Interviewed by The Occupied Times ~ of London

The Occupied Times ~ of London honoured me with a request for an interview. It has just been published here. The text of the interview is also copied below. Please support them any which way you can.

Money Talk$: Yanis Varoufakis

In the wake of the brutal austerity package – cutting 3.3 billion euros of wages, pensions and benefits – which has just been passed by the Greek parliament, Professor Yanis Varoufakis, Professor of economic theory at the University of Athens, gives the OT his unique insights into the dark days that lie ahead…

 

OCCUPIED TIMES: You say Athens is in a “deep depression” – how does it feel to be living there?

YANIS VAROUFAKIS: People can talk about little else except the crisis. You meet people that you have not seen for decades and instead of asking each other how life has been, you launch into a discussion of the ‘disaster’. The lights are going out on the city, as many families have had their electricity supply disconnected. Every other shop is now closed, even in the posh areas of Athens. Businesses that are hanging on are readying themselves for the final curtain. Everyone owes money to everyone else and no one can pay. Jobs are a mirage, with unemployment amongst young people reaching 45% across the population.

OT: Aren’t electricity bills in Greece going up now, and isn’t there some new electricity tax…?

YV: Both. Electricity itself has just gone up by 12% while, on top of that, the government is introducing new lump sum taxes via the electricity bill. If it were not so tragic, it would have been hilarious.

OT: People talk about “the Greek malaise”. What exactly is it?

YV: Let me remind you that until 2008, Greece was doing rather well. The economy was growing faster than the average in Europe, investment was on the rise both in the public and the private domains. So, why did Greece implode in 2009/10? The reason is both simple and complex. The simple story is that Greek industry retreated in the late 1970s, following the combined shocks of the oil crises (that boosted energy costs) and the removal of tariff protection, so as to support Greece’s entry into the EEC – the predecessor of the EU. At that point, the losses of the private sector were transferred to the state sector, inflating public debt (especially as the state was utilized to employ workers and employees that industry was shedding). Add to this mix a chronic dose of tax evasion (that began with the rich and then spread down to the ‘lower’ classes) and you have the makings of strains in the public purse. Before the euro, Greece managed to avoid crises through frequent devaluations. But once we were in the euro, the shock absorber of devaluations was gone. That was a time when rivers of cheap toxic money (mostly produced by Wall Street, the City and the large Northern European banks) were flooding their way into countries like Ireland, Spain etc. They gave everyone a false sense of security and progress, but in reality they were creating a consumption-led boom. So, when the Crash of 2008 hit us, it was just a matter of time before the capital which had flown in flew out again, leaving nothing more than devastation behind. And given the impossibility of a fall in Greece’s currency, to absorb the shock, the result is that something else had to give – Greece’s social economy.

OT: And credit rating agencies, how did they fit into all this…?

YV: These outfits performed their criminal miracle during the good times, especially in Wall Street and the City. They played a crucial part in helping the banks print their private, toxic money (e.g. CDOs or collateralised debt obligations) by labelling it AAA or ‘riskless’. An unholy alliance between these agencies and the banks created the pyramids that crashed in 2008, with the results that we all feel worldwide to this day. Nowadays, I do not think they matter much. And if they do, it is the politicians’ fault – for example, when a Central Bank (like the ECB) states that it will only take in as collateral bonds or titles with a certain minimum rating from S&P or Moody’s, whose fault is it if S&P and Moody’s then exercise exorbitant power?

OT: It seems like the technocrats are taking over (in Italy & Greece) – you think they can do a better job?

YV: No, this is not a matter of personalities. It is a deep structural flaw in the guts of financialised capitalism in general and the eurozone’s unsustainable architecture in particular. In some respects, a degree of personal competence is not a bad thing. Italy’s Mario Monti is certainly better than Berlusconi. Not so our own ‘technocrat’, Lucas Papademos, whose greatest asset, in my estimation, has been his readiness to act as his master’s voice for a long, long time (his master being the European Central Bank). Although in a way, he’s doing a sterling job, given that his job description was, from day one, to orchestrate the acceptance of these loans by the Greek parliament. Once a lackey always a lackey!

