to free itself. There are revolutions in the Arab wold.

      All countries that are free now were – in some cases not so long ago – not free.

      Greece after all is a democracy.
      If you have got a society that you and a major part of your compatriots are not happy with, you don’t need to risk you lives.

      All you need to do is to get out of your agony and join a political party. If you think the existing ones are no good, found a new one.

      I am not saying it’s easy. But it’s possible. There is no excuse for having a system that you know is corrupt and dysfuntional.

      Democracy is a beautiful thing – but it needs people that are not corrupt themselves in order to not be corrupt.

      Do somthing!
      It is not Germany’s fault that your system is rotten – it is your own fault it you accept it. If you can’t be bothered to do anything for yourself, maybe think of your children (if you have any). Or think of children of friends or children of other people. They deserve better than what you have set up for them at this point in time. Do you want them to live in such a mess when they are old? Why didn’t you do anything about it? Nobody is going to hurt you – you just need to get active and do something!
      With regards to the incredible cost of living in Greece and the low incomes: That is not a hardship you endure on your own. There are plenty of people living under similar conditions, also in Germany or other “rich” countries.
      By the way: The prices you mention are actually quite low by most other European countries’ standards.
      And if you believe that there are cartels that keep prices for some goods and services artificially high, then make sure you elect politicians that do something about it.
      Or – maybe better – become a little active beyond voting every four years and so something yourself.

    • First of all, let’s talk about the prices: We already know that prices in Greece are way higher than those in Germany or other countries. Even foreign tourists say so.

      Now, you have me wondering if you actually mean it when you say “vote for other people”. We want to vote for other people, that will change things. Problem is, these people are not the ones Frau Merkel and her cohorts want, hence the diktats, the threats and the ultimatums: “If you vote for SYRIZA, you’ll be kicked out of the EU, we’ll starve you to death, we’ll…” etc.

      Basically, you’re telling us that you want us to help ourselves. Yet, at the same time, you’re telling us to stick to this lethal “medicine” and the parties that looted Greece, set up a huge web of corruption (aided in no small part by honest companies such as Daimler AG and Siemens) and are now backed by the Troika. Is it not contradictory when you tell a people to vote against corruption, yet you support the very parties that created this corruption?

      As an added bonus, let me give you all something from my dear friend Omadeon: Angela Merkel’s Anthem:

    • What´s your point? These costs do not seem to be expensive. If the young person does not like it he/she can move somewhere else.

    • So you’re basically telling us that we should become immigrants. Would you be willing to accept a few hundreds of thousands of unemployed Greeks in your country? I think not – after all, Greeks are, according to your corporate media, an incarnation of the Devil himself and are portrayed in precisely the same manner as the Jews were portrayed in German interwar and WW2 media.

    • Airetiko: you made the mistake of assuming that Greece’s detractors are capable of elementary calculations of post-tax/deductions income. If they were capable of such, they would not have written the drivel that you are complaining about.

      Let’s put it in simple language: it is impossible for young people to live (except as dependent on their parents) on the levels of pay offered, owing to the low pay and high taxation and other contributions taken by the State. There is even VAT at 23% that all self-employed people (which includes many who should be employees) have to pay on top of other taxes. There is no comparison with Germany or the UK, for example — and this was true even before the crisis. Food prices, telecommunications prices, most costs other than electricity and water, are well above those of Germany. So the solution of the Troika is to privatise water and electricity, to raise the prices, so that nobody other than Papademos and his ilk van afford them. Just this one fact indicates the agenda that Germany and others have — no interest in reforming the Greek economy or doing anything to help Greeks: their priority is to maximise German profits at the expense of others.

      Got it now?

    • Martin

      Easy talking Martin. Easy talking.
      Really ,what do you want me to say? “Thank you daddy?”

      If you think it is that easy then i guess it is the Nigerians fault that the IMF is sucking them dry ,while saying that it helps them for 20 years now.

      Or you think you escaped (not really) your own past by yourselves alone?
      This is German easy talking.

      You are fooling yourself. Your government is as corrupt as any.

      You go ahead and do something as well. Everybody.
      And then maybe ,just maybe we’ll eradicate world hunger and finally use all that technology that is kept unused for the sake of mammon.

    • Pedro

      “What´s your point? These costs do not seem to be expensive. If the young person does not like it he/she can move somewhere else.”

      How about a family man of 4 that receives the same salary or about 150 euros more (700-750 euros)?
      With all the added costs for the children and ofcourse a lot more electricity?

      This is just another kind of slavery.
      If the same happens to your country too ,then what can i say. Bravo to you too.

    • Martin:

      Where did you get the corrupt part about the current players in Greece?

      Who is corrupt?

      Papandreou? no, he may be naive or incompetent but not corrupt.
      Venizelos? No, he may be self-important but not corrupt.
      Samaras? No, the guy has spent most of his political life in political wilderness and being an outsider to his own party but not corrupt.
      Tsipras? No, he is young and inexperienced but not corrupt.

      Your logic sounds like the Epimenides paradox. Epimenides said that all Cretans are liars but Epimenides is a Cretan himself; thefore Epimenides is himself a liar.

      If you have any specific corruption charges then make them known and let’s examine them.

    • Just concerning the cost of living / wage situation:
      Again, I am fully aware that in Greece there are many people that are not well off. Many of these people work hard and get a salary that doesn’t seem fair.

      The problem I have with your claim is that:
      1. This problem is not specific to Greece (there are many countries with a “working poor”, including Germany where a significant part of the population lives under conditions in terms of wage versus cost of living that are not fair)
      2. The numbers you give simply are not that terrible.

      Greece has got many problems but excessive cost of living (even considering that wages in Greece are lower than in, say, Germany) is not one of them.

      To get this discussion on a less emotional level, here’s a study on international cost of living and wages:

      http://www.ubs.com/2/e/medlib/wmr/pdf/Preise_Loehne_2011_e.pdf

      New York City is always “100″. Pages 4 and 5 give an overview of international cities concerning cost of living and wage level. The perhaps most interesting statistics is in the right column on page 6 which shows the “domestic purchasing power” (i.e. what in terms of goods and services you can purchase with the actual net salary). There you get an idea how much spending power the actual price and wage levels give the population. Greece is somewhere in the middle – not brilliant but also not exactly very bad:
      Berlin is at 77% of New York City
      Madrid at 64%
      Athens at 55%
      Rome at 48%
      Prague at 43%
      Warsaw at 35%
      Bucharest at 29%
      Sofia at 25%

      Of course you can always debate the findings of such studies – and things have got worse since this was last updated in August 2011.
      However it gives you an indication. Probably (and this is not going to make me very popular – again!) the domestic purchasing power in Greece is too high (and has been for years). It is going to come down – not to Bucharest levels but probably that of Prague.

    • It is all not so easy…
      I know!
      But it nevertheless had to be said. I think Ο Αιρετικός
      is making it a bit easy for himself (and everybody) if he just claims that the system is corrupt and bad and nobody can do anything about it.

      All I am saying is that in a democracy, I would expect the population to sort their societies out in a way that suits the majority.

      If you have got a rotten system and are unhappy about it, change it! Nobody else will do that for you – and you don’t even have to risk your lives like you would have to do if you brought up this claim in countries such as Syria, Sudan, you name it.

      The ordinary people always have the vast majority in a democratic system. So if you don’t have an acceptable system, then YOU (as in the average voter) has not done a good job.

      I know this is hard to digest and I am not saying the whole mess is there only because the average Greek voter has been making poor choices.

      But long term, a society that is following some basic democratic procedures (as Greece seems to do) gets the type of leadership they deserve.

      At the moment, that does not look good – but it could (and should!) inspire you to seek something better!

      So many countries have been in a desperate situation – but some of them made it and turned their misery into something they can be proud of today. You can do the same. But you need to try and not blame foreigners, at least not primarily.

    • “Would you be willing to accept a few hundreds of thousands of unemployed Greeks in your country?”

      As long as they work for their money noone in Germany has problems with Greek immigrants. I would need someone to cook, do my laundry and some work in the forrest etc.

    • “no EU dictatorship” wrote some polemic stuff, suggesting that Greek immigrants would be accepted mainly as demestic helpers and to do the gardening.

      I personally would think that it would be natural for Greek and citizens of other European countries to consider moving to Germany if you feel your situation at home is hopeless.

      The EU gives you the right to move freely and pick up work whereever you like.

      This is a huge achievement.

      Personally, I would hope that Greece will stabilize at some point in the not-so-far future, but of course you are welcome in Germany.

      Hundreds of thousands of Greek immigrants came here decades ago and the fact that many of them stayed for many years seems to suggest that most of them were not unhappy about their choice.

      The weather is rubbish but otherwise, it’s an ok country to live.

      Also, you’d probably find that most people don’t fit those negative clichees (fat, Nazi, no heart) too well.
      As in most countries, the young are more open than then older generation but generally, people are quite friendly I’d say.

      Mass-immigration cannot be the solution to the Greek crisis – but moving abroad is luckily an option every Greek has this day in case he/she finds the situation at home unbearable.

      I personally would be happy for a few hundred thousand of Greek, Spanish, Portuguese and Italians to come to Germany. That would feel a bit like the 60ies and 70ies again – and was of mutual benefit at the time and could be again. Why not?

    • We don’t want to leave our country. We want to correct what has been wrong with it (and we’ve been complaining about those problems for years). What we want is for Europe in general to (a) STOP supporting (especially with these inane blackmails against our people) the corrupt pro-bailout parties that brought us here in the first place, (b) let us rebuild our country from the ruins that the corrupt politicians and “businessmen” created (although we know full well that these people have long-standing partnerships with certain companies in the electronics, defense etc sectors).

