Unanimity is not essential to cutting the ‘Gordian debt’: our letter to the FT as published today

The other day I posted a letter that Stuart Holland and I sent to the Financial Times. Today it was published. Click here for the FT or…

From Prof Stuart Holland and Prof Yanis Varoufakis.

Sir, The crisis-fighting measures agreed in Brussels in the early hours of Friday are good news for the eurozone, but as noted by FT.com (June 29), the strength of the underlying political agreements is still open to question. One reason Europe has found it so difficult to break the deadlock has been an assumption that resolving the crisis must be unanimous. But it does not need unanimity.

Under “enhanced co-operation” nine or more member states are allowed to move ahead to form their own policies without other members being involved. This procedure could be adopted both to mutualise a share of the debt of most member states at lower interest rates and to issue bonds to fund recovery.

Is there a precedent? Yes. The introduction of the euro itself was a de facto case of enhanced co-operation. Most member states joined it, some did not. On an enhanced co-operation basis, Germany and other member states such as Austria, the Netherlands and Finland could keep their own bonds just as the UK kept sterling rather than join the euro.

Nor need Germany bankroll the rest of Europe to gain bonds for recovery. These could be funded by a share of global surpluses rather than transfers between member states. Brazil, Russia, India and China have been calling for European Union bonds from the onset of the financial crisis and would invest in them. They want the eurozone both to survive and to grow to sustain their exports, as does the US.

Financial sector insiders confirm that they would subscribe to European bonds at less than 2 per cent. The central banks of the emerging economies and sovereign wealth funds could do so for less. The European Central Bank could hold them, although not service them without fiscal transfers.

But the European Investment Fund, which one of us proposed to Jacques Delors to issue Union Bonds, and now is part of the European Investment Bank Group, has confirmed to the Economic and Social Committee of the EU that it could issue recovery bonds without a treaty revision. These would co-fund projects by the EIB and be serviced from the joint revenues from them without needing a common fiscal policy.

Besides, while many member states are deep in debt after salvaging banks, the EU itself has next to none. It had none at all until May 2010 when the ECB began to buy up some member states’ debt and some non-performing bank debt. The US should be as lucky as Europe is now. The EU, deeper in self-doubt than in debt, has a late-starter advantage.

The institutions and procedures are already in place. They do not need treaty revisions. Projects which have gained planning approval yet have been stalled by lack of national co-finance during the eurozone crisis are, in Barack Obama’s words, “spade ready” to go. Europe could cut the Gordian knot on debt on the basis of enhanced co-operation, preserve the euro and ensure a New Deal style economic recovery.

Stuart Holland, Dept of Economics, University of Coimbra, Portugal

Yanis Varoufakis, Dept of Economics, University of Athens, Greece

Copyright The Financial Times Limited 2012. 


    • Yes, David, I understand that you would like to spend the surpluses which you haven’t produced, wouldn’t you?

  • I’ve have said this before on this blog and I will say it again. It seems the media and politicians in general have completely lost touch with what money actually is and it seems as if we are now on a path that simply treats money as a commodity, a commodity whose supply is not finite and a commodity which is free to be manipulated like figures on a spreadsheet.

    In short, it seems the establishment have either lost touch with reality or are simply unable to define what money actually is. Given the commentary in the media, it seems both could be the case.

    • Richard

      True. For years now. Nothing new there.

      One disagreement though. Money is not finite. We control its amount and must direct it creatively ,as we have argued before. At least for a controlled stimulus.

      No need to answer and begin arguing again ,just mentioning the other side.

    • It’s not that they have lost touch: they never had the slightest idea of what they were talking about anyway. When things go badly wrong, then is the time that everyone sees (most) politicians and journalists for the bullshitters that they are.

    • I would have to agree, I think basically the politicians have been led up the garden path. To me at least, it is becoming more and more obvious who they answer to and it is not the people 🙁

    • how can a fiat currency be finite is beyond my understanding.Convertibility has stopped since the 70s.Indeed people dont understand what money is.They still think we live in the commodity backed currency era and treat money accordingly.
      Though you can certainly say that euro’s infinite supply is artificially constrained by the nonsensical maastricht bull.And look where it took us…

    • Dear Demetri, you can only control what you have. For example, Greece doesn’t have money.

