Greece is ungovernable (while the euro's derailment continues): On ABC tv 7.30 Report

Following the latest Greek election, I was interviewed on the ABC’s 7.30 Report. In the interview (which you can watch here), I presented a gloomy, yet realistic, view that it really matters little now what happens in Greece. “Greece is finished”, I argued, as long as the derailment of Europe’s euro-system is proceeding unhindered. Read on for the transcript:

LEIGH SALES, PRESENTER: Joining us now from Athens is the Greek economist Yanis Varoufakis. 

The obvious question is: what happens now?

YANIS VAROUFAKIS, ECONOMICS, ATHENS UNIVERSITY: Well, the derailment of the train that is the eurozone, which started with Greece and then other carriages started leaving the tracks sequentially – Ireland, Portugal, now Spain – is continuing. And yesterday’s vote is not going to change that at all. All exuberance and celebrations are completely and utterly misplaced. I’m afraid that the eurozone and Europe is continuing along the path of the last two years of a cascade of errors, a comedy of errors. Just look at Spain, what is happening there today. Look at what is happening in Italy. Unless the logic or what passes as logic in the European approach to this crisis alters and alters fast, very soon the eurozone will be history.

LEIGH SALES: Well, let’s stick with the big picture for the moment before we drill down into Greece. What do you think could happen then to avert that disaster as you see it?

YANIS VAROUFAKIS: I’m sorry, I didn’t hear you because there’s a lot of noise – could you repeat that question?

LEIGH SALES: I will. What do you think needs to happen to avert the disaster as you see it?

YANIS VAROUFAKIS: Three things, the very simple steps that need to be taken. Look, in Europe, whether it’s Greece or Spain, what we have now is we have insolvent banks that are in a deadly embrace with insolvent states. So, the states get – borrow money from the centre of Europe in order to give to the banks and banks borrow to give to the state and both banks and states are sort of locked into a deadly embrace with another sinking very fast. So what we need to do is we need to break this nexus between insolvent banks and insolvent states. So, the way to do this is to unify the banking system, to Europeanise it in the European Union and have it being funded directly not through national governments. That’s a very simple step, but it’s a step it seems too far for the European Union. 

Secondly what you need is a mutualisation, a kind of common debt, like in Australia we have, you know, the Federal Government having its own debt over and above states. And thirdly we need an investment policy which runs throughout the eurozone. Because you have a secondly currency area, you need to have an investment strategy, a recycling mechanism for the whole thing. Unless we have these things, and Germany doesn’t want to have these things, I’m afraid there is absolutely nothing to avert the continuation of this slow motion derailment.

LEIGH SALES: Just to go back to Greece specifically, the politicians in Greece couldn’t even agree on the terms of a televised debate during the election campaign. How are they going to compromise on measures to fix the Greek economy?

YANIS VAROUFAKIS: They cannot fix the Greek economy. The Greek economy is finished. The Greek economy is in a great, great depression. The growing social economy is in its long, long winter of discontent. There is no power, no force within the Greek economy, with Greek society that can avert – it’s like – imagine if we were in Ohio in 1931 and we were to ask: what can Ohio politicians do to get Ohio out of the Great Depression? The answer is nothing.

LEIGH SALES: So what then happens to Greece?

YANIS VAROUFAKIS: It depends on what happens in the eurozone. Just like what happened in Ohio depended of the rise of President Roosevelt and the New Deal, unless we have a new deal for Europe, Greece is not going to get a chance. Now it doesn’t mean that if Europe fix itself, Greece will fix itself. It’s a necessary condition that the eurozone finds a rational plan for itself. It’s not a sufficient condition. Europe may fix itself and Greece, being so flimsy and malignant, may still have huge problems and never recover. But until and unless the eurozone finds a rational plan for stopping this train wreck throughout the European Union, throughout the eurozone, Greece has no chance at all.

LEIGH SALES: I read some statistics today that seven out of 10 Greeks want to emigrate. How would you describe the national mood there?