    • Martin

      The way you put it now ,you are ofcourse ABSOLUTELY CORRECT.
      I am not talking about the immigration issue but the political choices.
      And when you speak the truth ,even for the negatives of Greece ,you are most welcome and you certainly do not become unpopular.

      We do something here. Why not a long time back? For the exact same reason all people in the so called civilized world do not change situations. They adjust to what they think applies at the moment.
      This is nothing Greek. It is human nature.

      That is why i have thanked the problems. Because people wake up.

      The problem is ,as i said before ,that the elite does not want the change.
      And when they manipulate the sentiment of people ,you can see that democracy has not been around for a long time.

    • Martin

      You have to understand what is the essence of the capitalist system in its present form. Debt.
      There is nothing Greek about it. It is global. This is how this global economy is made to function. It is unreasonable to talk about Greece only.

      It is a fact that Greece has problems ,but you have to understand that the crisis will hit everybody.
      While we need the reforms ,right now they are not even half measures.

      It is not all Germans ,it is a group of people of different nationalities that want to exploit the crisis at the expense of the ordinary citizen as it always happens.

      The crisis just hit Greece first or it was decided using the MUCH NEEDED REFORMS as an excuse. YES WE NEED THE REFORMS. The fact of the matter is ,they try to contain the crisis in the periphery and while some say why should we pay for the Greeks ,they have NO FREAKING IDEA that we pay for them more. So at the same time you think you pay for the Greeks ,your country earns a lot and avoids the consequences of the crisis.

      You see ,i am willing to live a worst life than to give up the country.
      As a German is willing to work less than to pay for someone else (as she/he is being led to believe. In reality they pay the crisis in general).
      And i am also willing to accept any honest help from the Troika.

      If the leaders were honest ,then we would have had the crisis in wall street continue ,escalate in America and then in the countries were overdebted banks would have failed. Germany as well. Greece would have been a later problem. And ofcourse the rest of the periphery.

      If there weren’t a crisis and the leaders were honest about the reforms ,they would have informed us about them before and helped us with their organisational efficiency.
      Since they all want to help so much (yeah ,right).

      The excuse of the austerity is that no reforms would happen without it. Oh ,come on. No reforms are possible with it. Austerity does not work without global growth.

      Although NEEDED ,now the reforms are a mask.
      Austerity is not about helping Greece. Is about containing the potential global crisis here ,while at the same time buying everything at a bargain price.

      We all fight against the elite.
      I really am sad to see people not understanding the whole picture.
      In the capitalist system the crisis is an opportunity to profit by worstening the quality of life of the citizens. Always.

      It is really pathetic and hypocritical for some people to say that the Greeks in general are trying to live at the expence of others ,when the life style of these others ,even of the average citizen ,is preserved because of that exact parasitic nature of the system.

      So ,what are we fighting for?
      We are fighting for everyone to pay ,what everyone MUST pay.
      LEGALLY.

      Although ,the elite might just pull it off again.
      I hope not.

    • Martin, just use the public transportation system in Frankfurt or check in a Frankfurt hotel. “They” have arrived. And this is a good thing. It lowers the cost of services that we use.

  24. Professor Varoufakis, many thanks for your refreshingly frank assessment of the current eruo-crisis. You are certainly correct in your diagnosis of the insanity of the EU’s current path, but what do you believe the ultimate agenda of the EU’s policy elite to be? Is it German hegemony? Or the destruction of social democracy? Or is it the creation of a continent-wide serfdom that will cater to the needs of a pan-European plutocracy? Speaking for myself, I incline toward a somewhat less conspiratorial view — namely, that the member states of the EU presently suffer from the profound misfortune of being governed by a cabal of hapless imbeciles and craven lunatics. Regards, Dimitri Lascaris.

    • My first reaction is that I have seen this movie before.

      So, Frau Imperitatus wants to set up a 25-year fund for the debt overhang from the 60% statutory limit in exchange for clear fiscal dominance from Berlin.

      I’d say! This is what Tsipras has been looking for all along! :-)

    • The Fourth Reich (and I don’t care if this offends German-born commentators; after all, they have plastered on me and on my compatriots pretty much the same labels they once plastered on the Jews) deems Eurobonds “unconstitutional”.

      Oh really?

      And what about all those destructional austerity measures that the Fourth Reich, in collusion with the Troika, has imposed on the “PIIGS” in clear violation of their Constitutions?

      Germany thinks that its Constitution is somehow superior to those of other countries. Congrats, Germany; you’re pretty damn close to reviving your Aryan Supremacy ideology, which you grudgingly had to hide after the Allies handed you your posterior on May 8th, 1945.

      P.S. The – designed at Hitler’s behest – KdF (a.k.a. as “The Beetle”) has always been one of the worst examples in automotive engineering – every bit as bad as the Ford Popular, and there was no originality in its design; it was a rip-off of the Tatra T97. There, I’ve just slaughtered another Aryan Sacred Cow.

  25. Professor Varoufakis

    So you are implying that you will be the prime mover of saving Europe only when ideologues cease to be voluble. In other words, your participation in saving Europe and Greece depends on a miracle.

    • Why dont you do what you see fit to save Europe instead of asking others why they’re not doing it* ?

      *Thats your personal view.In my view once Prof. Varoufakis or any other “Prof Varoufakis” enters the system,his position becomes weakened,since he becomes part of the system and is treated as such.

    • Putting aside the fact that I’ve yet to see any reasonable person who is in touch with the world around him adopt a bow-tie as part of his everyday wardrobe, I’m going to ask you a few questions:

      1. If I failed as an entrepreneur and went forward and asked the taxpayers to bail me out, would it be morally acceptable?

      2. If I went to a casino and gambled my wages, my personal savings, even my children’s college money and lost it, would it be morally acceptable for me to ask the taxpayers to bail me out?

      3. If I gambled on the stock market (because that’s what buying and selling stocks and bonds is, whether you like it or not) and lost bigtime, would it be morally acceptable for me to ask the taxpayers to bail me out?

      4. If I went on a lending spree, giving pre-approved loans to a quadzillion of people whose financial standing I never bothered to check (I’ve received about a few hundred calls from currently insolvent banks telling me to get “pre-approved” loans and credit cards, even though I NEVER asked for them), and then was unable to collect the loans and their interest, would it be morally acceptable for me to ask the taxpayers to bail me out?

      In a truly free market, entrepreneurs and businessmen assume responsibility for their business moves. They set a certain level of risk they are willing to accept and then they take it. They bite the bullet and accept the simple fact that they might win, but they also might lose.

      The banks got bailed out time after time after time since 2008. Greece’s “bailout” has been proven to be nothing but a bailout for the insolvent Greek and European banks. And guess what? Their CEOs, knowing that the taxpayers, terrorized and bullied into sacrificing THEIR well-being for the banksters, will keep on bailing them out, are back to their old tricks.

      Why should the taxpayers be asked to save the cushy jobs of failed entrepreneurs and stock market gamblers? Is this morally acceptable?

      The only conclusion I have reached from all this is that bankers and their supporters are parasites. Pests. Like rats, mice, cockroaches and their ilk. To paraphrase my favorite perma-tanned tax dodger, it’s pest control time.

    • If you are so concerned to help Greece, then perhaps you would consider moving over here and spending your Australian pension in a country where every little would help. Until you do something other than whine, you cannot expect to be taken seriously.

  26. If Syriza wins it will be because they are perceived as less corrupt and not the guys who destroyed the country. In a weird way I don’t think it will have much to do with their platform.

  27. Pingback: Much, Much More Than it Fears Syriza « naked capitalism

  28. I found it remarkable to realize that barely 50% of the voters in the Irish “Bank Debt Treaty Referendum” turned up. ….Shaking head in disbelief, really, it was a case of Turkeys voting for christmas. Did they spice the Guiness supply for a month before the vote with serotonin neurotransmitter blockers or the likes? No! Sad, but true.

  29. Thank you Yanni for your perspective on current events. I find your analysis invaluable and that your solutions are logical. But I believe Syriza is just another Pasok-to-be and that even if Europe changes course and implements your plan and the Crisis is arrested the system will not have changed at the root, and a few years down the road we will be dealing with more insanity and corruption and so on and so forth.
    And I don’t believe the system will change during the good times if your plan is implemented.
    PS: Are you not an atheist? In my view both atheists and religious have reached conclusions when at the end of the day we don’t know much. Isn’t being agnostic more logical? I’d like to think we might be pleasantly surprised by developments, after all this is a farce of a stage-play in my opinion.
    On that thought why hasn’t there been a global voting platform for online direct democracy yet? That’s what worries me the most :P

    • And what do you suggest? Voting for more of the same (i.e. PASOK & ND, the two parties that destroyed Greece)? Or would you rather have us opt for the paranoia of the Communist Party? Or maybe the neonazis of the “Golden Dawn”? Or the “Democratic Left”, which is a Siloam Springs for PASOK members who see their chances of maintaining their posh MP lifestyle diminishing and their reputations destroyed by their own actions? Or perhaps the “We need MORE austerity! NOW!!!” Neanderthals of the neoliberal parties (who, incidentally, were total failures both as businessmen and as politicians)?

  30. A rather simple argument…
    Not diminishing the importance of economics and their ability to offer in the advancement of any society much like the other hard core sciences, I still believe that the solution in this Crisis will have to be given through politics and not economics. Not going into the long lasting debate between Freedman and Keyns, austerity vs. spending, (which turns into something like the philosophical dilemma “Plato or Aristotle”), particularly here in Greece we miss a point.