OT: Is there any more to give? Any more assets to strip?

YV: It is important to emphasise that the worst aspect of the Greek ‘bailouts’ is that their purpose is not to asset-strip Greece. Their purpose is to hide the true, sorry state of northern European banks. For this reason, the insolvent Greek state, and its battered citizenry, is being asked to take on loans that it cannot repay for a simple reason: so as to pass them on to the insolvent banks. But to pass these loans through the German parliament, whose members do not want to pass these loans, the German government must demonstrate to its MPs that Greece ‘deserves’ its loans because it is suffering, bleeding and selling out. Thus, Greece is asset-stripped in order to placate German parliamentarians to pass loans to the bankrupt banks.

OT: What’s your issue with the PSI? (Private Sector Involvement) and the debt ‘restructuring’ we’re about to see?

YV: My issue with it is that it is fraudulent. I am all for haircuts. If a loan turns bad, then both the borrower and the lender must take a hit. So far, the burden and the pain has gone only to the Greek people, while the EU and the IMF are piling up new debt on Greece’s weak shoulders so that the bankers do not lose a penny of the money and the interest due to them. The reason why the PSI is fraudulent is that it forces the bankers to take a hit, but also forces them to pretend that they are doing this voluntarily. Why? To ensure that the Credit Default Swap contracts (in effect insurance policies, that some hedge funds and banks bought from other banks and hedge funds, that pay their owner money in case of an involuntary Greek default) do not ‘fire’ – since if they do then those bankers that have issued the CDSs will end up being insolvent too (since they lack the money to pay out the insurance contract owners). Thus, Greece is now being asked to negotiate with the bankers what hit the latter will take ‘voluntarily’. It is like asking a mouse to negotiate with a cat as to which part of the mouse the cat can eat. And all that as a precondition for the EU and the IMF granting more loans to Greece, that Greece will be using to pay the bankers leading to even more crippling austerity – while being prohibited from using even a fraction of that money to boost its economy or fund hospitals.

OT: It’s been rumoured that certain currency exchanges are preparing for a return of the Drachma – do you think that’s going to happen? What would happen if Greece pulled out of the euro?

YV: It would be criminally negligent if our governments were not preparing contingency plans for such an eventuality. Having said that, I think that a collapse of the euro would be awful for all of us; both those inside and those outside the euro area. Moreover, the human cost in a place like Greece from leaving the euro, while the euro remains legal tender, would be appalling.

OT: Will people be forced to leave the big cities (Athens, Rome, Lisbon etc.) and go back to rural areas?

YV:  A number of people are, indeed, leaving Athens for the countryside, hoping to establish a simpler more sustainable life. But this is not the solution. We live in urbanized, cosmopolitan societies in which the city is our civilisation’s lynchpin. The task ahead is to made them work. Not to abandon them.

OT: Why is ‘debt’ so powerful?

YV: Because the creditors possess monopoly power over the political system. Especially after the Crash of 2008, we live under a system I call Bankruptocracy – rule by the bankrupt banks. The greater the black hole in their midst, the greater their capacity to mobilise the state in order to extract rents from the rest of the social economy.

OT: Do you think the people will ever take back control of their banking system?

YV: Not until the middle class also revolts, and the political system realises that they must yield to the masses, or be done away with themselves.

OT: What do you make of the Occupy movement?

YV: It is the only ray of hope during a particularly dark night.

