• Yanis another interesting interview and many good points made…but I have to wonder where does the Greek state and the citizenry take responsibility for its demise? I agree that the EU was never designed for the many issues now faced by the EU as a whole and in particular to soveriegn defaults etc. One thing that continues to strike me is how unable or unwilling Greek leadership continues to ignore making tough decisions within Greece. I would like to understand one detail, why after two years since publically recognizing that Greece was insolvent, do we still have a bloated public service with no cuts but only wage cuts ? Does the greek leadership believe that the problem will simply go away ? Unfortunately, we can blame others for our economic state but I truly wonder who the hell was at the wheel for all these years when the leadership spent money like it was free and without any accountability. We have relinquished our soveriegnty because we allowed for this to occur, and we I mean the leadership in Greece. The country was run like a family business for political leaders and the business elites and they have systematically destroyed an entire nation because of their gross negligence. Whether the EU was designed to ensure equity which we all know it was not, our leaders willingly accepted EU loans and continued to perpetuate an economic system within Greece that would never provide any lasting and concrete benefits tro to the Greek people. I am appauled and extremely dissappointed in our own mismanagement and lack of accountability! It is not for the EU to ensure our interests are being served but it is our responsibility to ensure that they are being duly represented.

    • Abe Evreniadis

      Thank you very much for bringing a balanced view into something which has become – excessively – a one-sided debate!

    • @Abe Evreniadis

      As I see it, the economic problem has two stages: The euro coalition stage and as subset the Greek case.

      It is to our interest as Greece that the euro does not collapse, since it is a supporting substructure and if it does, Greece’s insolvency problem is exponentially increased.

      If the systemic problems of the euro are addressed, this still leaves Greece in very deep trouble, which needs addressing separately.

      Had we not been within the eurozone we would have effectively defaulted in 2009, inflation going through the roof, as has happened before a few times since WWII. It is much easier for society to inflate the currency, because there is a time buffer before the hoi polloi understand what has hit them. Being socked with 1000+euro of extra taxes in a month and a 50% salary cut is certainly a wake up call for the average joe ( or kotsos).

      Now the decisions of the political class have to be interpreted with sociology and psychology: They perpetuate themselves by being voted in, they are voted in the more perks they give their supporters. Elementary, and if you see old greek movies the picture is clear. The over borrowing and over spending started after the”socialists” in the 80’s discovered borrowing from the future.”Money exists”, all we have to do is to borrow from the koutofrangoi. It was a general socialist mantra in Europe at the time that “money exists” to be borrowed from the future, I used to have coffee time arguments in international physics meetings on the improvidence of such plannings.

      So we had this mixture of politicians serving their constituents by hirings in the civil service and business perks, and having their hands in the till of the future: a recipe which brought us here. Sociologically it is like a tide, too much force to be able to turn it: any politician who tried to stem it was history.

      Add to that the antiquated civil service bureaucracy and its increase due to the inflation of servants ( work expands…) , the sport of tax evasion, globalization which de-industrialized Greece, the fall of the iron curtain which flooded Greece with black labor, EU agricultural policy which favored a run to the cities, syndicates in civil service raising the wages to 150% the private sector, … and here we are.

    • There is an simple solution to every problem. It’s usually the wrong one.

      I’ve counted at least 15 references to the “greek leadership” in your comment. Indeed an accurate indictment of the culprits.

      But….but, you finish with this gem: “I am appauled and extremely dissappointed in our own mismanagement and lack of accountability! It is not for the EU to ensure our interests are being served but it is our responsibility to ensure that they are being duly represented.

      What do you mean by our own? The majority of the Greek people are equally responsible?
      What is the responsibility of the people to ensure due representation? Vote differently? Riot in the streets? Resign from their jobs in the public sector? What?

      Get a grip my friend.

    • Abe dear:

      The whole world is appalled at Germany’s lack of depth in managing a global crisis, and you find time to be appalled by minor movements?

      When the elephant is crapping all over your living room, is the ant’s movement your number one priority?

      If Germany were to cut its debt to GDP ratio the same way Greece has just done then Germany’s economy would be blown to smithereens resembling cosmic dust by now.

