The Eurozone after the November Eurogroup ‘Greek Deal’: On the current state of play

On November 27th, 2012, the Eurogroup (comprising the Eurozone’s finance ministers) reached a decision on Greece. Its essence is a guarantee that Greece will remain in the Eurozone (and therefore off the Northern European agenda) for another ten to twelve months; at the very least until the German federal political cycle has seen through the election of a new Bundestag. The repercussions of this short-sighted agreement are grave not only for Greece but for the Eurozone, and indeed the European Union, more broadly.

To accomplish the task of taking Greece off the minds of markets and Northern European electorates for this space of time, Eurogroup ministers came to an agreement with the IMF on how to patch up their conflicting agendas on Greece by means of a joint communiqué according to which Greece’s de-railed Bailout Mk2 is, supposedly, back on track. The basis of their agreement is twofold:

  • The IMF will pretend it believes Europe’s claims to have rendered Greece’s public debt viable without an OSI (i.e. a haircut in the loans provided to Greece by the troika, aka its European partners), while
  • Europe will pretend that it can do this without an OSI.[1]

The idea here is that, yet again, the Eurogroup-ECB-IMF alliance is not ready, politically, to reveal the truth to its various constituencies.

  • The German and Dutch governments (not to mention the Finnish) feel it is impossible to tell their Parliaments, and voters, the terrible truth that some of the money they have put up as part of Bailout Mk1 & Mk2 will not be retrieved.
  • The IMF cannot admit that it allowed Europe to involve it in a country program that does not fulfill the debt-viability conditions that any IMF program ought to.
  • The Greek government has invested its survival on misleading its constituency into believing that the tailspin of the Greek macro economy can be arrested under the current arrangements.
  • And, finally, the ECB is struggling to maintain the illusion that it can remain faithful to its no bailout clause vis-à-vis governments, especially in view of the great challenge awaiting in relation to Spain and Italy.

This holly alliance of subterfuge and double-speak raises a pressing question: What does this new ‘Greek Deal’ mean for the Eurozone in the medium to long run? Before discussing this question, a quick look at the latest ‘Greek Deal’ may be helpful.

The latest ‘Greek Deal’: From OSI to PSI Mk2

Last year’s Greece’s Bailout Mk2 was predicated upon the fantasy that Greek debt would fall, as a percentage of GDP, to 120% by 2020. The specific number, of 120%, was chosen by the IMF as the level that allowed it to remain part of the Greek ‘rescue’ effort (nb. since, unlike the Europeans, the IMF is charter-bound not to provide loans to a country with a runway debt to GDP ratio). What gave ‘credence’ to this target (in the eyes of the unschooled and uninitiated into the laws governing imploding macro-economies) was the substantial haircut that was part and parcel of Bailout Mk2 – the so-called PSI, which imposed ‘voluntarily’ on private bond holders a write down of 54% of Greek government bonds’ face value (on the basis of a swap with longer maturity bonds) which, in present value terms, translated to a 75% haircut. The gist of Bailout Mk2 was: Greece would be back on track on the basis of further austerity, a new 130 billion euro loan for Greece, a 100 billion private sector haircut, and a privatisation drive that would, supposedly, raise 50 billion euros.

As many of us were predicting at the time, screaming our predictions from the rooftops, it took only a few months for the predictions of Bailout Mk2 to reveal themselves as pure fantasy. Less than a year later, Europe had to confess that Greece’s debt to GDP ratio was edging toward 200%. Clearly, the IMF’s Ms Christine Lagarde could no longer pretend that the IMF was faithful to its own charter in remaining part of the Greek ‘program’. And since the German government needs the IMF to remain on board, so as to convince the German conservative side of politics that its ‘Greek strategy’ remains intact, some new ‘deal’ on Greece was necessary that would allow for a re-freshed claim that Greek debt can be pushed down to around 120% by 2020.

To procure this magic number, the powers-that-be had, somehow, to argue that Greece’s GDP will rise by about 50 billion while its debt will fall by 40 billion (nb. for if this were to happen, by 2020, Greece’s debt to GDP ratio would be back to just over 120%, thus keeping the IMF’s board, if not happy at least, pliant). This is precisely what they announced on 27th November: a boost in GDP by 50 billion and a concomitant reduction in public debt by 40 billion.

The first observation regarding these two numbers is the audacity of the first one. At a time when Greek GDP is shrinking inexorably, and with new austerity measures that amount to fiscal waterboarding of a national economy (new austerity measures of 12 billion euros for 2013 alone), the troika of Greece’s lenders had no compunction in predicting that, somehow, the Greek economy would miraculously achieve a growth rate of, on average, more than 4% annually for at least eight years. And all this with a broken banking sector, no serious investment by the European Investment Bank and, to boot, within a Eurozone that is caught firmly in the clasps of a double-dip recession!

Setting aside this preposterous ‘plan’, let us now turn to the Eurogroup’s other ‘number’: the planned reduction of Greek public debt of 40 billion. How do they intend to effect this? By three means.

First, by cutting 1% off the interest rate Greece pays for the loans given in the context of Bailout Mk1. How much is this going to shave off Greece’s mountain of public debt? Two billion, is the answer. OK, 2 billion gone, 38 to go.

Secondly, by postponing by 15 years the repayment of capital and 10 years the repayment of interest on Bailout Mk2 loans. How much does this reduce Greece’s debt by? If this is a mere re-scheduling, as it seems to be, it does nothing to reduce debt per se. What it does do is to lighten the repayments that the Greek government will have to be making for the period of grace granted. (If the interest rate is, later, pushed below 2% then there will be an element of debt relief, but nothing that makes a substantial difference to the 2020 target.)

Thirdly, by returning to the Greek government the profits made by the ECB on Greek government bonds that the ECB purchased, at a discount, between 2010 and 2011 as part of the failed SMP program (when Mr Trichet’s ECB purchased second hand Greek, Irish and Portuguese bonds in an ill-fated attempt to prevent these states from going under). How much will Greece get from that? Around 7 billion is the answer.

So, by means of an interest rate reduction and an ECB-profit return, 9 billion euros will be shaved off Greece’s debt. This leaves us with 31 to go in order to reach the target of 40 billion announced by the recent Eurogroup decision. Where will these come from? Answer: By means of a debt buyback. Greece will be lent more money by the EFSF with which to buy back its own post-PSI bonds and tear them up (or ‘retire’ them, in the trade’s own language). At the time just before the Eurogroup met, Greek bonds were trading at a price of 35% of their face value. Assuming that Greece was given 16.7 billion euros from the ESFS (in new loans), it could buy back (at that price, 35% of face value) 47.7 billion of its own bonds, in order to retire them. Hey presto, the debt reduction of 31 billion (47.7-16.7) that the Eurogroup announced would be a reality!

Alas, if Greece is given enough cash to buy a significant part of its distressed bonds in the open markets, the increase in demand for these bonds will push up their price to an extent that the debt buy-back will be pointless. Already, the mere rumour of this debt-buyback pushed Greek bond prices well about the 35% level. For this reason, the Eurogroup decided to fix the debt buyback price at the 35% level that was the going rate on the preceding Friday. In other words, the proposed debt buyback will not take place at a free-floating price but at a price set by the Eurogroup which was designed to ignore the increase in demand caused by the… debt buyback itself. To put it differently, the Greek government must now convince bond holders to sell their Greek government bonds to back to the Greek government at prices which are now much lower than those determined by demand and supply (i.e. by ignoring the effect on demand that the EFSF loan to the Greek government has effected).

To gain a perspective on the Greek government’s problem, in convincing the private sector to sell 41.7 billion worth of bonds back to it, at 35% of face value, it is worth nothing that the total value of bonds in the hands of the private sector, globally, is 61.8 billion. Of that, 15.2 billion is held by Greek banks, 8.6 by Greek pension funds and then rest (38 billion) by non-Greek investors, mainly hedge funds. So, the success of the debt buyback program will depend on non-Greek investors. Assuming that Greek banks and pension funds can be made ‘an offer that they cannot refuse’ by the Greek Finance Ministry (nb. already the Greek Finance Minister has told them that it is their… ‘patriotic’ duty to cough up their bonds at the offered price), the Greek government will be short by 23.9 billion (nb. it needs to buy back 47.7 billion, minus the 23.8 held by Greek banks and pension funds, equals 23.9 billion). Will foreign institutions, and hedge funds in particular, ‘play ball’? Or will they hold out for a higher price (perhaps for a 100% redemption even)?

With these thoughts in mind, it is clear that the latest Eurogroup decision will go down in history as the precursor to PSI Mk2. The reader may recall that this Eurogroup summit was supposed to, at the IMF’s behest, usher in the long awaited OSI. But resistance from Germany led to the debt buyback idea which is no more than a disguised new PSI primarily for Greek banks and pension funds. Not only will we fail to achieve the target of 40 billion debt write off but, at once, the already bankrupt Greek banking and pension system be given another major push into the mire of irretrievable bankruptcy; the very same banking (and pension) system which is supposed to provide the financing and backing for a rebound of Greek GDP to the tune of 4% per annum…

What does this all mean for Greece, for the Eurozone, for Europe more broadly?

It is clear that the Eurogroup cannot be serious about either its Greek debt or its Greek GDP targets. The November 2012 decision was merely a pretext for releasing withheld loan tranches to Greece so as to buy another year or so for Europe to patch up, in similar fashion, its crisis elsewhere – in Italy and Spain in particular. Meanwhile Greece has been condemned to another year of misery, failed targets, depression etc.

