Some of us always said it: Grexit was an incredible threat

So, Grexit is off the table, at least for now.

Well, it was really never on the table, as some of us have been shouting from the rooftops for years now.

Back in May 2011, I was writing here that the whole idea of expelling Greece from the Eurozone was based on “an incredible treat”; on “…a flagrant lie”.  “Greece” I insisted, “cannot be pushed out of the euro without the euro collapsing in short order.” The utility of issuing such a threat was, I suggested, “to exact from the Greek polity many pounds of flesh, by which to impress Northern Europe’s despondent electorates that Greece deserves another huge, expensive loan. As is so often the case with naked blackmailing, an incredible threat is pressed into the service of an ill-conceived goal: To the issuing of a fresh gargantuan loan to an insolvent country that neither needs nor wants it.”

Events of the past few months have confirmed all of the above. Now, that this revised loan  agreement has been forced upon Greece, the Grexit threat has been put back in the drawer, to be retrieved whenever the powers-that-be think necessary. Meanwhile, the organised supporters of the troika’s austerian irrationalism are doing what they are good at: painting all critics of the troika program with the same brush. To give an example, Nuriel Roubini’s admission that he was wrong on Grexit is used as an excuse for celebration; as confirmation that the troika’s cheerleaders were right all along. In their enthusiasm they fill Greece’s social media with tweets such as “Roubini and Varoufakis proven wrong” and questions aimed at me like “Roubini accepted his error. You?”

Well, I prey and hope that I too can admit I was mistaken. That Greece and Europe are back on track. Alas, reality does not let me do this. For, as this post (among many others) demonstrates, I was, unhappily, spot on: Grexit was indeed used as part of a fiscal water-boarding strategy for the purposes of pushing Greece further into its curent Depression.

Grexit, as some of us were warning, should never have been taken seriously. It was never on the cards. Tragically, as a strategy of subjugation it worked a treat.



30 thoughts on “Some of us always said it: Grexit was an incredible threat


  2. While the horse of the Greek economic resurgence kalpazi under its mentally supple rider Antonis Samaras toward victory (read the ending of the economic crisis), Professor Varoufakis rides his donkey and bringing the message of further depression for Greece. By the time his slow messenger will arrive, Varoufakis’ doomsday message will already be overcome by events.

  3. It is about time for Greece to leave the Eurozone and the EU all together since they have proven to be children of the same evil. The EU isn’t the Europe of the people it is the Europe of Merkels mighty friends of the banksters and the cleptocratic ecomonic elites!

    Leave before its too late and Greece is completely destroyed and has become a slave house ( very competitive labour wages ) of the rotten heart of Europe.

    • Aristoteles – “Leave before its too late and Greece is completely destroyed” – I’m with you 100%. Its not the ultimate answer but it is a massive step in the right direction.

      There are plenty of countries with less going for them than Greece and yet their people are as prosperous as anyone. For example Singapore, Hong Kong, Switzerland, Austria, Norway

      I’m ready.

  4. Professor Varoufakis, I have a question, if I may. You’ve written that Grexit was never credible as a threat issued to Greece. However, can Greece exiting the euro ever be a credible threat issued by Greece to the troika?

    I know, You’ve written You’re opposed to Greece exiting the euro, since the consequences would be so destructive. And that explains Greece’s behaviour: Since the threat value Greece has in negotiations is so low, practically any deal offered by the troika is better than going at it alone. But isn’t it possible that, as the economic position of Greece deteriorates as a result of austerity, abandoning the euro might become a relatively more appealing option than sticking to the troika’s demands?

    That kind of shift would be interesting from a negotiating perspective, since it would drastically alter the bargaining position of parties involved: Under those circumstances, Greece leaving the euro would be beneficial to it, but it would likely tear the euro apart and send the rest of the Continent into a depression, something politicians from other member states would probably want to avoid…

    • T. – Destroying Euro or tearing it apart etc is “fluff”. No matter what happens the Euro will always exist. I mean name one government that defaulted and changed the name of its currency or adopted another currency.

      You say austerity. Please cease using this word and call a spade a spade. The Greek people are experiencing simply massive tax increases in nominal terms and in relation to income its a hockey stick.