    • BTW, Abe:

      It’s time for you to learn that Germany is the biggest debt transgressor of the 20th Century:


      and since you are at it, why don’t you explain to us what is the reasoning behind the 50% PSI haircut, a proposition than neither benefits Greece nor Europe?

      “”Today, exactly one year after Greece received an aid package worth €110 billion, it has become apparent that the rescue has failed and the country will not be able to get back onto its feet without restructuring its debt. As willing as the EU was to put together a new aid package, it is now ruling out a Greek default because, it is said, banks would begin to fall like dominoes. But the banks have long since transferred their problematic Greek debt holdings to the European Central Bank, which willingly took it on. The ECB has become Greece’s largest creditor. Given the sums involved, one could almost say that the entire Greek banking system belongs to the ECB. Greek banks have refinanced themselves via the central bank to the tune of €91 billion. In addition, the ECB is thought to have bought up Greek state bonds worth €47 billion. A restructuring of Greek debt would be a catastrophe for the European Central Bank.”

    • Here’s a link to Greg Palast’s observation of the proximate cause of Greek economic crisis: http://corpcoinc.blogspot.com/2011/11/virginia-meet-capitalism.html. The conservatives had to borrow from US financial capital in order to temporarily prop up the pretense that the financial capitalist’s order works, and the conservatives can operate it. The order, one of primitive accumulation, doesn’t, cannot work for most societies and people and environments.

      Regardless of their belief that states can deficit spend, everyone believes in debt–or money liquidity, as it’s known when we’re not being manipulatively moralistic. It’s a fundamental part of economies, as well as pious, exploitative moral economies. Debt was the key to US military-economic dominance in the latter half of the 20th century, and this constrained everyone else’s options–especially in Europe, not to even mention how the financialization/debt model was sold, was saturation-marketed as the 1-Tru (TM) path to infinite economic expansion.

      But of course the underlying problem is that actually-existing financialized capital is principally a tool for primitive accumulation–appropriating, concentrating and controlling value and exchange; and unless we fight to reduce its power, we cannot escape it and our own over-determined economic dispossession and depletion.

      Like the 20% (a low) of Americans who still somehow believe that they will be in the top 1% of wealth accumulators, everyone somehow still believes that there is a universal, moral path to wealth accumulation in a fictitious 2-D world without power, and that little Greece, if they’d just been more moral or more cooperative, could have followed that yellow brick road, paved by the benevolent financial system devoted to unproductive accumulation and geo-political power moves undertaken by the financial capital centers of the US, England and Germany in the west, and oil capitalists and China eastward. The level of political- economic and geopolitical naivete required to maintain this moral handwringing and within-Greece fingerpointing is flabberghasting at this point in history.

      Nothing could have been done for the welfare of Greece–Financial-military capital has not been and is not aligned for this. That this mal-alignment destroys capital and undermines the Greek, European or global economy is not a problem to financial-military capital. Our bankers only ask for assurances that, as long as you or your politicians are worried about liquidity for your society’s survival, they are entitled to the wealth your society creates into the future.–short of promoting a global network of rebellion. This is the blackmail of late capitalism. You give your wealth. You get a steady supply of bloody fingers, etc. in the mailbox. To really paraphrase Nixon, do we all have Stockholm Syndrome now?

    • I am not Mr Varoufakis but i can give you one answer . Solutions that are considered straightforward in calm times are tricky to be used within a storm . Privatization of public sector and firing civil sector can be done in calm times and blooming national and international environment . See Canada in 90s . Doing this in times of international turmoil and recession is just worsening the Greek problem . Private and public sector is strongly linked to each other . Debt is not only about expenses . It’s about revenues as well .

      While , i am in total agreement with you . This is not the right time to discuss this matter . In international media , Greece is heavily criticized for its mistakes and for the mistakes of others as well . Mr Varoufakis voice is a minority .

      And i would be unfair to Mr Varoufakis if i say that he’s just supporting Greece . European governments are putting the blame on Greece for their own wrongdoings for the last two years . Misleading about the core of the problem . What Mr Varoufakis says is simple , to my understanding .

      Greece is not an isolated country ! Greece is part of the european SYSTEM . It’s a multi-player game . Europe is not an isolated continent. Europe is part of a global financial game as well . In short , it’s wrong to assume that it is a problem with one unknown . It’s a system with many parameters .