The Eurogroup’s underlying ‘logic’ is that, as long as the Samaras government plays well its ‘model prisoner’ role, Greece will be given its OSI after the federal election in Germany is over, in September 2013. Many commentators, even those critical of Europe’s dithering, welcome the implicit acceptance that an OSI is inevitable. I think they are wrong. Take for instance last year’s PSI. What did it prove? It proved that a haircut can be meaningless if badly delayed. While it is true that a haircut of privately held debt in 2010 would have been helpful, Europe’s insistence that there would be no such haircut (and its desperate attempts to fill the gap by huge loans and austerity) ensured that, when the haircut came (with the PSI), it was too little too late. Similarly with the impending OSI: when it comes evenutally, after the awful delay effected by the latest Eurogroup’s shoddy ‘Greek Deal’, it too will prove too little too late and too toxic not only for Greece but for Europe as a whole. In short, delaying the delivery of the inevitable medicine turns it into poison.

So, what will come of Greece, given the latest Eurogroup ‘decision’? It is my fear, and belief, that the country is becoming a version of Kosovo – a protectorate in which the euro remains the currency, sovereignty is minimal, the population is ruled over by a glorified kleptocracy with strong links to Berlin and, last but not least, a permanent migratory flow is established that sees the young and the skilled move to northern Europe and beyond.

Turning briefly to the significance of the latest ‘Greek Deal’ for the Eurozone as a whole, the omens are particularly troubling for Spain and Italy. First, there is the small matter of the inbuilt domino effect. The reader is reminded that the reduction in Greece’s interest rates (which will be enhanced in the not too distant future further, as the Greek state grows increasingly unable to repay its partners’ loans), will translate into losses by the Spanish and Italian governments (since other troika ‘program’ countries, i.e. Ireland and Portugal, have been spared). The fact that the markets’ expectation of some OMT assistance for Italy and Spain are keeping their bonds’ yields low, for the time being, does not alter the fact that the vicious contagion dynamic is gathering strength.

Beyond this ‘small’ matter, Rome, Madrid and, indeed, Paris must now reckon with a Eurogroup decision that demonstrates how bogus all talk of a Growth Pact really has been (since President Hollande raised it as an issue a few months ago). The fact that the Eurozone’s finance ministers declared, without the slightest hesitation, that substantial growth will come to depression-hit Greece without an iota of a smidgeon of a hint of fresh public investment reveals that Europe is truly blind to what it will take to deal with the recession it faces in aggregate and with the various depressions in its Periphery.

Last but not least, the readiness to sink Greece’s already bankrupt banks further into bankruptcy (by imposing upon them surreptitiously PSI Mk2), rather than implementing the June 2012 Agenda for decoupling the banking crisis from the sovereign debt crisis, is yet another sign that the Eurozone remains on the road to ruin. And, as long as this is the case, the European Union will be increasingly buffeted by the centrifugal forces (especially those emanating from London) that may well cause its evolution into, at best, some form of NAFTA-like quasi-free trade zone.


[1] OSI stands for ‘Official Sector Initiative’, and is juxtaposed against last year’s PSI (Private Sector Initiative). In essence, PSI was a nominally voluntary, but in reality compulsory, haircut on Greek government debt held by the private sector, whereas OSI refers to a haircut taken by the troika of Greece’s official lenders – the IMF, the ECB and the EU’s member-states. Note however that the IMF is bound by its charter never to concede to a haircut. And given that the ECB is vying for similar ‘superseniority’ status, an OSI is widely expected to hit the taxpayers of EU member-states that have lent money to Greece in the context of Bailout Mk1 and Bailout Mk2.

79 thoughts on “The Eurozone after the November Eurogroup ‘Greek Deal’: On the current state of play

  1. Pingback: La cólera antialemana del FMI y su relevancia para la periferia deprimida de la Eurozona | El Blog de Juan Pérez

  2. “About Stiglitz’s book, your position implies that people chose the price inequality of their own free will.”

    Could you make that a bit clearer for me because I’m having trouble seeing it.

    So what changed then? And I am not asking because I want to “convert” you or anything, I just really want to understand. Because, here’s the funny thing, I used to defend your position. And as far as Greece is concerned, to an extent, I still do. But there are certain realities that I feel like I cannot ignore anymore, and what changed my mind, is not the situation in Greece, but the situation in the U.S.A. beleive it or not. I was there in 2008, one of the best experiences I’ve had, but also quite shocking. Because you see two different worlds unfolding right before your eyes. You walk the streets and you see affluence and destitution at the same time. And it just does not make sense. So I’d really like to know what changed for you.

    • Ilias – I wasn’t fair. From Amazons review “growing inequality is not inevitable: moneyed interests compound their wealth by stifling true, dynamic capitalism. They have made America the most unequal advanced industrial country while crippling growth, trampling on the rule of law, and undermining democracy.” how is this possible?

      1. How are the wealthy able to stifle dynamic capitalism?

      2. How were they able to cripple growth?

      3. How were they able to trample the rule of law?

      4. How were they able to undermine democracy?

      I’m suspicious of Stiglitz but if I can tell you what I think.

      .1. They bought power and influence and used it to exploit the worker who had no way of defending himself.

      2. They used their power and influence to manipulate politicians into moulding the economy into something that served them rather than the people. They robbed people of their opportunity.

      3. The used their money, power and influence to undermine the legal system. They bribed and seduced the law makers into doing what they said was best for the economy. They said what was best for the people was best for them, trickle down economics.

      4. Again, they used their power and wealth to manipulate the media and to promote politicians who represented their interest and suppressed those that did not do their bidding.

      And this is what I used to think the solution was

      In short what we need is a stronger government with stronger regulations to make it impossible for these kind of abuses to continue. Rules and regulations need to be black and white and not open to the interpretation by those with most money. Government needs to be forced to act in the interests of the people and not those with the biggest wallets. Money has to be taken out of politics, money needs to be a political tool that is rendered obsolete.

      How did I do?

  3. “And yes, nowhere has true economic freedom. What you can say is the country with the lowest taxes and least regulations are the ones where people have the greatest political and economic freedom.”

    I beg to differ. Low taxes means low public spending. This means that public services that need to be of a high standard, like education for example, are either non existent or just plain shit. Which stifles social mobility, which hurts the economy, which brings everyone down. I suggest you read http://www.amazon.com/The-Price-Inequality-Endangers-ebook/dp/B007MKCQ30 (who is anything but a communist). Your model of economic freedom is good for those who can afford it, for those who can seek quality services (read Ivy league schools or comparable) in the private sector for high prices. Should everyone else go screw themselves then? Denmark and Sweeden are renown for their extremely high taxes. I guess the Danish and the Sweeds are not free, economically or politically. I guess it is Ireland and Iceland (as it is now) and Singapore that are the trully free ones. Are you joking?

    Low regulation? Does 2008 ring a bell? Does the BP gulf of mexico oil spill ring a bell? Does Enron ring a bell? We already know what happens when regulations are low and/or the state does not strive to enforce existing regulations. We’ve had plenty of examples. And yet people keep advocating that taxes, public spending and regulation is the source of all evil. It’s mind boggling that you are not even willing to consider that your economic model just might be wrong.

    And about my definition of freedom. First of all will you please stop quoting wikipedia? It’s not the bible. Second of all you are trapped in the notion of individual freedom. We are not hermits or monks. We live in buzzing communities. Clearly individual choice must be taken in that context. If you think the people that can do whatever the hell they fancy are free…I don’t know what to tell you. This is exactly why I did not want to have this discussion. You are one of the people that deify the individual. I don’t. It is impossible for people like us to see eye to eye, so let’s just drop it.

    “If you have economic freedom how can someone oppress your political views? Of course they cant. Unless of course they tell you who and who you cannot give your money to.”

    You live in a bubble Richard. In an earlier post you also mentioned something about political contributions. Do you realize that in order for you to financially contribute to the political party you beleive in, you need to actually have the money? What will a cook in London or a builder in Ireland or a bus driver in New York contribute? How can they use their economic power to affect policy? They can’t! Because the do not have economic power in the first place. And this is where what you advocate for leads to. We’ve seen it countless times, how much more do you need before you open your eyes?

    • Ilias – Let me just say I understand your position and that I also used to agree with it & defend it.

      About Stiglitz’s book, your position implies that people chose the price inequality of their own free will.

  4. “If I hold you captive against your will would you class that as violence?”

    Have you met many people that are willingly in captivity? Does it even matter? Yes, of course it’s violence. The only question is, is it “legal” violence (police arresting a criminal) or illegal violence (an ordinary citizen enforcing his own “rules”). As long as human rights are respected what exactly are we talking about here?

    “Personally, do you think it is *moral* be able to break the law if you have not harmed anyone or anything and/or for not doing something?”

    Thankfully, it does not matter what you and I think. The “law of laws” so to speak is the constitution of each country. So if a law is not unconstitutional then it must be followed. If it is unconstitutional it must be followed until the relevant court concludes is unconstitutional and cancels it. I really do not see what you are asking me here. Why don’t you just tell me what it is you are trying to get at?

    “I’m asking a simple question, how is it possible to be oppressed if you have complete economic freedom?

    I have trouble understanding why you are hell bent on forcing an answer out of me that I am not willing to provide. I know what Stockholm syndrome is, what does that have to do with our discussion?

    If you have economic freedom, how exactly could your political beliefs be suppressed? What form would the oppression take? You see what I mean? What would be the mechanics of the situation?”

    A brief look at the history of public administration in Greece will solve that one for you. Or even art in Greece. In short, if you are on the right side of the political spectrum, you are pretty much screwed. This has been the case over the last 30 years or so. Before, it was the left that got screwed.