      Greeks are also experiencing benefit cuts while the government is spending more or less the same as it did in 2007/2008.

      When I think of austerity I think of having to make do with less in order to save/pay of debts.

      It is not austerity for the Greek people because they are being forced to spend more. Full stop.

      The Greek government is not being austere because it is spending just as much as it did before.

      If you want to call an organisation charging its customers more and giving them less in return austerity okay, Personally I would call it gouging.

      In short to call the Greek government’s actions “austerity” is plain wrong. Call it tax increases, call it cuts to benefit payments or better still, call it the government gouging the Greek people of their savings now, and property later.

      About the Euro & the Grexit. The Grexit is only used to threaten the Greek people. The Greek government uses the imploding Greek economy to threaten Germany.

      The end game? What Yanis outlines as the solution.

      He may not know it, but he is going to get exactly what he wants. The solution he outlines is what the Greek government and the central banks are working towards. Unfortunately there is going to be an immense amount of collateral damage in the meantime.

      The collateral damage is essential to make Yanis’s plan look like a solution because it is currently politically unpalatable.

      But you do raise an interesting perspective re Greece using the Grexit to threaten the EU. However I dont think it holds water.

  5. Welldone Yanis,

    Yesterday at SKAI TV, Mr Varvitsiotis – the MP with New Democracy – misrepresented and distrorted what you have actually said during the last months concerning the Grexit Scenario…. (try the link: and go to the 45min).

    I hope you are well,

    My regards from Athens

  6. Yanis – You are still making the fatal error of referring to “Greece” as one entity when it is two. Namely the Greek people and the Greek government.

    About the water-boarding. I agree, the Grexit was and is a terror tool but it was not a tool used by the Troika. The Grexit is a tool used by the Greek government in order for them to push through tax increases and cuts in welfare payments rather than trimming the public payroll and pork barrel spending.

    Again, the Grexit is a tool, a tool of the Greek government which it uses to coerce and terrorize the Greek populous into submitting to their kamikaze economic policies.

    • Are you on a troika payroll?
      If not please refrain from commenting on topics you’re not familiar with.If you ask any Greek that experienced the pre-election period in Greece, he will tell you that he kept hearing about the Grexit from all directions…inside and outside the country,government and non governent people, and european politcians too.
      I still remember the German minister of finance calling the Greek people to make the right choice in the elections.The choice that would keep Greece in the eurozone.And guess what.We made the right choice according to him..So please….give me a break already.

    • Crossover – Steady on, I obviously did not make myself clear. The word “Grexit” is new, the “threat” of Greece being “forced” out of the EZ is not. I hope that clears up the point I failed to make earlier. Regards

    • @Richard

      You said:
      “I agree, the Grexit was and is a terror tool but it was not a tool used by the Troika. The Grexit is a tool used by the Greek government in order for them to push through tax increases and cuts in welfare payments rather than trimming the public payroll and pork barrel spending.”

      In reply to this,read what i just said about the pre-election period in Greece.
      No matter what you call it: grexit,greek exit,greek return to the drachma etc this threat has been going on for quite some time now, and like i said such threats have originated both from the greek gvt and the troika and other european officials.
      So my point still stands.Unless you are backing the troika for specific reasons, just stop writing about stuff that would be impossible for you to know about (since you’re not living here) because they are misleading.Its time for you to realise that the gvt and the troika are on the same side.

    • Crossover – Let me just say I am a Greek taxpayer. And with regards to “backing the Troika”. The only thing I am backing are the citizens of Greece. The Troika are not implementing anything, it is the Greek government, therefore they are the problem not the Troika. It is black and white.

    • I dont know what you are and what not.But it looks like you dont have actual experience from the situation in Greece.Safe to say you dont live here.

      “The Troika are not implementing anything, it is the Greek government, therefore they are the problem not the Troika. It is black and white.”