    • TMK, if I can correct you

      “Greece doesn’t have money.”

      Greek people have money, its the Greek government that has the problem, the Greek people don’t have financial problems (but the government is making their lives much harder)

    • tmk

      in strict capital flow terms ,Germany doesn’t have money either.
      Noone has.

      We are a union.

      Do you know what that is?

      Money is only a tool that we use accordingly to adjust the rate of production. Money is a lot more than that. Money flows and is transfered for many reasons. In the union ,Greece doesn’t have money because she doesn’t create her money. Others manipulate the flow for political reasons.

      Money for governments is not what money is for households.

      Economically ,there is no crisis.
      It has absolutely no meaning that Germany has the surplus. Someone had to have it.

      And what are they doing?
      Instead of managing the flow for the real development of Europe ,they use the debt and the fact that banks overleveraged (in a debt-based system – wow ,how strange is that!) ,to acquire more power.
      And since the debt is backed by taxpayer’s money ,they use the taxpayer’s money to cause trouble so as to pass their policies.

      Youi never had to pay for Greece. As a matter in fact ,you may have not payed anything.

      But that doesn’t suit you ,does it?

    • Demetri, I have to pick you up on this

      “Money is only a tool that we use accordingly to adjust the rate of production”

      This is completely and utterly wrong.

      But it is the line we are given by the media and politicians and it is complete and utter nonsense. The politicians have to say this. If gives the impression that they can help the economy.

      Money is nothing without production. Production controls the value of money not the other way round. If production does not control the money we get the mess we are in today. A mess where money has been disconnected from the thing it is supposed to represent. (please see my desert island analogy)

      It is important to realise that money is not the actual tool. Money is the value of the tool in a form that is easy to trade between people. Nothing more than that.

      Sure you can print more money and try to manipulate the monetary value of the tool but in the long run the tool is worth what it is worth, not more and not less, the monetary value of the tool may change but the real value of the tool does not.

      The value of the tool does not change just because a government or central bank says it is worth a different amount.

      Nobody can change the value of the tool with money. The only way to change the value of the tool is to improve it and make it a better tool, or to invent a new tool that replaces the old tool.

      The printing press does nothing in the long term, is only distorts values in the short term and holds back the economy as people use their time to adjust to the new quantity of money rather than developing new ideas with a stable money supply.

    • Dear TMK, who really has money nowdays?
      Only some bankers, brokers and a few entrepreneurs.

      The people of all EU countries are essentially broke.
      I don’t expect you to understand this now, because you’re an idiot.

      Everybody in EU will be as broke as greeks are today.
      And all “tycoon controlled” mass media will tell them that they are lazy, that they do not produce as much as their asian counterparts etc…

      Everybody will be …”greek” in the EU in the near future…

    • “The money exists” in Greece, the problem is the government is taking it all from the people.

      Re introduce voluntary taxation in Greece like the old days and watch the economy bounce back. The government is the problem, not the people.

    • Richard

      It is both Richard.
      It is not always a sequence. First this ,then that.
      It is not “money is a tool to control value” or “value of product is first” etc.


      Remember ,different forces to focus on ,depended on the situation.

      A affects B and B affects A at the same time.

      Now A must affect B more ,due to lack of money supply and misallocation of energy.

      You think like we are in the Gold standard and onesided.

      Once more. In this universe ,one way or the other ,everything applies. We can control the flow.

      So my disagreement with you is not really a disagreement.
      Start thinking of all the other sides. They apply too. We control the flow to better our lives.

      Let me say it differently.
      Anything we say can be proven correct ,if we focus on the right situations that prove correct what we say.

      So ,if enough people die in this system and economy is destroyed and people start slowly to produce stuff from the beginning ,then the products will have some value naturally and then economy will bounce back up in time.
      And ,behold ,you are right.

