Greece’s duty to negotiate with Berlin: Part B of an interview with Roger Strassburg and Jens Berger, of NachDenkSeiten

Roger Strassburg and Jens Berger, of NachDenkSeiten, interviewed me on the Modest Proposal to Resolve the Euro Crisis and the Eurozone Conference that James K. Galbraith and I organised in Austin in November 2013. Part A of the long interview was posted here. Here is Part B of the interview, which (as you will see) focuses more on Greece and the chances of kickstarting the debate that Europe is refusing to have, so far….Roger Strassburg:  What do you see physically as the effects of austerity in Greece?  How has it changed in the last five years?

Yanis Varoufakis:  We are talking about the greatest diminution of human life prospects since the 1930’s during the Peacetime.  It’s inescapable.  Wherever you turn your eyes and ears towards, you see and hear signs of a country that has fallen into a hole.  I can give you several rather sad examples. 

You walk around Athens at night and you can’t fail to notice that there are several apartments that are not lit, but where people live in candlelight because they can’t afford to pay their electricity bill, especially after the government started introducing the deduced property taxes that are extracted from one’s power bill, electricity bill.  Then there is the massive exodus of highly-educated young Greeks who are flooding the rest of the world, not just the rest of Europe. Perhaps the most toxic part of the equation is the banking sector around which a new kleptocracy is being created, funded by loans that the long suffering Greek taxpayer has taken from European taxpayers with which to retain in authority the very bankers on whose watch the banks went (and remain) bankrupt, thus guaranteeing that even healthy Greek firms will not have access to credit for decades to come.

And, of course, the worst part of it all is the rise of the Nazis. Now in Greece, the country that fought tooth and nail against the Nazis during the 1940’s, on a par with the Yugoslav resistance, we have a Nazi party, not a neo-Nazi party, but a fully-fledged old-fashioned Nazi party that commands more than ten percent of the vote. Even though its leadership has been apprehended and imprisoned, their strength is actively increasing, feeding on the desperation of very many people, and, of course, on the lost legitimacy of a political system that has imploded alongside the social economy.

Roger Strassburg:  Do you see a danger that the Chrysi Avgi would actually become the largest party at some point?

Yanis Varoufakis:  I don’t see that, but what I see is something worse. I see the Nazi party, Chrysi Avgi, already in power. They are already in power as we speak!  They’re not in government, which is a form of irony.  Let me give you an example which made me feel deeply ashamed to be Greek. 

Before the May, 2012 elections, the police apprehended a very large number of women on the streets of Athens, women that looked disheveled, that were possibly prostitutes. They were apprehended without warrant, without cause, on the order of the Ministers of Public Order and Health. They were thrown into cells, then photographed and subjected by force to HIV tests. When the results came back, those whose HIV tests were negative were released but the rest were photographed, their photographs and their names were posted on the government website and the women themselves, without any counseling or genuine medical assistance, were thrown in jail.  That runs in the face of every liberal and constitutional norm or piece of legislation that I can think of, and it violates public health guidelines; it violates constitutional rights.  Now, why did they do that?  Well they acted that way in order to placate Chrysi Avgi, Golden Dawn, potential voters, and to try to lure them into voting for them, away from Golden Dawn.

On to a second example: After this current government was elected, in June, 2012, one of the first things they did was to change the law regarding requirements for entering the military and the police academies. Suddenly, it no longer sufficed to get the right examination score if you’re a youngster and to be a Greek citizen.  You now have to prove that have a Greek bloodline.  It’s called ‘ithagenieia’.  So you can be a fully-fledged Greek citizen, a person who was born in Greece, is a Greek citizen, went to Greek school, has never left Greece, has the grades to enter the police academy or military academy, and yet does not have the certificate of ‘ethnic cleanliness’.  Now, personally I feel deeply ashamed to be Greek. My country has managed, in 2012, to bring back from the dead Nazi Germany’s 1930s legislation. This why I am saying that Golden Dawn is to a large extent in power. For if they have succeeded to force the Greek government and parliament to institute such abhorrent pieces of legislation and practices, why do they need to be in power themselves?