    Your whole notion of economic freedom is just wrong. Just how many people can you name that are “free” economically? If you think that a worker in Britain is economically free you have another thing coming. Go check the hours and the salaries of a cook in London (highest wages in your country for cooks). Then check rent. Then come talk to me about how “free” these people trully are. True economic freedom is not about freedom of choice, it’s about how much you earn. If you work and you cannot earn enough to support yourself, you are not free. This is pretty much the case globally right now. how do you change that? Politics! There you have it.

    • Ilias – “Have you met many people that are willingly in captivity? Does it even matter? Yes, of course it’s violence. ” – Okay.

      “Thankfully, it does not matter what you and I think.” – You have no comprehension as to what freedom is. None. The *only* thing that matters is what the individual thinks. https://en.wikipedia.org/wiki/Liberty

      ““I’m asking a simple question, how is it possible to be oppressed if you have complete economic freedom?” – I have trouble understanding why you are hell bent on forcing an answer out of me. Sorry. Let me tell you why you cant have political freedom if you don’t have economic freedom.

      If you do not have economic freedom you are forced to contribute to a system that is in conflict with you political views. Ie your political beliefs are suppressed.

      If you have economic freedom how can someone oppress your political views? Of course they cant. Unless of course they tell you who and who you cannot give your money to. In which case you don’t have economic freedom

      Okay so you have your economic freedom but you want to live like a communist in a capitalist society. No problem, you find like mind individuals and you live in a co-operative. Nothing is stopping you from living like a communist.

      If you have your economic freedom but you want to live like a capitalist in a socialist society you are free to reject the services of the state in favour of private companies.

      As things stand today socialists are forced to contribute to capitalist systems, capitalists are forced to contribute to socialists systems. In short there is no political freedom *because* there is no economic freedom.

      And yes, nowhere has true economic freedom. What you can say is the country with the lowest taxes and least regulations are the ones where people have the greatest political and economic freedom. And Wales and Greece are pretty far from the top of this list.

  5. “Okay so we are on the same page. We have a major problem. We have a corrupt entity in the ECB/Greek government/EU that is indebted the Greek people to unsustainable levels deliberately.”

    Yes, very much so deliberately. But the end is different than “to decimate the wealth of the Greek people”. Because, ok, say for the sake of arguement that since 1997 the ECB was complicit. What about in the 80s? Because again, this mess is 30 years in the making. The goal was re-election for the greek politicians and that is it. The ones that trully loved the country and it’s people, were cast aside.

    “Okay, so why dont Greeks escape the madness?”

    Because they are part of it! Let me give you one simple example. As you might know PA.SO.K was in power from 1981 to 1989 under Andreas Papandreou, father of George Papandreou. From 1981 to 1985 government spending sky-rocketed. Salaries sky-rocketed. But inflation was running wild (a bit less than 20%), while the drachma was being devaluated. So it didn’t matter in the end. 30 years later, I still meet people that tell me “Andreas put food in peoples plates.” They don’t get it. You do not need to be an economics expert to know what “inflation” or “devaluation” means. Your laguage skills are enough for that. But as soon as you point out that yes, your salaries went up but your spending power didn’t you know what happens? They get angry at you for accusing their “great leader.” Greeks are complicit, throught ignorance if you will, but they are.

    “Let me be frank. Economic freedom is the only thing that counts. If you have economic freedom you have complete freedom. It is impossible to be oppressed if you have your economic freedom.”

    This is were we disagree, but it is a long discussion and what will happen should we ever have it, is that we will not budge from our respective positions. My point of view is that first comes political freedom. The rest follows.

    “About Greece’s problems. I agree with you. And as you highlight, all of the problems are connected to government, not the people.”

    This is not exactly what I am saying. I blame the people as well. Government in Greece is elected, like anywere else. The people brought these politicians in power. And they had options. In all sides of the political spectrum, they had options. Take the current SY.RI.ZA. our very own radical left. Before it became the current monstrosity, it was a moderate left party, advocating, above all else, the value of dialogue and concensus in politics. And it barely made it in the parliament. As soon as it started moving to the far end of the spectrum (and that is pre 2008) it started gaining momentum. You know what the leaders that advocated concencus and cooperation are called today, buy the left voters? Traitors.

    And it does not end with the left. We had good choices to make. There were good parties to vote for, but the voters never did. If a voter cannot be bothered to read a newspaper or 2 every week, I am sorry, but I cannot say that a person like that is not to blame.

    “You keep bringing up the majority as if that makes things okay. Did you support slavery in the USA because blacks were in the minority?
    In short, majority is no judge of morality.”

    It is in democracies. Whether this is good or bad, is another topic, but this is the best we have for now. I were to address your example about slavery in the USA I would tell you look at that time. Do not judge it by today’s standards. Was there anything moraly questionable THEN? And the answer is, back then, no. Sad as that may be, and it really is, it’s the truth. Morality isn’t and has never been absolute, outside of relegion. It has always been relevant to the culture. To think of men and women as anything but equal in our culture is moraly questionable. For the Arabs though, it’s perfectly normal. In short, you need to put the respective culture in the picture before you start talking about morality. And if you look at it that way, then yes, morality is shaped by the majority in that culture.

    “You keep bringing up anarchy, anarchy from what I understand is ant-state.
    Do you believe that a state can only exist through coercion?
    You think the state’s role is to coerce the minority?
    You think the role of democracy is to decide who gets coerced?”

    Anarchy is anti-state, but you were advocating against state violence, which I enterpreted as law enforcement agencies. Without those, the state will collapse to a form of anarchy.

    I do not think coercion is part of any democracy. I am not sure what you are refering to. Again, in democracies, the state throught law enforcement and the justice system is responsible for protecting the rule of law, which as you yourself said comes from the people, thus closing the circle leading all the way back to democracy. This is what I mean when I say “legal state violence.” Law enforcement and nothing else.

    • Ilias – Why are you giving the Greek government a pass? If you borrow money from the bank under a set of pretenses which sound reasonable. And then 10 years down the line the bank said we made a mistake now you have to pay us back the loan plus another 20% you would refuse to pay and you would let it go to court. It is as simple as that. Your attitude is giving the government a pass for doing something illegal. Well it would be legal if it were carried out by any other organisation under the sun. You see what I mean. Just because the Greeks took what was offered does not make them complicit in the slightest.

      Let me say that again. Just because Greeks accepted the money through government jobs or whatever does not make them complicit. Not even remotely. A lender cannot lend to you under one set of agreements and then change it after the fact.

      And then you go on to giving the ECB a pass! Forget what was happening pre Euro, all that could be disguised with inflation. The Euro has exposed the government.

      You say you understand but I am not sure you do. “Because, ok, say for the sake of argument that since 1997 the ECB was complicit.” Again, did you read the source I gave from Bloomberg? Bloomberg have the ECB documents to show it is a fact. Their law suit was to get the ECB to admit ownership of the documents. If you only believe something is a reality if the government says it is, okay, but lets not pretend there is any doubt about the facts. No one is saying Bloomberg have fake documents. Not even the ECB.

      “My point of view is that first comes political freedom. The rest follows.” You’ll have to explain that to me. How is it possible for you to have political freedom if you do not have economic freedom? I put it to you that it is impossible. When you do not have economic freedom it means you are forced to contribute to political parties and/or activities that you do not agree with. War for example. That is the opposite of political freedom.

      About slavery. Exactly. What is socially acceptable changes with time.

      About violence. I was not clear. Specifically I mean the initiation of violence against peaceful persons. Not violence in general. What are your thoughts on that?

  6. @ Richard

    Yes the EU comission is not elected, but we are talking about the future here. I am anything but convinced that European Government will remain as it is now post federalisation. Again, it remains to be seen.

    I did read your sources, and they were not the first sources I read that state that the EU and ECB knew. And to any one showing me things like that I have the same response. Well of course they knew! They are not bloody idiots! And we knew that they knew. But on one hand you have 2 institutions that allow you to be part of a currency union when they know you don’t meet the criteria, on the other hand you have your own leaders, who know full well what is happening (everybody knew, now everybody is acting surprised…) and they did not bother doing anything about it. Who would you blame?

    There is a point after which reality gets distorted so much, you know you must lie to yourself to stomach it. This is what happened here. Everybody (still) is collectively lying to ourselves. We knew the numbers. The real ones. Do not let anyone tell you any differently. No one asked because the money kept flowing. The people who were warning us for the past 20 or so years ( the first time one spoke of an IMF program for Greece, was in 1993 in the parliament…) suffered the most brutal punishment by the media and the electorate (the Golden Dawn is almost at 15% now, a nazi party, while the Libertarians of Drasi could not gather a measly 3%). Anyone who suggested that our current course is not viable was ridiculed, marginalized, branded as neo-liberal and cast aside. And you want me to blame the ECB. Well no. If we had done half of the things we were supposed to do as far back as 30 years ago, I would. But now, no.

    I have no doubt in mind you have a far better grasp of economics than me. What you fail to see is that this is deeply political problem Greece is facing. The crisis is not an economic crisis, it’s a crisis of institutions, social values, democracy, education and politics all at once. You see only the economic side, which is just a symptom, not the malady itself, and I completely understand why. You simply do not have enough information. But trust me when I tell you Greece has been a ticking bomb for the past 30 years but we could have disarmed it. How much the ECB knew or when makes little difference to me, because we knew, and we could have fixed it. Now it’s too late to do it on our own.

    About state violence I think you are missing my point. Let me address your statements one by one:

    “A sovereign state must monopolise violence to enforce the rules that the majority decides”. We are in big trouble if the police and/or the courts start acting in the interest of specific political parties. ie they start getting involved in the democratic system.