      BUT today we have a more flexible system and a lot more complicated than what it should have been and what the Eu leaders are doing is worsening the situation. Given enough time they will be proven right. After a lot of unjust and illegal debt has been piled up and people have lost wealth to the bankers. And people will believe them.

      We have that flexible system to avoid crises ,but the neoliberal ways are causing crises for their own political purposes.

      The biggest problem is the people that control the system than the system itself. The people that control the system ,made it to rigid for the people in the Eu ,while it is too flexible for them.

      It was flexible for everybody to acquire debt and rigid for everybody to control the debt.

      And now the surplus countries think they acquired surpluses because of their production. NO. The exact opposite was the bigger force. The manipulation of the flow.

      Now we have to reverse that manipulation.
      But what they want is to keep their power to manipulate the flow as they will ,while people pay for their crimes.

      Since the system in reality is flexible we can do that easily. What is happening today is about power only. Since the status quo will not just change overnight ,the solution at leatt for the beginning must respect what already applies.

      Yes we could do everything you propose and without taxes more money will be in the real economy ,so production will increase.
      Money is a precondition. People can not just start to produce staff in this economy without the right resources. Only if we go back in the old ways. Is this the plan? Impoverish Greece and the south in general? Reverse the evolution of economy?

      Since the leaders will not change the system because they do not want and even if they wanted ,the whole world would find itself in shock right now and since they want to first save the banks by also passing their policies through forcing others to extreme austerity ,they will not stop the taxes or do whatever you say. Only when the situations are ripe for them and according to their plans.

      Again what we say about money applies many ways. It is the flow that matters and what is best for the situation. Not only for the interests of one country ,Greece vs Germany but for controling the effects of global recession.

      As time passes ,situations change ,solutions change.
      Default of Greece would be better long time ago if they wanted an immediate scapegoat to cover themselves. But in reality not even that was needed. Only the needed adjustments.

      Now caught in a deflationary spiral ,and with markets controlling the values ,because that is what applies today unfortunately and with markets being without confidence and without eing able to make immediate deep changes in the system (they do not want anyway) ,the only solution is for a flow adjustment through an initial stimulus.

      The longer time passes ,the more stimulus needed. Until it is too late. The longer time passes ,the more people shout that they pay for the southerners. Until their life is gone to hell too.

      You ,Richard talk about how production creates value in a world and in a system where the financial markets are the broader frame and life is controlled with a keyboard somewhere in Brussels.

      You are right ,just not now. Do not think everything as static points and static definitions. The flow is dynamic and relative ,the same is the definition of money and production and value and the way one affects the others.

    • Demetri, I think you are close to a breakthrough but I think you are still being shackled by propaganda. The old propaganda is stopping you from fully appreciating your new knowledge.

      ” It is not always a sequence. First this ,then that. It is not “money is a tool to control value” or “value of product is first” etc. It is both. BOTH. And many more. WE DECIDE. WE GIVE THE DEFINITIONS …… FUNDAMENTAL LAWS OF NATURE AND OF THE FLOW”

      This is exactly what I am saying, it is nature we are dealing with not definitions. Things only have value when we give them a value. That is my entire point.

      The laws of nature are fundamental, they cannot be altered by money printing. Do you see your contradiction?

      You acknowledged we are dealing with fundamental forces of nature but at the same time your saying the laws of nature can be bent with a printing press. They cannot.

      About “it is not always a sequence”. You are wrong.

      It is a sequence. Always.

      The rules of physics, mathematics, chemistry do not change.

      The value ALWAYS comes first, ALWAYS, without value there is no use for money. That is a fundamental law which cannot be altered.

      If you have no value and you have money, then the system is based on confidence only and not reality, this is not natural and this what we have now, hence the problems.

      “You think like we are in the Gold standard and one-sided.”

      Demetri, we do live under a Gold standard, the politicians and central bankers tell us we don’t because this line gives them an excuse to have power.

      Regardless of the money system, we live in a commodities based economy, no matter where you are in the world. That is a fact.