YANIS VAROUFAKIS: This is a our Great Depression. Not only in an economic sense, but also in a psychological sense. Greeks are in a catatonic state. One moment, in a state of rage, another, this is a typical case of manic depression. There are no prospects. There is no light at the end of the tunnel. There are sacrifices, but nobody gets a feeling that these are sacrifices that take the form of some kind of investment in turning the corner. This is the problem when you are stuck in a eurozone which is really badly designed, which is collapsing and which does not give opportunities to its flimsier parts to escape through some kind of redemptive crisis.

LEIGH SALES: Yanis Varoufakis, we can hear how noisy it is there. Thank you very much for making the time to speak to us tonight.



  • Truly it was very noisy.

    I beg to differ. Greece is not finished.
    The economy as we know it may be finished and have hard times ahead ,but Greece is never finished. We still have products shipping all over Greece directly by manufacturers.
    That is how i get my supplies.

    Then we may have our own local currencies ,share food ,move to the country and generally do the old good deeds that are somewhat forgotten today.

    No ,we are not finished. We are just well done ,the fat is melting and the sauce is boiling.
    Let’s just be vigilant so as to avoid complete dryness.

  • I remember once mentioning here that one should fight fire with fire. To which Yani promptly responded that it would be politically incorrect and that if I adopted fighting tactics against the Germans this would lead to an escalation of a Greek fighting a Greek and a German fighting a German as well as both fighting each other. In other words that it was not nice neither high minded.

    So now the Left after being subjected to a relentless campaign of terror is beginning to do some of the terrorizing itself.

    Welcome to fighting tactics my friends. Whereby it is wholly acceptable to take the arguments of your enemies and turn them against themselves. The Germans have been doing such since day one.

    BTW, you don’t have to feel guilty about it because everybody is doing it. And oh, yes. According to the German Bible, morality is indeed relative. Because everything the Hunnic scourge does is “proper” unt “clean” unt “good for you”. And everything the opposition does to the angels from the Rhine is of such a bad taste and highly suspect and a grand misunderstanding. Yeah, right!

  • Didn’t they say no more cuts? And who believed them except the ND brainwashed people?

    Well ,more cuts took place already. Pensions are the first to be hit again.
    And not only that but they say the unemployed will be asked to pay 400 euros tax.
    Except if they declare that they had at least 700 euros income for the year.

    Heh ,do you see something wrong with the picture above?

    Is this how they fight tax evasion of the rich? By pressing the unemployed to declare income they never received?
    Are they trying to frame the unemployed ,so as to have an excuse and cut the unemployment benefits ,while giving to their corrupted friends in Europe the opportunity to repeat the tax evasion fairytale?

    Is this how reforms will take place? With even less money in the real economy?

    Tsohatzopoulos has a nice house with lots of wealthy stuff. He made the deals for third rate German military equipment.
    As a Greek citizen i decide and declare that he should pay all of our taxes together with the German manipulators.

  • Dear Professor Varoufakis,
    I would like to comment on this interesting article through a proposal for economic recovery while increasing political stability and governance in Greece. Is this the rigth post to do that? Or perhaps, you would like to suggest an alternative way or Email account.
    Your response would be highly appreciated
    Dr. Jairo Morales

  • If Greece is really ungovernable (I agree with your view on that), there is nothing any foreign entity can do. Only Greece herself can do the required changes to become governable. Like, to install a working tax collection system, a working land registry offices system, deregulation of vested job markets…

    BTW; I just read that your colleague Yannis Stournaras takes over the job at the Finance Ministry. He seems to be unaware that Greece is ungovernable.

    • vss

      It became ungovernable now. Why is that really?
      Do not bother answering.

    • n eu d

      Hell no!
      I am not one of those who are supporting more state employees for nothing.

      A bigger problem though is not the number of employees but the misallocation.

    • He looks like a mini Barroso from a certain angle.
      Heh ,he is the mini-me of Barroso.