    State violence (law enforcement) does not act in the interest of political parties. It acts in the interest of the rule of law. Together with the judicial system, they are one of the pilars of any democracy. The majority decides the rules (laws) and follows them. Any one who does not want to comply will be dealt with by law enforcement. I ask you to name one modern democracy where this is not the case.

    “Without state violence, you can have no rule of law and thus no democracy. ” As far as democracy being unnecessary in a society without state violence I agree 100%. The law has nothing to do with democracy, see my previous point.

    Here you completely missread my point and clearly you have a very flimsy understanding of democracy. The law is not a cold hard thing, that is not related to society. It is the rules that society decides to live by. It is the very heart of democracy. A society without state violence collapses to anarchy. I hope this is not what you advocate for.

    With regards to your support of the initiation of violence. You think it is necessary for you to be able to cage or kill someone if they do not do as you tell them? If so can you give an example of a circumstance?

    I do not support violence in any way from anyone other than law enforcement, when all other means have been exhausted. This is my point. It is not me or you that “tells people what to do”, it’s the law. And what is the law again? Read above. If you do not like that system of government, change it. Create your own political party and try to convice the electorate of your ideas. Until then, everybody plays by the same rules. And state violence (law enforcement) will guarantee that.

    • Ilias – Okay so we are on the same page. We have a major problem. We have a corrupt entity in the ECB/Greek government/EU that is indebted the Greek people to unsustainable levels deliberately. The response to this has been to decimate the wealth of the Greek people. What we are looking at is a heist, plain and simple. It is the way loan sharks operate. So you say everyone knows this. Okay, so why dont Greeks escape the madness? Because there is one party with the monopoly on force. It takes away people’s ability to vote with their wallet and that is the only true democracy. For all the reasons you highlight voting is a farce.

      “The crisis is not an economic crisis, it’s a crisis of institutions, social values, democracy, education and politics all at once. You see only the economic side, which is just a symptom” Let me be frank. Economic freedom is the only thing that counts. If you have economic freedom you have complete freedom. It is impossible to be oppressed if you have your economic freedom.

      About Greece’s problems. I agree with you. And as you highlight, all of the problems are connected to government, not the people.

      You keep bringing up the majority as if that makes things okay. Did you support slavery in the USA because blacks were in the minority?

      In short, majority is no judge of morality.

      You keep bringing up anarchy, anarchy from what I understand is ant-state.

      Do you believe that a state can only exist through coercion?

      You think the state’s role is to coerce the minority?

      You think the role of democracy is to decide who gets coerced?

      About the law, ultimately that is decided by the people not the state. The legal system has nothing to do with the state or democracy https://en.wikipedia.org/wiki/Jury

      And about changing things, yes I agree.

    • @Richard

      I am not giving the Greek government a pass. Blogs like this are being used by people as examples to go out and say “see, it’s not out fault, therefore we should not be doing anything about it.” I am simply trying to point out that this is a democracy, the government is elected, and if it’s a bad one again and again and again, the voter must have some responsibility. One cannot be trusted to decide for the fate of his country trhough voting and when things go wrong pretend that he is not to blame. At the end of the day, if the voters do not want to assume responsibility for the fate of their country, lets go back to monarchy and spare ourselves the elections every 6 months.

      The reasons it seems that I am giving the ECB a pass are similar. People are hiding behind the monstrous mistakes the EU and the ECB made to give Greece a pass. Well I’m sorry no. Even without the EU and ECB there are so many things wrong with the country. This crisis can be an opportunity to fix these, for good. Greeks have a long standing tradition of blaming anyone but themselves for what has been happening to us, throughout history. And whether they are right or wrong, you look a the specific problem and you can find catastrofic mistakes that greeks made. This cannot happen again. Just because the ECB and EU screwed up does not mean we can use it as an excuse to say that everything was ok untill they got involved. Hardly anything was ok and we need to see that and act now.

      Keep in mind that our series of exchanges happen in the context of a blog that does support your point of view. A blog that I follow. So clearly I see some truth in it. My one issue with the author (sorry Yanis) is that while he makes some really good points, he always fails to remind his readers that Greece is a soviet economy that needs reforms. Worse, he says occasionally that even if we had these reforms in place already, nothing would be different. Maybe he is right. But if we don’t reform now, no matter what the ECB-EU-IMF end up doing with us, we will end up here again 20 years down the line.

      What I am trying to say here is that these 2 positions are not mutualy exclusive. Yes the ECB-EU knew. Yes the greek government has commited crimes against the country long before 2008. But the people are also to blame. Yes, Greece was already not in a sustainable course and everybody, but there is more than 10 years that we did not use to reform (2000-2012). If we ever hope to solve the problem, we cannot only look at one side of the coin. Voting matters. People need to get that through their thick skulls.

      I really, really do not want to get into the political vs economic freedom discussion. Sorry Richard!

    • Ilias – Check this: https://en.wikipedia.org/wiki/Stockholm_syndrome

      “political vs economic freedom discussion” Discussion? I’m asking a simple question, how is it possible to be oppressed if you have complete economic freedom?

      If you have economic freedom, how exactly could your political beliefs be suppressed? What form would the oppression take? You see what I mean? What would be the mechanics of the situation?

    • @Richard

      “About violence. I was not clear. Specifically I mean the initiation of violence against peaceful persons. Not violence in general. What are your thoughts on that?”

      Like I already said, the only “acceptable” from of violence in my eyes is the one that comes from law enforcement agencies and even then only as a last resort. Clearly there is not reason to initiate violence against peaceful people (if they break the law you just arrest them, no violence needed) . I think that clears it up.

      You will need to scroll down a bit for the rest of my response, I responded to myself for some reason and it’s further down. Sorry!

    • Ilias – “Clearly there is not reason to initiate violence against peaceful people (if they break the law you just arrest them, no violence needed) . I think that clears it up.” If I hold you captive against your will would you class that as violence?

      Personally, do you think it is *moral* be able to break the law if you have not harmed anyone or anything and/or for not doing something?

  7. @ Richard

    First, let me start by thanking you for referencing these texts, I’ll be sure to take a look.

    On integration. We have the problem of not knowing exactly what we are talking about, because integration is not really there. We do not know whether it will come to pass, or what form it will take. If we are assuming a kind of “United States of Europe” then the tiny group of people deciding the value of labor or property is no more fascist than the U.S congress or any U.S. administration. It is currently the assumption among european peoples that when integration happens, it will be a proper democracy and government will be elected and accountable (well….at least as accountable as the U.S. equivalent is.) In any other case, yes, we are talking about an authoritarian regime, but I cannot imagine europeans going for something like that. It remains to be seen.

    You need to live in Greece to understand a few things about how the greek state works. I for one stand by the following, seemingly ridiculous, opinion : for the last 35 years or so, greek politicians have been doing EXACTLY what the voters want. If a greek were to choose between encountering the devil, Lucifer himself, or a reformer, he would gladly choose Lucifer. This is how bad reform sounds in Greece. Why that is the case is a very long discussion, and there is no difinitive answer but the origins of the modern greek state play a part in the establishment of this mentality. But the E.U. and E.C.B. cannot be blamed for what is happening. This is default no 4 for us. With a brief 200 years (actually less) of history as a sovereign state, we have defaulted 4 times. Name one other nation with such an abysmal performance.

    Lastly, I would like to quote your last paragraph:

    “The violence must be taken out if its politics. The power the Greek government has to kill or to cage its citizens if they do not do as they are told must be removed.”

    We have a name for your proposal. It is called anarchy. A sovereing state must monopolise violence to enforce the rules that the majority decides. This is essentially one of the pilars of modern democracies. Without state violence, you can have no rule of law and thus no democracy. Which happens to be the case in Greece, because let me tell you, the greek state is anything BUT violent towards it’s citizens. One could even argue it is too lenient.

    • Ilias – “If we are assuming a kind of “United States of Europe” then the tiny group of people deciding the value of labor or property is no more fascist than the U.S congress or any U.S. administration.” – Politicians do not decide the value of our labour and property. I would urge you to see “Money Masters” by Bill Still (its on YouTube). I do not agree with his conclusions but the mechanics are sound.

      About the congress and the EU. They are not comparable in the slightest. The EU commission is not elected, it is appointed. There is no democratic process. For this I would read Nigel Farage’s autobiography. He explains in depth the workings of the EU in Brussels.

      ” I for one stand by the following, seemingly ridiculous, opinion : for the last 35 years or so, greek politicians have been doing EXACTLY what the voters want.” – Ilias either you are not in Greece or you do not understand the situation. The current situation is a direct result of what you claim the people wanted. ie you claim the Greek people wanted to massively increase their debt obligations either directly or indirectly through taxes. This is not what the Greek people wanted I can assure you.

      “But the E.U. and E.C.B. cannot be blamed for what is happening. ” Ilias you must not have read the sources I gave you. Let me spell it out again. The ECB concealed the dire straits of the Greek finances in order for Greece to join the Euro. And more than that. The ECB *continued* to conceal the state of Greek government finances allowing the Greek government to be come indebted to a level the ECB *KNEW* would be unserviceable. These are the facts not opinions. The ECB is at the center of the current crisis in Greece and they should be the first in the blame line.

      “A sovereign state must monopolise violence to enforce the rules that the majority decides”. We are in big trouble if the police and/or the courts start acting in the interest of specific political parties. ie they start getting involved in the democratic system.

      “Without state violence, you can have no rule of law and thus no democracy. ” As far as democracy being unnecessary in a society without state violence I agree 100%. The law has nothing to do with democracy, see my previous point.

      With regards to your support of the initiation of violence. You think it is necessary for you to be able to cage or kill someone if they do not do as you tell them? If so can you give an example of a circumstance?