      The fact that we have a fiat currency system just creates problems for the population at large and profits for people that work with the fiat currency. Altering the supply of money does not alter the fundamental fact that resources and labour are finite at any given moment. Unlike a fiat money system.

      You need to get away from the idea that money can change things. It cannot, it is impossible for money to change anything in the long term. Changing the quantity of money in the short term only distorts reality.

      Until you can understand that money is always based on value and never the other way around you will be always be the victim of people who say they can change the laws of nature with money ie politicians and central bankers.

      And this is why Greece is in the mess it is, people believe government has the answer when ALL facts show it never has done and never will do.

      It is IMPOSSIBLE for government to improve the prosperity of its citizens, the physics do not change according to who is in power. The only successful political system is one that recognizes the laws of nature and works with nature, not a system that tries to manipulate nature, this can only lead to massive failure.

      These articles illustrate my point



    • @Richard. The primary reason that capitalism has a problem with even the concept of money is that it has two broad (and largely incompatible) functions. On the one hand, it is the principal medium of exchange for transactions of all sorts. On the other, it is treated as a commodity that can be accumulated, stolen, lost — and most recently created with no obvious backing other than public trust in the banks that have done so.

      Since the complex configuration of global capitalism has now become intrinsically and inextricably caught up with money as a commodity, its function as a medium of exchange has taken second place. The idea of the eurozone was excellent in principle (since it stabilised the medium of exchange across the eurozone) but terrible in design, because politicians chose to construct a half-assed system that could never survive an exogenous shock.

      The countries most responsible for this cynical incompetence are Germany and France: they are therefore the countries that bear the moral and political responsibility to repair the damage that they have done to countries like Greece. Just as Germans bear the responsibility to pay for the damage that they did to people in the Nazi period. Other morality tales, that derive from Protestantism, have no bearing on the matter — despite the continuous lies and lectures from the current German administration.

    • About the treatment of money, I agree with you. This is why there is the rule of law, ie to stop theft and fraud. The problem is not capitalism, it is governments turning a blind eye to theft and fraud. Not only are government complicit, they are actively blocking criminal investigations. For example Wells Fargo laundering hundreds of billions of dollars in drug money and only getting a fine.

      About countries, I wont repeat myself, everyone should worry about their own government first before looking elsewhere

    • Richard

      “If you have no value and you have money, then the system is based on confidence only and not reality, this is not natural and this what we have now, hence the problems.”

      Hehe. I think you are close to a breakthrough too.

      Let’s say we agree at anything. The above sentence of yours and the description by Guest (xenos) does explain the problem well.
      It is also the opposite. If you have unprocessed value and no money the markets will not do business with you. In order to create value ,if you do not have the proper processed initial resources you need money.
      Then money and value will affect its other.

      The system today IS based in confidence. The fact that we use a fiat currency gives you the flexibility to solve this problems in no time.

      We act like we live in a Gold standard era WHEN we do not have too.
      The politicians act like that because it suits them now. NOT because the system doesn’t have the solutions.

      We adopted a fiat currency system to have this flexibility and escape certain problems of the past. The fact that they do not use this ,is not a problem of the system. The problem is entirely political. The fact that they keep it flexible for them but rigid for everybody else ,only for their goals.

      Why in this system value does not come first in sequence although it matters more and the resources are finite?
      Because the markets are the broader frame of society. Overleveraging and unregulated complex financial applications have distorted reality as you have said ,the values have been distorted ,bubbles were created and the solution depends in reversing all these with the parameters that apply today.
      Like it or not you have to take into account that markets ARE the broader frame of society and as time passes the problem gets worse.

      We need a solution that will not cause a shock to the markets.

      Money printing by itself is not the solution as we have said a million times before. It is the affect of the flow that matters.
      The markets want to feel that there is energy ,money, to adjust the values and economy start functioning again.
      It is not money that will adjust the values ,it is the fact that the markets know there is energy to be used so they will be glad to take part in a procedure of supply and demand with you.
      Because energy IS a precondition.

      Now you take into account that we are the ones that give the definitions and the values but you do not take into account that we have given this power of value adjustment to complex markets.