      And in this System , UNFORTUNATELY , Greece is simply insignificant to play any role .

      As Mr Varoufakis says quite often , if we were more organized , tax paying citizens , we would be second or third from the end . Thus our situation would be more or less the same as now !

      Italy has a far more organized state , and it’s just passed the point of no return too . UK has the most “refined and optimized , flexible ” state . The financial status of UK is going to deteriorate very soon as well.

      All you say , is true but they don’t help at this moment !

    • To Abe , and political elite didn’t destroyed Greece because they were negligent !
      They got and still get a profit out of it !
      They were bargaining and still are bargaining their power and political connections to get a higher profit .

      And by the way , you know who’s controlling major private media in Greece , why do you still listen to them?

  • Galbraith’s most likeable pronouncement (according to mois) is the following(BTW, that’s all you need to know):

    “Leading active members of today’s economics profession, the generation presently in their 40s and 50s, have joined together into a kind of politburo for correct economic thinking. As a general rule — as one might expect from a gentleman’s club — this has placed them on the wrong side of every important policy issue, and not just recently but for decades. They predict disaster where none occurs. They deny the possibility of events that then happen. They offer a “rape is like the weather” fatalism about an “inevitable” problem (pay inequality) that then starts to recede. They oppose the most basic, decent, and sensible reforms, while offering placebos instead. They are always surprised when something untoward (like a recession) actually occurs. And when finally they sense that some position cannot be sustained, they do not re-examine their ideas. Instead, they simply change the subject.”

    • Yes, I saw that and Laughed!!! Out!!! Loud!! At least Venizelos can rest assured that there might be something waiting for him after politics!

  • concerning germany i read a WJS article a couple of months ago claiming that the german govt for some reason(greek sttistics!)does not pick up its obligations towards national pension funds on its balance sheet,something that the greek govt did to shoot itsself in the foot in 2009.by doing so the german debt would rise substantially.has anyone else heard or read a similar article?

    • There is an issue here !

      I am reproducing what i have heard here by greek officials in greek statistics bureau that they were forced by the head of European statistics authority to change the methodologies as to what to include in debt or not .
      They were accusing the European head office that , the methodologies that were imposed on Greece , were not incorporated in Germany as well . They were talking mostly about debts of municipalities and public interest private companies in Germany .

      Some years ago , the leap of greek debt was due to a change in methodologies as well . Back then , it was they way the military spending was recorded in debt . As far as i know , other countries records it in different ways .

      Definitely something is rotten here .The level of transparency in such authorities is be a great concern .

    • And a sick scenario :

      I have the suspicion that “dark side forces” , tampering with the way the greek debt is recorded , had something else in mind too .

      A nation’s debt is not everything that a state owns . It is defined by european legislation what is to be included or not . The conditions to be met in order to include something in public debt are complex though .

      By putting something irrelevant in public debt , and because of that addition the debt augments . This gives the legitimacy to the political powers to argue that a cut in what they have added is the right thing to do .

      In short , is there something public you want to sell to private companies? Make it look bad , put it in public debt and then blame it for the augmented debt . This way , you can make politically correct cuts to whatever you want .

      According to this scenario , german government can put pension funds obligations in the public debt , derail public debt and then issue cuts on pension funds as a solution to the problem .

      I repeat , this is a sick scenario , that i have the suspicion that took place in Greece . Be careful to how politicians justify their actions .

      We are not going to turn into whores just because a so called “weather type event crisis” occurs !

  • I think Abe’s point has merit. In a sense the cliche “you get the government you deserve” likely has some truth to it. My whole life I’ve heard Greek government after Greek government tout reform, change, modernization, an end to corruption. And none has delivered. This is because I don’t think there is an appetite for it in Greece.

    There is a political culture in Greece whereby votes beget jobs and jobs beget votes. I have seen this personally. I have seen a Pasok party member threaten to take her entire extended family’s votes to ND if the local party officials didn’t find a job in the public sector for her daughter.

