Missive from the Libyan Sea: Thursday's meeting, if it takes place, will add to the litany of gross failures

Still on holidays, and still under-informed about the goings on (I just manage to read snippets of the news on my mobile phone, whenever a signal miraculously appears on its screen). And yet it seems certain that the Thursday EU summit (of which I got a brief whiff in a few tweets I stimbled upon), if Mrs Merkel chooses to honour it with her presence, will prove another flop. For from what (little) I read, the preparatory work that is being done (and whose success Mrs Merkel is treating as a prerequisite for attending), is moving steadfastly into the wrong direction: that of a debt buy-backs in the secondary markets. In short, our leaders are committed to the same-ol’ calamitous view that this is a debt crisis of the periphery to be dealt with in a manner fitting to a parent reluctantly paying for the prodical children’s sinful debts. Unable to write more on my mobile phone (without risking blindness and the combined wrath of my family), I shall end this missive thus: The more they persist with this fantasy, the closer we are edging toward the euro’s τέλος (end).

PS. Tragically, our holiday is ending on Thursday morning. Which means you can expect this blog to return with a vengeance that reflects not only anger at the EU’s unbounded idiocy but also frustration at having had to abandon southern Crete.


  • Dear Yannis,
    I myself am very angry, when people from my job think they have to call me on my holiday, even though I have done everything, so that they don’t have to.
    We, the thankful readers of your blog, are certainly those, who wish you the best also in your private time. So, I just hope, you will find a way to make up for it.

    • Dear Xenophon,

      Thanks for this. Just returned to Athens and, once I catch up with the developments of recent, I shall produce my first post-holiday post.


  • Unfortunately, this seems to be a battle between economists and politicians in a field where the rules are set (and constantly changing) by the economists and the politicians have been cornered, showing no political strength or nerve to fight back. Usually, in these cases it takes a 3rd party or an other type of catalyst to solve a conflict like this one. What is that going to be ? We are running short of wannabe super-men.

  • Dear Yanis,

    actually a few days back there was a plan circulating that beats buy-backs in idiocy: it contained a new loan, plus participation of the private sector, plus buy-backs, plus ECB intervention plus “selective default” 🙂 (here is the link)

  • Hello Mr. Varoufakis from Brooklyn/Athens. I am a follower of your blog and enjoy your posts greatly. I hope your transition back from Southern Crete is not too terrible, but, after all, what can be reasonably expected? Perhaps you will be intterested in my community art/activism blog in Carroll Gardens (Brooklyn), NY where, this month I am featuring images and words from the Syntagma Sqaure “Indignants” from June, 2011, and wondering aloud what we Brooklyn citizens might learn (?) from them. http://carrollgardenspetition.blogspot.com/2011/07/indignant-citizens-movement-in-greece.html
    I am also also featuring, this summer in short segments, some wise words from guest writer, Mr. Yiannis Zaglaris, mathematician/philiosopeher from Athens who follows you from there. http://carrollgardenspetition.blogspot.com/2011/07/liberty-leading-people-artist-eugene.html
    My best Triada Samaras

  • This is an excerpt from today’s FT editorial:

    “The confusion, indecisiveness and lack of urgency with which eurozone policymakers have addressed the crisis must be replaced this week with a comprehensive strategy for defending the eurozone. Fixing the terms of a second rescue for Greece, though important, will not be enough.

    True, it will help if Angela Merkel, Germany’s chancellor, and Jean-Claude Trichet, the European Central Bank president, end their increasingly pointless squabble over private sector involvement in a Greek debt relief package. But it will not transform Greece’s prospects for escaping from its debt trap, and it will not touch the heart of the matter – that Europe faces not a mere liquidity problem in a small, sun-kissed Mediterranean state, but a systemic crisis of its monetary union.