      As a matter in fact ,in any system we need to have something that will act as the energy ,the life blood accepted by anyone to feel that things keep flowing.

      It is not money printing by itself that will distort reality ,it is the way this energy will be used. In a fiat currency system we have the flexibility to manipulate that flow as we wish. They do not manipulate it correctly.

      Energy is always needed ,and will always be attached to value and will always be affected by real value according to supply and demand and will always affect value by the complexity of the markets. It is that the markets need more regulation that will keep a balance. Or else we will always have distorted reality no matter the money printing.

      It is certain functions of the markets that cause the problems ,not the money printing. Money as an initial form of energy will be used as fuel to continue production and then a feedback loop with many parameters will affect the value. But not without that initial energy that must be directed into the right places and used as it must.

      The small businesses first and foremost.

      The markets must be regulated so that they are not the broader frame of society but a part of society that provides a service. Only then the values will be more balanced and still we will need to adjust the money supply accordingly.

      It is the flow that matters. Everything else we define for many different purposes. Value as well. We decide any value and still we need a preconditon that will give the confidence to be part of the procedures that allow creation and production. This precondition is the thingy we have agreed to use as energy. Money.

      If money is scarce then no matter the initial value ,markets will not accept to do business with you.

      No money ,no honey. Period.

    • Richard

      Also i hate what you are doing when you are refering to the propaganda of the politicians and how i am affected by it ,when we have repeateadly said together with Crossover ,that it is the politicians that act like things are not flexible and people believe them.

      While you understand that we are more flexible today ,you confuse where the real problem lies to justify your idea that money printing will not have any affect.

      You acknowledge that politicians are too rigid on purpose ,and you still propose that we should be flexible in the real economy (accepted) and rigid in the basics of the system ,like we do not have available energy.

      Do not confuse the fact that we have limited natural resources with the fact that markets today use money in a fiat currency system as a transactions medium. Do not be confused that money today is also used as a commodity. That does not change the fact that markets are functioning only when they perceive that energy exists.

      No matter the other mistakes of the markets.
      Money is not creating value as you have said too.
      Understand that money (flow energy) IS A PRECONDITION TO BE USED AS A TRANSACTIONS MEDIUM.

      The commodity thingy is another matter.
      The fact that we have finite resources is another matter too.

      We consider everything. The fiat currency system allowes us to be more flexible with our decisions ,even though the politicians-bankers today have used it in criminal ways to destroy uncontrollably natural resources stealing from third world countries using debt as a tool ,overproduce and export creating a consumer’s society ,create complex financial intruments and without regulation attach non-existent real value to them ,create bubbles as a result ,give too many loans and overleverage without having these instruments been backed by real value.

      We need regulations for all of the above.

      This does not change the fact that we need to have money flowing and used properly as a medium of transactions.

      Cutting the supply of money ,destroys economy. The problem is that when money printing took place they used the money for financial “jokes” ,instead for the real economy.

      So we need money printing and we need it to be directed where it will help economy. Since the potential of production exists ,inflation will not be a problem.

      Today the distortion of reality is because the money were used for financial “jokes” that have nothing to do with reality and real value.

      It is not the money printing by itself that will distort reality. It is the use of the money from the markets.

      Politicians of today have decided to cover the mistakes of the banks and the fact that they misused money by bailing out their banks using as an excuse the sovereign debt and at the same time destroying the economy of a country so as to pass their policies.

      They know that money by itself is not the problem. It is the manipulation of the flow.

      We create the energy and we can use it as we want. Still this energy is bound by the same natural laws of the flow of energy. We manipulate the flow ,because it is our creation but not the laws that work upon the flow. So if we block the flow ,something gets in trouble. If we direct the energy in limited amounts ,something gets in trouble. If we direct a lot of energy in the wrong endeavours ,something gets in trouble.

      No matter how much money we have created in the past ,if we can direct the money where production is possible ,we restore the balance.

      The politicians ,instead of doing that ,they block any flow to the sovereigns ,and they create greater unbalances and inequalities. Why?

