He's an interesting guy no doubt, but accounts tell us he was just doing his job. When he went to Germany and tried to force their hands by feigning he might grexit, to his amazement the private response was more or less, how can we help you gtecit? Despite appearances, he did not want grexit and was a ploy to get better terms, but the ecb had already discounted Greece.
> When he went to Germany and tried to force their hands by feigning he might grexit, to his amazement the private response was more or less, how can we help you gtecit?
That's very poor understanding of what he did. What he said was we won't accept any more loans that we can't pay back and requested a sort of new deal for Greece which of course, included a large debt haircut.
He was never pro-Grexit. He was arguing that even throwing Greece out of the common currency was impossible, etc.
I understand that his way of doing things might confuse some people, but if you take the time to read/watch his interview his thinking is crystal clear: He wants to change the EU from within not disintegrate it. In fact he is trying to save the EU from itself (e.g. Brussels) by democratising the processes (e.g. add mics and records to Eurogrops, etc.).
Plus, I the ECB effectively closed the GR banks he had a plan of putting the ECB (Mario Draghi) against the Bundesbank. His own party kept him down stripping on of his only weapon by re-assuring the ECB behind his back that they'll not allowing him to use it. His plan was very clever.
"but if you take the time to read/watch his interview his thinking is crystal clear"
And here is, I think, the problem. In general people don't take the time, and that's OK, but then they have not problem in having a strong opinion, that they read in some interested media.
My advice to the people so inclined is: check some of Varoufakis (and others) youtube interviews. Read a little about what is going on.
Check, for instance, how Spain was allowed to spend without consequences above the deficit limits just before the elections.
Check how, in the same way there is a limit to deficits in the treaties, there is a limit in surplus that Germany don't feel it has to respect.
Or just think how it's impossible that everybody is in surplus at the same time.
Or how all integrated monetary areas have deficit and surplus regions and that is OK because they have some way to compensate the unbalances.
Varoufakis is a kind of special case. I believe his personality combined with his charisma, puts fear in the establishment so they needed to discredit him as much as possible.
For example if you read the picture The Economist paints around him, as opposed to Dijsselbloem (Dutch Minister of Finance) who is technically several orders of magnitude inferior is astonishing.
Varoufakis said that when he went to the US, at the beginning of his tenure, someone (Larry Summers?) told him that he'll be the victim of an organised campaign of character assassination by Brussels. I found this claim a tiny bit far-fetched, but on the other hand, the amount of false claims the established media kept throwing at him is amazing.
I came across ppl who thought Varoufakis as a buffoon like Trump, Boris Johnson, etc. and other political figures who can't put two words together. V is not like that at all, he is a intellectual beast, with a surprising ability to simplify rather complex ideas.
You are correct that he is all drama but we need to see more substance. None of his positions were actually original, and his actions are constantly divisive. I m sure he s interesting as a superstar tv person, but, other than his storytelling about the eurogroup meetings, his thought is not that coherent, it changes often and he often attacks strawmen (eg his critique of piketty). It makes him a lively interviewee, but doesnt gain him academic credit.
He had a plan (allegedly it was a Plan B) for the exit of the Euro if Brussels (actually Berlin) continue with the craziness. The Greek primer minister decided not to continue with the plan and he resigned as finance minister.
The primer minister could be accused of cowardice, but we have to understand that Greece was threaded with the shut down of its financial system in what, in the opinion of a lot of people, was an illegal movement by the ECB (1). It was a really difficult decision.
> When he went to Germany and tried to force their hands by feigning he might grexit, to his amazement the private response was more or less, how can we help you gtecit? Despite appearances, he did not want grexit and was a ploy to get better terms..
That's sort of my problem with him though. I don't think of him as either a hero, or a jerk, or a guy doing his job, but simply an idiot. He was trying to bluff with a hand that everyone knew was empty, and of course it didn't work.
He's a lot of things, but not an idiot. Varoufakis was one of the few finance ministers who is actually an economist (as opposed to e.g. a jurist), so he was very qualified. But he went into the negotiations thinking that everybody was trying to solve the problem amicably, that they were trying to find a compromize everybody could live with. But no, it was pure power play. Germany and co wanted to keep the status quo of a Greece close to bankrupt that they could boss around. And I think they wanted the left-wing "experiment" to fail under all circumstances, to set an example.