      Even if this was the case, with this comment you’re not denying that the “you/we’re gonna be thrown out of the eurozone” threat involved the troika apart from the greek gvt.
      But since you mentioned it.Allow me to make a logical question.The troika has been proven to be able to choose when to allow the loan tranches to be given and when not in order to push for stuff.Thats a fact because it has already happened.
      If we accept that the Troika does not agree with the reforms then what stops it from delaying a payment in order to force the government to make different kinds of reforms?
      And why is it that the only complain i’ve been hearing from the side of the troika is that the government is either not implementing all of the things that it agreed upon or its implementing them with significant delay.
      Never did i hear them say they were against a reform and the government beat them to it.Ever!
      Are you this naive to believe that the gvt is more powerfull in decision making than the troika ?

      And i need not mention that the current government enjoyed the support of the EU for the elections.All these things are completely inconsistent with your claims.

  7. Was it actually taken seriously? I’ve mainly heard of Grexit form UK and US commentators who are arguably not the most relevant or well-meaning.

    • Pavlos – Greek politicians have been using the, leave the Euro/Grexit tool from the start. It is the term “Grexit” that was created by the UK and US media.

  8. Yanis:
    In your 5/30/11 blog part of your conclusion was ….
    “But if they choose to jettison Greece from ‘their’ monetary system, the only sensible way in which to do it is by opting out of the euro themselves.”

    Since Merkel’s party recent defeat in Jan. 2013 Lower Saxon elections, is it possible that more german people are becoming dissatisfied with Merkel’s approach to Germany’s economy? Do the Germans want to leave European union too like Great Britain? Last year was not a good year for Germany’s economy and 2013 outlook is projected to be .4% increase in GDP growth. How long can so called Euro happy news shield the results of so many other European countries in recession?

  9. Today the Greek sovereign debt is at about the same level prior to the 2 PSIs(both flawed as hell) despite all sorts of financial engineering in vain.

    “Grexit” was used as a form of subjugation and of political manipulation as well.

    Cyprus, which is an innocent casualty of Merkel’s PSI nonsense, is now told that there is only one political party in Cyprus which could bring about a solution. That’s Anastasiades which is the equivalent Samaras figure for Cyprus. Merkel in an unbelievable move of voter manipulation has thrown her 100% support behind Anastasiades’ candidacy.

    Not only Grexit was a fabricated term of terror for submission purposes but also a blatant tool of unbelievable political manipulation.

    The result today is that neither Greece and soon nor Cyprus have any sovereign governments. What they have are Berlin based franchises managed by local employees of Merkel’s choosing.


      Κατά τη διάρκεια του φετινού Νταβός η καγκελάριος, θεωρώντας πως η Γερμανία είναι πλέον ο αδιαφιλονίκητος ηγέτης της Ευρώπης, έχοντας καταφέρει να ανέλθει στην πρώτη θέση του βάθρου με τη βοήθεια της κρίσης, μίλησε πια ολοκάθαρα και χωρίς κανέναν ενδοιασμό.

      Κρίνοντας από αυτά που είπε, θεωρεί χωρίς καμία αμφιβολία την κρίση χρέους της Ευρώπης, της Δύσης καλύτερα, σαν μία μεγάλη ευκαιρία – μία μοναδική συγκυρία, με τη βοήθεια της οποίας θα οδηγήσει ολόκληρη την Ευρώπη, όπως έχει ήδη συμβεί με τη Γερμανία, σε ένα «εξτρεμιστικά» νεοφιλελεύθερο καθεστώς. Ειδικότερα, είπε τα εξής:

      “Εμείς στην Ευρώπη θέλουμε να εξελίξουμε την οικονομική και νομισματική ένωση, σε μία ένωση σταθερότητας – ενώ είμαστε όλοι εντός της ΕΕ σύμφωνοι. Αυτό είναι το ακριβώς αντίθετο από μία βραχυπρόθεσμη εγχείρηση, στην οποία αναγκάζεται να υποβληθεί κανείς επειγόντως.

      Πρόκειται ασφαλώς για έναν μακροπρόθεσμο δρόμο – έναν δρόμο, τα βασικά χαρακτηριστικά του οποίου είναι από τη μία πλευρά οι διαρθρωτικές αλλαγές, με στόχο την αύξηση της ανταγωνιστικότητας, ενώ από την άλλη η εξυγίανση των δημοσίων οικονομικών.