45 Comments

  • Yanis, you should remind people that by the mid of 2011 Greece still ranked pretty low on the level of total debt (public and private) whereas the highest was the UK. So why only the public sector’s debt matters? And then you go on explaining the inconsistencies if politics, motivated by intercapitalist power struggles abetted by economists who should know better.
    joseph halevi

    • Mr.Halevi,
      you know, every time, when we Greeks open our mouth in Germany to talk about statistics, then you probably can imagine what kind of comments we get to hear. “Greek statistics” and the kind… So, before we can bring arguments of that kind, we have to explain, especially to the German public, what exactly is the issue with the Greek statistics and if there is an issue at all. (Former prime minister Simitis recently wrote an article on this:
      http://www.keeptalkinggreece.com/2011/11/16/ex-pm-simitis-to-sarkozy-greece-has-not-cheated-to-enter-theeuro-zone/)

    • Although i dont know if Simitis is telling the truth,there are still some facts that should be made known to the public,especially the Germans as you said.
      1)Whether these debt swaps were legal-legitimate or not,Greece was not the only country to use them.
      2)France and Germany were the 1st countries to violate the Maastricht Treaty criteria somewhere around mid-00s and they mutually decided to not impose “fines” for these violations.

      And then i should add my personal opinion on the matter.Even if we accept that Greece did “cook” the numbers ,how can anyone be that stupid and believe Germany and France allowed that to happen under their nose?Its impossible that they didnt know what was happening.
      So why would they allow that to happen if they knew?
      The answer to the question is a question also:What would happen if the “PIIGS” never joined the Euro?
      1st of all what all the “PIIGS” countries share in common is their trade deficit.Thus they play a devaluing role for the currency that tends to keep its price at “acceptable” levels (in terms of making eurozone exports attractive).Were they not members of the EZ,would result in EZ being a big net exporter that would cause the price of the euro to skyrocket.Secondly,given that most of the eurozone trade is internal,this means that the “PIIGS” are valuable clients for the eurozone exporters.Were they not members of the eurozone,the exchange rates would be so high they wouldnt afford buying German or Dutch products.
      Having said all that,i cant see why would Germany or France decide to adopt a currency that would not only not help boost their growth but instead decrease their ability to export since it would definitely be harder a currency than the franc or the mark.

    • @Xenofon

      Every country cheated (a little) with its stats in order to satisfy the already weakened convergence criteria for euro entry. Greece cheated a lot more, with all of its stats — including the measurements of inflation and debt.

      The pattern of manipulating data is observable across the spectrum and I have published detailed analysis of Greek migration data in an edited volume called “Statistics and Reality”. I argue that there are two realities competing — an independent one derived from scientific measurements, and a politicised one that is shaped by the Greek state and politicians. The socio-political importance of each individual set of statistics determines the balance between these two competing forces; so, some statistics are reasonably non-interfered with, others completely artificial and distorted.

      To be fair, I place Simitis in the modernising faction that supported independent scientific data, but he was (and is) in a small minority.

    • Every country cheated (a little) with its stats in order to satisfy the already weakened convergence criteria for euro entry. Greece cheated a lot more, with all of its stats — including the measurements of inflation and debt.

      Of course, they got a little help from their friends . . . Italy. (Hat tip: Yani 😉 )

      . . . I have published detailed analysis of Greek migration data in an edited volume called “Statistics and Reality”.

      “New immigrant receiving countries: Greece”

      I just read it. Thank you.

      Btw, are you Maritn or Katerina?

    • @guest-xenos
      Every country cheated (a little) with its stats in order to satisfy the already weakened convergence criteria for euro entry. Greece cheated a lot more, with all of its stats — including the measurements of inflation and debt.
      That is a bullshit argument and you know. It’s lazy and malicious cooked-up to excuse those who like to have it both ways.

      Please tell us what the actual debt:GDP ratio was in 1999 and by how much did the Greek govnt misprepresent that number to fool the EZ decision makers? Let me remind you that the benchmark was 60%. Now, pls respond.

      Some time ago, I gave an analogy: You are looking for a bride in her 20’s. You meet a woman who’s 36. You ask her age and she says 33… like most women do. Some time later you find out the truth and you feel defrauded.
      My point is, do you consider that the fraud was the 3 “hidden” years or the fact that you never had the 20 year-old you desired?

