Putting a human face on Greece's financial crisis
February 15, 2015 12:22 AM   Subscribe

Greece's recently appointed finance minister may have a secret weapon -- charisma. One commenter has called him the world's most interesting man. He certainly lives in interesting times.
posted by Sir Rinse (97 comments total) 16 users marked this as a favorite
 
Mentioned nowhere in either of those articles is that of his previous job: Valve Corporation's in-house economist for Steam.
posted by reiichiroh at 12:31 AM on February 15, 2015 [14 favorites]


He was on the blue previously because of his work as a consultant to the gaming company Valve and previous economic work.
posted by JauntyFedora at 12:32 AM on February 15, 2015 [2 favorites]


"So, Europe... want to buy some Grecian hats?"
posted by kmz at 12:34 AM on February 15, 2015 [5 favorites]




"Beauty is truth, truth beauty,/
—that is all"
posted by clavdivs at 1:01 AM on February 15, 2015


Although the title of 'most charismatic finance minister' is not that hotly contested.
posted by Segundus at 1:40 AM on February 15, 2015 [11 favorites]


I'm just imagining the new Greece economy being based on microtransactions and hats...
posted by xdvesper at 1:48 AM on February 15, 2015 [2 favorites]


So hot.

fuckyeahyanisvaroufakis.tumblr.com
posted by colie at 1:59 AM on February 15, 2015 [3 favorites]


The new Greek government may have a point that the EU shouldn't have bailed them out years ago and that the current debt is perhaps too much of a burden for the Greeks to crawl out of.

But what I really dislike about the Greeks and their government is that they seem to be of the opinion that it is all the evil foreigners' fault. Just look at this random soundbite of Varoufakis from the first link: "Europe in its infinite wisdom decided to deal with this bankruptcy by loading the largest loan in human history on the weakest of shoulders - the Greek taxpayer"

Uh, yeah, maybe it wasn't exactly smart to give money to the Greeks. But it's not like the money was forced on them. You need someone asking for money first before the EU coughs up emergency fiscal assistance.

Also, let's not forget that Greece managed to sneak into the Euro by blatantly falsifying just about all fiscal data. So what is Varoufakis implying here? That the EU thought that investing in Greece's debt is a good investment? That the plan was all along to you the money in order to make you their debt colony? Because that's apparently what Tsipras thinks.

Meanwhile, the newspaper serving as the mouthpiece of Varoufakis' Syriza party denounces German finance minster Schaeuble as a Nazi. Picture here. I'm not sure if that's a smart move or more of a "lah lah lah, I can't here you!" thing.

So let's recap:
- Massively corrupt Greece fraudulently manages to be accepted into the Euro zone,
- The EU reluctantly gives them money (less than they originally asked for) to keep the country in order,
- The country has been effectively bankrupt for several years (a fact that is still being obfuscated by the ongoing falsification of fiscal data) but refuses to implement the necessary reforms,
- Varoufakis' Syriza party insists that it's all the evil Nazis' fault, and by no means their own fault.

It is true that the EU shouldn't have given them the loans, but come on, at least you need to acknowledge that it is mostly your own fault (or that of your own corrupt politicians). Don't go after EU politicians - the evil guys are in your own country, or possibly on some luxury yacht in the Mediterranean.

As long as Greeks don't recognize that blaming everyone else but themselves won't get them anywhere, nothing will improve.
And one thing is for sure: Things will get a lot worse before they get better. All they have going at the moment is tourism (lots of tourists from Germany, but that might decrease if the keep up with the Germans = Nazis nonsense). Other than that it's just goat cheese and olives and that won't get them very far. (Of course, with a bit of common sense, the EU could have realized that a decade ago.)

And why on earth is it so difficult for a leftist populist party that is immensely popular in their country to go after the corrupt non-tax-paying capitalist swine, which is incidentally where the money is that should have kept the country afloat in the first place?
posted by sour cream at 2:16 AM on February 15, 2015 [17 favorites]


I think Varoufakis' election is interesting in terms of the state of blogging (and lets do him the credit of linking to his blog). Until recently there would not really be a channel by which an informed specialist could rapidly reach a wide audience without the mediation of gatekeepers such as employers and editors. From the electorate's point of view, choosing a favourite blogger as a candidate allows them to do so on the basis of a far deeper knowledge of that person's background than would normally be possible.