  8. According to today’s NYT’s article the total sovereign debt for Greece stands at 323 Billion euros.

    Check this out folks:

    Current(year end) sovereign Greek debt = 323 Billion euros + 44 Bil. tranche soon to be released = 367 Billion euros.

    This post PSI figure is higher than the sovereign debt of 356 Billion euros pre-PSI (before the first haircut). So, what did the first haircut do? Answer: Absolutely nothing, aka ZERO. It only destroyed the Greek and Cypriot economies beyond repair and inflicted misery upon millions of innocent people. That’s all.

    • Hello Dean – I have said it before and I will say it again. The goal is to prop up the national tax collection agency in Greece (ie the Greek government) so it can continue its work of seizing the assets (labour of physical) of Greek citizens . I predict that we will see laws being passed allowing extra judicial actions to be taken by the Greek state to seize the assets of those who are behind on their taxes. Banks are going to recapitalise their balance sheets with the houses, factories, shops and savings of the Greek people.

    • Richard said: ” Hello Dean – I have said it before and I will say it again. The goal is to prop up the national tax collection agency in Greece (ie the Greek government) so it can continue its work of seizing the assets (labour of physical) of Greek citizens . I predict that we will see laws being passed allowing extra judicial actions to be taken by the Greek state to seize the assets of those who are behind on their taxes. Banks are going to recapitalise their balance sheets with the houses, factories, shops and savings of the Greek people.”

      I couldn’t agree more with you! And all this is happening because of Merkel, Schoible and all the other Northern European Economic Apartheid Fans! We can’t even blame the IMF for that since they were the ones asking to cut the debt and reduce austerity to a more resonable level.

      At the end what will happen soon is simple to foresee the EU will fall apart and Germany will be left with nothing but ruins! Not that I bother too much about that since at the end it is the fault of the Germans that the situation is escalating and dragging the whole EU down.

      See the latest article of FTD in case you speak German:

      http://www.ftd.de/politik/europa/:kolumne-thomas-fricke-die-ftd-angies-juengstes-opfer/70123613.html

    • Aris – “We can’t even blame the IMF for that since they were the ones asking to cut the debt and reduce austerity to a more reasonable level.” You forget that Germany were the only ones forcing the first write down of Greek government debt?

      The Troika is at fault in my opinion because they are propping up an oppressive tax collection agency.

    • So if the first PSI did nothing, then….were did the money go? This is a typical example of oversimplification to “murk the water” as we say in Greece. The current debt is greater than it was pre PSI yes. It’s fairly obvious that it would have been over 450 billion euro without it. That is something. Wether PSI was a good or bad step and how it was done as opposed to how it should be done is another story. But it’s not nothing.

  9. @Richard

    Fascism/communism? Hardly. Have you heard him speak? Have you read his book? If his assumptions are correct, I am no economist, I cannot judge that, then what he is proposing is pretty much a return to the only way capitalism has managed to function post the great depression. Like I said, I am no economist, but I am a mathematician. And what is happening right now simply makes no sense mathematically speaking. Forget about the particular failures of Greece. What did Spain do wrong? Or Ireland, the poster boy up until very recently of economic reform? What did the UK do wrong? Sure, you are not completely in the shit so far, but have you checked your numbers lately?

    No sane greek will ever say that Germany is at fault for the outbreak of the crisis we are experiencing. And no greek wants to live on the german taxpayer’s dime. Greece needs extensive reforms. But reforms take years to deliver results. You think we have that kind of time? It is up to us to prepare (reform) for the post-crisis era, whatever that may be. To end the crisis…I have my doubts. Even if we assume that what is happening in Greece is entirely our fault, even if we assume that we can reform TOMORROW, even if we assume that these reforms will impact the economy the very next day, how on earth are they going to “rescue” Spain or Italy? And don’t even get me started on France.

    You are also forgeting one tiny detail. In his modest proposal, he never once mentions anything about one german euro flowing in Greece. It is all centered around the ECB, the ESM/EFSF and the EIB. And these are not giveaways. They are loans, like the ones we get now, like the ones we have been getting for the last 12 years, and like the ones your country gets to support your trully massive deficit. I suggest you read the proposal before talking about it. Also, this whole discussion on the “independancy” of Greece, no one thinks this is possible in a currency union. And the same goes for all 17 members of the Eurozone. This is what we’ve all been trying to do since 2002 and well….the results are there for all to see.

    Since you immediately went to fascism/communism from my 2 line comment, I assume you are an avid fan of capitalism. If so, maybe it’s time you learn how it works. Money needs to move, in a cyclical fashion, otherwise the whole things comes crashing down. The “surplus recycling mechanism” he suggest’s is not a hand-out, and it is definetely not for the benefit of greeks, or italians alone. It is a necessary part of the machine. Remember, cyclical. It WILL flow back to the surplus regions again. If not, it is just as broken as the current situation. Take the euro out of the equation, and we are having a different discussion. But the euro is very much in the equation and no one seems to want to take it out. So this is the only possible discussion we can have, especially mid-crisis.

    • Ilias – Hello. Ill start by saying I agree with most of what Yanis says. Unfortunately Yanis’s position as a Keynesian leads him to the conclusion that the answer is the same as the cause. His answer is that we simply did not do enough integration and that is the problem. As a Keynesian this is the only answer he can give.

      About the numbers. Yes, all countries in the western world have the same problem as Greece. Let me outline exactly why the Greek government is in the mess it is in now. The Greek central bank and the ECB deliberately misreported the health of the Greek government finances and this allowed the ECB to monetise Greek government debt to unserviceable levels. Make no mistake, the Greek central bank and the ECB have put Greece in the position it is in today. Here are some sources.

      http://www.guardian.co.uk/business/2011/oct/27/eurozone-crisis-sarkozy-greece-euro

      http://www.bloomberg.com/news/2012-11-29/ecb-wins-ruling-to-deny-access-to-secret-greek-swap-files.html

      Mechanics of government debt in Eurozone

      Prophetic speech from Margaret Thatcher.

      About independence and currencies

      About the good intentions of the EU

      With regards to how economies work. I am saying this is the most respectful way. It is no excuse to be ignorant about economics. Sure it takes an investment of time to sit down to read books in order to educate oneself but it must be done.

      Let me give you a couple of books that will give you a solid foundation on what is going on. These books are excellent and I promise, you will find them highly entertaining & educational.

      http://astore.amazon.co.uk/i4w-21/detail/047047453X

      http://astore.amazon.co.uk/i4w-21/detail/047052670X

      http://astore.amazon.co.uk/i4w-21/detail/0446549177

      http://astore.amazon.co.uk/i4w-21/detail/0255365764

      In short, Yanis’s solution of allowing a tiny group of people (who are not accountable to the people of Europe) to decide the value of our labour and our property is the fast road to a fascist dictatorship.

      And if I can finish with Ron Paul’s farewell speech. He talks about the USA but if you take out the references to military spending he is taking about the UK, Greece and the world in general.

      The answer to Greece’s problems in simple. The violence must be taken out if its politics. The power the Greek government has to kill or to cage its citizens if they do not do as they are told must be removed.

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  14. @Richard,

    you wrote :
    ”The last thing Germany wants is for the Greek economy to go down the toilet. How are Greeks going to buy BMWs and Mercedes if they have no money?”

    But, if you consider the latest Eurostat figures for poverty :

    ”3.4 million Greeks near poverty line in 2011, Eurostat reports”
    http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_03/12/2012_472690

    And, of course, the 3.4 million in 2011 will very likely be 5 million , or more ( at least half of the Greek population) in 2013, in view of further taxation, salary cuts and unemployment of 26% ( official)
    So, BMW’s and Mercedes are out.
    The real question is :
    How are Greeks going to buy the bare essentials, like food.

    It is indeed a puzzle – what is the troika , in reality,aiming at ?

    Fixing the Greek economy?

    Hardly.

    The ”Kosovo-type state” seems a likely explanation.
    And , of course, the ”benefits”, e.g. the lenders eventually taking over 90% of the banks, in turn taking over the Greek companies that are unable to pay back their loans, as well as taking possession of properties of value, and so on and so forth.

    • Afroditi – “e.g. the lenders eventually taking over 90% of the banks, in turn taking over the Greek companies that are unable to pay back their loans, as well as taking possession of properties of value, and so on and so forth.” You forget the government.

      About everything else you say. You believe that Germany is the one calling of higher taxes. It is not. Germany wants a smaller public sector and a more efficient economy. Germany knows Greeks will not be able to afford Mercedes if they are paying 70% of their income to the government. It is the Greek government and the Greek government alone that is imposing these higher taxes.

      The real puzzle here is why Germany is continuing to fund the Greek government which is obviously sabotaging the goals of the German government. Even the German people do not want to prop up the Greek government, just like the Greeks. That is the real question why are they funding these actions by the Greek government. It is not as if the Greek government does not layout what they plan to do.

      Why does Schauble call the Greek government a black hole? Why does Schauble say the failure in Greece is down to the political elites and then continue to fund the same government that is sabotaging his plans to rebuild the Greek economy?

      I can only assume the devastation that would be imposed on the Greek people by the Greek central bank is not something Germany wants to be fingered with. Strict bailouts are the lesser of two evils.

      The fact is Germany has assets, the UK, France and the USA are bankrupt. Germany does not want its assets inflated away, the USA wants its debt inflated away. Given that there is only one way out for Greece and that is a government default. Merkel has already said she is prepared to insure the losses of Greek savers. The ball is in the court of the Greek people to force their government to default.
      http://independence4wales.com/2011/merkel-on-the-esfs-the-only-sane-person-in-the-room

    • If you consider the latest Transparency International figures about corruption, the Kosovo type state becomes more and more likely.

