Max Keiser and Stacy Herbert interviewed me, on the Keiser Report, on my notion of Ponzi Austerity, with particular reference to Spain, Ireland and Greece. Watch the video below and let me know what you think. But before you watch it, allow me to state one disagreement of mine with Max and Stacy’s interpretation. Max (in particular) suggested that, by shifting debt around (between the EFSF, the ECB, insolvent states such as Greece and Spain etc.), some ECB bankers or functionaries were profiting. I do not believe they were. Take for instance what happened last month: Greece borrowed 4.2 billion euros from the EFSF so as immediately to pass it on to the ECB so as to redeem Greek government bonds that the ECB had previously purchased in a failed attempt to shore up their price. This new loan boosted Greece’s debt substantially but netted the ECB a profit of around 840 million (courtesy of the 20% discount at which the ECB had purchased these bonds). That’s all true and accurate. But it is incorrect that ECB bankers pocketed that 840 million. Who did? No one! It was lost inside the ECB’s balance sheet! Without a trace. So, the situation is worse than Max assumes. For if some unscrupulous characters in the ECB were to profit from Greece’s pain (or Spain’s), at least there would be a logic (however sinister) to what they are doing. But there is none! All that we witness is organised madness, guided by an ideological commitment to an unworkable status quo! Now, enjoy the video. And keep your comments coming.
- October 9, 2012 -
June 18, 2012
[...] Varoufakis makes lots of good points about the Euro, but this might be one of the best: “ Max (in particular) suggested that, by shifting debt around (between the EFSF, the ECB, [...]
June 16, 2012