From the comfortable obscurity of academia to become one of the most recognised politicians on the planet

from The Observer

The island of Aegina is just 17 miles from Athens, a mere 40 minutes’ dash on a hydrofoil. Owing to its proximity to the Greek capital, it’s less a tourist island than a second-home sanctuary for wealthy Athenians, but it boasts several impressive classical sites and a distinguished history. Not only was it briefly the capital of a newly liberated Greece in the 19th century but back in the 7th century BC it was the first Greek state to mint its own coins.  

Given Greece’s current predicament, trapped in the euro and an ever-expanding debt crisis, that last fact is a monetary irony not lost on one particular wealthy Athenian on Aegina. Sitting on top of a hill a few minutes’ drive from the port is the holiday home of Yanis Varoufakis. He is the former finance minister of Greece, although that’s hardly a description that befits the man’s legend. Gikas Hardouvelis is also a former finance minister of Greece, but no one has heard of him.  

It would be more accurate to say that Varoufakis is the former finance minister of Greece who took on the global banking system, the European political elite and, in the minds of many, the great god of capitalism itself. His is a story so full of drama and symbolism that it contains more than a hint of Greek myth. 

An economics professor by occupation, he went in a few months from the comfortable obscurity of academia to become one of the most recognised politicians on the planet.  read much more

“Syriza did not expect to stand alone in the negotiations” Interview with Athanase Contagyris

from Norbert Häring

Anasthase Contagyris is a French and Greek economist living in Athens. He is Co-Founder of Attac-Greece, CEO of Dialogos Ltd, an Athens  Startup coaching and export facilitation consultancy he founded in 1987. He is a member of the Truth Committee on Public Debt of the Greek Parliament, which recently issued a preliminary report. We met in Frankfurt. He is well conneted, though not a member, to Syriza.

The Interview

Häring: Mr. Contagyris, in Germany many people do not understand the behavior of the Greek government in the negotiations with creditors. It seems to have made quite a few unexpected turns.

Contagyris: This negotiations were a lot like a poker game all along. Players adapted to the hands they had and to what they found out about the cards of their opponents.

What did Syriza hope to achieve in these negotiations?

SYRIZA, YOU CAN DO THIS – AND YOU CAN DO IT NOW

from Trond Andresen

As a point of departure I refer to this paper, on page 2 in the Real-World Economics Review, issue 71, 28 May 2015. The paper argues for and describes how to possibly implement an electronic parallel currency in Greece.

But the proposal for a parallel currency should now be even more specific, tailored to the current drama and urgency. And the pressure to do something along the lines suggested below is increasing all the time (because the so-called “bailouts” only imply further exponential debt growth in a pyramid game – something that is mostly not recognised in the media and by commentators).

Here are my suggestions: PHASE A 

New Greek bailout increases the odds that Grexit will actually happen, despite Washington’s pressure.

from Mark Weisbrot

It is now clear that the European authorities do not intend to let the Greek economy recover any time in the foreseeable future. The primary surpluses that the government has been forced to agree to—2, 3, and 3.5 percent of GDP for the three years of the deal, 2016 through 2018—will not allow Greece to escape its depression, which is now in its sixth year.  Even if they miss these targets, which is likely, just trying to do what they have committed to will keep the economy from recovering.

The Foundation for Economic and Industrial Research in Athens has projected that the Greek economy will not recover in 2016.  It is worth noting that since 2010 past projections from official sources, e.g., by the IMF, have almost always projected recovery for the following year – even though it never happened until the tiny, short-lived, recovery of 2014.

One can only speculate on the motives for inflicting this harm on the people of Greece. Clearly it is not about the money – the Financial Times estimated that the primary surpluses will contribute about 4.5 billion euros out of what is now an 86 billion euro package. Punishment is probably part of the motivation for these hateful conditions, as well as a fear on the part of the tormentors that “leniency” could encourage people in other vulnerable eurozone economies to vote for left parties or demand an earlier exit from mass unemployment.  