    And this point looks like it becomes more and more significant between Greek voters (myself included), and this may somehow make some european readers of this blog to understand why far-left, radical, Syriza is on the rise.

    We cannot concede in choosing those who were entirely responsible with their actions the last 10-15 years for this situation, to be the “saviors” of the next day. And unfortunately those who drove the country in these sallow waters, are still around claiming the vote of the people. I am one hundred percent sure, that if the pro-bailout pro-troika, pro-referendum pro-austerity parties could somehow convince people that they are emancipated from political figures so much entangled with the treacherous past, and could present a reformed right-central-left, that has learned from its mistakes, meaningfully marginalizing all those political figures who were actively involved in political decisions and actions in the past, Syriza would not stand a chance. But allas, this is not the case, and never has been in the history of politics. It was the Chansellor herself who at random times have said “I cannot believe the Greek people voted for such politicians” and that for the peril we are now in, the ones to blame are the Greek politicians. But here she is, her and every institutionalized European politician blackmailing greek voters to vote again for the same people. And if I may add this, Professor to your argument, as simple as it may seem, for voting Syriza…if I may.

    I will not, ever concede in voting again for people who are responsible in one way or the other for this situation.No matter what the cost. Lessons from Greek tragedy teach us that for every Hubris, Nemesis must occur. Its the only way to achieve catharsis and turn our erynies to eumenides. And I think its time, these politicians, this manner of governance, to face their political Nemesis. It is not a vote of anger…it is the only justifiable option.

  31. Having now studied your “modest proposal” very closely I fail to see where, in the actual situation, the money to cover the Greek primary deficit should come from.

    Unless, of course, this proposal is to be considered to be only a grand scheme for Europe, while a few specific problems (Greece, Portugal …) are supposed to be treated as they come (and therefore left undiscussed in the proposal).

    • If you want to counter a country’s primary deficit, you need to have its industry make stuff people abroad will want to buy. Ergo, you need know-how. You need stuff like research and development. This is for someone in the educational, agricultural and tech fields to come up with.

    • Fact #1: In order for a gvt to run a surplus without hurting the private sector,there must exist an equal or greater current account surplus.

      http://www.slideshare.net/MitchGreen/mmt-basics-you-cannot-consider-the-deficit-in-isolation

      Fact #2: Not all countries can have current account surpluses at the same time.By definition one’s surplus is another one’s deficit.

      Fact #3: So not all gvts can run surpluses at all times.In fact most gvts run deficits most of the time.

      Fact #4: Any deficit at around 4-5 % is sustainable for an economy in normal conditions.A moderate level of inflation 2-3% and a moderate level of real growth 2-3% can offset such a deficit.

      Fact #5: All PIIFGS have their own domestic problems that made them easily exposed to the crisis which is not a result of these domestic problems.Having said that,the MP tries to solve the root cause of the crisis.It doesnt try to solve Greece’s particular problems or any other country’s domestic problems,nor does it claim so.

      Fact #6: You cant impose any type of reforms in the middle of such a disaster.Whoever demands domestic reforms,he should do anything in his strength to solve the crisis first and do all the reforms he wants later.

  32. i actually like some of the economic team of syriza :dragasakis,milios,stathakis what is your opinion of them yanis?and if syriza is first party who will be economis minister in your opinion?

  33. Applying your expertise on game theory, of which I know precious little, wouldn’t it make more sense to let some country with less at stake to pull the rug? I.e. the penalty for Greece calling the bluff would certainly be greater than for say Ireland or Spain? Would it make more sense for Greece to just stall?

  34. True that syriza made the same pro-election mistakes of the previous parties. They weren’t moderate as needed.
    On the other hand ,this doesn’t change the fact that a change in direction will occur only with a different policy.

  35. What I really can’t stand is to see people- real people, modest people, rational(?) people that suffer from this evil ‘self-inflicted’ european crisis- still support the propaganda that they were obliged to inhale, to digest…It’s sad. Change is not feasible if people don’t wake up, it demands some courage and effort but has to be done for the sake of our children. Change can not happen only by the Greeks, although I must admit that it’is better than nothing..EUROPEANS WE DON’T HEAR YOU!! WAKE UP!!

  36. Proof once again that academics should not be left anywhere near real-life problems. Will you, Yianis, pay the pensioners who will be left without a pension in July? And, when Syriza issues IOUs (i.e., drachmas) to pay them, will you make up their buying power that will be reduced by 50%? I suspect not. I suspect you will be writing articles from the comfort of your armchair on why the EU has committed suicide by forcing Greece out of the euro etc etc. And when the EU then treats Greece like the Lehman Brothers of states, letting it die in order to muster the political support to rescue the rest, will you be the one explaining to the Greeks why they gave up all their achievements over 40 years in being an integral part of Europe and are now left more isolated than Bulgaria, Romania and Cyprus – perhaps even Turkey?

    I don’t like Antonis Samaras, but he is right when he says that Syriza – and its supporters like you – have confused gambling and politics. Stop playing with peoples’ lives. Let Greece survive in Europe. It’s a win-win. If Europe solves its problems, Greece is also saved. And if Europe fails, Greece is not alone. Europe may or may not solve its problems at some point, but Greece cannot force it to do so, and trying to do so will simply be committing suicide. Your ideas on Europe are good. Go sell them to the people who can make them happen, not to Greek voters who can only lose by them!

    • Well, it has been doing so until now (despite prophecies by many like yourself that it would not).

    • Demosthenes…it’s sad you have this name. A name that inspired so many people along human history…What you inspire me now by reading your text is fear. A coward man, filled with plain nothing. Go and vote for the people that destroyed you and your children just because you are ‘afraid’ and prefer to live in the shadows. But please change your name. It’s a shame.

    • Let’s talk facts here, because I’ve had it with the “if SYRIZA wins the election…” brouhaha.

      1. The “bailout” money does NOT fund ANY of Greece’s vital (and socially acceptable) public services. It only goes to repay interests of fraudulent loans.

      2. What’s more, the “Troika” DOES NOT ALLOW Greece to use taxes to fund the aforementioned public services. Instead, the “Troika” outright uses Greek taxpayer money for the frauduent loan interests and for its own, exorbitant salaries.

      Don’t believe me?

      Then see what the New York Times have to say on this:

      https://www.nytimes.com/2012/05/30/business/global/athens-no-longer-sees-most-of-its-bailout-aid.html

    • “Your ideas on Europe are good. Go sell them to the people who can make them happen, not to Greek voters who can only lose by them!”
      My dear friend, that’s exactly what Yanis is doing. The only people who can make his ideas happen (and are willing to listen) are the Greek voters. All the rest are either too scared or not desperate enough! What’s the point of living in a Europe that’s not worth living in?

    • Let Greece survive in Europe. It’s a win-win. If Europe solves its problems, Greece is also saved. And if Europe fails, Greece is not alone.

      This is the same “chicken”, unethical way of thinking that got us into this mess in the first place… I don’t want others to save me! I want to save myself.

    • That’s a weird logic Demosthenes.

      In the latest trance the EU only released enough money to cover sovereign debt obligations, and withheld all other monies that could be used towards pensions and medical coverage.

      Furthermore the EU says that unless you vote a certain way, you will never gonna see such monies other than coverage of debt obligations for the stability of the EU banking system.

      So, now you accuse Yanis that by supporting Syriza he somehow is irresponsible because he does not buy into the EU blackmail?

      I am a Samaras supporter but this blackmail tactic from Merkel is beyond criminal.

      If Merkel now is telling you unless you vote a certain way then no money, how is this different from taking your voting choice away? How is this different from having an unelected technocratic transitional government?

      I am not a Syriza supporter but I think you are 100% wrong in raising doubt about Yanis judgment and political choice. It’s like you are saying that the purpose of these elections is to give pensions and medicine to the pensioners and that anyone denying such outcome is irresponsible? How so? Do you think that Greece is some sort of Senior Living/Retirement Home facility whose adequate supply needs overrule everything else?

      What are you saying? I completely missed the point?

    • @Demosthenes

      Its mostly internal,shortterm lending that pays for wages and pensions.If you follow economic news,you will often see press releases from the public debt management organisation,about issuing short term treasury notes.Its mostly domestic investors that participate (in fact they might only be primary dealers) nevertheless Greece is still borrowing short term,from mechanisms other than Troika.

    • It’s good to see so many reactions, but sad to see so much blindness.

      My dear Eleni, the ancient Greek orator Demosthenes became famous because he tried to convince his fellow Athenians that their culture and achievements were at risk, but they would not listen. He talked of fear and danger (a coward man you might say…), not of empty promises and silly posturing. History proved him right, but it was too late. Let’s hope modern Athenians and other Greeks have learned from this.

      As for the nonsense that external support is not necessary: (a) the numbers don’t add – go study them – Greece still has a primary deficit, (b) without external support there will be no banks to buy short-term bills, so to think that the deficit can be covered domestically is defying economic reality. If you think you don’t need others to save you, fine, but you are drowning and refusing a buoy just because you don’t like the conditions on which it is given. Democratic choice? Sure, but silly – and criminal if others depend on you. Is it democratic that Angela Merkel is demanding certain things of Greeks? Yes, if you feel European and realise that it is not just Merkel, but a majority of European voters (read the polls). The only honest alternative view is that of the Communist Party: not sticking to the rules means getting out of the EU. You may disagree with the rules and you have every right to try to change them. But you cannot ignore them and expect others to respect you and keep you in.