    • @Gray

      Glad you are confirming my suspicions that you are intentionally siding with the stupid.

    • @Gray

      Simitis claims that the government in 2004 simply changed the way of calculating defense costs.While until 2004 the costs were taken into account at the time of delivery (eg You order an aircraft worth 1mil. in 2000.Aircraft is delivered in 2001 and thats when u pay,so this 1mil. is calculated for the 2001 budget) in 2004 they started calculating future deliveries as present costs.I cant tell if its true but you cant just choose to believe one side over another.Most likely the government in 2004 wanted to degrade the previous goverment (it was an opposing party) same thing happened vice versa in 09.Seriously a government admitting to have cooked the numbers (even if true) is as stupid as USA confessing Sadam didnt have no chemical weapons and it wasnt the actual reason for the war.There must be some other reason for admitting such a thing,other than the truth…

    • Hi, Crossover, I’m well aware that neither members of that PASOK government nor of the following ND one are especially trustworthy. I mean, look at that BBC report I linked! it shows ND was aware in 2004 that the nation had financial problems, but the fiscal data of the following years shows they even increased the deficit spending. Irresponsible.

    • 1. Greek nation irresponsible

      In the 90% of the articles describing Greece after the crisis emerged, I keep seeing the same word characterizing Greeks.

      “Irresponsible”. “Irresponsible”. “Irresponsible”.

      If Greeks were so irresponsible financially, how come Greeks have the highest home-ownership percentage in Europe? How come Greeks have the lowest private debt in Europe (now 2nd lowest)?

      I look at my parents and the parents of my wife and most of my friends parents. They have been saving money all their lives, with their petty salaries.

      2. Politicians and the state

      Irresponsible may be the politicians (the Greeks) and the Europeans that were accepting these numbers for their own reasons.

      But, in 2004 all the Greek media were full of propaganda about the robust Greek economy, about the strong Greek economy in the strong eurozone.

      How will the average Greek know about all this? Does the majority in any country of the world read the fiscal budget? Greek were irresponsible voters (as most voters in the world), but they are not an irresponsible nation.

    • @jctergal
      you are right but the truth is always somewhere in the middle.Its like someone says that “Greeks are dirty…look at their streets…they drop litter and every 5m you see cigarettes etc” and you argue by saying “How are we dirty?If you come to our houses you will see they are clean”.
      We are very responsible with our own finances but some of us dont give a damn about the public.But thats a whole mentality..its not just about money and fiscal policy.When we park our cars on ramps that are meant to be used by people with wheelchairs etc this simply proves we dont care about the others.
      But dont get me wrong,im not blaming the crisis on our mentality.Im merely saying that if we are to change,it should be for our own sake and not in order to avoid a crisis or whatever….the crisis has nothing to do with mentalities etc its all about the bad design of the eurozone.

  • Very good and clear answers imho.
    When I read Mr Michael Hudson correctly he accepts as a given that governments slash public welfare spending, bail out banks for their losses, take losing bank gambles onto the public balance sheet, do not write down real estate mortgages and other debts to the debtors’ ability to pay. Which I agree with is all wrong and exactly what is causing this mess. But what I do not agree with is the MMT “solution” he proposes which in my mind is just more debt creation which will not be paid and in my mind is identical with debasing the currency; inflation, stealing it, amongst others who had nothing to do with this crime wave, from people already living in austerity for at least >10 years, refusing to participate in the ponzi/pyramid/speculation schemes (housing, stocks, gold, insurance products etc) and saved their labour in the form of just this currency which we were supposed to trust.
    Your view?

  • “OT: Why is ‘debt’ so powerful?

    YV: Because the creditors possess monopoly power over the political system. ”

    I’d like to add: and the debtors possess the power of blackmailing over the nations whose taxpayers are forced to fund this ponzi scheme.