    Monetary union requires fiscal union, a fiscal union cannot be implemented without an explicit or implicit political ‘union’, but the latter requires ‘union’-wide democracy. Can political ‘union’ be forced upon the peoples of Europe without agreement to a constitutionalized Federation? Or are they just planning to implement Hitler’s dream with a 70 year delay?

    With regards to the Greek issue, what are the odds that Samaras et. al will be the ones that lead Greece outside the EZ adding a, post mortem, farsical note to the recent electoral debate?

    • “Yet even continued gifts under some sort of fiscal union would not bring prosperity, as we see clearly in Italy. Italian unification in 1861 married the Germanic north with the Latin south. The consequent misalignment continues to this day. If the euro holds together, this would leave the southern peripheral countries as a giant version of the Mezzogiorno. “

    • the “Latin south” in 1861 was far richer and more prosperous of the “Germanic north” …

    • Pedro:

      History is not your strong suit, hey?

      What Germanic north are you talking about? In Italy?

      The Italians are as ancient in the Mediterranean as the Greeks. In fact genetically we are the closest possible.

      And the south of Italy is full of Greek blood from Magna Grecia.

      How can possibly Italians be something that didn’t even exist at the same time as they did?

      Germanic north my bazooka. Go back to your caves man and stay there awaiting orders from the Greek High Command. Well, I mean the highest pedigree of human existence.

      Read your required anthropological assignment here and report tomorrow morning sharp 7:00 am for the obligatory testing of what you didn’t learn.

    • “And the south of Italy is full of Greek blood from Magna Grecia”

      Now I understand the economic situation and corruption rates there much better!

    • Pedro

      All the bail-out systems under the sun cannot make the eurozone work;
      The main issue is well-known; stupid non-usable “bail-outs” for patient southerners at the advantage of racist northerners.

      You haven’t got the whole Europe yet and you are in a hurry to change history.

      I am afraid the stupid ones are the southerners who still pay with austerity for the lifestyle of the northerners.
      And what lifestyle is this? To serve the masters.

      We have shown a lot of patience with you.

    • So all of Europe’s woes can be blamed on those “lazy, thieving, tax-evading, mooching Greeks”(did I forget any other fashionable derogatory adjectives that the German media has been slinging at the Greeks?) who have been living it up at the expense of their “hard- working, honest, northern european brethen. Hmmmmm and this does not sound like scapegoating to you. Right… Then again how would you know..It’s not as if the German people committed such scapegoating, oh let’s say, in it’s recent past, right? NO…It was not a wideheld beleif in pre-WWII Germany that the trecherous Jews and Marxists cost the germans their WWI defeat.( The Jews and Marxists supposedly abandoned their lines…) NO.. Nor was it a wideheld beleif that the “sly, manipulative, parasitic Jew” was to blame for the ailing pre WWII german economy. Noooooooo, such scapegoating NEVER happened. Nor is there any parallel to
      today right? Wow, if you cannot see the parallel then history is not truly your strong suit.

    • Oh, yes I forgot that mentioning Germany’s Nazi past is “inappropriate” and “unneccessary”, right? So dictates apparently certain Germans’,not all of course, willed amnesia and collective denial…Way to go on integrating your past, as they say in psychology! Yeah, nice way to move on in a healthy and fruitful maner…

  • Just a little addition to show you how even our “german BBC” works. It fits in here as it illustrates nicely how german people are informed, and how german media sometimes work, even the “BBC-alikes”.

    I published, in an ARD thread where countless people shouted against Greece after von Rompuy had “warned” Greece to ask changes after the last elections.

    My comment, translated, went like this, answering a man who had said “the greeks” would profit much now from a “130 billion” package and that the EU had showed “patience” long enough.

    – – – – – –

    ” “The” Greeks will not profit, and it is not a step into their direction, no big help. What happens, for example, with the 4,2 billions that Greece, a short time ago, got? The money comes from ESFS and was instantly and completely transferred to the european central bank. [I got this info from an interview of you, Yanis, and if I’d be partly wrong here, this ARD-discussion-comments is no scientific community. That would be no excuse, but just so that you know.]
    “The” Greeks do not profit at all here. The policies of the troika, of Merkel or of von Rompuy is either one of cynical people who know that this can’t be a success – or of dilettants. Merkel’s austerity politics didn’t make it.