Roger Strassburg: That is news. Do you think that there’s a balance on the other side that may at some point – Syriza is actually not that extreme, but is on the left.  Do you think that the other side of the political spectrum is gaining influence?

Yanis Varoufakis: Well, it’s my understanding that Syriza, the so-called coalition of the radical left, is edging ahead of New Democracy in the polls. New Democracy has suffered from false promises issued throughout this year, about the so-called recovery, which, of course, is just a piece of political propaganda that has no bearing on the truth.  Alexis Tsipras is now leading a party that is probably going to be – if there is an election in the next six months or so – the largest party, more likely than not.  One never knows.  But that seems to be happening. 

There are two questions here, the first one is, would a Syriza victory be followed by a capacity of the Syriza leaders to come to an agreement with smaller parties in order to forge a parliamentary majority.  And the second and of course biggest question is what will they be able to do once they manage it?

Roger Strassburg:  Well, the question is how much room they have to actually do anything.  They’re in kind of a box.

Yanis Varoufakis:  Yes, exactly.  My view on this is, and this is what I have been putting forward in Greece and in conversations with Alexis Tsipras, that they have no degrees of freedom whatsoever within the context of Greece’s institutions.  As you put it, they are in a box.

Syriza’s leaders have, over the last year or two, come to the conclusion, and I think correctly, that it will be a disaster to get Greece out of the Eurozone.  At the same time, it would be a disaster to try and implement the current loan agreement, bailout deal with the Troika – the reason being that it simply cannot be implemented.  It’s not a question of willpower. This is an agreement that is utterly irrational and which is self-defeating. 

So the only thing that they can do given that within Greece there are no degrees of freedom, as I said, is to renegotiate the agreement.  But the only way of renegotiating the agreement is if they are willing to adopt a tough bargaining stance. To go to the next European Union Council, once elected, and set out what the broad guidelines for a new agreement must be, adding that unless these broad guidelines are put on the table and discussed sensibly the Syriza government is not going to make any repayments to the European Central Bank in the context of bonds that the ECB owns and are maturing, and that none of the steps and measures agreed to by previous governments will be implemented. For instance, there won’t be any fresh public sector firings. Then, be prepared for two to three tense months before a proper bargaining process commences: a negotiation in Europe the purpose of which is a rational agreement on how the Greek state, the Greek public sector, can live within its means without any future outside assistance and without turning Greece into a deserted land sparsely peopled by walking ruins.

Jens Berger:  Yanis, as you’ve probably already heard about, in Germany the new Grand Coalition of Angela Merkel’s conservatives and the social democrats finalized their coalition agreement, and if you read the coalition agreement for the euro crisis policies, you’ll see that there’s nothing new.  It’s the Merkel course for the next four years.  What message is that for Europe, and how would you as a Greek economist comment on this.

Yanis Varoufakis:  Well it was not unexpected.  I did read the CDU-SPD-CSU agreement, and it didn’t surprise me at all.  And it didn’t surprise me at all because you only have to read what the SPD was saying prior to the election to realize that they never challenged the Merkel position, the Merkel blueprint on what to do with the Eurozone.  And if anything they criticized her for having gone… too far.  They criticized Merkel for the banking union, they criticized Merkel on the base that Merkel never came clean on how much these bail-outs would cost the German taxpayers. But they never criticized the Merkel’s basic logic on how to combat the Eurozone crisis. 

It was natural that the government that would be formed in Berlin would at the outset, at the beginning, not make any proclamations of any change to current policies. That, however, doesn’t mean that there won’t be any change.  But I’m not at all hopeful that the changes will come because the SPD is in the government.  I personally don’t trust the SPD at all.  I don’t trust that they are even interested in changing the Merkel strategy.

But I think that Merkel and Schäuble know deep in their bones that the current strategy cannot continue.  And it cannot continue because it’s self-defeating.  It’s not that the SPD or the current Greek government or the Spanish government or President Hollande or anyone else is going to force Mrs. Merkel to change course. Reality is going to change her mind, I hope.  And I actually think that Mrs. Merkel and Mr. Schäuble have a whiff of that for some time now.  It’s just that they were not prepared to make the changes before they feel they are running out of time.  I have no idea what changes they will conjure up.  But whatever those changes might be, it doesn’t surprise me that the present agreement between the SPD and the CDU and the CSU do not reflect those.  Those will be changes that will come about as a result of long negotiations with the ECB, with other governments and in light of the evolution of the crisis.