      And for those of you who think Greeks will change Europe, read the international press, talk to people outside Greece and then wake up and smell the roses. If Greece tries to avoid doing what the rest of European voters want it to do, their governments will let Greece off the hook before you know it. It won’t be hard – as Yanis correctly says, all it will take will be for the ECB to turn off the tap on Greek banks and then all will be over. Yes, it will be risky for them, but conventional wisdom in Europe is now clear: this risk is smaller than the risk of letting Greece get away with it and setting an example for others. And it will much more painful for Greeks (and especially the poor pensioners left without income or medicines) than for anyone else.

      So the choice is clear: stick with Europe or get out. But, for goodness sake, understand what you are playing with: people’s lives, not some sort of academic monopoly board game!

    • Demosthenes

      We would have accepted if the demands were logical.
      Concession of sovereignty is not logical.

      The demands are not for the Greek reforms.

      Can you not see that?

      What you say is ,accept to be a happy slave hoping that they will be good masters for you.

      Choose your poison. Sovereignty’s or slavery’s.

    • Demetris, Greece has to concede sovereignty.

      The whole idea of Greece joining a broader monetary union was for Greece to concede monetary sovereignty to a supranational authority. Stopping halfway was foolish.

    • @Randy
      You appear to have misunderstood something. The half-way position about sovereignty has occurred because of France and Germany, not Greece. The ECB is based in Frankfurt, not in Athens, and it is Germany that has called the shots in the appointment of rabid neoclassical economists to its board, not Greece. Furthermore, the ECB should be supporting the banking system of Europe, instead of kowtowing to the Bundesbank.

      So, Greece should concede its sovereignty and Germany not? In case there is any doubt, I can assure you that it is the German constitutional court that has for decades been insisting that German law is about the law of Europe. Nobody else has the fucking arrogance to insist on this, only the Germans. (The Greeks teach this ideology in Athens Law School, but the Council of State has never dared to say it in judgement. Everyone other than the Germans accepts the partial loss of sovereignty, and now the Germans demand the full loss of Greek sovereignty but not any of theirs. Does this remind anyone of any historical precedents?

    • Demosthenes:

      You say: Greece has two choices “either stick with Europe or get out of it”.

      Let me give you a 3rd choice. We stay in Europe, regardless (of what some other Europeans morons want) and we shape Europe to our liking; until she becomes the sunshine of our love:

    • Everyone has the right to dream (that Greece can stay in Europe even if it ignores the rules of the club, that it is not most Europeans who want Greece to get out but some dictator in Germany, that Santa Claus exists and will bring euros for Christmas, etc). But those who keep on dreaming when their house is on fire will stop dreaming rather sadly… Those who wake up, might just get another chance to dream. The problem with democracy is that if most people keep on dreaming, those who wake up will also get burned.

      Dream on if you wish. And by all means keep advocating the future you want for Europe. But if you are smelling smoke, you may want to wake up for a minute to have a look….

  37. “I think it is a form of pre election silliness. They will get over it soon, I hope.”

    Me too……..

    good day professor.

  38. Inspecteur Clouseau strikes back!

    Or Monsieur Trichet’s newest proposal – soon playing at a theater near you

    May 17 (Reuters) — Europe could strengthen its monetary union by giving European politicians the power to declare a sovereign state bankrupt and take over its fiscal policy, the former head of the European Central Bank said on Thursday in unveiling a bold proposal to salvage the euro.

    The plan offered by Jean-Claude Trichet, who stepped down last November as ECB president, would address a fundamental weakness of the 13-year-old single currency, the survival of which seems at present under threat.

    His proposal was presented in Washington on the eve of the G8 meeting of the world’s major economies, hosted by U.S. President Barack Obama who will press Europe to intensify its efforts to resolve the sovereign debt crisis, which threatens a fragile global recovery.

    For the European Union, a fully-fledged United States of Europe where nation states cede a large chunk of fiscal authority to the federal government appears politically unpalatable, Trichet said.

    “Federation by exception seems to me not only necessary to make sure we have a solid Economic and Monetary Union, but it might also fit with the very nature of Europe in the long run. I don’t think we will have a big (centralized) EU budget,” Trichet said in a speech before the Peterson Institute of International Economics here.

    “It is a quantum leap of governance, which I trust is necessary for the next step of European integration,” he said.

    “It is a very radical proposal, couched as a modest step,” said Richard Cooper, international economist at Harvard.

    Caio Koch Weser, former German economics minister, said he found it “very attractive”.

    [...]

    Mr Weser:

    I am appalled that you find this proposal “very attractive” as it “oh-so” quietly and conveniently disposes of the sole right still left in the hands of the of European Citizen: The Right To Vote.

    Mr Trichet’s latest gem of a proposal is in essence using “The Crisis” in order to implement a delicately disguised economic invasion and use it as a stepping-stone to form a “New China” out of the countries in the European Periphery – namely Greece, Italy, Ireland Portugal & Spain.

    The bottom line is that no-one – and certainly no-one amongst the Masters of the Universe i.e. the G8 leaders – is ever going to address the root of our current predicament:

    A. The real trouble with fiat currency

    Most of the money supply in a country is created by banks as debt out of thin air. The notes and coins is a small part of the money supply.

    Since no nation is on the gold standard anymore, money has no intrinsic value and the size of the money supply does not need to be constant. It can be decreased in good times and increased in bad times.

    There are three ways that a government can raise money for public spending:

    1. Taxes.

    2. Borrowing from private financial institutions.

    3. Gift from the central bank.

    The third option is very important in the present crisis. Usually it is disguised as lending but that is not true since if one arm of the government makes money out of thin air and lends it to another arm of government it is not lending but money creation.

    On the insistence of the German government the third option has been taken off the table for all countries within the Eurozone because the ECB is forbidden to lend to countries using the Euro.

    This is the main cause of the present Crisis.

    Countries that are Not on the gold standard and do Not have public loans in a foreign currency simply Can Not Go Bankrupt!

    The German rule has, however, de facto put Europe on a gold standard and driven Greece bankrupt.

    The counter argument goes that when central banks create money, and then use it for public consumption, there is an increase in inflation.

    However, the ECB has just created 1 Trillion Euros and given it to the banks.

    It is absolutely absurd that money is given to banks at close to zero interest in this way so that they can lend it to Portugal at 12%.

    Clearly the Germans thinks it is perfectly fine to help the (German) banks with Trillions of Euros of welfare but not the people of Europe.

    So what should have been done?

    In the beginning of the crisis, the ECB should have offered the Greek government a 400 billion loan over 100 years at 0.1% interest from money created out of thin air.

    This would not have cost the Europeans anything because:
    - the amount is small and
    - the money was already spent i.e. no increase in inflation.

    It is now crystal clear that the root of the problem is that back in those high-flying days banks lent far too much money in the hope of making a killing. It didn’t work out.
    Interest repayments and bad debts are stalling any chance of a recovery.

    The solution is simple:

    - Debts need to be restructured or written off completely.

    - Banks need to be restructured, recapitalised and nationalised.

    B. The structure of the Global Derivatives Market, as recently exposed in the whopping loss by JP Morgan of a still elusive amount – 3 Billion USD and counting – on Derivative exposure gone sour at the Bank’s Chief Investment Office in London which is essentially the Bank’s Core.

    It has “suddenly” dawned upon the UK, the USA and the rest of the G8 leaders that the 5 biggest USA Banks – including JP Morgan – may go bankrupt immediately should just 1 % of their exposure to Sovereign Debt (of which Greek Debt is part of) go under water, as these banks are the underwriters of 97% of the Total Global Derivatives Market, of which the CDS (Credit Default Swaps) constitute the Lion Share and amount to over 200 trillion USD.

    Think about it: just a 1% Default on these Financial Papers – not unrealistic considering Spain’s banking woes – would bankrupt the said Banks on the spot.

    Since there is literally no economist in the world that knows exactly how the derivative money flows or how the system works – while derivatives are traded in microseconds by computers – we really don’t know what will trigger the crash or when it will happen, but considering the global financial crisis, this system is in for tough times that will be catastrophic for the world financial system:

    JP Morgan Chase has a derivative exposure of $70.151 Trillion USD.

    $70 Trillion USD is roughly the size of the entire world’s economy.

    We are in real uncharted territories here…

    However, the tragic alternative would be for Europe’s generations-to-come to keep donating their taxes, deducted from hard-worked income, in order to pay off the insolvent bank’s gambling practices while they continue to fool around and reward themselves with obscene amounts of money for their failure.

    The day has dawned upon the G8 leaders in which, due to the Greed of their major banks, they will have – in an ironic twist of fate – to hold the Can in the end, should Greek voters come to their senses and vote en masse against austerity measures.

    In the very likely case of such an event, the consequences of the relentless campaign against the Euro would be put under the world’s spot light:

    Orchestrated for the sole purpose of maintaining capital streams to the Bottomless Hole which currently describes the US borrowing needs, more than 4 Billion USD of foreign Capital per calendar day.

    Has anyone forgotten last summer’s debacle between Obama wanting to raise the debt ceiling and the Republicans vehemently opposing it, which resulted in the U.S narrowly escaping default and being stripped of its’ triple A credit rating for the first time in history?

    Incidentally, the Madrid government asked Goldman Sachs to audit the books of the struggling lender, Bankia, following a run on its’ deposits as news broke that 1 Billion Euros have been withdrawn since its’ nationalisation by Mariano Rajoy’s Conservative government.

    Does this ring a bell?