    If you’d like to get some background basics, you could well read the superb english blog of Yanis Varoufakis or read his “global minotaur”. Extremely good!

    Right at this moment not few greek peope suffering from cancer cannot pay their medication any longer. You find info about this easily in english, for example here: Sadly enough there is not much to find in german…”

    – – – – –

    I am stunned to learn that ARD online did not publish this – mainly things you as economist would have said much more wisely and precise, but all in all just facts.

    They publish each and any hate-speak comment in the crudest of ways….like for example something like this in the same thread…with a whole lot of rudest mistakes in grammar or writing wrong words…

    Sozialhilfe aus Deutschland?
    24. Juni 2012 – 13:02 — (name is not important, cut^^)

    Der Deutsche Steuerzahle muss nicht nur in Eigner Heimat, Sozialhilfe Zahlen sondern auch noch an Länder die nicht Wirtschaften können, oh je wo kommen wir da hin wenn der Art jeder Land so eine Forderung stellt,
    ich empfinde das langsam Lächerlich, und unverschämt über so etwas überhaupt zu Diskussion ins Welt zu setzen, am besten wäre das die Griechen Ihre Drachmen wieder bekommen, und das eine ende Diskussion antritt ” Griechenland ”

    this translates to roughly something like this…

    Welfare from Germany?

    The German Taxpay must not only in ogwn homeland, welfare Pay but also still to countries who can’t Economize oh my where will this end if this way eachrg country makes such a demand,
    I feel this is slowly getting Ridiculous, and outrageous to get a discussion going at all about this, would be best the Greek would get their Drachma back, und that one End discussion accedes “Greece”

    – – – –

    Now don’t think I want to make jokes about this sadly poor comment from a poor man who can’t write fluent german and seems to get all of his information out of our yellow press.
    But I want to show you that comments like these are published at ARD (our Beeb, to repeat it). A whole lot, since many moons.
    And if you just write what Yanis said (yes, I could have said it better, I am sure, I am no economist and there is so little time to talk to all those horrible people in your rare spare time…) – they censor it away. It is crazy.

    From the same thread, ( and there were much worse ones in the past, is this here: (my translation) Grammatically not that much incorrect now, but full of one-sidedness:

    “Always the others – and always just demanding and claiming”

    24. Juni 2012

    They do not want to reduce this whole army of clerks, like necessary. Bravo! Are the civil servants who can’t find a place in the office allowed to go out and have a walk then? The stupid German will pay the bills, of course! I have also read anything yet about that they would fight tax fraud. They, again, postpone the most important things they had to do. Even if it had been written often enough that with a functioning state and finances the biggest problems in Greece could be solved soon.
    First the Greeks have to provide, to deliver, then we could think about renegotiations.”

    – – – –

    Now I always would be first to say my post was not directly from Einstein. But it is an utter shame how even the BBC-like media handle this all. I didn’t quote the most rude comments showing you those 2 examples, I can tell you. There are thousands like this or worse.

    What do you expect from german people if they are informed this way? How would they start asking questions? How could they see how wrong Merkel and so many more are?
    As far as I was aware only very few, and certainly not ARD did report about the problems of very ill people in Greece, for example. I can guess that my mentioning of cancer-patients put them off? Wouldn’t fit in the consense-nonsense, I guess.

    Usually I never mind if someone does not publish a comment. It’s just a comment.
    This time, after reading such a horrible nonsense from so many, I did ask ARD why they publish things like I showed you, and censor away my comment.
    And I will send this to german “Presserat” too. It was mainly built for sending in reports of extremely bad, hateful reports. But the way german media report about Greece borders on – well, I won’t say.