Jens Berger:  So you’re still an optimist.

Yanis Varoufakis:  I’m trying.  But it’s getting to be increasingly difficult to remain an optimist.

Roger Strassburg:  Yeah, I was going to say that I’ll believe that Merkel’s going to change when I see it.

Yanis Varoufakis:  Yes, me too.

Roger Strassburg:  I don’t think she will.  I don’t think Schäuble will, either.

Yanis Varoufakis:  Well, you know what?  In that case, the Eurozone is going to bid us farewell.

Roger Strassburg:  It will, but I think this is what’s kind of behind Heiner Flassbeck’s position that the peripheral countries should get out of the euro.  That really isn’t his preference, but I think he has reached the conclusion that there’s not going to be any other choice, that it’s not going to get better.

Yanis Varoufakis:  He’s probably right.  Where he’s wrong, and where I disagree with Heiner, is in his conclusion that we should simply get out of the Eurozone or, at the very least, threaten to do so. What we should do is veto the present policies.  And bring things to a head.  If I were the Greek prime minister I would declare that I would never going to get out of the Eurozone.  “If you want to throw me out, go ahead and do it.  Do your worst.  Switch off ELA support to the banks and let everything go to hell.  But I’m not getting out of the Eurozone.  I’m also not going to fire 4,000 public sector workers in December.  I’m not going to redeem the ECB for the bonds that it’s holding.  And I’m not going to be talking to the Troika until and unless we have a European Union and Council in which we sit down and discuss reasonably and rationally what needs to be done.  Now if you want to dismantle the Eurozone in the process by unilaterally discontinuing ELA support to my banks go ahead. If you want to get out of the euro yourselves, be my guest.”

Roger Strassburg:  What do you think is keeping that from happening?  The leaders in the peripheral countries have been extremely timid.

Yanis Varoufakis:  Well, the fact is that the Periphery is ruled by clones of Mr. Quisling. The whole point of the political stance of the Periphery’s leaders is to demonstrate that they remain on a side with the powers that be.  They don’t really care about anything else.  Mr. Rajoy, Mr. Samaras, even Mr. Letta in Italy.  If they have to assign priorities, their number one priority is to get a pat on the back from the powers that be in Frankfurt and Berlin and Brussels.  And until and unless there are political leaders who put the national interest, and the interest of the people of Europe more broadly, above their great eagerness to be patted on the back by the powerful, we are not going to see anything change. Europe will continue to decline.

Roger Strassburg:  Do you see anybody on the horizon that might actually have the backbone to stand up and do that?

Yanis Varoufakis:  The reason why our conference was interesting here in Austin was we hosted the one political leader in Europe who can possibly become prime minister and who is likely (if he does become prime minister) to break with the Quisling tradition. Alexis Tsipras.  But I think that his importance goes beyond Greece. I don’t really care who does it in Europe, whether it’s a Greek politician, an Irish politician, or a Portuguese politician. Somebody has to start the ball rolling.  One government has to say no.  And I believe that “no” by one government will be like the little chip on the dam that causes a small leak that will then bring the whole dam down.  I think that there of lots of politicians even in today’s corridors of power who are eager to open their mouths and start speaking up, and that none of them is going to dare to be first unless somebody else does it.  So what we need is one government that tries something we’ve never tried out in Europe so far, and that is speaking the truth. Then a chain reaction will be triggered.  I have no doubt about it.  The question is who is going to be the one that starts it.  The reason why Jamie and I were keen to bring Alexis Tsipras over to our conference was because we think that he may be somebody that might do it.

Roger Strassburg:  Is there a place for you in the government when he does?

Yanis Varoufakis:  I hope not.  I really hope not.  But let me say why.  I’m an academic.  I find it very hard to operate along the lines of what the British call the ‘collective responsibility’ of cabinet.  I like the opportunity of disagreeing with myself.  And I’m not very good at toeing a line that is given to me.  So I sincerely hope that the answer to your question is no. In fact, I have little doubt I would not be very good at that racket.