    Goldman Sachs was also called-in by Kostas Simitis, head of the Socialist government, ahead of Greece’s acceptance within the Euro System in 2002.

    Will this dire merry-go-round ever come to an end, Ms Lagarde?

    • Ah yes, the esteemed Jean-Claude Trichet (who is every bit as worthy as Jean-Claude Tergal).

      This guy used to recite the “2% inflation” mantra, and I think he still does. He thinks that, if an economy has 2% inflation (without ANY regard for any other measure), everything’s A-OK.

      BTW, weren’t the real estate bubbles in Ireland, Spain and elsewhere forms of inflation?

  39. Professor Varoufakis
    Since you believe it’s wise for someone to dare to be the circuit-breaker that will save Europe and since Syriza, in your opinion, can play this historical illustrious role then why you don’t rush as a volunteer to be “part of that team” that will save Europe from its madness as well as being one of its conspicuous intellectual saviours that history will record in golden letters?

    • Because I cannot stand long meetings with ideologues… (This is my honest answer, which I know you will appreciate.)

  40. In your introduction you refute the opinion that
    “the solution must involve (a) austerity and (b) structural reforms”.
    However, in the main body of your text you are only addressing austerity.

    So why do you think that structural reforms are harmful to Greece?
    Or, if that is not your opinion, why did you call the demand for structural reforms an “establishment view … profoundly mistaken”?

    • I did not say that they are harmful. Some are good and proper. The problem is that they are irrelevant to the the Crisis (while not at all irrelevant to long term prosperity after the Crisis is over). Having said that, other proposed structural reforms are downright destructive (e.g. the reduction of minimum wages)

    • Considering that Greece has an economy that is dependent on an enormous inflow of capital, structural reforms are certainly not irrelevant.

      Or could Yanis perhaps name a few countries that has had a structural current account deficit and a currency peg and where stimulus has worked without any structural reforms? Of course not. For there are none.

    • Peter ,we have said again and again that reforms must continue. It is the type of reforms and the way of implementation that is the problem. The wrong reforms ,the wrong time.

      The proposal is for the EZ architecture ,not for the specific reforms in each and every country. The idea is that the nature of the crisis is such that to be resolved we need changes at the broader frames of the system that should have been implemented in the past.

      Then we continue with the reforms needed in each and every country ,that should have been implemented in the past also.

      Now austerity worstens the situation.
      Wrong reforms ,wrong time.

    • Klaus:

      The article you are are quoting says: “without the memoranda (I&II) the recession in Greece would have been deeper”.

      If you were grading papers, this is were you give an F to the student and you don’t even read the rest of the nonsense written. The student simply does not get it and flanks the class. Classic case.

  41. Please allow me to quote Nikos Tsafos from the Greek Default Watch blog:

    “Greece has changed from being a fat kid that was going on a diet to a fat kid that wants to sue the candy company. In the end, the fat kid may get a check – but will he get any thinner?”

    And here is a Greek proverb which I picked up recently:

    “Any fool can throw a stone into the sea, but once he does, a hundred wise men can’t pull it out!”

    I rest my case.

    • Don’t rest your case quite yet. Thinking of a country as one person, or kid, is unhelpful and dangerous (you would not like it if I thought of Germany as one person; for that person would probably be hideous to you, if verging on the ‘representative German agent’). I know lots of Greek children who found it damn hard to survive in Greece during the ‘good’ times. Who worked during the day in garages and restaurants and went to night school. Now, they have to pay the price of austerity. Be careful Klaus. I expected more from you.

    • Excuse but Tsafos is an amateur. A kid in his 30s, he has no clue nor formal training in economics or even the minimum MBA background.

      He is an obscure natural gas analyst.

      He is probably paid by Merkel’s propaganda machine to spew and reinforce non stop whatever the Berlin propaganda is.

      Sorry Klaus, but quoting Tsafos is the lowest possible denominator that one could introduce in this discussion.

    • Yanis, don’t expect much from the prevailing german political thought. It’s exactly the kind of thought that eagerly generalizes and demonizes entire nations, races, cultures etc. Perhaps our “dear friend” Klaus Kastner ought to remember what a way of thinking frighteningly similar to his gave the world on March 1933.

    • Yanis, I would not have seen anything offensive in Nikos Tsafos’ quote (BTW, I consider his as one of the best blogs on Greece!) but if others did, I apologize. Actually, I was under the impression that economists like to use metaphors like “fat kid”, “minotaur”, etc. and I, for one, find metaphors useful. As per your request, I won’t rest my case there and since you expect more, I will deliver more.

      Your statement that some children did not have a party during the party years triggers deep feelings on my part. Indeed, not all Greek society had a ball while seemingly all Greek society had a ball and, indeed, those who had less of a ball then (or none at all) have now been asked to participate unduly and unfairly in the repair cost of damage with which they had little or nothing to do!!! Yes, today misery is over segments of Greek society and financial stress and emotional strain over a large part thereof. BUT: there is, in my judgment (and remember that I spend close to half a year in Greece), quite a large part of society which even today is having a very, very good life. And I am not thinking of the ultra-rich Greek families. I am thinking of the “smart and clever ones”.

      The Gran Masoutis nearby is packed with shoppers (and prices are no less than 3-4 years ago if not higher, and many are higher than in Austria). Whenever I stop by IKEA, I hardly need to move on my own. People traffic carries me with it. On weekends, the parking lot of Cosmos Mediterranean (the largest I have ever seen) is full and the place is packed with families paying the same prices for fast food as in Munich. As the weather gets better, the weekend convoy from Thessaloniki to Chalkidiki is getting under way again (I just returned in bumper-to-bumper traffic). I could go on.

      And then I read that a young couple living on a teacher’s salary has to get by with 588 Euro net every month! Nice guys finish last? Well, there are a lot of nice guys in Greece but there are also a lot of fast movers who are not paying their traffic tolls. In my judgment, one part of Greek society has taken the other part for an unbelievable ride since the EU and particularly since the Euro.

      And here is my case now: who can/should fix all of this unfairness in Greek society? The Troika? The EU? George Soros maybe? Only Greeks themselves can fix domestic issues within their own jurisdiction and exactly this is what Greek brainpower should be concentrating on. Leave the Eurozone’s problems to Eurocrats. They will fix them or not (I lean towards the latter). But take on Greece’s problems and suggest ways how they could be solved!

      I could give you an endless list of issues which Greece could/should tackle on its own. My blog is full of them. Just take the decline in the Euro as one example. Here the Euro (including the Greek Euro) has declined versus the USD by about 25% in a reasonably short period of time. Presumably also versus other currencies. Now if that is not a window of opportunity for increasing exports to non-Euro countries then I don’t know what a window of opportunity is. I am not even sure if Greece’s policy makers have noticed that exports have increased but they certainly have not done anything to “make a killing” out of such a window of opportunity. Attracting tourists from non-Euro countries might have been a smart idea at a time where Eurozone tourism is tanking. Etc., etc.

      Now to Alexis Tsipras and SYRIZA. I have sent you links privately. Below is my post after I read the Economic Manifesto.

      To recommend not to read a party’s manifesto but recommend to still vote for the party is not my idea of responsible voting recommendations. I would very much recommend to read the manifesto because I think it is a very interesting document which deserves a lot of credit for certain things.

      I myself could not vote for SYRIZA because a vision where the predominant role of the state for the happiness of people is not mine, but I can see why others would have a different vision. But I am getting to the point where I think that it may indeed be best if the next Prime Minister with a stable majority would be Alexis Tsipras.

      Best for the Eurozone because it would force EU-elites to either fish or cut bait. And best for Greece because it will tell Greeks how much the Eurozone likes them (or not). At least, all this meandering of the last 2-3 years would be over. But then again, who am I to say that, with Alexis Tsipras, the meandering would be over???

      http://klauskastner.blogspot.gr/2012/06/syrizas-economic-manifesto.html

  42. Dear Professor Varoufaki,

    your posts and proposals make a lot of sense – following your “Modest Proposal” is a blueprint for exiting the crisis. But I fear there is a political side that you pay little attention to, that makes it (the proposal) unlikely to be adopted.

    Alexis Tsipras is, right now, the only hope for the country for reasons beyond economics. There is a malaise in Greece – conspiracy theories abound and no reform measures can be implemented by either ND or PASOK (and have not been for over two years – privatizations are the most striking example). SYRIZA is a credible political force (and patently honest since it has never been in government). Tsipras will be a tough negotiator, and, in a game of chicken, is credible in threatening to escalate the crisis.

    Yet it seems unlikely he will be effective in achieving a grand bargain for the country and the continent – there has been entrenchment on the European side that is difficult to, politically, get out of. Appearing tough towards Greece is apparently the new litmus test for the heads of the IMF, the ECB, and politicians in the rest of Europe. It brings to my mind the situation leading up to the first world war: once the logistics leading up to the war started (trains with preset schedules, carrying troops to advanced positions) it became impossible to stop an obvious, foreseeable, calamity.

    In the end I cannot see any European people buying into the “Modest Proposal” – there is too little time, and no will, to turn the European Union into the United States of Europe. Yet I think Tsipras and SYRIZA are still the best prospect for Greece right now: if they are in power when everything falls apart they appear to have the legitimacy (comparatively speaking) to contain the consequences.

    • You are right. Very little room for hope. But hope is the only thing we are left with. Even if it is irrational…

    • @Stathis I am amazed that you do not see that Syriza is a conglomerate loosely bound with the false promises of reversing everything. It has the coherence and workability of a bag of cats.