    Eurozone finance ministers stated on July 11 that they were looking at ways to enhance the flexibility and scope of the European financial stability facility, the EU’s main rescue mechanism. It is essential that eurozone leaders put flesh on the plans this week. Proposals are in the air for the EFSF’s lending capacity to be tripled to €1,500bn, or made even larger still, in order to cope with possible emergencies in Italy and Spain. There are also suggestions that the EFSF should be given the power to buy government bonds in the secondary market.

    Such ideas have drawbacks as well as positive features. For example, an exceptionally large increase in the EFSF’s lending capacity might put the top-notch credit ratings of Germany and France at risk. But the important point is that the eurozone’s leaders must dither no more. Any suggestion that they will put off consideration of a comprehensive solution until September could be fatal.

    As long ago as February 2010, European leaders promised to take “determined and co-ordinated action, if necessary, to safeguard financial stability in the euro area as a whole”. The political hurdles to courageous action are obvious. But it is the leaders themselves who have repeatedly pointed out the dangers of inaction. Now they must make up their minds how they plan to save the euro.”

  • Dear Prof,

    Since some extra courage will be needed before facing a hot as hell and frenzied Athens again, I ‘d like to propose a couple of commentaries which are still reminiscent of the basics – something most heartening at least for me: http://mpettis.com/2011/07/current-account-dilemma/ and
    http://www.nakedcapitalism.com/2011/07/marshall-auerback-the-european-monetary-union-is-the-titanic.html (Yves Smith’s NC remains a valuable source of real evidence)

  • Dear Yannis,
    do you expect they will choose selective default as a solution for Greece on Thursday ?

  • Dear mr yannis, i am looking forward to see your commments on the decisions of the today ‘s european meeting. It seems to me that at last the EU leaders are determined to make some brave moves.

  • A new EU is proven to be a necessary urge.
    Any historically stated economic establishment was based on a nuclear political institution. In Europe’s current plexus the call is for a democratic institution with Ισοπολιτεία(political egalitarianism) the sufficient condition for the Nova Europa. Interlocked with this democratic constitutional base, the economic advancement-as complex as it appears to be- would be eventual in a lockean naturality.

    This quest for a politically cohesive EU, as fundamental as it has always been, was never employed by its centralized vicarious and undemocratic current institutional bodies.

    It’s high time we applied the most gradual and reviving panacea structural political reform as a prerequisite of any positive and abrupt economic concatenation.

  • Dear Yanis,

    In a critical German article was stated that Poland has financial problems caused by the problems in the euro-zone. The Swiss franc has increased in value from 1,36 SF to 1,19 SF for one euro. The Polish Schlotty seems to be based on the Swiss franc. This problem of a more expensive Swiss franc caused by the eurozone-problems is also valid for other EU-countries. So it really is an EU-problem and not only one of the eurozone, as you already stated.

    Source: http://www.heise.de/tp/artikel/35/35160/1.html
    Die vergessenen Opfer der Euro-Krise (The forgotten victims of the euro crisis)

    Remarkable today: ASEAN+3-ministers spoke today about economic integration and are looking very carefully how the EU is solving the eurocrisis.
    ASEAN+3=10 ASEAN-countries, China, Japan and South-Korea.

  • http://www.zerohedge.com/article/fatal-flaw-europes-second-bazooka-bailout-82-million-soon-be-very-angry-germans

    “As the guarantees of the periphery including Italy are worthless, the Guarantee Germany would have to provide rises to €790bn or 32% of GDP.” That’s right: by not monetizing European debt on its books, the ECB has effectively left Germany holding the bag to the entire European bailout via the blank check SPV. The cost if things go wrong: a third of the country economic output, and the worst case scenario: a depression the likes of which Germany has not seen since the 1920-30s. Oh, and if France gets downgraded, Germany’s pro rata share of funding the EFSF jumps to a mindboggling €1.385 trillion, or 56% of German GDP!”

    –> Bankrun! We will all sink with the EU ship. I bought gold for a six figure number today.