    The largest of said nations being Germany, whose taxpayers are austerity-squeezed since more than a decade and for generations to come, just to ensure the finance industries profits. Directly and indirectly via Greece et al.

  • What more does it take for the Greek “middle class to revolt”? To me, the Greeks seem to be so desperate and worn out, struggel to cope with the next day, that I don’t see it anymore. And: The ones, who still dare to stand up, are drowned in tear gas, even if they are peaceful. And this is the case in Spain, Portugal …. and the US.

    Do we need a full blown famine?

    • My question exactly, and one I ask over and over again… Except I paraphrase “What more does it take for “Greeks” to revolt”? I’m also curious:

      – What is the state of the Hellenic Military in this entire fiasco? I had read somewhere that they are still purchasing military weapons. How does the govt. continue to support a viable military under these circumstances?

      – One does not hear much about the “trillions” of cubic meters of natural gas sitting under the Aegean in Greek territorial waters. If Greece does indeed possess these kind of natural resources, who owns the extraction rights?

      – Why does no one ask WHO the principal architects of this fiasco were IN Greece? Who are the people responsible for selling out Greece? They should be brought to justice as “enemies of the state”.

      Great interview Yanis. Glad to see that you were interviewed by the OTofL.

  • ”Let me remind you that until 2008, Greece was doing rather well.”

    I take quite issue with the above statement. Exports and “growth” maybe were there but so was corruption, deficits, debt, lack of a law abiding society, government infrastructure, etc. How Greece was doing well?

    What happened in Greece was decades in the making after the “metapolitefsi”, it did not happen overnight. It almost smells of the bad foreigners that did it to us poor Greeks. Very disappointing.

    • You have misunderstood my point. Of course our ‘growth’ was progressing on the back of a bubble. And of course it was predicated upon corruption, inefficiency and incompetence. But, at the same time, all this was a mere reflection of the global paradigm. After all America’s and Britain’s post-1980 growth was based on a massive bubble and incredible degrees of (financial sector) corruption. And yet all we could hear, prior to 2008, was how well the anglosaxon model was functioning. It is in this sense that I wrote that “Greece was doing rather well” – I meant that, by the criteria of the time, it was doing well. At least well in terms of the (sub)standards of the period.

    • Sorry, Prof Varoufakis, but this isn’t really convincing. According to your logic, aren’t virtually all nations on earth subject to that “global paradigm”? Then how can it be that Greece’s corruption problem is the worst in the eurozone (ok, competing hard with the Italians), according to studies? Or that Greek competitiveness is even below that of the Lebanon? Also, is there an insuperable leverage that forces Greece to follow the US and UK example, instead, of, say, the Swedish or Swiss one? How can it be, then, that other nations, acting under the same undeniably harsh conditions of globalisation, fared so much better? I don’t think coming up with excuses for Hellas’ sad state of affairs is helpful. All efforts and energies should rather focus on identifying all the aberrations of the past and into developing ways to correct them.

      Btw, as far as I remember it was rather Ireland which was still largely seen as a model of success in early 2008, despite rising concerns about the alarming inflation of its financial sector (German banking regulators did urge their Irish counterparts to take a deeper look into the books of Irish subsidiaries of EU banks). Greece, on the other hand, had raised doubt in the European commision and Eurostat starting in 2004/2005, because of the questionable quality of its statistical data:
      http://www.europeanfoundation.org/my_weblog/2010/02/eurostat-set-to-gain-auditing-power.html

      So, the EU didn’t naively see Greece as a success story in 2008, but instead had good reasons to be alarmed about the fiscal policies of the Athens government. Imho this shows that the Eurodebt crisis at least partly was the result of insufficient regulation, especially of the limited data access of the regulators. I’m well aware that Germany did play a rather unhelpful role in this when we got into deficit troubles in the early 2000s, but to proactively counter the probably inevitable criticism, it has to be pointed out that neither Eurostat nor the European commission are poodles of the German government. And, anyway, the main responsibility still lies at the governments. The German one reacted on the deficit and corrected the course. The Greek one didn’t.