    Here in Canada there is always a tension between conservatism (I think another term for it is neoliberalism) and liberalism (which I believe is also called social liberalism). There is a large voting block that is neoliberal. And there is a debate between neoliberals and social liberals about the benefits of government. ( Personally I think the neoliberal tendencies in North America have lost their perspective and have become reflexively anti-government and pro private sector – even after 2008 — finding, in some bizarre way, the ability to blame even that on governments) . But still, there is that debate. And you see that debate manifested in things like governments privatizing erstwhile public services like garbage collection or neighbourhood post offices, electricity generation & distribution, information technology, etc. You see governments focusing on policy (i.e. governing) and staying out of the doing. They farm out the doing to the private sector. You see governments staying out of the regulation of professions. And you certainly don’t see laws limiting the number of bakers in a neighbourhood. I’m not saying that any of these things is good or bad, but at least there is constant re-examination of how things are done.

    I’ve never actually seen that type of conversation happening in Greece. Not among the politicians and not among the populace. Neoliberalism has never had much traction in Greece. (BTW – I’m not a neoliberal). Either the neoliberals are there and they’ve never had any traction amongst the population, or they’re just not there. So there’s never been any debate. There’s only ever been statism — even amongst the so-called conservative parties. Put another way, you can’t just blame the politicians. The politicians are not parachuted in from the moon to govern. Presumably they rise out of the population and adopt the policies that resonate with the population.

    Among all the Greeks I know living in the diaspora (who over the years gradually adopted the ideology mixes of their new homes), there is not much sympathy for the goings-on in Greece today. There is help for individual family members who might be in distress, but for the larger issues there is a “kalla na pathoun” attitude.

    • I think you honestly give a view of what people in Canada and Greeks living in Canada think .

      BUT does this view depict what the real problem in Greece is ? What if you are wrong ? By encompassing this view , you are doing more damage to Greece than you think .

      They way i see things , Greece , as far as international media are concerned , is a scapegoat . It is apparent that everyone is trying to separate himself/herself from this “image” . That explains this “they are getting what they deserve attitude” in a subconsciously level .

      I repeat once again , there are many things to improve in Greece , but what does this have to do with what now is going on in Greece ? By implementing the policies dictated (forced) by EU , greek debt has almost doubled . Every prediction they had made , proved to be wrong . According to the rational thinking of Canadians , what does this mean ?

      And one more thing , the logic that ” the greek political elite is incompetent and corrupted and therefore those who voted them are incompetent and corrupted as well” , is misleading .

      You are underestimating the power of propaganda by the media . This is merely a greek issue . It is an international one .

      There is a missing link here !

      Once more , what you say , does not contribute in the direction of a solution to the greek problem , not to mention the European problem which is far more significant and it affects Greece as well !

    • N. Kanello: (Niko?):

      The reason you heard government after government to promote change is because we, the voters, always vote for change as long as we don’t have to change ourselves.

    • Ilias

      What I think is not based on what the foreign media say. The only purpose the foreign media serve (for me) is to reinforce what I know to be true based on my own perceptions. Like the story Yannis tells of his reaction to reading Michael Lewis’ article. I, too, clapped.

      It is based on the experiences of my Sister, who grew up in Canada but now lives and Greece, and therefore sees Greece through the lens of a Canadian.

      It is based on the experiences of my father who tried to build a retirement home in the village of his birth, and eventually threw his hands up in the air in frustration at the ineptitude and inefficiency (and corruption) of the bureaucracy.

      It is based my own observation that the IT company for which I work has R&D labs throughout Europe (including Ireland, Spain, and Italy as well as the Eastern bloc) but NOT in Greece.

      It is based on the scandals that go back to Koskotas.

      It is based on the discussions with my cousin on the corruption in Greece. I once asked him how he could stand to pay bribes. His response is that it was no big deal. That, in his words, “you have your system and we have ours”. I have one uncle who once proudly told me “If you have any problems, come to me. I know how to get things done.” He thinks he impressed me, but he didn’t. He filled me with disdain. These seem to me to be a tacit form of acceptance that corruption is a way of life. And there seems to be an inability to recognize it doesn’t have to be. I have never paid a bribe in my life, while many of my relatives who live in Greece have. And I get darned good service in the private and public sector. Even if I ignore Transparency International’s statistics, Bayes’ theorem tells me that the likelihood I’ve hit upon a really unlucky bunch of relatives and friends is pretty slim.