A side note on an unjust world: when Varoufakis leaves his shirt un-tucked on a visit to Downing street he becomes a sex symbol - but when I spill soup on my tie I am just a dork....

posted by rongorongo at 2:25 AM on February 15, 2015 [1 favorite]


in order to make you their debt colony?

Yes, that is exactly how it works. While internationally connected elites remove cash through the back door and the media noise machine goes on about 'the Greeks'.
posted by colie at 2:27 AM on February 15, 2015 [5 favorites]


Yes, that is exactly how it works. While internationally connected elites remove cash through the back door and the media noise machine goes on about 'the Greeks'.

I think that's an extremely risky strategy, what with the next haircut being right around the corner. Investing in Greek government debt doesn't look like some evil mastermind move to me, more like a stupid decision based on insufficient/faulty data.
posted by sour cream at 2:32 AM on February 15, 2015


...because *everyone* is the corrupt, non-taxpaying swine?

The biggest reform the Greek state desperately needs to make is to start collecting taxes in the way that just about every other nation does - as a non-optional activity. Blaming everyone else, anyone else, is far easier than owning up to the fact you are part of the problem. Here in central London there are loads of Greeks pursuing their careers.

Every single one I have spoken to freely admits that only a fool pays their taxes.

Nothing will get better for Greece and the Greek people until they face up to acting like a real nation, and stop playing at this stuff. They can't play games with their currency and massively devalue while they remain in the Eurozone. The new government has to make painful changes, or things will simply get worse and worse. They are right, there is a deal to be made with their creditors but the terms are way past their democratic mandate.

The Greeks have spoken and they are simply not ready to make the changes required to function in the rich countries club. Perhaps they can drive out another compromise and cling on, but I can't see them staying in the Euro much longer.
posted by Hugh Routley at 2:43 AM on February 15, 2015 [8 favorites]


Way to tar a whole country with one brush there, sour cream.

Uh, yeah, maybe it wasn't exactly smart to give money to the Greeks. But it's not like the money was forced on them. You need someone asking for money first before the EU coughs up emergency fiscal assistance.

Also, let's not forget that Greece managed to sneak into the Euro by blatantly falsifying just about all fiscal data. So what is Varoufakis implying here? That the EU thought that investing in Greece's debt is a good investment? That the plan was all along to you the money in order to make you their debt colony? Because that's apparently what Tsipras thinks.


It wasn't the current Greek government that requested these funds. So it sems a bit 'rich' to criticise the new one for the sins of the old. Syriza weren't involved in the decision to join the euro either. Varoufakis actually argued against the whole idea of the euro at the time, although he wasn't linked with Syriza then.

Syriza and Varoufakis are contending that the decision to load the 'largest debt in human history on the weakest of shoulders' was based on a flawed understanding of the problem and that the way it was done was counterproductive and certainly not 'technocratic'/neutral. They would say the loans constitute an ideological lever designed to massively restructure the Greek state (even in areas that had nothing to do with why they needed the funding in the first place), and also flagging how the debt itself is considered by many in Europe, mostly the Germans, as a moral issue that requires the Greeks be punished for their 'profligacy'. Here's Varoufakis on that issue.

It is true that the EU shouldn't have given them the loans, but come on, at least you need to acknowledge that it is mostly your own fault (or that of your own corrupt politicians). Don't go after EU politicians - the evil guys are in your own country, or possibly on some luxury yacht in the Mediterranean.

The FT would like to point out to you that "Syriza has identified the rich “oligarchs” as one of its primary targets" (also, here), so I'm not sure why you think that they aren't doing just that. The crippling repayments are what is currently producing the humanitarian crisis in Greece, not wealthy oligarchs. The loans issue is the number one priority right now, but to say that Syriza haven't said they are targeting the wealthy in Greece is fallacious.

And why on earth is it so difficult for a leftist populist party that is immensely popular in their country to go after the corrupt non-tax-paying capitalist swine, which is incidentally where the money is that should have kept the country afloat in the first place?