    Maybe a short note of you, Yanis, to ARD online would help far more than a user-complaint will. If you find the time, it’s ot only the BBC who treats opinions like yours in a bad way. Maybe it would even be better to kindly ask them to stop the one-sidedness and make an interview with – you.

    • the truth being that Germany has no more real independent media, I made the same experience both in the public financed media as in the private one: ard, zdf, zeit, spiegel, focus and so on. As soon as a comment doesn’t match the dominant propaganda it is censored. The media in Germany are in a really shameful state: arrogant, chauvinistic, one-sided.

  • “So, the way to do this is to unify the banking system, to Europeanise it in the European Union and have it being funded directly not through national governments. That’s a very simple step, but it’s a step it seems too far for the European Union. ” – Yiannis, are you proposing that European taxpayers pay their taxes directly to the banks? If not, where is the banking system going to get the money with your system/solution?

  • Yanis,

    Unfortunately Soros also believes that Greece is finished already! Excerpt from his interview on SpiegelOnline (26/6/2012):

    “Soros: Unlikely. Rescuing Greece would require an enormous kind of magnanimity and generosity. The situation there has simply become too poisoned. I think that by standing firm and not compromising on Greece, Angela Merkel would be in a better position to persuade the German public to be more generous toward other nations and distinguish between the good guys and bad guys in Europe.”


    Do you believe that we Greeks should pack and leave the country?


    • Pack and leave the country? Are you serious?
      No we should stay here and build the country.

      Soros agrees with Merkel using Greece as a scapegoat.
      He doesn’t just accept that the situation in Greece has become very poisonous without mentioning that it is courtesy of Merkel herself ,he also says that Merkel should use the already erstablished narrative of portraying the Greeks as the bad guys ,so as to convince the Germans to accept the delayed necessary changes now.

      How kind of him.

  • Could anyone please comment on the following article?
    To me, not being economics educated, it sounds like a petty solution.
    Maybe any of the people more educated in economics here have something to say?

    “How 50bln euros might save the euro” By Hugo Dixon
    (taken from, published in Reuters)

    “The break-up of the euro would be a multi-trillion euro catastrophe. An interest subsidy costing around 50 billion euros over seven years could help save it.

    The immediate problem is that Spain’s and Italy’s borrowing costs – 6.3 percent and 5.8 percent respectively for 10-year money – have reached a level where investors are losing confidence in the sustainability of the countries’ finances. A vicious spiral – involving capital flight, lack of investment and recession – is under way.

    Ideally, this week’s euro summit would come up with a solution. The snag is that most of the popular ideas for cutting these countries’ borrowing costs have been blocked by Germany, the European Central Bank or both.

    Take euro bonds, under which euro zone countries would collectively guarantee each others’ debts. They would allow weak countries to borrow more cheaply. But Germany won’t stand behind other countries’ borrowings unless they agree to a tight fiscal and political union which prevents them racking up excess debts in future. Such a loss of sovereignty France, for one, will find hard to swallow.

    Or look at pleas for the ECB to buy Italian and Spanish government bonds in the market. That too would cut their borrowing costs – for a while. But when the bond-buying ends, the yields would just jump up again. Private creditors would merely use the opportunity to offload their bonds onto the public sector. The ECB has already spent 220 billion euros buying sovereign debt with no lasting impact, and is reluctant to do more.

    Italy’s idea that the euro zone’s bailout funds should buy bonds in the market has the same drawbacks. What’s more, the bailout funds only have 500 billion euros left. If they use their firepower to bail out private creditors, they will not have enough to fund governments. Giving the bailout funds banking licenses and allowing them to borrow from the ECB would solve that problem. Unfortunately, both Germany and the ECB are against the idea.

    But what about a direct interest subsidy? Core countries – such as Germany and France – could pay into a pool an amount that depended on how much their cost of funding was below the euro zone’s average. Peripheral countries – such as Italy and Spain – would then take a sum out of the pool depending on how much their cost of funding was above the average.