Roger Strassburg:  It wasn’t entirely serious, either.  Somewhat, because I know you have advised Tsipras, haven’t you?

Yanis Varoufakis:  Yes, that’s right.

Roger Strassburg:  Thank you very much.

Yanis Varoufakis:  Thank you.

24 thoughts on “Greece’s duty to negotiate with Berlin: Part B of an interview with Roger Strassburg and Jens Berger, of NachDenkSeiten

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  5. Before negotiating with Berlin on anything, one must ask a fundamental question:

    How did we end up in a situation that the sum total of the European dream in achieving peace, prosperity and human fulfillment has come down to saving a currency?

    Since when Europe = euro ? and why have we allowed this to come about?

    And if we are to snap out of our lethargy in saving what is left of the Europe ideal then the dissolution of the euro might be the safest and quickest path in getting there.

    You could then discuss with Berlin and other European capitals how best to achieve such dissolution. Not negotiate, but how to cushion the effects of undoing something flawed that shouldn’t have been there in the first place.

    • Dean, you raise a very sore point that is discussed intently already in Greece.

      Watching the news in Greece, literally not a single day goes by, not a single austerity law goes by, without someone (government minister or pm, parliament member, journalist, economics professor, etc) raising the argument that if we Greeks don’t continue with austerity we will be “thrown out” of the euro. “Submit, or die via Grexit” is the ultimate, unchallenged argument in every public discussion, daily, on every TV panel, parliament debate or press conference in Greece these days.The euro has become a ridiculous postmodern boogeyman in Greek politics in the last 3 years. [I am wondering if this pathetic kind of public dialogue is going on in other EZ countries, re. Greece or themselves and at what intensity. Anyone?]

      This has taken its toll on Greek politics. Many decent Greek people prefer to be represented by filthy Natzis who reject (even verbally in public) the “Submit to austerity and the kleptocracy that imposes it, or die” blackmail, than by, say, Independent Greeks or Syriza, who refuse to outright reject the blackmail, in fear of being criticised as “anti-european”.

      What about the rest of the EZ?
      Mr. Trichet blackmailed first Greece and then Portugal and Ireland and then again Mr. Draghi blackmailed Spain and Italy (via OMT), that the ECB would **destabilize** their financial system, by
      arbitrarily deciding not to accept collateral from them any more, *unless* these countries imposed the policies the ECB council favoured (whether these policies were right or wrong doesn’t excuse blackmail, but being the wrong ones adds injury to insult).

      By this **abuse of power** by the ECB, the euro and the Monetary Union transformed from the epitome of trust among EU partners to a prison for dissident (=non-austerity) policies in the EU.

      Absurdity seems to prevail in core countries also. According to Yannis, high-level german officials believe that Germany “controls” the EZ council, via its euro exit card. According to him, the absence of dissident voice in the EZ councils is reason to suspect that officials from other core countries (e.g. France?) seem to agree with these German officials.

      So Dean’s point is very well taken; should any country—core or periphery—participate in a monetary union when the bankers in charge of it have no compunction to use their power to blackmail electorates and/or their elected governments?

    • Vasili:


      1. No one can throw Greece out of the euro. Such is a complete fabricated lie.

      2. Greece should not voluntarily abandon the euro (we had such opportunity in the past which was not taken. At this point self-exit is pure punishment with zero benefits).

      3. Greece (using the EU Presidency podium) must and should convince all member states to exit the euro simultaneously. Only under such “simultaneous exit” scenario Greece could entertain a euro exit of any advantage. If Greece fails to convince then let at least assist in starting a serious debate before the May wrath of abused citizens is heard loud and clear. But there is very little time left.

    • Dean,

      Well said as always. But the euro is not going anywhere – 99.9% certainty.
      And as you say Greece cannot leave with others staying.

      So the effort shifts to forming a true monetary union. It might take 20 or 30 years
      but it will probably be the most likely outcome.