Statement by Yanis Varoufakis on the FinMin’s Plan B Working Group & the parallel payment system

Statement by the Office of Yanis Varoufakis, former Minister of Finance, Member of Parliament, Hellenic Republic

During the Greek government’s negotiations with the Eurogroup, Minister Varoufakis oversaw a Working Group with a remit to prepare contingency plans against the creditors’ efforts to undermine the Greek government and in view of forces at work within the Eurozone to have Greece expelled from the euro. The Working Group was convened by the Minister, at the behest of the Prime Minister, and was coordinated by Professor James K. Galbraith. (Click here for a statement on the matter by Professor Galbraith).

It is worth noting that, prior to Mr Varoufakis’ comfirmation of the existence of the said Working Group, the Minister was criticized widely for having neglected to make such contingency plans. The Bank of Greece, the ECB, treasuries of EU member-states, banks, international organisations etc. had all drawn up such plans since 2012. Greece’s Ministry of Finance would have been remiss had it made no attempt to draw up contingency plans.

Professor James K. Galbraith’s statement on the Ministry of Finance Working Group convened by former finance minister Yanis Varoufakis

I spent five months from early February through early July in close association with the Greek Finance Minister, Yanis Varoufakis, and was part of the Working Group that did contingency planning for potential attempts to asphyxiate the Greek government, including aggressive moves to force the country out of the euro. Since a great deal of public confusion has now arisen over this effort, the following should be stated:

(1) At no time was the Working Group engaged in advocating exit or any policy choice. The job was strictly to study the operational issues that would arise if Greece were forced to issue scrip or if it were forced out of the euro.

Wolfgang Schauble, the hero of the Greek austerity crisis?

from Dean Baker

Like many people following the negotiations between Greece and its creditors, I was inclined to see Wolfgang Schauble, Germany’s finance minister, as the villain of the story. After all, Mr. Schauble insisted on severely punitive measures for Greece as a condition for continuing support from the European Central Bank (ECB). He appeared to be the bad cop relative to others in the negotiations, such as German Chancellor Angela Merkel, who was willing to make at least some concessions to keep Greece in the euro. But a more careful analysis arguably leads to the opposite conclusion.

Schauble did not argue for throwing Greece out of the euro simply as a punitive measure, although he quite obviously disapproved of the way Greece had run its budget and its economy. He argued, quite possibly sincerely, that at least a temporary departure from the euro zone would be the best path forward for Greece. 

European authorities refuse to let Greek economy recover, making eventual Grexit more likely

from Mark Weisbrot

The battle over the future of Europe – currently centered in Greece – is far from over. But, with the tentative deal that has been struck between the Syriza government and European authorities, it has certainly entered a new phase.

Prior to the July 5 referendum, European officials had been carrying out a strategy of “regime change.” Deadlines came and went, and threats of a forced Grexit were mainly bluff, despite the fact that the most powerful leader of the eurogroup of finance ministers, Germany’s Wolfgang Schäuble, seemed to favor it. The strategy of regime change looked relatively easy: the European Central Bank (ECB), by restricting credit, together with the standoff and rumors of Grexit, had already pushed the Greek economy back into recession. It seemed only a matter of time before the economic failure, combined with anti-Syriza media coverage, would undermine support for the Greek government enough to usher in a new one.

In his first interview since his July 6 resignation from the post of Greek finance minister, Yanis Varoufakis describes “The complete lack of any democratic scruples, on behalf of the supposed defenders of Europe’s democracy,” i.e., his eurozone negotiating partners. They continuously “delayed and then came up with the kind of proposal you present to another side when you don’t want an agreement.” 

Habermas on the EU/Greece debt deal

from Lars Syll

Guardian: What is your verdict on the deal reached on Monday?

Habermas: The Greek debt deal announced on Monday morning is damaging both in its result and the way in which it was reached. First, the outcome of the talks is ill-advised. Even if one were to consider the strangulating terms of the deal the right course of action, one cannot expect these reforms to be enacted by a government which by its own admission does not believe in the terms of the agreement.