Like I said, they are. Here's Varoufakis saying 'We are going to destroy the Greek oligarchy system'. Oh, and while we're on the subject, more than half of the bailout money, some say up to 80%, went straight to paying off bondholders outside Greece, including French and German banks and other private investors. The bailout should have involved these private investors taking losses on their investment, but instead it was all hoisted on Greece, at massive social cost.
posted by knapah at 2:59 AM on February 15, 2015 [46 favorites]


"The new government has to make painful changes, or things will simply get worse and worse."

Oh, more austerity, because that's worked so well? Austerity has cut Greece's GDP by 20%. Austerity isn't the solution to Europe's problems, but the cause.

Krugman on Greece. Note that, without the loan repayments, the government would have a surplus.
posted by zompist at 3:06 AM on February 15, 2015 [23 favorites]


Wasn't it Goldman-Sachs that helped engineer/falsify the financial data that allowed Greece to enter the EU?

The problem was/is that Greece has a culture of not paying taxes and yet are being put in a position where everybody really needs to pay their taxes.

Whatever the sins that led to this situation, the situation is as it is and has led to a substantial change in government. Personally I'm holding my breath to see if they can bring about the cultural changes necessary to bring domestic financial practices in line with those of the rest of the EU.

I hope they can, I really like Greece and have known a lot of great 'Greeks' - they have a really hard road ahead of them.
posted by From Bklyn at 3:08 AM on February 15, 2015


The conservative writer in the second link says this Greek finance minister and Milton Friedman would both agree that the situation is not as sour cream puts it above (lazy Greeks ran up credit card, industrious Germans bail them out). The writer said that the Euro was set up in such a way that was bent to Germany's interests and thus created a giant credit bubble in the southern economies, and that the austerity measures were the wrong thing to do and the ECB's tightfistedness was what was prolonging the crisis. But I don't understand the history of the Euro nor economics enough to understand what that means. Can someone who does know economics maybe unpack those assertions a bit? :)
posted by feets at 3:18 AM on February 15, 2015


It is entirely foreseeable that when you create a currency union economic activity will shift in favour of regions whose economy is already better developed. In an EU context this meant the North, especially Germany, would benefit while the South* would come under pressure. In the long run, painful adjustments leave the European economy better off overall, but they are painful. There should have been from the beginning a system to help cushion the transition, which inevitably would mean by one means or another the North would subsidise the South for a while. That has been completely neglected if not deliberately avoided, and the German population has been allowed to think they are rich because they work hard, while the Greeks are poor because they are lazy. This is an appalling failure of leadership and vision within the EU. An organisation set up to ensure peace and friendship within Europe has been allowed to become its biggest source of xenophobia and hostility.

*including Ireland which in many ways belongs in the Med, I feel.
posted by Segundus at 3:25 AM on February 15, 2015 [15 favorites]


...both agree that the situation is not as sour cream puts it above (lazy Greeks ran up credit card, industrious Germans bail them out).

I never said that I think that the Greeks are lazy. Also, they weren't bailed out by Germany but by the EU.

I think the main problems, as pointed out by others above, are that (a) the entire country is corrupt to the bone and noone pays their taxes, and (b) there is a culture putting the head into the ground and blaming it all on the evil foreigners.

There is no sense of a greater good in Greece. As someone pointed out above, the idea of paying taxes seems downright laughable to most Greeks. So everyone just looks out for themselves, or possibly their families.

One Greek person explained to me that the lack of sense of a greater good is due to the long Turkish rule, where those who dared to organize and fight this rule were slaughtered in the most cruel way. I don't doubt that it is possible that the long Turkish rule can still be felt to this day after 100+ years, but even this explanation strikes me as very typical: You see, it's all the fault of the Turks. And of course the Nazis. And the EU. But it's certainly not the fault of the Greeks that Greece is in the sorry state that it is today.
posted by sour cream at 3:47 AM on February 15, 2015 [3 favorites]


"Syriza’s most radical plan for Greece? Collect taxes" - whether they can do it is another matter, but it's certainly on their radar.
posted by knapah at 4:11 AM on February 15, 2015 [7 favorites]