    • Κωστα:

      I am not sure about the 99.9% certainty. Here is what Ambrose-Evans Pritchard thinks:

      “The old nomenklatura is losing its grip. The Franco-German axis has broken down, whatever the rhetoric from Mr Hollande this week. You could argue that Germany has already left the EU in all but name, conducting its own unilateral trade and foreign policies with China and Russia, conducting its own Middle East policy, and turning its back on fiscal union (contrary to all the logic of EMU). Indeed, you could argue that by its actions, Germany has already left the euro.

      You could argue too that the EU no longer exists as a motivating project. It is a relic of the Cold War era, an empty shell, overtaken by nation state revivals across the EU, and by global free trade under the WTO. As for Mr Odell’s “duties”, did you know that even Tunisia has tariff-free access to the EU market?

      A British exit would be extremely damaging to the EU’s already tattered credibility, and possible the coup de grace – as Germany’s Wolfgang Schauble admits, precisely because he is Germany’s last true believer in the Project. It would change the EU chemistry in unpredictable ways. It would upset the internal EU power structure, leaving the triple stool standing on two unstable legs.”

      I find it a very persuasive argument:

    • Dean,
      Ambrose is ahead of himself most of the time, Germans still believe in the euro, they just don’t want loosey-goosey countries in it. On the other hand 60% of Greeks want the euro. So the situation will drag out for quite some time to the suffering of Greeks unfortunately.

    • Costa:

      The supposed 60% of Greeks supporting the euro comes from the flawed way Greek polling companies frame the questions asked and as it turns out is absolutely false.

      Credible international companies like Pew Research place the number of Greeks happy with the euro to only about 19%.

    • Dean,
      The other question is whether they like the drachma better.
      I don’t think so. If there was a way to have a two currency economy where all the taxes and public expenses are paid in drachmas but you have the option to do business in euros that would be the best of both worlds, I am sure this would not work though.

    • Costa:

      If someone approached me in Greece today and asked me if I would like the drachma better I would probably say “No” because the debate has been framed as a unilateral decision of only Greece leaving the euro and thus inflicting all Greek citizens sizable pain.

      What I am suggesting is very different. If a block of EZ countries decided to dissolve the euro simultaneously this would create enormous negotiating leverage which Greece on its own (and by doing the same by herself) does not have nor could it ever get it. It’s the coordinated common action that is the force multiplier. Not the drachma. You can come up with another Greek currency but that’s not the important part. The important part is to be taken deadly seriously in renegotiating the terms of a bad deal.

  6. The second part of this interview is quite interesting, as you outline a highly improbable strategy for a potential Greek Government (GG of either Tsipras or Samaras).

    Summary: Unless the Greek ***people*** are prepared to leave the EZ and possibly the EU, in order to avoid orchestrated deflation, any negotiation is futile, because of timing. Or, to put it conversely, your strategy may work only if the Greek people are prepared to leave the EZ and possibly the EU.

    In more detail:

    First, the problem with your proposal:
    So, let the GG announces that “it is not servicing its loans, because blah, blah, blah…
    but stays in the euro, do your worst”.
    How will the EZ lenders react? They will simply say “fine”, and start treating it as a default: go to court. In the meantime, they (a) promise that, as a token of solidarity to the Greeks, ELA continues, and is increased if needed (b) start a campaign in their countries against the irresponsible government of Greece which steals their money and (c) asks the rest of the world to join them in admonishing it severely (with threats and legal action). Very responsible and in the highest spirit of solidarity and stability. At the same time, the GG’s voice is drowned by angry commentators domestically and abroad.

    As the days go by, who will stay in support of this GG at home? A population that has been deluded (by the likes of you nonetheless) to consider the euro more important to survival than sunlight, that sees the “magnanimity” of the EU and suffers yet another slump in business and employment, as the liquidity crisis deepens, will likely revolt against this GG and demand immediate change.

    Or will foreign governments stand with the GG, even in Portugal and Ireland (who, remember, are among our lenders) or Italy, who is Greece’s #1 export market? Or as the eurosceptics call for a forceful ousting of Greece?

    A GG will find no support, domestically or abroad—although many will ask to “give it time to come to its senses, after all the suffering etc etc”. and time will erode its position quickly until the GG is replaced, by the Greeks themselves, with a compliant one.