      Because they do not want the people to know that the unregulated banks and markets have caused the problem and not the sovereign debt by itself or the money supply by itself.
      Also because they have stupid arbitrary rules that do not allow better control of the neoliberal ways. Too flexible for them to do all the wrong things and too rigid for others to be able to control the flow.

      They decide to use the taxpayers to cover their status quo ,while this ofcourse creates more problems. They do not mind if people get hurt because this way they will pass their policies and acquire wealth. Then they will act as they have to. But instead of having the markets more regulated as they must ,they will leave them as they are now.
      People will be convinced that the true problem was the sovereigns ,then after they have passed their policies they will use the flexibility of the system to correct the situation while people will have a distorted idea of what happened.

      If and when they do the right thing ,money printing will occur.
      The question now is ,do they want too?

      This i guess you understand. Now understand finally that they need to redirect the flow to “ignite” the engines of economy.

    • Horrible! No second chance for Greece to ripp off other countries and keep on spending their money unconditionally! What does Greece do without that opportunity? Right, I forgot, she goes bust because she doesn’t produce what the world needs by herself.

    • I am only posting your messages as a cautionary tale: a warning to all others of how ignorance and misanthropy coalesce to torpedo the idea of European integration. Thanks for playing this role so well.

    • You are welcome, professor, it is a pleasure for me. And I appreciate your preference for freedom of speech, something which wasn’t very respected in Greek media, at least prior to the crisis.

      And thank you very much for this entertaining blog, it reminds me of all the reasons why Greece should leave the Euro Zone as fast as possible. I just pity the inward-looking honest Greeks, e.g. not you and your readership.

    • I know Yiannis posted but I thought I should add something. There’s no reason you have to the world through those borders, you can imagine a more unified community. For instance in the US some states pay more than a dollar for every dollar they receive from the government, and some states pay much less. This is probably also correlated with the balance of payments of each state, yet you don’t see high export states quitting the United States. So why should Greece? Anyways this crisis isn’t about where production is taking place, its about leverage.

    • A summary would be nice! Anyway, my point is I think you will find all states in the US operate with a deficit. ie they send more money out than they get in. Globally and nationally combined

    • Although there may still be net exporting states in USA…he is talking about the internal trade between the US states….by definition some of them have surpluses some of them have deficits as is the case in any country and in any common currency area…I’ve been making the same argument over and over again.

  • “Meanwhile, the gloomy mood now blanketing Europe has been captured by the German publication der Spiegel, which is running a cover story “Wenn der Euro zerbricht” in its latest edition.

    According to der Spiegel, “investment experts at Deutsche Bank now feel that a collapse of the common currency is “a very likely scenario.” German companies are preparing themselves for the possibility that their business contacts in Madrid and Barcelona could soon be paying with pesetas again. And in Italy, former prime minister Silvio Berlusconi is thinking of running a new election campaign, possibly this year, on a return-to-the-lira platform.”

    According to the article, economists at the Dutch bank ING have calculated that output in the eurozone would crash by 12 per cent in the first two year’s after the euro’s collapse – a loss of more than €1 trillion. But a study commissioned by Germany’s finance minister, Wolfgang Schäuble, came up with an even grimmer forecast. The German finance ministry calculated that in the first year after a euro collapse, the German economy would shrink by up to 10 per cent, while more than 5 million people would be unemployed. “The officials were so horrified by their conclusions that they kept all of their analyses under lock and key, for fear that the costs of rescuing the euro could spin out of control,” der Spiegel notes.


    • Guest – JM

      Ha! Too late.

      And as it has been said before ,now they are locked in the current policies so they may just continue till the big bang.

  • Hey Prof., that is not sufficient. I don’t think that the emperor without clothes in the Élysée has time to read this crap. You must send him a personal letter:

    “Monsieur le Président, I offer you the honour of “enforced bankrup..”, … pardon, “enhanced co-operation” with Greece, the cradle of civilization (yes, it’s true, I promise! Don’t be blinded by current events). My plan is to spend your m… to issue Euro Bonds together with you so that the fate of our great economies is bound for good. And I promise you, we will pay back every cent that we borrow and we will prosper together! I really promise you this! What do you think?”