That's an excellent, balanced article, and both shows why there's some sliver of hope that the election of Syriza (and, more importantly, the rejection of the previous stagnant political duopoly) might result in real changes. And why the trope of "nasty Germans crushing Greece with austerity" is so simplistic and counterproductive.
posted by sobarel at 4:27 AM on February 15, 2015 [1 favorite]


Some of you people make me so fucking mad. Blame the Greeks it´s all their fault. Really. Are you serious? Is that what you want us to presume from your Ivory towers looking down your nose at "those" people.
It is the blinkered mentality of people like yourselves who are part of the problem because you definitely are not part of the solution. When was the last time you wonderered where your kids meals were coming from? how you could pay
for their school books.? How much you could afford to give your sister because she was made redundant and has no social security. How to pay for your Mum to get to the hospital? Has any of this happened to you? But it is all their own fault, just pay your taxes citizen and suck it up.
The guy driving that new Mercedes, his tax returns show zero. That cigar puffing fat cat on the afterdeck of his boat; pay taxes, why his company is offshore.
And the peon on the bottom of the pile trying hard not to be in a soup kitchen line. Pay your taxes citizen and suck it up.
It can´t possibly be the fault of the financial classes, oh really
How Goldman Sachs Helped Greece Hide Its Debt & Made 2.8 Billion € Disappear

Spit in the milk more than sour cream
posted by adamvasco at 4:49 AM on February 15, 2015 [8 favorites]


How much you could afford to give your sister because she was made redundant and has no social security. How to pay for your Mum to get to the hospital? Has any of this happened to you? But it is all their own fault, just pay your taxes citizen and suck it up.

People paying their taxes is how social security and hospitals are paid for.

The guy driving that new Mercedes, his tax returns show zero. That cigar puffing fat cat on the afterdeck of his boat; pay taxes, why his company is offshore.
And the peon on the bottom of the pile trying hard not to be in a soup kitchen line. Pay your taxes citizen and suck it up.


That is precisely the status quo. People are arguing for it to change.
posted by sobarel at 5:10 AM on February 15, 2015 [13 favorites]


adamvasco, noone actually said that the current situation is exclusively the Greeks fault.

What some people here take issue with is the current consensus among many Greek people (including the recently electred government) that it is everyone else's fault, but the Greeks. Part of the responsibility also seems to lie with the Greeks, don't you think?

Oh, and if effectively noone has been paying taxes in Greece, then starting to do so now does seem like a good idea, doesn't it? I think that's actually also what Syriza wants.
posted by sour cream at 5:11 AM on February 15, 2015 [3 favorites]


Can't have monetary union without structural transfers/fiscal union. This would be true even if the Greek government started collecting taxes.
posted by PMdixon at 5:30 AM on February 15, 2015 [4 favorites]


The Greek people have shown what they think of the last government by voting in Syriza. I do not equate that with blaming everyone else. Yes people have to pay taxes for the state to provide benefits but until everyone is forced to pay their taxes; and it is the rich who can most afford to and who most frequently don`t, the system is broken.
The man on the street did not invite Goldman Sacks to fiddle the books. As pointed out above Greece is facing a humanitarian crisis.
At least 90% of the Greek bailout has paid off reckless lenders with only 10% reaching the Greek people.
in 2013, and life has not improved, 50 % of Greeks or 6.3 million people lived in or at risk of poverty. But it´s all their own fault?
posted by adamvasco at 5:48 AM on February 15, 2015


"However, lost in the current debate are Germany’s long-standing debts to Greece, which are 70 years overdue. Greeks have long demanded reparations for atrocities committed during World War II and for an outstanding “war loan” that Nazi Germany took from Greece to finance its military campaign in North Africa. But postwar Germany refused to settle with Greece, as it did with Holland, Israel, France and others. Even a partial payment or some debt write-offs in lieu of reparations could help get Greece’s economy going again. It would also set in motion reconciliation between the two countries whose relations are bristling with acrimony, the roots of which lie farther back than the debt crisis."
posted by Sir Rinse at 6:11 AM on February 15, 2015 [11 favorites]


So let's recap:

Funny, I don't see anything in there about Germany grinding the eurozone periphery (Greece, Spain, Portugal, Italy) into the dirt by insisting that there can never be any inflation ever, nope, no-how.