      And dear Greek friends, pls. spare us all the blabla that aliens are to blame for Greece being by far the most corrupt nation on the continent (and one of the most corrupt ones worldwide).

    • “And dear Greek friends, pls. spare us all the blabla that aliens are to blame for Greece being by far the most corrupt nation on the continent (and one of the most corrupt ones worldwide).”

      So lets see.You bribe a public servant in order to proceed faster with say getting your license to start a business, and you are corrupt.On the other hand you control a whole country through its puppet government,blame the citizens for all the hell that broke loose in Europe,frame them as lazy,party crushers whatsoever,use the country as a proxy to bail out your banks so as not to make your voters angry,you enforce poverty on the population and you’re not corrupt.You’re just the German Chancelor.Yea it makes sense.

      As they say, you kill a person and you’re a murderer.you kill a million and you’re an emperor….

  15. “In short, delaying the delivery of the inevitable medicine turns it into poison.”

    Suppose your modest proposal is implemented. Given the above statement, will it work now?

    • Ilias – Ill chime in here I hope that is okay. Yanis has a very big problem in his thinking. He believes Greece cannot be a self sufficient country and that it needs Germany to recycle some of its income to Greece in order for the country to survive. This, in the most respectful way, is fascism/communism and it gives a Greek government that manages its economy badly, by over regulating its population and by overtaxing its population a free pass to continue as it is. The Euro has exposed years of mismanagement of the Greek economy. Maybe Greece has to go the way of Singapore and Hong Kong and become a free trade area and a tax free zone in order to compete with the larger countries. I do not think so but even if it does I cannot imagine any Greek complaining about the fact that they have no income tax to pay, that they have no sales tax to pay, that they have minimal property taxes, that their petrol is cheap and that their country is called home by the world’s rich and famous.

  16. An excellent analysis and one which I totally agree with, that charts what is going to happen in graphic detail.

  17. Again, you focus solely on finance alchemiae. Why don’t you provide your view on the only things that would make a real change, which are, structural changes.

    As for “Its essence is a guarantee that Greece will remain in the Eurozone” is IMO misleading. Since it is only Greece herself who can decide to stay in the Eurozone or not. BTW, it is also only Greece herself who can decide if she wants to continue down the road to Kosovo-like failed-satetenss or not.

    BTW, the 1st PSI has cost the German taxpayers already ~15bn Euro, real money, lost forever. Thanks to the (partial) ownership gteh regional and national governments took of zombie banks like Commerzbank and some Landesbanken, or the Bad Bank ‘FMS Wertmangament’.

    This is reality, as is what I expressed here already several times, since a long time: Greece, and only she herself, must decide if she wants to continue to live on a living standard the rest of the Eurozone is willing to subsidise – or if the nation wants to become free again and start all over. If I’d be a Greek, my choice would be very clear.

  18. Couple of comments:

    1. Here is the Eurozone Program in case you want to read it and suggest contributive improvements instead of rhetoric:

    http://www.tovima.gr/files/1/2012/11/30/LGBB.pdf

    2. Less than a year from the PSI disaster, Greece finds itself with the exact same debt as before (assuming the new tranche of 44 bil.) is disbursed. Therefore, where are the saving of 110 Bil. from the PSI? Gone up in smoke in a matter of months. Therefore the PSI was just a marketing gimmick with the real effect of plundering primarily private assets with absolutely zero positive effect to either arresting the level of debt and/or improving the Greek economy.

    http://www.spiegel.de/international/europe/bild-869768-429733.html

  19. I have been saying that Greece needs to be prepared to leave the Eurozone if neccessary and also the EU alltogether if the Northern EU members continue to impose economic apartheid on the south of Europe!

    We don’t need the Germans and their vassals!

    The Germans together with their allies have destroyed Greece many times in the past and that is what they try to do once again!

    We need to stick with our historical allies and friends and not with our historical enemies!

    • Aristoteles – Your historical enemies of Greeks has been the Greek state. Military dictatorship, the imposition of massive debts onto the private population. If you think the Greek government cares about you I would love to know what you would expect them to do if they did not care about you.

    • Richard,

      You might be partly right with what you say BUT you don’t know enough about Greek history in order to make such a statement like “Your historical enemies of Greeks has been the Greek state”

      The Junta has been instituted primarily by the American CIA and the NATO stay behind network (Gladio-like) in Greece if you know what I am talking about.

      Since I don’t want to lecture here about the German occupation of Greece or the Greek history in general I would refrain from such statements.

      Greece is one of the most ravaged and oppressed places in Europe historically so what you say has been a logical consequence of foreign occupation and influencing.

      And now it happens once again with German instigated economic apartheid policy.

    • Arostoteles – I took the time to read this, the blockade of Greece by the allies was something I was not aware of https://en.wikipedia.org/wiki/Great_Famine_(Greece)

      “And now it happens once again with German instigated economic apartheid policy.” As an outsider looking in I do not see any prejudice by the German government against the Greek people, against the Greek government sure. The fact of the matter is this.

      If Greece were to do what the German government is saying it wants, ie for the state to balance its budget, Greece will have more control over its own destiny not less.

      You yourself highlight the influence in Greece of the anglo americans and this fits in perfectly with what is happening on the ground in Greece at the moment.

      You have a government controlled by Britain, France and the USA. The country has been oppressed for years so it is dependent on the whims of outsiders and this was financed by the printing of Drachmas. This financing has been stopped with the Euro. This has cut the leverage the USA and the UK has over Greece.

      The Euro has forced Greece to become competitive and independent because the government can no longer use inflation to disguise its mismanagement.

      The Anglo Americans do not want to lose their leverage over Greece which will be the inevitable result when Greece becomes self sufficient.

      In order for the anglo americans to maintain control over Greece they have told their operatives (Papandreou/Papademos/Samaras(?)) to burn the Greek economy so it has no chance of becoming independent and no chance of freeing itself from their control.

      There is no doubt that the actions being carried out by the Greek government are utterly self destructive to the Greek economy and the exact opposite of what the German government wants. The exact opposite.

      What we are seeing in Greece is a massive tug of war between the anglo americans and the germans. Germany wants a self sufficient trading partner with whom it can sell its goods, the anglo americans want to maintain control over Greece for geopolticial and reasons and possibly for natural resources.

      All this is freely admitted in the international media. You have the anglo amercians pushing for mass money printing which is what was happening during the Drachma. And you have the German government demanding that the Greek government balance its budget which inevitably leads to lower taxes, a freer economy, more efficient government and a population which is better equipped to purchase German goods and services.

      These are the openly stated goals of each of the parties. Anglo americans political control through dependence & money printing, Germans sound money and a prosperous population able to buy German products.

      Having said all that I am more than willing to have my opinion altered if and when new facts present themselves.

    • Richard,

      Not the Anglo-Americans caused the starvation of about 500.000 Greeks but the Germans!

      A quote from your Wikidedia link:
      The Axis powers viewed conquered nations as sources of raw materials, food and labor. As a matter of policy, subjugated nations were to provide material support to Germany and Italy. According to this principle, already from the outset of the occupation, German and Italian troops initiated a policy of wide-scale plunder of everything of value. Moreover, pillage, torture, executions, and civilian massacres throughout Greece were also part of the Axis agenda during the years of occupation. The German attitude toward occupied peoples was expressed succinctly in the words of Hermann Göring in a letter to the Reich commissioners and military commanders of the occupied territories on 6 August 1942:

      .”..This continual concern for the aliens must come to an end once and for all… I could not care less when you say that people under your administration are dying of hunger. Let them perish so long as no German starves.”

    • Aristoteles – I dont want to get into the war because I think it is another subject but let me just say that the west also blockaded Iraq and that resulted in the death of over a half a million Iraqs. In short blockades/sanctions only end up hurting the citizens. That is a known consequence. And no I am not saying German was innocent merely that there were not the only guilty party.

  20. Dear Dr. V excellent analysis as always.
    Let me just point out that this time NOBODY in Greece believes in the viability of the “plan”. NOBODY and NO ONE. Every mainstream or alternative TV channel, newspaper, internet site or blog, even those which formerly propagated “hopium” for the people, do not purport that this is a solution for Greece.
    The most optimistic commentators pray that somehow we will be able to to keep our pieces together until the October German elections, whereby the newly elected chancellor will divulge to the German people that they will have to foot the bill for all the European Club Med.
    Everyone, including you, talk casually about the impending OSI, as if this is not the international bond markets Armageddon. Leaving the enormous financial impact for all sovereign debt world wide and legal ramifications aside, this OSI, if it ever happens, can very well be the end of the European Union. If the OSI happens or if it is proposed as a solution, even the most indifferent, apolitical and passive northern European citizen will understand that “solidarity” is something that will impact his family budget. Given the systematic and thorough stereotyping of the preceding years about the lazy and corrupt South, and the successive Greek failures at achieving a priori impossible tasks, it is safe to say that debt forgiveness will not go down well in the northern’s electorate throat…
    Assuming that the AAA countries politicians know that, their plan is not to give Greece an OSI but to give Greece the BOOT, even if it miraculously manages to survive the latest water boarding spree till the German elections. By this time next year Greece will be beyond repair. If, by that time there is some world wide growth, however feeble, they will easily paint Greece as a “special case”. If there is no growth, they will make a paradigm of Greek expulsion to the rest of the countries, which will be on the fast track to becoming Greece.
    So the real question for everyone living in Greece is how it will all play out WHEN the country blows. Can you help us with a PLAN B Dr. Varufakis?