    • TMK those countries were around long before the hunns decided to make a state. They payed their debts even when the hunns didn’t. When the hunns owed them and didn’t pay they one way or the other granted them the money.
      But the hunns who are in control now, are as stupid as the old ones, or more.
      For the first time Europe was in their hands without 100 million being killed.
      And was was their primary thought?
      “Hell, where is the bloodshed?”

    • Dear waves
      You are confused. I am pretty sure that with “Huns” you mean today’s Germans, following allied war propaganda from WWI. That is a bit of a misunderstanding (or plain evil). As you are so interested in “the huns”, maybe read something about them so you understand the subject a little better:
      Another shocking reality: Germany even 100 Years ago was not purely “German” from an ethnogenetics perspective. They were a mix of Germans (in the sense of German tribes beginning to settle in what is now Germany almost 2000 years ago) as well as Slaw and later French, Italian, etc.
      Over the last few decades, immigration has become more global and I don’t think Germans today are any more “huns” than e.g. the Greek.
      What you make clear in your post is that you sure don’t like Germans and that’s fine. But you should not overdo it and mix things up / repeat war propaganda that even in the former enemy countries has got a bit out of fashion, please.

    • Dear martin,
      I have no problem with the German.
      The policy though that is imposed today by Germany to Greece is hunn like. Hunns, as nomads didn’t care about the future of the places they conquered. Killed the men, raped the women,took alk food they could carry, took the gold. Usually the places they visited were erased from the map…
      The argument on the other hand that Greeks are as hunn as the Germans… try a little harder.

    • Dear Waves
      So far, resources have been transferred from the core to the periphery. So “the huns” (as in the group of people that accumulate goods and services produced elsewhere) were not Germany / Netherlands / Finland / Austria but the now indebted countries.
      The debt has not come from nowhere but from taking more from the Eurosystem than what was put in.
      That was true for e.g. Greece.
      Now, however, this system has come to an end which is painful for everybody. But I think you are mixing up the facts if you suggest that e.g. Germany has a locust like business model. I don’t think that is true.
      It feels cruel now that the steady stream of cash into e.g. Greece has stopped / is only continuing under what is seen as harsh conditions. And it is true that the money sent over to e.g. Greece is primarily used to roll over the debt. Which is good for the idiot creditors of e.g. Germany who lent money to e.g. Greece while forgetting to ask for adequate interest in the fist place.
      But the money is still flowing, from the core to the periphery. So the are that behaves “hun-like” (if you absolutely insist on this wonderful analogy with that nomadic tribe from inner asia) is not the core of the system.

    • So far, resources have been transferred from the core to the periphery…

      and then again:

      …And it is true that the money sent over to e.g. Greece is primarily used to roll over the debt. Which is good for the idiot creditors of e.g. Germany who lent money to e.g. Greece while forgetting to ask for adequate interest in the fist place.
      But the money is still flowing, from the core to the periphery. So the are that behaves “hun-like” (if you absolutely insist on this wonderful analogy with that nomadic tribe from inner asia) is not the core of the..system…


      The money is going frm the periphery to the core in a hunnish style.

    • Dean, as I have said to you before, it takes real ingenuity to screw a country with such huge resources, so badly.

    • Richard

      Yes indeed.

      Well you know what they say about the Greeks. They reside on all the spectrum of human activity.

      From extreme negative to extreme positive.
      Oh ,well.

      The devil fools everybody and the Greek fools the devil.