      But mostly it is based on the frustration that no political movement that is willing or able to do away with this culture has been able to gain any traction in Greece. I’m sure you feel the frustration too, but why does it have to be that way?

      You might say I’m conflating two issues. That Greece’s current economic predicament has nothing to do with all of these things. But I don’t think so. I think these things all serve to beget a lack of competitiveness that has caused the current state of affairs.

  • @Abe via Dean. The reasoning behind the PSI the way it is done, i.e what it includes and what it excludes, is to bring us to the inevitability of seeing the Greek banks into foreign or ESF hands (same) and our pensions being further cut due to -allegedly -the “haircut” i.e the difficulties it will create for our pension funds’ survivability.I will abide by the spirit of Dean’s and others’ comments and add that the worst thing we did in Greece was to buy into this collective national responsibility autodestructive self-critique which deflected the attention from the responsibility of the financial sector for the mess we are in and landed it properly on the head of every 90year old pensioner soon to die in a dark (power cut) cold (same) home in the process of reposession (unable to pay taxes).Unfortunately it is not an example produced by an exalted mind but was all in the news for everyone to see today as a pensioner was fighting in the court so that her life does not end this way.She lost.

  • Although prof. Galbraith’s text refers (see bottom) to a video archive of the full meeting ‘Crisis in the Eurozone’, I could not find a video. I followed the excelent conference, but I did not take notes.

    Yani, please do something. Thanks.

  • Greece’s current state is of no accident and one that took 40+ yrs to establish with the beginings of deficit spending having started in 1981 and ballooned by both Pasok and New Democracy. (I have the stats if anyone is interested) Although, I am less interested with which party did what, I am more concerned that the country is now in a state of utter hell. To debate whether one country is more indebted than another is meaningless because it serves little to alleviate the current conditions in Greece. The Greeks are the masters in their own home and if they mismanaged their finances it wasnt by accident nor should they look to find blame elsewhere. The Greek financial crisis was made in Greece by Greeks. No one is niave to assume that the larger problem in Europe is outside of Greece but that does little to assist Greece in its current impasse. To blame others is silly and frankly irrisponsible. I need not be lectured on economic theory, I know it well, thank you. This is about being accountable to a state, a vision, a culture, and ultimately its people. Its time that Greece take responsibility and correct the wrongdoings that ultimately brought the country to this state. To suggest that Greece start blaming others is counterproductive and simply yields no benefit.

    • If you are right, then how do you account for Spain’s troubles? After all, it was running a surplus till 2008.

    • Spain and Ireland were the victims of something like one-time events (banking and real estate bubbles of a proportional magnitude exceeding the sub-prime bubble in the US). Other than that, both countries had functioning business models before 2008. Ireland’s, in fact, was so good and so competitive that core EU countries came up with cute ideas how to prohibit a country from being so competitive and from being able to live with lower taxes…). One-time events create enormous one-time damage but when this is absorbed, a country is back to business as usual. In fact, given the magnitude of the one-time damage in, say, Ireland, a haircut would appear justifiable as it was justifiable in other historical situations where one-time damage had occurred.

      Italy, because of her sheer size, had a functioning business model but it was a decaying process in slow motion (with enormous acceleration in the last 2 years). So Italy is more similar to Greece than to the others.

      Greece had already lost her business model by 2008: exports of 20 BN€ against imports of 64 BN€; a current account deficit of 35 BN€; services about 80% of the economy (if not more); all financed with debt. Everyone criticizes (rightly so!) the US for their enormous current account deficit. The Greek one was more than twice as high!

    • Dear Klaus, Thinking of countries in terms of ‘business models’ is part of the problem. Spain and Italy (plus Portugal of course) were experiencing, since 2001, a vast loss of competitiveness caused by divergent unit labour costs vis-a-vis Germany. The tectonic plates had shifted. The 2008 credit crunch would always bring Italy and Spain to their knees. Without a surplus recycling mechanism in place, the euro system was always going to shrivel and die. But to wrap one’s mind around this one must think macroeconomically – and not confuse the rules that govern a business with those that govern large open economies.