    The idea recently surfaced in an article by Ivo Arnold, program director of the Erasmus School of Economics in Rotterdam. It has also been touted by Pablo Diaz de Rabago, economics professor at the IE Business School in Madrid. But it has not yet had much oxygen.

    Under such a scheme, the final cost of funds paid by all countries could be equalised or just narrowed. The key questions are: would it work, would it be politically acceptable and is it legal?

    First, look at workability. An interest subsidy would help the peripheral countries in two ways. They would benefit from cash payments from the core. But the yield they pay on their own bonds would also drop as worries about the sustainability of their finances eased.

    The yields on core bonds, by contrast, would rise. Investors would be worried that Germany and others were shouldering part of the burden of bailing out their neighbours. What’s more, some of money that has rushed into German bonds in recent years would flood out. But, in a sense, this would just be giving back to the periphery a windfall Berlin has enjoyed as investors have panicked over the possibility of a euro collapse.

    My colleague Neil Unmack and I have crunched the numbers. Suppose the yield on Spanish and Italian bonds fell by one percentage point as a result of the scheme, and that the yield on the bonds of core countries rose by 50 basis points.

    Also assume that core countries were willing to make up half the remaining difference between their interest rates and those in the periphery. That would limit the scale of the subsidy while maintaining pressure on peripheral countries to reform. In this scenario, Spain’s cost of borrowing for 10 years would drop to 4.4 percent, while Italy’s would drop to 4.1 percent – no longer worrying levels.

    Now look at political acceptability. The interest subsidy would start off being cheap. On the above assumptions, the first year cost would be only 1.9 billion euros, about 60 percent provided by Germany. Each year, of course, the cost would mount, as countries added new debt to the scheme. But the cumulative cost over the first seven years would still be a manageable 53 billion euros.

    The core wouldn’t have to guarantee the periphery’s debt. And subsidies could be provided one year at a time. So if a country didn’t keep up with its reform program, it could be kicked off the scheme. What’s more, if markets settled down, the operation could be wound down.

    Such limitations mean the scheme would be unlikely to fall foul of the German Constitution or the no bailout clause in the EU treaty. Of course, investors may not be convinced that the safety net is strong enough. So it wouldn’t remove the need for Europe’s leaders to come up with a credible long-term vision as well as continue with their reforms. But interest subsidies are still a reasonably cheap and practical answer to the zone’s most pressing problem. [Reuters]”

  • …what we have now is we have insolvent banks that are in a deadly embrace with insolvent states.

    I like the analogy of two drunks, at night, leaning up against each other. 😉

  • A letter to a trader.


    I saw your video about Spain and the banks.

    I would like to ask you if you remember the accounting identities of public sector ,private sector and current account.
    I am sure you remember ,but i mention them because it seems everybody forgets the basics.

    I know you are a trader ,not an economist and you want to translate what you hear in trading positions ,no matter if what is being heard is true or not.
    I understand that.
    But since you mentioned the lies of the banks i would like to know ,do you make a deeper research about what is going on?
    Do you really think Germany truelly pays ,the “bad bad , oh poo” countries?

    A surplus country in order to be in a surplus needs the deficits of others.
    In the union exports of the surplus countries increased to the neighbours.
    Germany exports 70 to 75% in Europe. Especially EZ.

    What is the responsibility of the surplus nations?
    To direct the surpluses gained by this cooperation for creative investment in the deficit countries.
    A SRM (Surplus recycling mechanism) of somekind.

    What did the big countries of the core do in the union?
    Instead of the natural transfers ,they loaned everywhere uncontrollably (not just the periphery) ,they overleveraged with financial instruments and they loved it.
    Then they cooperated with the corrupted politicians and friends of theirs ,
    so that German and French corporations get all the projects in the bad bad countries and the money return to the elite ,
    without projects materializing properly.
    There is no more corrupted country in Europe than Germany. The only difference is ,she’s got all the power and money.