    • From your reply, it sounds like it’s an exercise in rearranging chairs on the deck of the Titanic… Only that there are no lifeboats this time… Melancholia… (also by Lars von Trier)

    • “A Dream Deferred”, by Langston Hughes

      What happens to a dream deferred?

      Does it dry up
      like a raisin in the sun?
      Or fester like a sore—
      And then run?
      Does it stink like rotten meat?
      Or crust and sugar over—
      like a syrupy sweet?

      Maybe it just sags
      like a heavy load.

      Or does it explode?

    • @anna v: Perhaps I should have put hope in quotes… Please consider my reply to @yanisv in the context of what has (not) happened in the last 2 years, and what is (not) going to happen if Samaras (or Venizelos) runs the country (for however short a period he manages to hold a coalition together).
      PS. I like cats :-)

      @Randy McDonald: I like the poem. Not sure who the dreamer is though. But I enjoyed learning about Langston Hughes and struck about how the status of dreams (and optimism) evolved in the African American community between the beginning of the 20th century (Hughes) to the later part of the century (King).

  43. Supposing Syriza wins the elections and forms a government that rejects the troika programme and Europe stops the loans to Greece (even because of foolness or shortsightness), what do you believe that will happen in Greece,knowing that Syriza’s manifesto cannot be implented (as you also admit)? You surely know that we Greeks aren’t famous for our patience. How much time would be needed for your scenario to be confirmed?

    • I have no idea. All I know is that there is no alternative. As for the cessation to the loans, I do not mind at all. In any case, these loans are sued to repay the ECB. If we do not get them, the ECB will miss out on an insignificant amount of money. The real worry is the banking system. The ECB system can stop keeping our bankrupt banks afloat. And then it is curtains. But if they do that, it will be the end of the euro…

    • No, professor, the ECB WILL stop keeping your bankrupt banks (and government) afloat. I have a champagne bottle in the fridge to celebrate this event.

    • Prof Varoufakis you say :

      “In any case, these loans are used to repay the ECB. If we do not get them, the ECB will miss out on an insignificant amount of money. ”

      Not the exact truth.

      The truth is “90% or so of these loans are used to repay the ECB”. The 10% or so is absolutely necessary to cover the growing gap between taxes and spending, the famous “πρωτογενες ελλειμα” .

      Already we are missing 1 billion from the current tranche and that is why we already have problems with procuring medicines for hospitals and patients.

      It is completely irresponsible of the KKE and Syriza to be going around saying that the debt is only to pay back the lenders, hiding the fact that we cannot stand on our own two feet.

      Even one month delay in EU decisions will bring chaos and third elections , i.e.default, in Greece, and have you known the EU to decide at the drop of a hat?

      Your advice sounds to my ears as “let them eat cake” .

    • Finally someone understands that we must get rid of this one size fits none currency!

    • anna v

      Your point that at least a small part of the rescue loans serves to finance the primary deficit is well-taken. I think what gets often
      overlooked is that, to this day, Greece as a country has really not had to live under a real financial crisis. A real financial crisis is when external funding stops; period; no more cash; nada. Ask Latin American countries what that feels like. Overnight you have to bring imports in line with external cash available. Overnight a deep recession if one has previously been very much dependent on external funding for one’s living standard. So far, Greece has been saved from all of this. In fact, not only could Greece continue to run a very significant current account deficit but the Greek banking system was given enough cash of foreign tax payers so that the banks could pay out over 70 BEUR of deposits. Think of this: Greek depositors received Euro-cash which remains Euro-cash as long as they hold it whereas the foreign tax payers sent Euros to Greece the value of which would evaporate if the Euro collapsed. In a real financial crisis, Greece would have had a bank holiday quite some time ago and bank deposits would have had to be frozen. So, a little thank-you to the Euro-currency-system, the ECB and EU is in order, I think.

      The really untested waters are how the EU/ECB would react if the Memorandum were to be unilaterally declared null and void. Personally, I doubt that EU/ECB can afford to allow a member country to literally run against the wall, even if it does that voluntarily.

      However, the consequence for Greece would be to get the EU-Commissioner right through the back door and then Mr. Tispras’ reaction would be fun to watch. EU/ECB would disburse funds on a line-item basis, i. e. prior to each disbursement they would review purpose of the disbursement and control appropriate application of funds. If money is required for, say, energy imports, fine. If money is required to finance parties, well, njet!

      The only way to avoid this is not to be cocky and throw around with big stones when you are sitting in a glass house. Instead of pursuing an antagonistic agenda (i. e. unilaterally declaring the above), a consensual agenda must be pursued. One does not threaten to “re-negotiate”; one always continues to “negotiate”. A default is not “declared” but it “happens” because it could not be avoided despite all efforts (it could even be “allowed to happen”). All efforts will be promised to “cure default” and then everybody will negotiate a new package in such a way that no one can ever call it a “re-negotiation”.

      Declaring a moratorium, or even repudiating part of the debt is immature because it destroys a lot and gains nothing. Ask the Argentines!

    • Anna:

      You say: “already we are missing 1 Bil+ euro from the current tranche”.

      It’s not accurate to say “we are missing”. It’s accurate to say that such amount was deliberately withheld. This id pure blackmail and should not be tolerated under any circumstances.

      The issue here is not to get the money somehow by doing what is necessary. Such would be the mentality of an employee. The “Get me paid and figure out the rest yourselves” mentality.

      But don’t you understand what the problem is? That whatever Greece is asked to do digs an even deeper hole and makes the primary deficit impossible to bridge? It’s the Merkel nonsense that has destroyed the Greek economy. It’s the Merkel PSI amateurism that has destroyed liquidity. Everything that the stupid woman has asked us to do is the wrong thing; 100% the wrong thing.

      In how many languages do we need to hear that Merkel is 100% wrong?

    • @Klaus

      “I think what gets often
      overlooked is that, to this day, Greece as a country has really not had to live under a real financial crisis”

      Yes.If thats because we are part of the eurozone,let me tell you that were we not part of it we wouldnt be in such position anyway.So dont put it like we should be thankfull for the “bail out”.For its not a bail out (at least not a bail out of the people) and its the very least the EU can do since EU and its design is the reason for all this madness.

      Any country can service its debt at all times,no matter the interest rate or the debt/gdp ratio, as long as its issuing its free floating fiat currency.
      And i didnt even speak about the fact that floating rates wouldnt allow the current account deficit to grow that big.

    • Correction: as long as its issuing its free floating fiat currency and the debt is denominated in that currency.

    • @GeorgeG

      I agree. Greek revolutionary fervor is hard to maintain in these times, when we’re not fighting against the Turks. I think when people face a fuel/medicine/grocery shortage, Syriza will fall in a week.
      However the banking system may already have collapsed if an accident occurs, with grave consequences for all.

      @tmk
      I hope you also keep a multi-billion euro buffer to immediately recapitalize Spanish, Italian, French and Austrian banking systems that will start to collapse through direct exposures to Greece and other Reas where contagion will hit.

  44. My intention during these days was to write a similar in spirit and argument note. Felt only sad for the reason that I might being characterized now, as one among your Greek flock. A tag I desire the least, since I believed and still believe you contributed, not to say created, an overwhelming confusion on the internal economic debate. Only the white-water rafting of wide publicity made you to change course in line with your high intellectual vigor. So, stop staring for a while at your international career and steer to the internal debate to resolve the confusion that somehow you are also responsible, trying to inform and educate with no ideological attachments rather than influence and mislead.

    Ολη αυτή τη χολή δεν τη βγάζω για να προσβάλλω ούτε εσένα ούτε αυτό που πιστευείς. Άλλωστε το πιθανότερο θα ήταν να μη δημοσιευόταν καν αμα επιχειρούσα κάτι τέτοιο. Το κάνω περισσότερο γιατί με ενδιαφέρει αυτός ο τόπος και οτιδήποτε αξιόλογο δεν πρέπει να μείνει ανεκμετάλλευτο. Μεσά σε αυτο είσαι και έσυ αυτή τη στιγμή. Πάρε βήμα στην Ελλάδα χωρις όμως υπεκφυγές και αοριστολογίες όπως συνήθιζες. Εμαθα πολλά απο σενα, οχι όμως οι περισσότεροι oι μη εξοικειωμένοι επι του αντικειμένου που είτε εχουν τα κουρελόχαρτα των οικονομικών που νομίζουν πως σπούδασανε ειτε οχι το ίδιο είναι. Και αυτο γιατι αντιλαμβανόμουν και τί έλεγες, και τι υπονοούσες αλλά και τί υπέθετες ή προυπέθετες. Ο Ελλήνας θα ψηφίσει και οχι ο Ευρωπαίος. Το ρίσκο είναι μεγάλο, οσο σίγουρος και να θές εσύ να πιστευείς πως είσαι. Παραταύτα, είμαι και εγώ αυτής απόψης πως αυτό το πείραμα χρειάζεται να γίνει. Είναι το μόνο από οσα έχουν ήδη γίνει που ίσως εξασφαλίσει κάτι ευπροσάρμοστο. Οχι βεβαίως για να χαιδεύτουν πάλι τα αυτιά μερικών αλλά να επιζήσει οτι απέμεινε ζωντανό. Δεν νομίζω να είσαι απο τους ακαδημαϊκούς που η γνώση τους ειναι περισσότερη απο την ευφηία τους, είσαι όμως απο αυτόυς που διψάνε να την επιδεικνύουν. Καντο αλλά σε μια άλλη κατευθυνση για λίγο.

    After, my short break in Greek for which I want to apologize from the international readers, back to English.