    • Gray.

      Which were the actions of the EU if they were so “alarmed” about the Greek situation?

      Given the inactivity, I do not think this was the case.

  • Inspired by J Halevi’s comment above, just one question to Yanis: how do you explain the fact that financial markets behave quite normally towards UK when its total debt (public+private+financial+industrial) / GDP represents 995%?
    What is the purpose of isolating the public debt only in the nominator of the ratio?
    Thanks
    Alex

  • Ιs there a specific reason to take into account only public debt/GDP and not total debt (=public+households+financial+industrial) in order to go into conclusions concerning debt sustainability? UK has a total debt to GDP equal to 995% but none seems really worried about…..

    • Japan has the largest debt to gdp ratio and no one cares.Thats because its not a sovereign debt (debt owed in foreign currency).

    • My point exactly…the debt of the eurozone countries is 100% issued in “foreign currency” since the countries are simply currency users and not issuers unlike UK or Japan.

  • Please excuse my ignorance. Why would the euro remain the legal tender in Greece if Greece pulls out of the euro? Why can’t the Greek Government make something else ( eg. the drachma) the legal tender in Greece?

    • My point was that the euro would remain legal tender internationally. In which case such an attempt by Greece to ban it would resemble Cuba’s earlier attempt to ban the dollar. A recipe
      For a lucrative black market.

  • Interesting Mediterranean Oil and Gas Developments….

    The New Mediterranean Oil and Gas Bonanza
    Part II: Rising energy tensions in the Aegean—Greece, Turkey, Cyprus, Syria

    http://www.globalresearch.ca/index.php?context=va&aid=29609

    “The discovery in late 2010 of the huge natural gas bonanza off Israel’s Mediterranean shores triggered other neighboring countries to look more closely at their own waters. The results revealed that the entire eastern Mediterranean is swimming in huge untapped oil and gas reserves. That discovery is having enormous political, geopolitical as well as economic consequences. It well may have potential military consequences too.”…

  • @lastgreek: I am male

    @estrangeiro: what exactly is a bullshit argument? The facts, perhaps? If you seriously desire to know expert assessments of individual statistical data at specific points in time, then you need to consult a specialist on each statistic. I am not an expert on Greek borrowing (and nobody commenting here is); I do have some experience with Greek econ data generally, and with some specific data in great depth. The conclusions of my detailed research are presented in detail in publication, and in very brief summary above.

    In answer to your more general question, it is an invalid one. You make the mistake of personal analogies that are emotional and pointless. The convergence criteria for the euro were originally determined by an expert committee (whose report was kept secret); were rejected by the politicians, since countries like Italy, Spain and Greece would never get into the euro. The much weaker criteria invented by France and Germany were then broken by most countries with fiddled inflation data, and some with slightly fiddled debt ratios. Greece’s statistics, as I mentioned above, have always been faked when it suited politicians; the real political problem is the degree of faking, and the (alleged) deception of its euro partners. The real economic problem is that the Greek decision to enter the euro was purely political with no consideration given to its economic rationale. The person most responsible for that is now Greek PM, and nobody seems to be accusing him of neglect of duty. Instead, he is the recipient of multiple large pensions, and put in charge of Greece to do the bidding of northern Europe. Maybe you should ask Papademos your question…

    • A comment on your last conclusion. Greeks are absolutely mad angry against the own greek politicians first and then everybody else.
      The biggest mistake Greeks did was that they didn’t react to this mess fifteen years ago … . The reason was that the healthy part of greek society was too appalled by the corruption to be involved in politics and … stupidly enough left the ruling of the country to the corrupt ones.

      This is an honest answer to a stupid question though. Criticizing decisions taken fifteen years ago with today’s criteria and economic environment can be only misleading.
      I still don’t get why we are discussing about Greece today. There seems to be much bigger problems that require immediate actions and do not concern Greece in particular. Greece is not even the tip of the iceberg.