Yes, the Greeks need to pay their taxes, but the ECB needs to stop screwing the rest of the eurozone with things like rate hikes during a recession.
posted by one more dead town's last parade at 6:20 AM on February 15, 2015 [2 favorites]


The problem is not Greek behaviour, it's German government behaviour. As a minimum, the Germans should have allowed the issue of Eurobonds, so that Eurozone debt could be funded by the Eurozone, not by the country where it fell. It's the Germans who are getting a free ride and steadfastly refusing to pay for it.

War debt, on the other hand, has nothing to do with it, and the emergence of that as an issue is really ugly and please God not a portent of things to come.
posted by Segundus at 6:27 AM on February 15, 2015


There is a good plot in this McKinsey post Debt and (not much) deleveraging which shows Portugal and Ireland and Singapore (!) in much the same boat as Greece. Meanwhile the S&P 500 closed the week at 2097 so for us mortals it is all confusing as hell.

The chance the new Greek leader is going to help them is not much better than Obama helping us in January 2008. I remember my friends thought he was like Gandhi.
posted by bukvich at 6:28 AM on February 15, 2015


Segundus"Including Ireland which in many ways belongs in the Med, I feel." You feel that way because ??? BTW, Ireland did immediately implement rigorous, if not severe, austerity measures and has reestablished financial credibility--and the e economy is improving... I have a great deal of sympathy for many of the Greek people--but very little patience or sympathy for trying to ecplain away how they got into this situation.
posted by rmhsinc at 6:37 AM on February 15, 2015


Yanis Varoufakis is apparently a game theorist as well as an economist. Which makes this bit from the Guardian interview quite interesting to me:

When I ask Varoufakis if he has a plan B, for all negotiators surely have a credible alternative, he looks at me wide-eyed. “We constantly hear, ‘if you don’t sign on the dotted line there is going to be Armageddon’. My answer is ‘let it happen!’ There is no fall-back plan. That is my plan B.”

I've said previously that Greece is going to be hard to scare with threats of what happens if they don't accept a bailout. That quote in particular though made me think of Herman Kahn's strategy for a game of chicken: throw the steering wheel out the car window while driving at speed. It'll be interesting to see if the EU veers off or crashes the car as it were, by forcing a crisis which could precipitate an "Grexit" from the Eurozone.

Sir Rinse: Germany's war debts are very relevant when you consider they were largely allowed to restructure them. As Krugman was fond of saying "economics is not a morality play".
posted by Grimgrin at 6:40 AM on February 15, 2015 [4 favorites]


The chance the new Greek leader is going to help them is not much better than Obama helping us in January 2008 You think things have not significantly improved since 2008--please exclude comments on wealth inequality--lets talk about almost every other economic indicator.
posted by rmhsinc at 6:41 AM on February 15, 2015


War debt, on the other hand, has nothing to do with it, and the emergence of that as an issue is really ugly and please God not a portent of things to come.

You have to assume that part of it is Syriza trying to throw a bone to the bunch of nasty nationalist right-wingers that they - for some reason or other - decided to go into coalition with. But, yes, it's a total red herring.
posted by sobarel at 6:42 AM on February 15, 2015


There wasn't a person alive who didn't know about the widespread use of derivatives to move debt off balance sheet to hit the Maastricht Criteria. Politicians around Europe made the decision that the optics of the currency union were more important than the actual health of the union. That and then the Germans went in with an undervalued dmark.
posted by JPD at 6:58 AM on February 15, 2015


You think things have not significantly improved since 2008--please exclude comments on wealth inequality--lets talk about almost every other economic indicator.