I think that's part of the problem, Varoufakis is intelligent and an economist, yes, but really not a diplomat, and his job here as Greece's main negotiator was more a diplomat's than an economist's job. He was very naive, as his book somewhat admits, about how EU politics work (and to some extent about Greek politics as well, where he assumed Tsipras was on the same page as he was).
Stathis Kouvelakis, a member of Syriza's Left Platform faction that later split from the party, had this criticism [1] about both Varoufakis and his successor Tsakalotos (another economics professor), which I think has some truth to it:
Tsakalotos said he was very disappointed by the low level of the discussion. In the interview to the New Statesman, Varoufakis says very similar things about his own experience, although his style is clearly more confrontational than Tsakalotos's. From this it is quite clear that these people were expecting the confrontation with the EU to happen along the lines of an academic conference when you go with a nice paper and you expect a kind of nice counter-paper to be presented. I think this is telling about what the Left is about today. The Left is filled with lots of people who are well-meaning, but who are totally impotent on the field of real politics.
Yes, they were really naive thinking that the meetings of the ministers of economy were about economics and how to improve the lives of the citizens.
This is telling about what the Euroarea is about today.
I suppose, at least it's a good thing if those naive professors, now that they are not so naive, explain the rest of citizens how the system really works.
His hand was quite full as long as Tsipras agreed to do what Varoufakis thought needed to be done. The moment Tsipras decided against him he lost his hand. So, his error was probably to trust Tsipras would do what needs to be done instead of clinging to power.
As a Greek I consider him a jerk. He enforced capital controls due to his incompetence and his ideological approach to financing. Furthermore, he's a pathological liar. While in many occasions he had admitted the faults of the Greek economy he never took specific actions in correcting them.
If it wasn't for the group of clowns that constitute the current government and gave him the keys to the economy, nobody would give a flying fuck about what he says. He's a second rate economist at best.
> While in many occasions he had admitted the faults of the Greek economy he never took specific actions in correcting them.
By doing what, exactly? The country was bankrupt. In such a situation, the only sensible thing to do is default. Instead, Greece will be a 3rd world country with almost no public assets, and mass unemployment for decades.
Regaining competitiveness through decades of internal devaluation is, to me, far less preferable than default. What Greece was given was like Versailles on steroids.
Yesterday, there was a news that Greece has reached an agreement for a new round of money in exchange for further cuts to pensions and removal of some tax exemptions. So yeah, it is going to happen again. And again. And again.
And all to save a few German and French banks, because politicians feared the results of telling them "you wanted to play in the casino and you lost, now the money is gone" after Lehmann.
Or rather it'll happen again and again until the casino is turned into a viable and competitive economy. I wouldn't blame the Germans and French for trying to contain a crisis at its origin..
> I wouldn't blame the Germans and French for trying to contain a crisis at its origin..
The origin is that banks can lend money without any risk. End of story.
Banks get interest for various reasons - one reason is risk of not seeing the money again and that has to be a real risk or banks will just lend money without thinking twice.
> Or rather it'll happen again and again until the casino is turned into a viable and competitive economy.
By what mechanism? Each round of cuts drives up unemployment and poverty, and cutting expenses hasn't solved the deficit because trashing the economy has destroyed tax revenues.
The first few rounds were rationalization, but they were too little too late. At this point the deep restructuring that's still needed is unapproachable - it's too slow and too unpopular, and the economy is already too weak. The recent cuts haven't been sensible and structural, they've been deadline-beating short-term moves to unlock a new tranche.
Germany gains from this, certainly, but by making an example of Greece. It deters other high-debt Euro nations from getting into the same state, but it's not moving Greece closer to functionality.
Each round it gets exponentially bigger... There will come a time when postponing it won't work, then what?
By the way, how injecting money in the hands of a chosen handful and taking it from a country to try to pay back can make a viable and competitive economy?
The problem here was cashflow; defaulting might save you from more loan payments, although actually doing it is quite painful under international law (see Argentina). But Greece needed to take out further loans in order to meet immediate public funding needs - and defaulting would have prevented that, or made it much more expensive.
I've turned this over in my head a number of times. None of the options are particularly pleasant, but it's not a good idea to pretend that defaulting would have been trouble-free.