  21. This is an excellent analysis and one can only remain speechless at the utter idiocy not only of the Eurogroup and assorted partners in crime but of the IMF. Of course there are contingencies, fear of triggering a global explosion if Germany is told point blank either an OSI NOW or I go home! But that too is short sightedness to the extreme, More of the proverbial kicking the can down the road till you give it the last kick and it explodes in your face because it was not an empty can but a canister of toxic gases.
    At this point in time all I can worry about is that this does not turn to bloodshed. However, if leadership all over Europe continues down this criminal path, I very much fear it will come to that. And probably soon.
    The Merkel/Schauble regime are probably delighted that they got their way again and the IMF backed down, but even the best laid plans have a nasty habit of going terribly wrong. The trouble is when the Merkel/Schauble plan does go wrong, because there is no way that it will not, the repercussions may be devastating for the whole of Europe and not just Germany.

    • “This is an excellent analysis and one can only remain speechless at the utter idiocy not only of the Eurogroup and assorted partners in crime but of the IMF”

      Fortunately, the Greeks themselves (‘elites’, politicians, unionists, public servants, average fakelakists and so on) never were, still are not, and will never be utter idiotic.

  22. We tell the joke of the balloon with a second part
    The guy in the balloon says
    – I am still lost, and I am late because I don’t know what to do with your information
    – So you must be a politician.
    – How come do you know?
    – Very simple. You don’t know where you are nor where you are going; you made a promise that you cannot fulfill, and you expect somebody else to solve your issues. In fact, you are exactly in the same situation before finding me, except that by some weird reason it is my fault!

    Prof. Varoufakis should be in charge. I don’t know where, but somewhere.

    As a side note, don’t you think that the dot-com bubble in Germany (and also in Spain) had a certain influence in the flee of capital for higher and sound profits (real estate in the mediterranean, for instance)?

  23. Dear Mr Varoufakis,

    I could not agree more on your analysis of the “non-solution” achieved in the Eurogroup, which is a real recipe for disaster, at the national Greek and the European level. The decision is one more decision in the chain-events developed throught the “crisis-hit” on Greece back in 2009 and the “non-solutions” given back then, which were subsequent to European instiutional deficiencies and current political realities (that you highlight excellent also).

    All these characteristics of the EU and of its MS were very well to those Krugman refers to as “Very Serious People”, other people refer to as “the banksters” and media-people call “the markets”. Except them, all these characteristics were also known to the White House, who stepped into the world financial crisis 4 years ago, boosting the crisis from its financial to the world financial sector, through letting Lehman “fall”, while “saving” all the rest, with public funds that gave the American government the power to shape world financial supermarkets’ policies – what have actually happened back then was the partial nationalization of the world financial sector by the US government. Yet, this is not recognized to the date, but only from few (Vergopoulos spoke about the era “AFTER the end” (of capitalism) since 2009) .

    The spill-over effect which took place and transfered the “crisis” from the US to the EU periphery, through Greece, and which is now getting to the very core of the EU, could easily be predicted and it could, also, be easily “focused” on specifi “targets-countries and target-markets and target-institutions”, with certain characteristics, if “wider targets” were set, connected with these specific targets. One needs to look at the big picture: back then and till today, ONLY the White House had a full overview of the world financial sector, as it as the only “player” who made the BIG STEP: it NATIONALIZED the financial institutions with access to world debt, got an “inside view” of the numbers and audits and after that, it designed its “strategy-out-of-the-crisis”, though boosting the crisis abroad.

    So, after 4 years of US financial crisis on a “globalized world”, what we observe is a US succesful “crisis management”, as it managed to de-touch itself from the crisis, which became “everyone else’s problem”, more and more. Everybody else COULD NOT face such a “hit”, BY DESIGN. Therefore, one should not blame them for not being able to overcome their natural design: what one could blame them is they are not “shaped”, “tailored” and “labelled” as a US design, but this is actually everyone else’s right and choice.

    Summing up. After 2006, a chain reaction is developping its predicted course. Mac ‘n’ Mae’s Fall – Lehman’s Fall – Nationalization of the rest – spill-over of the crisis to EU periphery – “hit” of EU hardcore – EU disintegration, partial or total. This disintegration
    seems to be the target of US government, which – through a New ‘Pantokratoric’ Vision (Holdren calls it “world socialism”!), opts to boost the old world order to total disintegration, looking for a new “white page of History”, so it can right on the “blueprints of the future”. One should think of Machiavelli and combine him with Shoun Tzou and Keegan, so he can assess the big picture of the world politics, one of the agenda of which is the world economic crisis.

    Keep up the good work. You make understundable difficult subjects to the world public. But please also, make an effort to put the data on the track in a “Power Analysis Model” that respects geopolitics and geoeconomics, along with Political Economy. We live in the era “Geography strikes-back”, as George Friedman puts it. And this is exactly the context within which all “non-solutions” are being made today, as major Propaganda forces manage to shape political forces’, governments’, institutions’ and peoples’ respective choices, ideas and actions. Chicken-games of the current “deadlock situation” are only part of a wider END GAME set on place. If we – the people of the world – fail to stop this end game, we will all pay the price in the short-to-medium term. Attempting a very risky estimation, I do not see a way for the European South not to face “an accident” of any kind, before the European elections…

    Alexandros Liakopoulos

  24. Professor Varoufakis, certainly you may be right but only “figuratively” so, that according the incongruity of the figures you presented, if they are correct, will not lead to a reduction of debt by 40 billion Euros and will not change the fate of Greece in its insolvency. However, absent in your analysis is the human factor, which obviously you tend nihilistically to underestimate, and indeed, to nullify, in its power to learn from its mistakes and transform things.

    Your argument rests on the premise that only you can learn from your errors, as the serial revisions of your ‘Modest Proposal’ have shown since its birth, and that the governing class of the Euro-zone and its technocrats, including the IMF’s, are inherently unable to do so and are fatefully stuck in their continued wrong policies without a ‘smidgeon’ of a chance of contributing toward the resolution of the Greek crisis. The breathing space that Greece has been given by the Troika in this bailout can be used by the decisive, resolute, and imaginative Samaras’ government to create the right conditions by the restructure and privatization of the economy and its efficient operation both in the private and public sphere and hence turn the country into a centripetal force for investment that would rekindle its economy and put Greece on the trajectory of economic development.

    Samaras endowed with the strong attributes in the intellectual, spiritual, and moral sphere, has better than a chance to pull Greece out of its present tragic quandary. Indeed, he may turn out to be the Anagennitis of the Greek Anagennisis, while you will be licking with relish the egg off your face.

    • “Your argument rests on the premise that only you can learn from your errors, as the serial revisions of your ‘Modest Proposal’ have shown since its birth, and that the governing class of the Euro-zone and its technocrats, including the IMF’s, are inherently unable to do so and are fatefully stuck in their continued wrong policies without a ‘smidgeon’ of a chance of contributing toward the resolution of the Greek crisis.”
      Wow….so did the troika in your opinion learn from its mistakes?Did anything change regarding their demands in 2010 compared to now?You cant be serious…

    • Dear Mr. Kotzabasis,
      You write: “the decisive, resolute, and imaginative Samaras’ government to create the right conditions by the restructure and privatization of the economy and its efficient operation both in the private and public sphere and hence turn the country into a centripetal force for investment that would rekindle its economy and put Greece on the trajectory of economic development.”
      Of course, and pigs can fly,
      Rainer Rupp
      Economist M.A., Journalist

    • “Samaras endowed with the strong attributes in the intellectual, spiritual, and moral sphere, has better than a chance to pull Greece out of its present tragic quandary”

      Hahahahaha, really? Sorry but the guy is an average moron with a family background of money, and no personal achievements of ANY sort, in life. Unless you consider the malakia with the name FYROM to be some sort of success story: most of the world does not.

    • @Guest

      “Hahahahaha, really? Sorry but the guy is an average moron with a family background of money, and no personal achievements of ANY sort, in life. ”

      Ι assume you understand greek.so here it goes.
      He actually once said “Καποτε ειχα στην Αμερικη μια πιτσαρια με εναν φιλο.Και ΕΣΚΙΣΕ! ” lol….

    • @Crossover: yes, I vaguely recall that interview. Until that time, I had assumed that Samaras was in the higher class of moron (that is, a step above Papandreou). Alas, my optimism had to be radically revised.

  25. I suspect one of the things coming down the road before too long is a recession in Germany. Until now, the German people have not been too badly affected by the EZ crisis, but as the German economy runs into trouble, this is likely to change.

    One could imagine this would engender a political demand for growth policies led by Germany, but I am not convinced this will happen. We will see, but I am wondering if you have a sense of how the Germans & the troika might respond.

    Thanks for your post — I saw the announcements in the news & was wondering what your take on it would be.

    Beth

  26. Yanis,

    Great piece, just a few typos to correct. As I stated in my recent comment on clinching a lasting Greek deal, this isn’t the end of Greece’s sovereign debt woes but this deal buys Greece time to continue reforms and it buys Merkel time to focus on getting reelected:

    http://pensionpulse.blogspot.ca/2012/11/clinching-lasting-greek-deal.html

    In my opinion, Stournaras is doing a great job, even got Lagarde to push the Germans on another debt writedown. This will come after Merkel gets reelected and only if Greeks show they are serious about reigning in their bloated public sector.

    Importantly, if Greeks think it’s business as usual, they’re in for more hardship. This deal is only a temporary reprieve, allowing for more reforms and to finally shift the focus on growth.

    Dora Bakoyiannis said something last summer that stuck with me: “They could wipe out all our debt tomorrow and we’d be back at the same position in five years because the country keeps running deficits and there is no will to reform (the public sector).

    What also worries me is the sorry state of Greek pensions:

    http://pensionpulse.blogspot.ca/2012/11/is-greece-future-of-pensions.html

    It’s about time that Greece gets rid of cronyism and corruption, introducing some meaningful reforms in their pension system. Of course, without growth, this is a mute point.