    I will end this extended to many dimensions comment summarizing all what you wrote so as to make it clear and bold how correct I believe you are now, making the following statement.

    The risk of conformism is higher than anything else. And the chance of exit is as high as we want to believe.

    • Safis:

      It’s o.k. for Yanis to support his favorite political group.

      In fact, if Syriza takes the helm it would be the kiss of death for the upstart party. Whoever has to deal with Merkel after the elections is as good as dead.

      So, let the people express what they want. It’s part of the catharsis. Let’s see Syriza on top and in action. My guess is that they won’t last more than 3 months.

      So, my advice to you is stop being tactical and become strategic. What’s in the back of the minds of the Greek people is whether Syriza could actually deliver a better hope. For those unable to answer the question intellectually, I think they deserve an actual experiment to prove or disprove this hypothesis. And while they are playing in the lab, Merkel will be weakening even further.

      Therefore, the best outcome for Greece is to buy even more time’ just taking a page out of Merkel’s book. For the last 3 years or so we have witnessed an endless stream of Teutonic minimalism, incrementalism and obstructionism.

      My advice to you and other here obsessing about an intermediate outcome is this: take the same strategy your enemy has been using against you and turn it against Merkel. Let’ s see how effective a good dose of Greek minimalism, incrementalism and obstructionism could prove to be.

  45. Ever the optimist! If you see the fiscal compact as the enabler of future federal fiscal transfers, it’s okay. Deficit spending cannot reasonably be done at the regional gov level. See Modest Proposal step 3!

    • I agree with the latter and disagree with your immodest optimism regarding the former. The fiscal compact is a piece of enormous idiocy. It will be taught to students in 300 yrs from now as an example of humanity’s grandest stupidity.

    • “It will be taught to students in 300 yrs from now as an example of humanity’s grandest stupidity”

      As a sub chapter of the greatest stupidity of all: “The Euro”

    • Well, professor, since two years it is clear that Greece’s membership in a monetary union which consists of modern European countries (except for Greece) will be taught to students as an example of humanity’s grandest stupidity.

  46. I’am Irish and voted no to this treaty.

    Many people felt disempowered by the democratic deficit in Europe, hence low voter turnout (50%). One prominent Irish polictician (during the campaign) even suggested running referendum if people voted no .

    Ireland has a history of rerunning referendum until elites get the answer they want.

    Yes advocates for the treaty used fear as their main campaign tool. Little to back up their support for the hideous policies of this treaty.

  47. Yani, THANK YOU SO MUCH for that article. We have been craving it for a LOOONG TIME. It was about time you came out for a political solution and your comments are all spot on (including SY.RIZ.A.’s inexperienced shot at an old-style political program). Chapeau!

    Here’s a just concern though:
    You correctly point out that someone must summon up the courage and stand up to the fathomless idiocy of austerity policies and Greeks have the chance to be that someone. Is it possible, though, that Greeks play Leonidas against the troikan Xerxes, only for someone else (Italians?) to play Themistocles? We know where each ended up and Greeks would certainly not want to be just a notable memory.

  48. With simple words that is the main idea and I totally agree ! Even if I never voted for a left even centered party this will be the solution.

  49. Don’t you think that SYRIZAs approach “First we cancel all voted fiscal measures, we raise all salaries to previous levels and after we can negotiate with the europeans” is rather irresponsible and a mere pre-election unable to fulfill promise? (and if all negotiations goes well and a new and improved greek-friendly fiscal policy is adopted by europeans, in the meanwhile how can we handle the missing budget?)

  50. pps, and of course my dyslexic old age shows :( that should be “NO in 2009″ . Not that 1989 was not a crucial turning point, but has not much to do with the matter at hand.

  51. Yanni,

    What if this is really a devious and pernicious plan and not simply stupid behaviour from Merkel and a few other incapable politicians?

    Ever thought about a purposeful vicious hidden agenda behind all the latest developments?

    See for example this here:

    Oι ΗΠΑ “ανησυχούν” ότι η Τουρκία θα μπορούσε να θελήσει το αμέσως επόμενο χρονικό διάστημα να εκμεταλλευθεί την “πρωτοφανή οικονομική και πολιτική κρίση” στην Ελλάδα και να προχωρήσει σε κινήσεις που θα αποσκοπούν στην απόσπαση εδαφών από την Ελλάδα! Αυτό αναφέρεται σε έκθεση της ειδικής ομάδας εργασίας που σύστησε η υπουργός Εξωτερικών των ΗΠΑ Χ.Κλίντον στο
    «Συμβούλιο Διεθνών Σχέσεων» (Council on Foreign Relations – CFR) για να
    μελετήσει τις προοπτικές των αμερικανοτουρκικών σχέσεων και να τις
    καταγράψει.
    Επικεφαλής της ομάδας εργασίας ετέθη η πρώην υπουργός
    Εξωτερικών των ΗΠΑ και στενή φίλη της κυρίας Κλίντον, η Μάντλιν
    Oλμπραϊτ, ενώ συμμετείχε και ο Στίβεν Χάντλεϊ, πρώην σύμβουλος Εθνικής
    Ασφαλείας του προέδρου Τζορτζ Μπους (του νεότερου).
    Η ομάδα αυτή που συστήθηκε ειιδκά για να μελετήσει τις αμερικανοτουρκικές σχέσεις έχει λάβει υπ’όψιν της πολλά σενάρια κι στην τελική της έκθεση, όπως αναφέρουν απόλυτα ασφαλείς πληροφορίες αναφέρεται ότι  “Η
    Ουάσιγκτον θα έπρεπε να συμβάλει ώστε οι διαφορές μεταξύ των δύο χωρών να μην εκτραχυνθούν. Η Ελλάδα αντιμετωπίζει μια πολιτική και οικονομική κρίση χωρίς
    προηγούμενο και δεν αποτελεί καμία απειλή για την Τουρκία.
    Η Τουρκία θα
    έπρεπε να αποφύγει οτιδήποτε υποδηλώνει ότι “θα
    εκμεταλλευθεί τα τρέχοντα προβλήματα της Αθήνας και να αποσπάσει … εδαφικα οφέλη από την τελευταία”!
    Μάλιστα προτείνεται η δημιουργία μιας
    τριμερούς στρατιωτικής ομάδας επαφής (trilateral military contact group)
    στην οποία θα συμμετέχουν αξιωματικοί του Ναυτικού και της Αεροπορίας
    από Ελλάδα, Τουρκία και ΗΠΑ, προκειμένου μέω της συνεχούς διαβούλευσης να αποφευχθούν κινήσεις από την πλευρά της Άγκυρας στο Αιγαίο και στην Α.Μεσόγειο.
    Δηλαδή θα υπάρχει κανονικά Αμερικανός τοποτηρητής ο οποίος θα προσπαθεί να “συμβιβάσει τις διαφορές”. Όπου “διαφορές” είναι οι τουρκικές απαιτήσεις. Δηλαδή στην καλύτερη περίπτωση οι Αμερικανοί προβλέπουν απλά “ελληνικό συμβιβασμό”.
    Οι ΗΠΑ θεωρούν ότι μια ελληνική στρατιωτική ήττα και απόσπαση εδαφών από την ελληνικό εθνικό κορμό ως απόρροια της μείωσης των αμυντικών δαπανών λόγω της οικονομικής κρίσης, απλά θα άνοιγε τους ασκούς του Αιόλου αφού η Ελλάδα και οι συνέπειες θα ήταν ανεξέλεγκτες ίσως όχι μόνο στα Βαλκάνια αλλά σε ολόκληρη την Ευρώπη.
    Αντ’αυτού προτείνουν ένα είδος “έντιμης ειρήνης” με την Ελλάδα με την ουσιαστική παραχώρηση δικαιωμάτων σε περιοχές που ελέγχει η Τουρκία η οποία κατά την ίδια έκθεση, είναι το μόνο κράτος-μέλος της Συμμαχίας που αυξάνει την επιρροή του. Και κατά τον Μπρζεζίνσκι η Τουρκία είναι ένα από τα τέσσερα σπουδαιότερα μέλη του ΝΑΤΟ μαζί με Βρετανία, Γαλλία και Γερμανία.

  52. I’m Irish and voted No ,it breaks me heart that we voted yes….The people of Ireland scared into voting yes by the clueless Government

    • What did you expect. Everybody knew that in case the result would have been “no”, you would have had to vote again.

  53. γειά σου Γιάννη.

    “the small team of political economists that will negotiate on Syriza’s behalf are good. moderate people with a decent grasp of the grim reality that Greece and the Eurozone are facing (and, no, I am not part of that team – but I know the ones I am referring to).”

    On the other hand, here is what I read today in the Hellenic media:

    “Κεντρικό ρόλο (στο οικονομικό επιτελείο μιας δυνητικής κυβέρνησεως Συνασπισμού Ριζοσπαστικής Αριστεράς) θα παίξει ο Γιώργος Σταθάκης, ο οποίος προορίζεται περισσότερο για τον τομέα της ανάπτυξης. Σκέψεις υπάρχουν να κληθεί από την Αμερική και ο γνωστός αντιμνημονιακός οικονομολόγος Γιάννης Βαρουφάκης”

    (for the non Hellenic speakers the above roughly says that there are thoughts in Syriza about prof. Varoufakis to held some kind of government post in some potential Syriza government)

    I completely understand your comments that you do not wish to be part of the political game (at least not from a post like the above), but I cannot resist asking you to at least not deny the above news, giving us a slight hope that something good is going to happen. I am not the one who will ask you to consider such an invitation. You know much better than us what is better with you and, above that, what is better for your country. just in these times, hope is our last resort, and hope was the feeling to us when we read the above news (even though we know that probably is ont going to happen)

    Ευχαριστώ και καλή δύναμη.