    Now the banks hold so much bad debt that instead of admitting their mistakes and accept their losses ,they transfer these losses to the periphery
    and cover them behind the sovereign debt.
    Because noone truelly knows and understands the interelations of economy they focus on the superficial fact that Germany has the money.

    But what does Germany do? She gives money in an unusable form ,as bailout money ,that are used first to buy third rate German military equipment (what the hell) ,
    then to use for the interest of the older debt ,so that money is recycled as payment to the banks.
    Nothing for the periphery and especially nothing for Greece.
    Then she asks for reforms that are no possible in a depressed economy.
    Why do they say is a competitive problem while in a global recession and now a depressed Greek economy (thanks to the so called bailouts)?
    Why doesn’t she increase her domestic demand?
    Do they want the periphery to absorb Germany’s overproduction now that her exports are even more decreased in America?
    Is this possible? How much should we grow for something like that? Does she really want us to grow so much?
    And she wants that by bad debts and depressed economy?

    In the union Greece lowered production to increase the German exports. Our good and honest neighbours.
    That is why countries that shouldn’t have been accepted in the Eu were accepted.
    As a matter in fact ,everybody lied and everybody knew. But it is only Greece’s fault i guess. Right?

    What is the plan? To throw good money after bad and burden the periphery with even more bad debt?
    To not transfer the required amount of money for growth ,as Germany has the responsibility to do (which when she did ,she got back by deals under the table)?
    This will only increase the debt. So ,what is she doing?

    But i forget. She asks for reforms first ,because we are all so bad.
    Only she leaves outside the Siemens scandals and a dozen of other German corporations. Her Pan–European corruption.
    In my book she doesn’t want corruption to be eliminated.
    Germany keeps giving money for bad bailouts. Why?
    She wants to cover her banks and she convinces her people that they pay their taxpayer money for others ,while they pay for their own banks first.
    So she gains legitimacy for a severe austerity and for asking full concession of sovereignty and all the gold and underwater wealth as collateral while the debt increases.

    Why did they intimidate the people to vote for the same corrupted politicians and convinced the world that it was a vote about staying or leaving in the EU?
    Germany has blood on her hands.

    According to OECD Greece is the only country that had so many cuts and the most severe austerity in the history of economy.
    But all you hear is Greece hasn’t done anything.
    According to OECD Greeks are the most hardworking people but you do not hear this. You hear they are lazy.
    You do not hear that Greece reduced her deficit to 18 millions (before the elections – now increased a bit) ,you do not hear that Greece doesn’t need any more bailouts.
    That she didn’t in the first place because she serviced her debt. Nothing will be enough because they created a mess. How cozy to blame it all on Greece.
    How cozy to hide their bad truth behind the bad truth of the Greeks.

    Germany and France haven’t paid anything. They gained by all the flow of capital and the low interest. And they want more.
    They want to bailout their banks and legally steal assets. A good opportunity because of the crisis that begun in America.
    But what do i know? I am just an irresponsible Greek that wants to avoid the truth and blame others.
    Weird is the fact that they had all this negative propaganda prepared beforehand ,isn’t it?

    In the union everybody focuses on bad Greece. They only think of the money leaving Germany but noone thinks of the reverse flow.
    How cozy.

    • I personally hope that Greece will not just leave the Eurozone but this damned European Dis-Union altogether!

      The EU has shown that it is a robbers’ cave nothing more, inspired and controlled by teutonic brigands hiding behind a curtain of alleged European integration!

      Stuff it!

  • Dear Mr. Varoufakis, I am a common citizen that never in the past had ever read anything about economics and especially macroeconomics. The last two years, due to the Greek crisis that proved to be European, even global, I have begun reading relevant articles and watching relevant documentaries.

    My current conclusion is that politicians do not find a solution because they do not want to find one, because of their greediness and immorality. I see that through the creation of public debt they have found an effective way to make the gap between rich and poor even greater. As you have said in the past, capitalism (and democracy together) is dead. And I add, now we experience looting or πλιάτσικο, as we say in our beautiful country, nothing really creative.