The cynical play for Greece might have been trying to schedule their bailouts in a default-friendly way. Accept bailouts, conduct several rounds of aggressive cuts to balance the budget (while financing with tranche funds), blame the Eurozone for them at home, and then default with a balanced budget immediately after a funding unlock.
I'm not sure it was possible - the deficit was too big to close without damaging the economy - but I suspect that leaning on international support while preparing an easy default might have been the best chance.
Greece's problem isn't the debt. It's the competitiveness of the economy, or more precisely the lack of. Even if we had all our debt erased, the way the economy is structured we'd be back in the same place give it a couple of decades, at most. We spend so much money paying pensions that it's a given we'd default one way or the other.
Furthermore, you can't just default on the debt just by saying so. There's a naivety among mostly Greeks that just by going back to drachma and defaulting on our debt will magically solve all of our problems. In a country that imports pretty much everything that would be catastrophic.
Varoufakis never came up with a plan. He admitted that there was no substantial alternative about converting into drachma. All that he did was playing bluff for six month, dragging a whole nation under his ideology. Then he moved on to greener pastures, not giving a fuck about the havoc he wrecked with his actions.
He can act as a smart-ass all he wants in his books, but we were here and we experienced first hand the results of his reign. Once we get rid of this charade of imbeciles that act as the government, he and many of his former colleagues will end up in jail for their actions. There he will have plenty of time to write memoirs.
>Furthermore, you can't just default on the debt just by saying so. There's a naivety among mostly Greeks that just by going back to drachma and defaulting on our debt will magically solve all of our problems. In a country that imports pretty much everything that would be catastrophic.
Well thinking from a trader perspective, by defaulting and going back to the drachma (and leaving the EU), Greece would have more flexibility wrt what goods they can import and from where compared to now with all the restrictions on trading that being within the EU imposes.
Combine that with land access to the rest of Europe, I can imagine a prosperous almost black market for such goods that would provide much needed inflows of capital to the Greek economy (outside of selling junk sovereign bonds and hoping pensioners die faster).
This would require a big plunge in the greek economy that people are not willing to take. To be able to recover swiftly from such a crash, the greek economy would have to switch from a very inflexible and sclerotic one (that it is now) to an adaptible, flexible and liberal one. The demographics of Greece do not support such swift action - greece is aging rapidly and the brain drain has gotten really intense. With regards to trade, greece probably benefits from things like e.g. the common agricultural policy more than it loses through restrictions. There is little support for grexit, because of a) the rhetoric and FUD from almost all political parties (including the pro-euro syriza) and EU and b) because there is not enough consensus on the side of the people to go through what would amount to a revolution.
The thing is, Greece, IMO, doesn't even need to leave the EU, they just need leverage (in the same way Turkey's leverage is in flooding the EU with more refugees), and they can get leverage in trade by ignoring EU diktats that stipulate what goods they can import in practice (while officially denying everything). International traders would pay a slight premium to be able to have land access to the EU from shipping. Hell, I personally know a couple of traders in SE asia who would pay tens of thousands of dollars to do so.
But I guess the consensus will be in favor of trying continue to squeeze blood from stone until there is none left. And when it gets that far, compared to the threat of cheaper citric acid, steal, etc imports hurting "blessed" EU suppliers, you'll have surplus kalashnikov's coming in from the ME, which I guess is even more profitable for traders ;)
The OPs perspective in the Greek's mainstream media and elite's perspective. You can't even discuss the eventually of switching currency in the TV.
At the same time other countries which are not on the brink of collapse are prepared to face an eventual break up of the Euro (e.g. LePen winning the elections in France) and the only who doesn't have a plan, and God forbid it comes up with one, is Greece...
>The OPs perspective in the Greek's mainstream media and elite's perspective. You can't even discuss the eventually of switching currency in the TV.
Pretty much how it is everywhere wrt having an actual discussion of practical options on the table (setting aside juicy ad revenue) that might not favor those whose social economic status puts their heads first in line on the not so metaphorical guillotines at some point ;)
I think the citizens of Greece should take page out of the Victoria Nuland play book.