    • I am not economics expert but consider this:
      Greece had always had big national debt for “historical” reasons as GMs of bank of Greece have commented repeatedly. Individual debt was always small though.
      This national debt was in our own currency though and owned by local creditors to a large extent.
      During the last fifteen years, most of this national debt changed hands and currency, mostly for reasons that have to do euro design and open markets.
      Nowadays, this national debt, by applying the measures imposed by foreign centers of power, is changing form again to individual debt. Let me remind you the absolutely illegal tax raids taking place in Greece. If this is not private property confiscation then what? Pensions schemes and funds accumulated by individuals are being exchanged for national debt.

      To me and to every other european citizen this actually means: GRAND THEFT AUTO. If it was a mistake not to react fifteen years ago, NOW, NOT REACTING, borders the lines with GENOCIDE.

    • The real economic problem is that the Greek decision to enter the euro was purely political with no consideration given to its economic rationale.

      Now we are getting somewhere. I totally agree with this statement and to make my position perfectly clear I will give you my opinion upfront. Greece should have never been accepted into the EZ and more importantly it should have never applied for entry.

      Having said that, I take issue with your insistence that the alleged fudging of data by the Greek govnt had anything to do with the decision. You claim it was a political decision taken contrary to the numbers logic which is true. If that’s the case, then the negligible “tweaking” of the Greek numbers at the time of entry did not influence the decision process. Therefore, alluding to the “Greek cheaters” meme is just bullshit and irrelevant and has no other purpose than to smear a people on a racial basis.

      Let’s get to the numbers which contrary to youe view I believe that are much easier to decipher than you do.
      Greece had a debt ratio way above the 60% allowed by the treaty. It was no secret and was not misrepresented. It really doesn’t make a difference if it was 88% or 83% or whatever number close to that. The deficit was found to have been 3.38% and by some manipulation they reported 3% to meet the target. A negligible variation that did not alter the rationale for the entry vote.

      Greece was in because Greece had to be in. That was a mistake but in detriment of the Greek people and not the Eurozone.

  • I can’t believe there’s still even a point of debate around whether Greece was corrupt, routinely, prior to, at, and after entering the Euro.
    Anyone arguing in the negative is in denial or insane.
    Like I’ve said, many times, the problem can’t be solved until it’s acknowledged.
    I’m sad to say, even among a seemingly intelligent and educated readership, too many people seem totally unable to accept such basic facts.

    • Yes, Greece was corrupt. But no more than Wall Street, the City of London, Finanzbank, BNP-Paribas, Siemens etc. Pre-2007 our Western Economy was utterly and genuinely immersed into corruption of gargantuan stature. Just wear it and stop taking cover behind little, idiotic, corrupt Greece.

  • I am sorry Yani, but I agree with Nikolaos.

    We cannot compare Greece with mature industrialised countries; for instance, the UK has its own insane bubbles and a public debt to match, but at the end of the day, still produces high value products and services, holds valuable patents, etc. Same for Japan, the US and other giants. Greece is not in the same league. If Greek politicians have borrowed without realising this, then they are incompetent. If the Greek electorate/media/academics/etc did not realise (and acted against) this incompetence, then the whole body politic must have been in a come.

    If we compare like with like, there are more reasons to be depressed: Greece has found itself into a worse situation that Portugal and Ireland! More debt; lower productivity; less social and political ability to cope. Yes, other small countries are also in trouble and yes they will go through toil and hardship; but if I had to bet a month’s salary on one of Greece/ Ireland/ Portugal (let alone Spain or Italy) to emerge stronger out of all this by 2025, why would I ever pick Greece? Apart from the re-branding campaign (give Greece A Chance, nice but hollow) I have not heard a single original, outside-the-box plan.