  54. I don’t know much about the Irish situation other than the “expected” Yes vote which was delivered as “promised”.

    However, regarding Syriza in Greece I can tell you without a doubt that any attempt to sway Greek voters to vote “reasonably”, actually has the exact opposite effect and greatly swells Syriza’s numbers.

    In fact, the more the “fear scenarios” are freely dispensed, the more the voters are determined to give Syriza a chance. So, if you are a Syriza supporter this is a good thing. Fear = higher % of the total vote in favor of Syriza.

  55. Wow, professor, compliments. I’d like to thank you for this advise, people like you make my dream come true to get rid of the rotten apple in the basket.

  56. This is not a logic that can convince me to vote for Syriza mainly because I see the writing on the wall :

    if Syriza were to become reasonable so as to be in a coalition with PASOK, for example, the small fragments it is made up with, will rebel and bring down the government because they will not compromise on the memorandum: trotskiists and marxists etc.

    If it gets a majority in parliament and stops the memorandum as it has promised its voters, the EU will stop the money for internal consumption and just play the musical chairs with the debt . They have already done that, it is not sure that we will get our next pension when we go to the bank, already, because they kept the 1 billion that would have covered that.

    Is it really necessary for Greece to become the scapegoat further? Let the next one take the fall and we just hang on until then, taking the monopoly money and trying to do the absolutely necessary , in my opinion, reforms in the civil service sector etc.

    The time for saying NO was end of 1989. Now we have the tiger by the tail, and the only way to keep alive is to keep rotating it.

    • p.s. We are already getting terrible stories of cancer patients not getting their chemotherapy because of lack of money in the public hospitals.

  57. Such a great economist such a dangerous mind. Sorry professor real life isn’t a game, at least from my perspective. Start the revolution without me.

    • Of course life isn’t a game.
      Please let me remind you the words of Gregorios Dikaios “Papaflessas” at the meeting of bishops and Proestoi ( heads of rich families) in Aegio (Vostitsa) before the Greek revolution. They were having doubts about starting the uprising, because they feared that nobody from abroad would help Greece to achieve freedom. Papaflessas told them: “I am starting the uprising on the 20th of March and God help him that the Turks find without a weapon.”
      Thank God for such “Dangerous Minds”. It takes people with courage to start a revolution. Those that have secured their future within the establishment are usually the most sceptical.

  58. Hi Prof. Varoufakis, thanks a lot for the clear words, concerning Syriza. It is considered natural in the US, that the good media openly recommend voting for a certain party, why should not a neutral blogger do the same, based on neutral criteria. You did it, it is respectable.

    Concerning me, the most important what you state is the following: “the small team of political economists that will negotiate on Syriza’s behalf are good. moderate people with a decent grasp of the grim reality”.

    Perhaps is Paraskevopoulos one of them? On a talk show in Germany he gave a convincingly reasonable impression. Most people in Greece have lost trust in our parties. Concerning the bargaining skills of our politicians… Well, it is not difficult to perform better than Samaras or Venizelos. And if you are right, than the second row of politicians at Syriza seems to be from a different universe then the first row, which seems to regard it self as some kind of 1821 fighter (against whom???)

  59. An unusual post. You start with “The establishment view in Europe is that the problem is too much debt (by profligate countries like Greece) and, therefore, that the solution must involve (a) austerity and (b) structural reforms (which increase the competitiveness of the weaker states). The problem, however, is that the establishment view is profoundly mistaken ” but never outline what you actually think caused the current crisis. In Ireland, fwiw, our debt can be broken into sovereign debt (60%+) and bank debt (40%-). As a consequence it is clear that while the bank guarantee our last government instigated in Sept 2008 was foolish, it merely added to an even bigger problem, namely gross overspending (and, indeed, under-taxing) over the previous 5 years.
    Undoubtedly some in Ireland voted Yes because they feared a lack of future funding but I believe a lot of people voted Yes because they see that the Fiscal Compact has the potential to prevent governments overspending in the good times and being left with a bare cupboard when hard times come round.
    As for our alleged record of voting against “euro-silliness”, given that we have voted Yes to all EU treaties (only 2 No votes which were more about mid-term unhappiness and/or then government incompetence and arrogance in not campaigning properly) I’m not sure that particular point stands up.
    One of the biggest problems facing Ireland is that, a number of years ago, the minor partner in government decided that Ireland should be “closer to Boston than Berlin”; this led to a serious reduction in taxation, reducing our tax base, and also a rise in incomes, especially in the public service. When the crisis broke in 2009, the country had a huge deficit and no decent tax base upon which to ride out the recession. Coupled with the bank guarantee this suddenly meant that we were in debt heavily and likely to remain so for a large number of years.
    Having voted Yes to the Fiscal Compact will not solve this problem (I don’t really think anyone thought that was what it was designed to do) but should ensure against a recurrence. We still have to work our way out of debt and that is what we are doing, as a nation, even though the cost is exceptionally hard to bear. I’ve lost my business and have no immediate prospects but I still voted Yes.

    • Sorry Dermot but I have written a whole
      book (The Global Minotaur) on what caused the Crisis. I may be wrong but I am certainly not theory-less.

  60. “The establishment view in Europe is that the problem is too much debt”

    This view is actually correct. Because, undeniably: if the debts wouldn’t be as astronomic as they are, the major problems wouldn’t exist. No?

    As for the fiscal compact: yes, it is idiotic. But so are as well the ESM, ESFS, IMF loans, the bilateral credits and whatever else the throwing of good money after bad was/is called.

    Interesting chart here: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/05-2/European%20Bailout%20Costs.jpg.

    I share your hope that the ultra leftish Syriza will be elected and forms a government. Because, quite unlike you, I do hope that this party manages to get Greece out of the EMU asap. For the better of the Greeks and of all the other countries of the EMU. Which is an undemocratic monster that by design can’t work sustainably, you know the reasons.

    I also share your view about the vicious circle where banks get money for 1%, give it to their nation with a whopping mark-up, only to be bailed.out with the very same money then. If ever there was a scheme to serve a few, may it cost the majority what it wants, it is this. Who came up with this process in the 1st place?

    Anyway, what I’m missing beyond all this finance alchemiae is the new, sustainable business model for Greece, one where she has more or less constantly a primary surplus and no current account deficit.

    Because no matter if she stays in the EMU or not: she must change a whole lot of things. If she doesn’t, she will mostly depend on what standard of living the taxpayers of other countries are willing to fund. Which is not a future I’d like to see for Greece.

    • It is as correct as to say that a cancer patient is suffering from a Pain Crisis: true but irrelevant

    • @VSS: “The establishment view in Europe is that the problem is too much debt”

      This is a problem, but not the root cause. the root cause is the absense of exchange rates!

    • @ Yanis

      A very relevant difference is that the cancer patient didn’t inflict the illness consciously upon himself by his own deeds and omissions, and even if, once he knew he is very sick, he stopped to increase the damage.

      Ah, BTW, what I’m still missing beyond all this finance alchemiae is your proposal for the new, sustainable business model for Greece, one where she has more or less constantly a primary surplus and no current account deficit. Now?

    • vss ,n eu d
      ————-
      “@VSS: “The establishment view in Europe is that the problem is too much debt”

      This is a problem, but not the root cause. the root cause is the absense of exchange rates!”
      ————-

      The too much debt problem is not a problem when the cycle of the capitalist business system is at its upswing.
      The true cause is the nature of the overall system.

      Now the objective is to stall/pause the system enough so that:

      1. bad debt of the main prevailling in the system institutions is covered as much as possible
      2. Quality of life diminishes so much that life gets cheaper

      Then ,those that have the money will restart the system by providing liquidity ,while they will have already acquired assets for nothing.
      This always happens. The difference with Europe is that maybe they misjudged the situation and their timing is off and/or they found a bigger opportunity to exploit the crisis even more.

      N eu d ,the exchange rates would not have stopped the crisis. But it would have been more manageable.
      ————

      vss
      ——————-
      “Ah, BTW, what I’m still missing beyond all this finance alchemiae is your proposal for the new, sustainable business model for Greece, one where she has more or less constantly a primary surplus and no current account deficit.”
      ——————-

      You are at the wrong site.

    • @Very Serious Sam

      Good point, especially the last statement: what nobody is focusing on while debating whether the bailout is correct or not, is that Greece has hoplessly outmoded state sector, rife with inneficiency and often corruption. That is what is holding the economy back and no one is thinking seriously about changing this.

      Syriza’s good (?) intentions are useless since they are adamantly anti-reform, except taxing capital more – cause that’ll really bring in the FDI… right!

      And this is why Yannis’ post, however well intentioned, is meaningless.

      He makes the valid point that debt was not the EZ problem – true it was a banking crisis… everywhere EXCEPT Greece, where it WAS a debt and balance of payments problem! Most importantly he fails to note that everything he proposes addresses the needs of every other country BUT Greece. Greece needs structural reforms more than anything else.

      True it doesn’t need more debt, but regardless of what disastrous recipe is used for funding & fiscal adjustment, if the structural reforms are not implemented it is headed on anne-way trip to oblivion!

      If structural reforms ARE implemented, a solution can be found because there will be an underlying viable economy, even if it requires extensive renegotiation of agreements.

      Renegotiating before reforms are implemented is again putting the cart before the horse, like we did when the Euro was created.

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