A New Deal to Save Europe – Project Syndicate op-ed

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LONDON – “I don’t care about what it will cost. We took our country back!” This is the proud message heard throughout England since the Brexit referendum last June. And it is a demand that is resonating across the continent. Until recently, any proposal to “save” Europe was regarded sympathetically, albeit with skepticism about its feasibility. Today, the skepticism is about whether Europe is worth saving. [To continue reading click here.]

Greece’s perpetual crisis will not end via one-off handouts. It will end only when Athens ends the perpetual lie.

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ATHENS – Since the summer of 2015, Greece has (mostly) dropped out of the news, but not because its economic condition has stabilized. A prison is not newsworthy as long as the inmates suffer quietly. It is only when they stage a rebellion, and the authorities crack down, that the satellite trucks appear. [To read on click here]

Trump, the Dragon, and the Minotaur – Project Syndicate op-ed

 

Screen Shot 2016-01-28 at 16.54.28Screen Shot 2016-11-28 at 18.31.37.pngATHENS – If Donald Trump understands anything, it is the value of bankruptcy and financial recycling. He knows all about success via strategic defaults, followed by massive debt write-offs and the creation of assets from liabilities. But does he grasp the profound difference between a developer’s debt and the debt of a large economy? And does he understand that China’s private debt bubble is a powder keg under the global economy? Much hinges on whether he does… [To read on click here]

The Universal Right to Capital Income – Project Syndicate op-ed

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Screen Shot 2016-10-31 at 14.29.27.pngATHENS – The right to laziness has traditionally been only for the propertied rich, whereas the poor have had to struggle for decent wages and working conditions, unemployment and disability insurance, universal health care, and other accoutrements of a dignified life. The idea that the poor should be granted an unconditional income sufficient to live on has been anathema not only to the high and mighty, but also to the labor movement, which embraced an ethic revolving around reciprocity, solidarity, and contributing to society. [To read on click here.]

Apple, Brussels, and Ireland’s Bruised Sovereignty – Project Syndicate op-ed

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ATHENS – Despite their unequivocal Europeanism, the Irish have been serially mistreated by the European Union.

When Irish voters rejected the Treaty of Lisbon in 2008, the EU forced them to vote again until they delivered the “right” outcome. A year later, when private Irish banks imploded, threatening their (mainly) German private creditors with severe losses, Jean-Claude Trichet, the European Central Bank’s then-president, immediately “informed” the Irish government that the ECB would shut down ATMs across the Emerald Isle unless Ireland’s unsuspecting taxpayers made the German banks whole.

To read on click here

The Politics of Negative Interest Rates – Project Syndicate op-ed

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ATHENS – Objects of desire come at a cost. Only bad things, like toxic waste, have a negative price, the equivalent of a fee payable to anyone willing to make them disappear. Does this mean that negative interest rates embody a new perspective on money – that it has gone “bad”? [To read on, click here]

Building a Progressive International – op-ed Project Syndicate

Screen Shot 2016-01-28 at 16.54.28ATHENS – Politics in the advanced economies of the West is in the throes of a political shakeup unseen since the 1930s. The Great Deflation now gripping both sides of the Atlantic is reviving political forces that had lain dormant since the end of World War II. Passion is returning to politics, but not in the manner many of us had hoped it would.

The right has become animated by an anti-establishment fervor that was, until recently, the preserve of the left. In the United States, Donald Trump, the Republican presidential nominee, is taking Hillary Clinton, his Democratic opponent, to task – quite credibly – for her close ties to Wall Street, eagerness to invade foreign lands, and readiness to embrace free-trade agreements that have undermined millions of workers’ living standards. In the United Kingdom, Brexit has cast ardent Thatcherites in the role of enthusiastic defenders of the National Health Service.

To continue reading click here

The Right Left for Europe: In response to leftwing Brexiters, Grexiters etc. – Project Syndicate Op-Ed

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ATHENS – The United Kingdom’s referendum on whether to leave the European Union created odd bedfellows – and some odder adversaries. As Tory turned mercilessly against Tory, the schism in the Conservative establishment received much attention. But a parallel (thankfully more civilized) split afflicted my side: the left.

Having campaigned against “Leave” for several months in England, Wales, Northern Ireland, and Scotland, it was inevitable that I faced criticism from left-wing supporters of “Brexit,” or “Lexit” as it came to be known. [For the rest of the article click here]

The ECB’s Illusory Independence – Project Syndicate op-ed

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 Screen Shot 2016-06-06 at 12.31.15.pngATHENS – A commitment to the independence of central banks is a vital part of the creed that “serious” policymakers are expected to uphold (privatization, labor-market “flexibility,” and so on).
But what are central banks meant to be independent of?
The answer seems obvious: governments. In this sense, the European Central Bank is the quintessentially independent central bank: No single government stands behind it, and it is expressly prohibited from standing behind any of the national governments whose central bank it is. And yet the ECB is the least independent central bank in the developed world —- To continue reading click here

Imagining a New Bretton Woods – Project Syndicate op-ed

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The financial meltdown of 2008 prompted calls for a global financial system that curtails trade imbalances, moderates speculative capital flows, and prevents systemic contagion. That, of course, was the goal of the original Bretton Woods system. But such a system today would be both untenable and undesirable. So, what might an alternative look like? Continue reading

Lies, Damn Lies, and European Growth Statistics

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ATHENS – “Greece has at last returned to economic growth.” That was the official European Union storyline at the end of 2014. Alas, Greek voters, unimpressed by this rejoicing, ousted the incumbent government and, in January 2015, voted for a new administration in which I served as finance minister.