    Now, consider an alternative approach:
    a Greek population which is prepared to the alternative of Grexit (which btw is already at 40% according to the polls) as viable and clearly understands the atrocious political and economic consequences of orchestrated deflation, supports its government in saying (a) to the EZ/lenders: “either we all fix the EZ within N months or Greece is out, preferably in an organized way”, (b) to Draghi: “we may need some more ELA because we just said we may leave” and (c) to the other EZ countries that, “if Greece leaves the EZ, it will also default on its loans to them”.

    This is the kind of thing that creates totally different responses. Not the “let’s change the GG which isn’t playing by the rules” response but the “let’s make a decision on the rules” response. This may be a hasty decision (e.g. Draghi saying “ELA is off” which I agree with you is highly unlikely) but if not, then a discussion starts ***on the rules***. Then, we all may argue that we ***prefer*** the EZ change option, not because of fear and helplessness but because of common vision etc etc.

    Note also:
    If the Greek population is educated on the viability of a possible Grexit and accepts the possibility as preferrable to orchestrated deflation, then it is likely that, under popular demand, both Samaras and Tsipras (or their successors) may form a coalition GG to this effect, making it very stable domestically.

    N.B. All my argument is premised on you *still* maintaining that Grexit is preferable to orchestrated deflation for Greece–as you proclaimed some time ago. If not, please admit it.

    • You are making a very simple but profound mistake.

      If exit from euro is good for Greece, then it’s good for the entire EZ-28. Having come to the conclusion that the euro is a flawed currency why do you want to leave behind 27 other EU nations to deal and suffer under its flawed concept?

      Don’t you think that Greece owes it to humanity and her own name legacy to do something good for the whole of Europe? and this is to engineer a simultaneous exit from the euro by all EZ nations?

      If you think exiting the euro is a good thing (which it might very well be) then exiting on your own and leaving others to suffer in it is a supreme act of selfishness. And since Greece is not selfish then Greece owes it to the world to open the exit door to all 28 members at the same time.

      This is the moment to rise above your own concerns and prove that Greece is thinking and acting for the benefit of Europe. This is how you prove that you are European vs. a European reject which is quite a different concept. Don’t you think?

    • Dean, I have no objection to what you say.

      But remember that I am among the 40% minority in Greece. The majority of 60% still maintains “No Grexit uber alles”, mostly because of FUD (Fear Uncertainty Doubt) spread by the unwilling and unintended “alliance” of idealist pro-Europeans, like our host, and cunning self-serving kleptocrats (politicians and bankers).

      For years now many (my puny self included) have tried to appeal to the idealists that FUD (aka. leaving euro membership undiscussed lest the discussion weakens idealism) is playing the game of the kleptocrats in Greece and outside of it. Progress has been slow, but steady, among idealists (e.g. like Pissarides’ recent change of heart) and the public (e.g, the anti-euro poll numbers in Greece, France, UK etc.)

      But progress is too slow, and the European “lost generation” turns from fear to grim reality every passing day. The only chance for timely change (including adoption of the MP) is to overcome the aversion to discussing euro membership.

      The MP (and its co-author, our host) is lacking severely in this respect.

    • Vasili:

      That’s another common perceptual mistake.

      Being anti-euro does not mean Grexit. Absolutely not.

      It means Greece-staying-put within the EU and engineering the euro collapse from within. Only after an EZ-17 common exit Greece (or EZ17exit) could exit at the same time. If we are to leave, we must first put on the European hat and do something which is also beneficial to other member states.

  7. A lot of intelligent people, by the likes of you, Jens and Roger as stupidly as falsely accused as being right wingers and anti-europeans and so on have seen this coming since years and warned: the more money is thrown into the bottomless pits of the finance industry and more or less failed states, the stronger their position will become: as blackmailers. The finance industry uses this power since long, having been made ‘system-relevant’ by their socket puppets in the parliaments all over the place. The debtor nations will follow suit.