    Leo Kolivakis

    Publisher of Pension Pulse blog.

  27. Να σου πω την αληθεια δεν περιμενα κουρεμα, δεν το αξιζει η Ελλαδα που μετα απο 3-4 χρονια σοβαροτατης κρισης δεν μπορει να μαζεψει το προυπολογισμο της. Ουτε καν τον πρωτογενη…

    Η αποφαση του eurogroup ειναι λουκουμι για την Ελλαδα. Ποσο θα πανε οι τοκοι; 4δις; 5δις; Δεν μπορει να τα βγαλει απο την οικονομια; Εδω πριν 4 χρονια εβγαζε 40δις απο το ισοζυγιο εμποριου… στα 4-5 θα κολλησει;

    Μακαρι οι τουτοι εδω πολιτικοι να το εκμεταλλευτουν, και αντι να κανουν αυτο που λεει η τροικα (να σταθεροποιησουν το χρεος), αυτοι να το ριξουν!

    • Χάπια…

      1 πρωί 1 μεσημέρι 1 βράδυ.

      Καθόλου δύσκολο.

      Μετά θα γίνεις καλά

  28. Yanis – If I can start by highlighting the failure of Bloomberg’s lawsuit against the ECB to confirm the existence of documents that would prove that the ECB knew that the Greek public finances were fantasy and that the ECB continued to monetise Greek government debt even though the ECB knew the Greek government would be unable to service this debt.

    I hope this addresses why giving power to the ECB is such a bad idea.

    http://independence4wales.com/2012/eu-court-chooses-to-bury-the-truth-about-greek-debt-the-ecbs-involvement

    Moving on to the figures in your post

    “This is precisely what they announced on 27th November: a boost in GDP by 50 billion and a concomitant reduction in public debt by 40 billion.” – Where do these figures come from? Check this report from Eurobank,ECB & the EU. It predicts growth of around 80 billion Euros by 2022 and a shrinking of the debt by over 120 billion Euros including interest payments by 2022.

    http://independence4wales.com/sources/eurobank_eurogroup-22-2012.pdf

    I think this is more realistic

    http://www.keeptalkinggreece.com/2012/11/29/citigroup-greece-probably-to-leave-eurozone-next-year/

    For what it is worth, I agree 100% with your assessment of this deal, it is utter nonsense and stinks of political junk food for the mass media who do not question any of the material they are given.

    Which takes me back to Bloomberg’s failed lawsuit and the precedent that it sets.

    The ECB more than likely knew that Greek debt was going to go bad in the biggest possible way. They obviously did not lend Greece money to lose money and given that they are not letting the government default the only other profit stream for them and the Greek banks will be the seizure of assets in the Greek private sector due to bad loans and the non payment of taxes.

    I know you place a lot of faith in the ECB so I would be interested to know how you can defend their position with regards to the Bloomberg suit and the real possibility that they deliberately put the Greek government in the situation it is in today.

    • Richard, please stop using independence4wales as any kind of support for your arguments. While it does suffer the kind of credibility problems that a “Free Tibet” blog would have when reporting on, say, the Argentine debt crisis, it suffers more from its love of conspiracy and apparent lack of journalistic integrity, fact checking, and English literacy.

      “Where do these figures come from? Check this report from Eurobank,ECB & the EU. It predicts growth of around 80 billion Euros by 2022 and a shrinking of the debt by over 120 billion Euros including interest payments by 2022.”

      Where do THOSE figures come from? Let’s leave aside the fact that it is a private Eurobank report that quotes information from the ECB and EU (not, as you imply, an official-sector document); let’s even ignore the fact that the report was issued five days before the final Eurogroup meeting and admits to “[r]elying on a number of media reports as to the content of official discussions… [w]ithout necessarily taking a firm view on the feasibility of proposed initiatives.” Let’s simply follow through the projections of nominal GDP growth. Starting from Greece’s 2011 GDP of €298.7 billion, it leads to a GDP in 2022 of €376 billion, just shy of €80 billion in growth. Back it up two years (since Yanis’ numbers were anchored in 2020) and it comes to €346 billion, or—surprise surprise—about a €50 billion increase, as he reported.

      Of course, if you believe the miraculous projection that a country coming out of five consecutive years of recession will experience a 5.6% swing in economic growth in one year, your critical reasoning skills may be as impaired as your critical reading skills seem to be.

    • Davydd – “Let’s leave aside the fact that it is a private Eurobank report that quotes information from the ECB and EU” okay –

      “not, as you imply, an official-sector document)” – “official sector”? What is that?? –

      “let’s even ignore the fact that the report was issued five days before the final Eurogroup meeting” – Eh, lets not, unless you believe things can change so much in 5 days? –

      “Let’s simply follow through the projections of nominal GDP growth. Starting from Greece’s 2011 GDP of €298.7 billion, it leads to a GDP in 2022 of €376 billion, just shy of €80 billion in growth. Back it up two years (since Yanis’ numbers were anchored in 2020) and it comes to €346 billion, or—surprise surprise—about a €50 billion increase, as he reported.” – Davydd I dont know how you can invest so much time in apparently attacking the Eurobank document without even reading it. Yes it does lead to a GDP of around 340-350 billion Euros if you back it up two years to 2020. What you fail to acknowledge is that Greek GDP will decline until at least 2015 meaning the increase in GDP will have to be around 80 billion to get to 340-350 by 2020. –

      And with your last statement you appear to believe that my position is one that agrees with the Eurogroup “if you believe the miraculous projection that a country coming out of five consecutive years of recession will experience a 5.6% swing in economic growth in one year,” – if so, then you have read even less of my comment that I originally thought……

    • Richard, by “official sector” I meant what is less cordially known as the troika; i.e., those that are dreaming up the programs and forecasts that the Greek government is accepting wholesale.

      I had read your comment as questioning the numbers put forth by Yanis in the article, and using the Eurobank report as evidence with which to do it. Based on the (fictional) numbers in the report, his statement about €50 billion matches your statement about €80 billion given the separation of two years. If your intent was to question the validity of any of the projected numbers being tossed about by the troika, then I misread and apologize.

    • Davydd – No problem, my main point was that the figures quoted by Yanis give undue credibility to the bonkers figures put forward by the Eurogroup. It is a completely insane situation and in my eyes credibility left the building about 2 years ago. Looking at the situation of Greece makes me feel like I am living in the twilight zone and the worst thing is is that people who see through all the b***ocks appear to be in a tiny minority. Actually scratch that, the worst part is seeing Greeks having to finance this nonsense through tax increases and pension cuts. People being forced to give up their labour and property to prop up a farce.

  29. dear mr. Varoufakis,

    As a Dutch/Greek citizen, living in the former with a small house in the latter, I follow your writings and try to comprehend what you say (I am not an economist) and estimate your knowledge and ability to explain what is happening or should happen. However now I think it is time you offer your insights and help the Greek government, because not enough “important” ears are hearing you. Mr. Stournaras could use some support in his struggle to appease the Troika and not kill the social fabric in Greece at the same time. Go back to Greece and help them make the right choices within the deadly grip of the EU.

    • Maria, you can be sure that the current mob of Quislings running Greece will not have anything to do with Yanis, or for that matter with anyone else possessing critical faculties and serious knowledge. I, too, regret that Yanis found it necessary to leave Greece, but I do not question his judgement.

  30. Unfortunatelly, Mr Varoufakis you are right. Greece is becoming a protectorate and Europe is occupied once again by Germany.

    A lot of economists including some greek ones, were seeing this coming and warned about the intentions of Germany.

    I said it before and i say it once again. What Greece needs is a brave return to drachma. It will be hard but at least Greece will keep its sovereignty and will not be humilated daily by German politicians and media.

    Greece is not and should never become a protectorate.

    • Kosta – Germany is a propaganda tool of the Greek government. Germany is used to distract Greeks from the attack they are under from their own politicians.

    • There are clearly huge barriers to getting the ECB or politicians to acknowledge this type of analysis that has been ahead of the game from the start. What are the odds of a push for the drachma coming out of the Greece populous? It unfortunately seems as though, similar to the Middle East, the people will have to fight from within for real change.

    • @Richard

      I disagree with you. Germans have been, from the beginning of the crisis very aggressive towards Greece and greek citizens, both the politicians and their media. While i agree that Greece has made many mistakes during the last 30 years,the ongoing ”attacks” by a nation that is supposed to lead inside a union of equality is unacceptable. Let’s not forget that Germany led to two World Wars and despite that it received massive help to rebuild its economy.

    • Kosta – Germany very aggressive? And rightly so, the Greek government found themselves in a position where they could not service their debt, the Greek government needs to make aggressive cuts in order for it be independent of Germany. And make no mistake, Merkel, Schauble are attacking the Greek government not the Greek people. I think many Greeks also believe their government is the problem so I am not sure why Greeks are opposed to the German government view. The people of Greece and Germany have a common enemy and that is the Greek government. The last thing Germany wants is for the Greek economy to go down the toilet. How are Greeks going to buy BMWs and Mercedes if they have no money?

    • “I said it before and i say it once again. What Greece needs is a brave return to drachma.”

      Right! That’s what I said since the desaster became obvious for everybody in 2009. To be precise, I said since the late 90ties that Greece is not fit and will never be to be a part of a currency union that is not constructed as a huge transfer union. But then, nobody listens to what I said and say, in this I share Yanis’ fate🙂

      “It will be hard but at least Greece will keep its sovereignty and will not be humilated daily by German politicians and media”

      well, dignity is hard to maintain if your standard of living is paid for by foreigners.

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