Secondly, the outcome does not make sense in economic terms because of the toxic mixture of necessary structural reforms of state and economy with further neoliberal impositions that will completely discourage an exhausted Greek population and kill any impetus to growth.

Greece and Argentina

from Dean Baker

With the prospect of Grexit increasing, there have been numerous news stories pronouncing this as a disaster for Greece. There have also been many accounts telling us that Greece will not have the same positive prospects as Argentina.

As Paul Krugman reminds us Argentina recovered fairly quickly after it broke the link between its currency and the dollar. As he points out, the real disaster was in the period leading up to the break.

While many people have emphasized ways in which Argentina has advantages in this break relative to Greece, that was not a general perception at the time. The general story back at the end of 2001 and 2002 was that Argentina faced disaster.

For example, on January 1, 2002 we got this NYT piece headlined, “Argentina drifts leaderless as economic collapse looms.”

Here are the first three paragraphs:

On the Euro Summit’s Statement on Greece: First thoughts

from Yanis Varoufakis

In the next hours and days, I shall be sitting in Parliament to assess the legislation that is part of the recent Euro Summit agreement on Greece. I am also looking forward to hearing in person from my comrades, Alexis Tsipras and Euclid Tsakalotos, who have been through so much over the past few days. Till then, I shall reserve judgment regarding the legislation before us. Meanwhile, here are some first, impressionistic thoughts stirred up by the Euro Summit’s Statement.

Dr Schäuble’s Plan for Europe: Do Europeans approve? – Article to appear in Die Zeit on Thursday 16th July 2015

from Yanis Varoufakis

Pre-publication summary: Five months of intense negotiations between Greece and the Eurogroup never had a chance of success. Condemned to lead to impasse, their purpose was to pave the ground for what Dr Schäuble had decided was ‘optimal’ well before our government was even elected: That Greece should be eased out of the Eurozone in order to discipline member-states resisting his very specific plan for re-structuring the Eurozone.

• This is no theory.
• How do I know Grexit is an important part of Dr Schäuble’s plan for Europe?
• Because he told me so!

I wrote this article not as a Greek politician critical of the German press’ denigration of our sensible proposals, of Berlin’s refusal seriously to consider our moderate debt re-profiling plan, of the European Central Bank’s highly political decision to asphyxiate our government, of the Eurogroup’s decision to give the ECB the green light to shut down our banks.

I wrote this article as a European observing the unfolding of a particular Plan for Europe – Dr Schäuble’s Plan.

And I am asking a simple question of Die Zeit’s informed readers:

• Is this a Plan that you approve of?
• Do you consider this Plan good for Europe?

Greece 2

from Peter Radford

Well so much for that.

Where do I begin?

The so-called deal announced yesterday achieves none of its objectives. The written objectives that is. The unwritten ones we will get to in a moment.

There is no doubt in my mind that the Greek economy suffers from a surfeit of inefficiencies. It cannot sustain the social edifice erected on top of it without ridding itself of the multitude of privileges that various groups have accumulated for themselves through time. Greek government has been, for many years, a source of patronage and protection of a slew of inside deals that wreak havoc on those – the majority – on the outside.

I am sure this systemic problem must irk everyone living further north.

But.

Clearing out those problems now is not the priority. Saving Greece is. Saving Greek democracy. Saving those who have no access to the myriad schemes and deals that enrich the minority. 

USA 1933 vs. Greece 2013 (3 graphs)

from David Ruccio

Child poverty and severe material deprivation in Greece 2008 and 2012 (2 tables, UNICEF report)

from David Ruccio

Is there any statistic more illustrative of the nature of contemporary capitalism—especially the effects of the global financial crash and of the so-called recovery—than the rate of child poverty?

According to the most recent UNICEF report (pdf),

An inconvenient historical truth

from David Ruccio

Thomas Piketty, in an interview with the German newspaper Die Zeit, is the latest to recognize an inconvenient historical truth: in 1953, Germany was able to negotiate a large (50-60-percent) reduction in its outstanding foreign debt (owed to many countries, including Greece).