I mean if I had means to be able to talk to the all the pensioners I would:
- advise them the reach out to any of there family/friends who have (decision making) roles in customs/commodity importers w/ decent import volumes from other EU countries
- work out a deal where they buy their materials from cheaper non "market economy status" places + flag them through while discontinuing imports from their northern neighbors (already profiting here, because cheaper)
- then pooling their funds and shorting companies/securities with the largest exposure to their non buying before earnings calls, and close out shorts soon after. (profiting on the other end, because why not? but you have to liquidate short positions before the ECB printing press comes to the rescue :P)
Or maybe people will continue to take the raw deal while bent over a barrel with ones pants at their ankles.
Please, give me a break. It was the Greek media, and particularly TV shows, that launched Varoufakis to stardom. Even liberal-conservative stations invited him to spread his bs.
Just because some of us don't agree with defaulting it doesn't mean we're in the elite or we're serving some agenda. Please, you can do better than that.
Greece had stopped getting any bailout funds way before Varoufakis or the current Government were in power. The IMF had already said that the program had failed.
Morally it's on those who give out loans to make sure that they can be repaid. It's wrong that Greece took these huge loans as well, but also it's wrong to suggest that they have to pay them back. Everyone has the option to default when they are unable to pay and this was clearly the situation for Greece (and probably Spain and Italy, maybe even UK soon enough).
Exactly. The (German) banks gambled on a bail out; I would not even call it a gamble, since the could be dead sure Schäuble would be standing at attention with the suitcases at the first sign of trouble.
And you are proved wrong by the fact Greece's government clearly was (still is?) "an unsophisticated or under-informed borrower". I mean the outcome of this borrowing speaks for itself.
When I take out a loan a bank usually asks for collateral but these loans to Greece are unsecured and not worth paying back. The banking system should have been left to fail but instead we live in this world where governments bailed them out. Capitalism for the poor and Socialism for the rich.
No, the fact someone takes out loans they can't repay doesn't 'prove' they don't understand the terms of the loan. I don't think any of the major actors in this look particularly great but it's not like the Greek government found a giant bag of money on their doorstep one day and nobody told them it came with terms.
Wait...what? The Greek govt. that took out the loans was incompetent, sure. But so were the lenders. Making a loan is taking a risk for both the lender and the receiver of the loan. It is in both of their interest to ensure that the loan will be repaid.
Varoufakis fought to find solutions that would allow Greece to actually be able to repay their debt. When that proved to be impossible, he refused to sit by and lend his name to a deal he didn't believe was in Greece or Europe's best interests.
> Varoufakis fought to find solutions that would allow Greece to actually be able to repay their debt.
Default is not a solution to repay a debt. You can choose to default, but you can't expect any credibility later. The message Varoufakis sent to Greeks was: "Let's just say we don't want to pay and everyone will forget about in a couple of years."
> The message Varoufakis sent to Greeks was: "Let's just say we don't want to pay and everyone will forget about in a couple of years."
The solution he proposed to the EU was rejected and the next day was applied by the letter on Ukraine.
Plus being accused of talking macro-economics on a Eurogroup should be like accused of liking basketball at an NBA playoff game. But then again, if the room is full of politician, who don't understand the first thing about economics and just blindly execute, that's what happens.
Nope, history says otherwise. As long as the debt stands Greece will not be able to get any financing exactly because it's assured that it will not be repaid.
The only way to get financing is by debt restructuring. It has happened time and again. You'd be amazed how many countries defaulted the last century. I think Germany defaulted twice.
Yeah, I just don't understand how so many people fail to see the most obvious solution: default and stop paying interest. Sure, you're credibility will be lost for now, but then you can slowly build it back up again since you're no longer burdened with paying back the defaulted loans. Its not magical: as it currently stands, Greek economy is going to die a slow protracted death anyways.
So quitting politics, in fact retiring, in fact bailing on Greece, to write books and give interviews to Sky is enough to make him an hero to Europe's working class?
He resigned the night of the referendum, when he understood that the government is going to capitulate. Maybe in some countries that's nothing special - as it should be. When you're not on the same page with what the government does, you retire and let someone else who believes in the solution, implement it and then pay the piper.
In Greece, I know of NO politician in 50 years, who retired promptly when his views and gov's views stopped being aligned.
So regarding Greece, that's a huge deal and gives him alone more credibility that the last 10 Greek governments put together.
He's not a hero to this one Greek of the "working class". All he managed to do during his tenure was set in montion a series of events that would greatly worsen the financial condition of Greece.
At least he tried, for sure.