      Θέλω να τονίσω ακόμη μία φορά εδώ το ότι, για εμένα είναι και τα δύο άρρηκτα συνδεδεμένα μεταξύ τους. Η δημοσιονομική πειθαρχία και η ανάπτυξη είναι βασικά οι δύο όψεις του ενός και μοναδικού νομίσματος, όταν το ζητούμενο είναι η επανάκτηση της εμπιστοσύνης”.

      Η ερώτηση που τίθεται αυτόματα εδώ είναι, ποιού ακριβώς την εμπιστοσύνη θέλει να επανακτήσει η κυρία Merkel; Πρόκειται για τη εμπιστοσύνη των ανθρώπων; Μήπως το ζητούμενο είναι η εμπιστοσύνη των αγορών, μία «συμβατή» με το «χρηματοπιστωτικό τέρας» παρωδία της δημοκρατίας;

      Μία νέα τάξη πραγμάτων, στην οποία η ελίτ του παγκόσμιου καρτέλ και των τραπεζών θα έχει την απόλυτη εξουσία; Μήπως αυτοί είναι οι κρυφοί εργοδότες της καγκελαρίου και όχι ο γερμανικός λαός που την ψήφισε;

  10. Thank you for responding. I hope that you in the near future adress the work of Bill Still and Dr.Werner. Their recepie is the same as was used by Lincoln when he issued his greenbacks, and when Hitler ended the economic disaster of the Weimar republic by nationalizing the issuing of the D-mark.

  11. Grexit was never on the table. It was used to ram through austerity measures and service debts of German and French banks. Having said this, Greece’s public sector grew to monstrous levels over the last 40 years as politicians bought votes. Some austerity measures were needed to reign in the bloated public sector. Sadly, it was the private sector which bore the brunt of these measures and that’s why austerity backfired in such a spectacular fashion. The focus now must be on growth and investments. If there’s no growth or little growth, debt servicing will be impossible. Problem is Greece needs to cut red tape as few foreign investors trust its corrupt oligarchy. A few mega wealthy families control everything in Greece, including the corrupt media which routinely shake down victims, forcing them to buy advertising ads or risk being publicly slandered. In so many ways, Greece is a banana republic run by corrupt charlatans. The best and brightest leave in search of a better future elsewhere. Who can blame them? Hopefully something good will come out of this crisis, but I fear that it will be too late by then. Let’s see, I remain optimistic and believe better days lie ahead for Greece.

    Leo Kolivakis

    Publisher of Pension Pulse blog.

    • Hello Leo – “Sadly, it was the private sector which bore the brunt of these measures and that’s why austerity backfired in such a spectacular fashion” – You really believe the Greek central bank and the ECB are so stupid as to not realise the measures implemented by the Greek government would implode the Greek economy?

      I put it to you they knew what the consequences would be in advance, like anyone with the faintest clue about economics.

      They simply did not care about the collateral damage, they had lent money to the Greek government, they knew the Greek government could not pay, so they told Papandreou/Papademos to get the money from the people and if that meant increasing taxes and/or seizing private assets due to debts owed to the state then so be it.

      The Greek people are being bled dry by their own government.

    • Richard,

      My point still stands, the private sector bore the brunt of these savage austerity measures. Job losses were concentrated in the private, not public sector. Greece has almost as many public sector jobs as Canada for a country with one third Canada’s population and much smaller in size. The buying of votes over four decades by successive governments created this public sector albatross and now that the money ran out, they still refuse to make the necessary cuts in the public sector. Who was really bled dry in Greece? Sadly, it was the private sector, the very engine of job creation. Greece needs a Maggie Thatcher but they would assassinate anyone with her courage.



    • Hi Leo – I 100% agree with everything you said, the point I was making was the motive of the obviously self destructive measures. Yes the private sector is taking the hit, yes the government needs to cut its payroll. Agreed. 100% and then some!

  12. Actually i think Roubini admitted that he was wrong but only regarding the time that the grexit would take place.From what i read he still insists that it will happen.He said he sees it taking place after the German elections.
    So he actually hasnt accepted his error.

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s