ZEIT: So you’re telling us that the German Wirtschaftswunder [“economic miracle”] was based on the same kind of debt relief that we deny Greece today?

Piketty: Exactly. After the war ended in 1945, Germany’s debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece. Instead, both of our states employed the second method with the three components that I mentioned, including debt relief. Think about the London Debt Agreement of 1953, where 60% of German foreign debt was cancelled and its internal debts were restructured.

Greece

from Peter Radford

So we reach the end. Good. Let democracy and popular government prevail. The entire Euro project was conceived by a small group of elitist technocrats, then foisted on national peoples often without any ability on the part of the people to veto it.

The crisis in Europe is an echo of the crisis here in the US. America’s banks went on an unsustainable binge of greedy excess. They generated, accumulated, mixed, and then sold mortgages in an ever increasing frenzy driven by the knowledge that as long as they moved the pile fast enough they could reward themselves handsomely and not suffer the consequences of their descent into the depths of outright fraud.

And it was a fraud.

Maybe not in the narrow and legally provable sense, but in the broader and more applicable ethical sense. The banks sought to rip us off to enrich themselves. They knew how compliant our governments all were. They knew that, in the end, they would be bailed out. So there was never a brake on their acceleration over the edge. 

Euro — the antithesis of democracy

from Lars Syll

That concern for popular legitimacy is incompatible with the politics of the eurozone, which was never a very democratic project. Most of its members’ governments did not seek their people’s approval to turn over their monetary sovereignty to the ECB. When Sweden’s did, Swedes said no. They understood that unemployment would rise if the country’s monetary policy were set by a central bank that focused single-mindedly on inflation (and also that there would be insufficient attention to financial stability). The economy would suffer, because the economic model underlying the eurozone was predicated on power relationships that disadvantaged workers.

And, sure enough, what we are seeing now, 16 years after the eurozone institutionalised those relationships, is the antithesis of democracy: many European leaders want to see the end of prime minister Alexis Tsipras’ leftist government. After all, it is extremely inconvenient to have in Greece a government that is so opposed to the types of policies that have done so much to increase inequality in so many advanced countries, and that is so committed to curbing the unbridled power of wealth. They seem to believe that they can eventually bring down the Greek government by bullying it into accepting an agreement that contravenes its mandate.  Joseph Stiglitz

Angela Merkel has a red and a yellow button. One ends the crisis. Which does she push?

from Yanis Varoufakis

Bankruptocracy is as much a European predicament as it is an American “invention”. The difference between the experience of the two continents is that at least Americans did not have to labour under the enormous design faults of the eurozone. Imagine their chagrin if the citizens of hard-hit states (eg Nevada or Ohio) had to worry about a death embrace between the debt of their state and the losses of the banks who happened to operate within the state.

Europe’s architecture was not sound enough to sustain the shock waves from the death throes of neoliberal capitalism

Additionally, Americans were spared the need to contend with a central bank utterly shackled by inner divisions and the German central bank’s penchant for treating the worst-hit parts of the union (the eurozone, that is) as alien lands that had to be fiscally waterboarded until they ceased to obey the laws of macroeconomics.

When oxi means no

from David Ruccio

By now, everyone knows that the Greek people overwhelmingly voted “oxi” in yesterday’s referendum. They rejected by a very large margin the austerity measures that have been imposed on and in that country since the first bailout plan of 2010 (a bailout, as I explained the other day, of European private banks).*

Difficult days lie ahead—and, at this stage, no one knows what the outcome will be.

But the results of the referendum do merit at least a few remarks. First, the margin of victory of the no vote is extraordinary considering the relentless campaign of fear and intimidation, from public pronouncements of non-Greek politicians and finance ministers to the strangling of Greek banks, that took place during the week leading up to yesterday’s vote. The Greek people stood up that campaign and both rejected the continued imposition of austerity measures and registered a vote of confidence in their still-young leftwing government.