      One day dropped in hell one Greek, one American and one Indian.
      They meet the devil who says:
      “To those who come here ,i give an opportunity to be transported to paradise.”
      He pulls out a huge whip, saying:
      “He who will endure three blows without crying, will go to heaven. You can use a shield of whatever you want.”
      First goes the American.
      “What will you use for a shield?” ,asks the devil.
      The American picks up a huge stone and says:
      “I will use this stone! I’m ready!”
      Satan raises his whip, and hits the stone that falls.
      Second blow and the American is screaming like crazy, losing the chance to go to heaven.
      Next was the Indian.
      What will you use for a shield?, Asks the devil.
      “Nothing” ,says the Indian. “I was practicing yoga for fifty years and I do not feel any pain!”
      First blow and the Indian was unperturbed. With the second he made some grimaces, and the third felt it more. But not a word from his mouth!
      “The first time someone endures three hits.” ,says the devil. “Well, you’re free go to heaven. It’s worth it.”
      “No” ,says the Indian. “I want to stay and see. In all the jokes, the Greek turns out clean. I want to see how he will escape now!”
      “Okay ,stay to watch” ,says the devil.
      Then comes the turn of the Greek
      “What will you use for a shield?”
      And the Greek answers:
      “The Indian!”


      There was a German, a French and a Greek that just died. Suddenly St. Peter appears and says:
      “I’ll give you a chance to see if you go to heaven or hell. You will throw an object in the sea and I will dive to find it. If I get it you go to hell, but if i do not get it you go to heaven. ”

      All three agreed with the proposal of the saint and began to think what to toss.
      First was the German who flew a sea button.
      St. Peter dives and a half hour later he comes out with the button on the hand.
      “Unfortunately for you I found it so you will go to hell,” he says.
      Then came the turn of the Frenchman who, after he saw the saint found something as small as a button, decided to throw a hair. St. Peter dives ,two hours passed and finally comes back with the hair in his hand.
      “And you did not succeed, so you too will go to hell,” he said to the Frenchman.
      Finally came the turn of the Greek who threw something in the sea. St. Peter dives, spends around five hours and finally comes out without holding anything in his hands.
      “I could not find what you threw and so you will go to heaven, but can you please tell me what it was?” Asks the Saint.

      And the answer of the Greek:
      – Depon effervescent!


    • Demetri/Dean. So there is no confusion, I was not saying that Greeks had screwed the country. I was saying the Greek government has screwed the country with huge outside assistance.

      If the Greek government was as hands as off as the UK (although even the UK government is far too big), the BBC would send a correspondent to the port of Dover to report on the spectacle of a country emptying.

      I mean, why would you live in the UK if its just as easy to do business in Greece, you know what I mean?

  • @TMK

    What you are suggesting would be true if it wasn’t for the following:

    The surpluses of the core are artificially high due to the monetary union (fixed exchange rates). If it wasn’t for the monetary union, these surpluses would never be that high, as they never were before the creation of the EMU.

  • And things go on…. Highly interesting interview with Professor Rudolf Hickel, (IAW Bremen) in “Junge Welt” of today, July 7. (title: “Der Text ist ein richtiges Ärgernis”)

    Hickel talks about the protest bill of 172 economists around Hans Werner Sinn that got us the wonderful gift of a next hype-wave in the media.
    Hickel calls this protest “of lowest level” and like “crackerbarrel-talk” (“unterstes Stammtischniveau”) ….”this pamphlet is utterly unscientific, terribly clumsy and connotes the idea they knew better about the problems – without substantiating that claim”, my humble translation.

    Hickel’s ideas seem to resemble yours, Yanis Varoufakis, in many ways. Sinn, come to think of it, wants to return to Deutschmark and wants to fight against the latest decisions you wrote favourably about. Hickel supports exactly the parts you like.
    Maybe a next guest commentary from Hickel right here, in english, would be welcome 🙂

    Interesting remarks about Merkel’s direction, Sinn and more.
    For all non-german-speakers here, use google translator, it’s at least better than neglecting this short interview.
    It is freely available, just type the title and the name of the journal, Junge Welt, as I don’t want to add the link here.
    Of course Hickel’s highly informed analysis appears in a little brave german newspaper, whereas Sinn and friends who failed so often get the big media-craze stage. Well, read Hickel too^^.

    • “Rudolf Hickel”

      Who the what? This guy is reputable? Because the ‘Junge Welt’ is not: it is an extremleftwingfashismcommunistpropagandapublication.

    • He is from Bremen. I would not take him seriously. Bremen has the worst schools in Germany and is broke. So it is like Greece with worse schools.