Last week, similarly celebratory reports emanated from Brussels heralding the “return to growth” in Cyprus, and contrasting this piece of “good” news to Greece’s “return to recession.” The message from the troika of European bailout lenders – the European Commission, the European Central Bank, and the International Monetary Fund – is loud and clear: “Do as we say, like Cyprus has done, and you will recover. Resist our policies, by electing people like Varoufakis, and you will suffer the consequences of further recession.”

Read more at https://www.project-syndicate.org/commentary/europe-real-national-income-mirage-by-yanis-varoufakis-2016-03#4iJEL4H7BWECpRpa.99

Real vs Money Incomes – the one thing we need to understand during deflationary times (with an illustration from Greece and Cyprus)

deflation.jpgIn inflationary times, real income growth is always good news. However, in deflationary times, real income growth may well reflect a deepening recession (or even a depression). This is important to know lest deepening recession is presented as… economic recovery (as has been the EU’s wont in recent times).

How can real income growth reflect a deepening recession? Continue reading

How the ‘Troika Effect’ was dubbed the ‘Varoufakis Effect’ – Project Syndicate Op-Ed and beyond

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As part of an impressive campaign to discredit the Athens Spring, and those of us who continue to honour and propagate its spirit, a cabal of journalists and ‘analysts’ have joined forces to depict me as the “destroyer of the Greek economy.” The purpose? To demonise the Greek people’s audacity to elect us with a mandate to oppose the Troika in the Spring and early summer of 2015, when they backed our stance with that magnificent 62% NO vote.

Their hideous campaign was summed up recently in the so called ‘Varoufakis Effect’ argument, by Berenberg’s Chief Economist, a Mr Schmieding. Using a chart that ‘shows’ business confidence to have collapsed during the days of my tenure in the ministry of finance (first half of 2015), he pinned on me Greece’s woes. Naturally, the troika’s Greek cheerleaders, with newspaper TO VIMA at the forefront, grabbed the opportunity to jeer and snarl. Except that they were caught with the smoking gun in their hands… Continue reading

Greece’s two currencies – Project Syndicate Op-Ed

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ATHENS – Imagine a depositor in the US state of Arizona being permitted to withdraw only small amounts of cash weekly and facing restrictions on how much money he or she could wire to a bank account in California. Such capital controls, if they ever came about, would spell the end of the dollar as a single currency, because such constraints are utterly incompatible with a monetary union. Greece today (and Cyprus before it) offers a case study of how capital controls bifurcate a currency and distort business incentives. The process is straightforward. Once euro deposits are imprisoned within a national banking system, the currency essentially splits in two: bank euros (BE) and paper, or free, euros (FE). Suddenly, an informal exchange rate between the two currencies emerges. Read more here

Schäuble’s Gathering Storm – my Project Syndicate op-ed

Schauble-VaroufakisATHENS – Europe’s crisis is poised to enter its most dangerous phase. After forcing Greece to accept another “extend-and-pretend” bailout agreement, fresh battle lines are being drawn. And, with the refugee influx exposing the damage caused by divergent economic prospects and sky-high youth unemployment in Europe’s periphery, the ramifications are ominous, as recent statements by three European politicians – Italian Prime Minister Matteo Renzi, French Economy Minister Emmanuel Macron, and German Finance Minister Wolfgang Schäuble – have made clear.

Renzi has come close to demolishing, at least rhetorically, the fiscal rules that Germany has defended for so long. In a remarkable act of defiance, he threatened that if the European Commission rejected Italy’s national budget, he would re-submit it without change.

Read more here

Greece without illusions – op-ed in Project Syndicate

b85ad19aa07a53832e74a323f95f77ea.landscapeLargeATHENS – “The costliest minor government reshuffle in Greece’s history.” That is at least one way to describe the result of the Greek general election on September 20. Indeed, with few exceptions, the same ministers have returned to the same offices as part of an administration backed by the same odd pair of parties (the left-wing Syriza and the smaller right-wing Independent Greeks), which received only a slightly lower share of the vote than the previous administration. But the appearance of continuity is misleading. While the percentage of voters backing the government is relatively unchanged, 1.6 million of the 6.1 million Greeks who voted in the July 5 referendum on continued “extend-and-pretend” loans with stringent austerity strings attached did not turn out. The loss of so many voters in little more than two months reflects the electorate’s dramatic change in mood – from passionate to glum… Continue reading here