    – What might be the peace divident for Greece? (3.2% of GDP annual spend on Defence, vs 1.6% for Portugal or 0.6% for Ireland)
    – How many opportunities in terms of financial gain and credibility, have been lost in petty squabbles with neighbours or by hanging out with the wrong kind of people? (ah, that Milosevic seems like a nice fellow… now let’s have a House of Commons discussion on where Alexander the Great was born: that’s how you plan for the 21st century)
    – I wish the Prime Minister could provide a vision for how he would like to see Greece in 15 years’ time: however optimistic, it might actually give us a strong signal about the overall direction of travel (e.g are we being invited to invest in a Holland-like, multi-cultural, small and flexible, open country; or are you moving towards a more Israel-like model?)

    • It’s very clear that the Greek political elite, its related academic clientele, and the useless Greek media (with occasional exceptions in each area) are overall completely incompetent. I don’t know why you hypothesise something that is evident.

      This is the result of a rent-seeking polity, as opposed to one that is production oriented. Greece has yet to find out what comparative advantage means (I guess they think it means being able to embezzle money more efficiently!)

  • Nice interview – but it is reported that outstanding CDS on Greek debt totals only 3 Bill. – a small amount you must agree. So one musn’t overemphasise the impact of CDS triggers on the picture. Losses resulting from haircuts are of course a major issue for holders – Northern banks in the main – however some Greek pension funds are reportedly holding out (ironically the Police). I suppose we will find out on Thursday/Friday whether CACs will be enacted. I have 2 issues – the first is I would like to question the basis of your conclusion that Greece is better off within the Euro. I am not so sure – despite all prognostications of doom from almost all sides. The second question I would like to ask is what is the government currently doing about all the red tape, bureaucracy, form filling and overburdened and not fit-for-task legal system. I think many are aware of the problems – though the precise apportionment varies by commentator, far fewer try to talk about solutions. In the current climate with the perceived threat of a return to Drachma, it is not unreasonable that foreign investors will hold-off committing to any projects there. However, this time could be used very productively to improve the background in which citizens and companies operate. With wage levels drastically reduced, and a very well educated workforce, high level of English-speaking populous, it seems logical that many businesses might be interested to set-up there once the financial picture stabilises. They will however, still be confronted with a communist-era bureaucracy at almost every level and a very variable legal system that cannot really be trusted. Whatever the eventual outcome of the financial situation – these important local matters need to be dealt with as a matter of urgency. Further points going forward will almost certainly need to address energy security and industrial policy and I would be interested to hear what, if any, developments you can report on. Thanks for your time.

    • Guess what. Although the actual value of outstanding CDSs is not large, ever since Greece was ‘bailed out’ in May 2010, banks and hedge funds blended Greek CDSs into private bonds and other derivatives creating new hyper-derivatives. If the Greek CDSs trigger there is a strong chance that these pyramid-like synthesized monsters will bite back.

  • @guest (March 7) The Greek situation is being presented as an unfortunate but normal state of affairs by global standards: “it’s only debt restructuring gone wrong; if it wasn’t for the sub-prime mortgage crisis, none of this upheaval would be happening; and everyone is in debt anyway, so what’s the big deal?”
    My argument is that this is not the case at all; there seem to be deep rooted problems in every aspect of Greece’s social and political life and that economics is not even the half of it. And that I am surprised that -even at this late hour- there is no sense of responsibility (has anyone resigned over this mess?) or a viable political vision. I would be extremely interested to find out what sort of society and economy someone like Yanis envisages emerging from this wreck. It would be great if he explored a couple of different future scenarios (I proposed a simplistic Holland vs Israel as a starter for 10) as a way of looking ahead and decoupling the debate from classical political lines.

    • Tony, you’re spot on with your comments.

      If just Greeks could spend a bit of time trying to envision what kind of society they want to have 20 years from now, there would be some hope. Instead a majority of the population spend an awful lot of time on scapegoating others and victimizing themselves.

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