    It is a pure paranoia to watch, four years now, politicians to pretend that they are trying to find solutions. I have really been tired with politicians’ insistent hypocrisy. Four years now we hear statements, we watch meetings, and we read suggestions. Much of it is pure propaganda. Mass media try to mislead people as regards the real enemy: Greeks are lazy, Germans are Nazis, public servants are corrupted, and so on.

    G20 met to find a solution. Ha! G20, in the middle of such a dangerous crisis, do nothing for the taxation of the big capital. The tax paradises in Marshal and Cayman islands are still there, well protected by the G20. Few days ago, President Holland spoke of taxation to the ultra rich, and President Cameron publicly sabotaged this effort. Hence, this is the root of the problem: politicians have chosen to protect the wealth of the rich instead of protecting the human rights of their voters. Generally speaking, they have betrayed their countries, they have betrayed their peoples. And solutions as the unification of the banking system or the making of a federation of EU are no real solutions as long as politicians act like criminals, even though the perform as very good actors.

  • From

    “…The proposals that the heads of four EU institutions — European Council President Herman Van Rompuy, Euro Group President Jean-Claude Juncker, European Commission President José Manuel Barroso and European Central Bank President Mario Draghi — have sent to the 27 governments are far-reaching. They propose a comprehensive reorganization of European economic policy in four areas:

    Banking union: In a first step, national deposit insurance funds could be combined to form a European fund. This fund would later be augmented with a Europe-wide bank charge. In the future, the money could also be used to help banks in trouble. If the four leaders have their way, a new watchdog agency would not just regulate the major banks, but all financial institutions. The new agency would be located at the ECB.
    Euro bailout fund: The European Stability Mechanism (ESM) is to be given the power to finance ailing banks directly. This would eliminate the need for an individual country to apply for bailout funds and fulfill additional requirements.
    Jointly issued debt: To reduce government debt, the authors recommend a debt redemption fund to pay off pre-existing debt, as proposed by the German Council of Economic Experts. In the long term, however, the four EU officials want a different model, in which no country in the euro zone would be allowed to take on new debt without the consent of the other countries. They also propose a European debt agency.
    Fiscal union: The proposal calls for the introduction of a financial transaction tax and the uniform assessment of corporate tax.

    Even through Van Rompuy and his co-authors carefully avoid potential divisive terms like “sovereignty transfer” and “euro bonds,” the plans stand little chance of succeeding. The Germans are strictly opposed to assuming liability for weaker countries unless it is tied to collective political control.

    For this reason, Berlin will do everything it can to weaken the report by the EU summit at the end of the week. Because there is already little hope that concrete decisions will be reached, the Brussels meeting can already be regarded as a failure. The expectations are so great that they will certainly not be met.

    The Europeans have decades of experience in maneuvering through crises with mountains of paper and by constantly forming task forces. The quartet of presidents is also prepared for this approach. The four men assume that European leaders will initially extend their mandate. Another interim report is planned for the fall, and by December a reform of the monetary union is expected to exist on paper — perhaps.

    Whether the euro will still exist in its current form by then is questionable. Greece, at any rate, might already have left the common currency….”

  • Long Run Greek Competitiveness

    One of the things you keep hearing about Greece is that if it exits the euro one way or another there will be no gains, because Greece basically can’t export — so structural reform is the only way forward.

    But here’s the thing: if that were true, how did Greece pay its way before the big capital flows starting coming?

    The truth is that before the euro and the capital flow bubble it created, Greece ran only small current account deficits (the broad definition of the trade balance, including services and factor income):

    (All data from Eurostat).

    And Greece’s net international investment position — the difference between its overseas assets and liabilities — was negative, but only to the tune of 25 percent of GDP, a rather modest number:

    Yes, Greece was poor and relatively unproductive. But its famous lack of competitiveness is a recent development, caused by massive post-euro inflows of capital that raised costs and prices. And that’s the kind of thing that currency devaluations can cure.

    • Aristoteles

      As it has been said before.


      My nerves 😡 👿 😈

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