    What you advise is not a “tough bargaining stance”. It is pure and simple blackmail. If a Greek prime minister came with such a stance to ‘negotiate’, the plug named ELA must of course be cut immediately. Germany will take a hit, by far not as hard as you seem to fantasize about, and life will go on in Germany. For Greece, I am not so sure, but hey, she would have begged for it.

    Now back to adult and civilised behaviour instead of the ridiculous ‘ If I were the Greek prime minister I would declare’ stuff:
    as for Greece staying in the eurozone: no, of course not. Get out! That’s what I argue since years. You should never have entered this misconstructed common currency. Even the Flassbeck guy has accepted this reality now. With the several years of delay leftish ideologists often need for this exercise.

    Greece should get out of the eurozone. To help her to start all over again, the creditors should accept a substantial hair-cut. Greece is lightyears away from a eurozone membership that makes sense for her and the other partners. Greece is simply not fit for the requirements and will probably never be. For a huge number of reasons – cultural, social, economical, historical – you name it.

    • Thank you for demonstrating your sentiments at the “we want change or we default on our debts, but are staying the EZ no matter what” stance.

      How would you react to “we want change or we are leaving the EZ and will pay what we can”? Would you consider discussing with the Greeks changes to this “misconstructed common currency”?

    • Hello Vasilis,

      I don’t like the “we want change or else” stance at all. Blackmail is blackmail. It should instead be “we will change …” and then DO IT. Not, as until now, promise and then don’t deliver (much) on these promises.

      Big, and painful, changes within the Greek society ar the linchpin for this great nation to get a grip on her many huge problems. No amount of money transfers, changes to interest rates on credits or whatever else from the outside can do this. Greece must 1st and foremost get her house in order, from the inside, only then she has a chance to get out of the mess.

      BTW, what I critisise with the ‘modest proposal’: it is focused on financial alchemiae. It does not tackle the root causes. It does not care much about the real economy. It is a theoretical thing, nicely phrased, well argued, but ignorant of to many practical constraints. For instance w.r.t. the sense making, profitable projects the EIP should finance in the periphery. There are not nearly enough of those!

    • Thank you for your answer, which raises issues.

      Although the kind of answer you gave demonstrates my point, it would be impolite not to respond to the issues you raise with my view.

      1) Greece (the society) *has* made big and painful changes; it has stopped investing, 1/3 of its workforce is not working and is consuming at the level of subsistence, it has degraded its health care and education and has yielded government planning to the troika. None of it have made things better.

      2) Unless there is some further financial alchemy agreed to with the EZ, Greece will not honour ~40bn of debt in the next 12 months. This alchemy, pretend and extend, is not approved by the majority of Greek parties, according to the polls.

      3) An analysis of the effectiveness of the MP is beyond my economic skills but the direction of changes it proposes are more convincing.

      4) You spoke of Greek society’s huge problems. The single huge (insurmountable) problem of Greece is banking credit crunch, aka the amount of M2 money: it is 25% less than what it was and decreasing as we speak, while obligations–interest and taxes–are mounting. There are many cures, but none is allowed by current EU/EZ rules.
      If this problem is not amended by those who control its monetary system (who are not Greek), Greek society’s only option in my eyes is to make a big, painful change (aka structural reform): abandon the EZ and possibly the EU.

    • Nobody is leaving the EZ, 60% of Greeks want in, the minute a politician dares to propose this his/her career is over.

      Greece does not need huge help. Greece needs the obvious.
      1. Stand behind Greek banks and guarantee deposits so that the Greek money that sits in German banks returns to their rightful place.
      2. Eliminate any fear of GREXIT at least out of the banking system. Deposits in euros stay in euros.
      3. Stop enforcing ridiculous taxation in the Greek system. It punishes the legal tax payers and does nothing to get the tax evaders.
      4. Provide relief of interest rates and move the bank recap loans out of the government debt and to the European mechanism that is there to recapitalize banks.

      Greece on its own needs to:
      1. Eliminate corruption, punish all corrupt politicians and ex-ministers.
      2. Reduce the pay of all politicians.
      3. Eliminate unneeded agencies.
      4. The most difficult to do – get politically serious. Syriza still is a ridiculous prospect
      for forming a Greek government.

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