To be fair, besides the stimulus and the ACA ("other than that, Mrs Lincoln... "), Obama's been pretty bad on the economy. I'm thinking of his complete neglect of monetary policy in particular.
posted by PMdixon at 6:59 AM on February 15, 2015


Huh. First off the US has the most heterdox monetary policy in the world. Second off the Fed is independent. You might disagree with what the fed had done but outside of literally dropping cash out of choppers theyve been as aggressive as possible.
posted by JPD at 7:04 AM on February 15, 2015 [3 favorites]


The cartoonishly nationalized morality play, besides being irrelevant (If you want the European project to continue, and the troika certainly does, you have to have fiscal flows. Everyone knows this.), is really really disingenuous. Everyone knew that the Greek books were cooked, in large part because they helped cook them. Helping your client falsify his bookkeeping so you can make him a loan, only to cry fraud when they can't pay, isn't quite the classic orphan definition of chutzpah, but it's surely close.

On preview: Certainly not most heterodox now, that's either BoJ or SNB. In 2010-2011, sure. The Fed is independent once the Pres makes his appointments, which Obama has been shamefully slow to do. And they're signaling very very strongly that headline inflation will not not not cross 2%. Regardless of whether they raise rates in the summer, that's the signal the markets interpret, and they're not wrong.
posted by PMdixon at 7:09 AM on February 15, 2015 [2 favorites]


PMDixon--other than the gratuitous comment--i don't understand your response and exactly what the objective indicators are for a failed monetary policy--compared to other nations here(Europe) the US seems to be bouncing back quite well--trade, energy, manufacturing, unemployment, tax revenues, debt etc. Setting aside factors common to all developed countries how is the US not doing well ( except income inequality which is rapidly becoming/is an international issue).
posted by rmhsinc at 7:10 AM on February 15, 2015


BoJ is falling the same exact blueprint.

SNB WTF knows what they are doing? Joined by the DNB soon it seems.

He's not making the appointments because he can't get them appointed unfortunately

Agree on the troika and the audacity of claiming to have been lied to. .
posted by JPD at 7:13 AM on February 15, 2015


We have 2.4% growth in the strongest year of recovery coming out of a deep recession. If you don't think that's a failure of monetary policy I don't know what to tell you.

I find Scott Sumner and Nick Rowe's arguments for NGDPLT targeting pretty solid, just so you know where I'm coming from.
posted by PMdixon at 7:14 AM on February 15, 2015


Uh because it's a failure of fiscal policy.
posted by JPD at 7:18 AM on February 15, 2015 [1 favorite]


You feel that way because ???

You question me because ?????

...very little patience or sympathy for trying to ecplain away how they got into this situation

They got into this situation by having the least developed economy in a currency union. It has nothing to do with their moral failings. It would be great if Greek tax compliance was better, but do you honestly think they'd have had the same problems if they hadn't joined the euro?

Do you think poor people deserve to be punished and rich ones rewarded?
posted by Segundus at 7:19 AM on February 15, 2015


War debt, on the other hand, has nothing to do with it, and the emergence of that as an issue is really ugly and please God not a portent of things to come.

I dunno. As an outsider, it does seem fair to me to point out that when things were reversed, you were reasonable and expecting similar consideration is not insane.

But I like the Greeks in this situation: finally someone is standing up to a global elite who care more about an extra coin in their Scrooge McDuck vaults than in the actual, non-fungible lives of real people who deserve the basic dignity our collective wealth can afford. The Greeks collect enough taxes to fund their expenses minus investment-bank bailout payments; Syriza is also planning tax reform — let's try governing for all the people instead of for the neoliberal economists who have advanced income inequality by crying "poverty! austerity!"
posted by dame at 7:25 AM on February 15, 2015 [10 favorites]


Yeah, in talking of BoJ, I might be overly conflating my respective judgments of Kuroda and Yellen with their banks. Kuroda went forward with a one vote majority; Yellen still is overly concerned with Fed norms of visible consensus. But, I mean, fuck Plosser.

SNB I was more referring to big negative rate. Quantitatively that's gotta be most heterodox, but if you want to say that's too tied to the unpegging goofiness to count as policy that might be fair.
posted by PMdixon at 7:37 AM on February 15, 2015


Segundus "You question me because ?????" because I don't understand your point of putting Ireland into the Med--I certainly understand the similar economic experiences in 2008 +--But in many ways Ireland (where I live) strikes me quite different from the Med. countries, and I think they see themselves as very different from a cultural, ethnic, historical and economic perspective. Would you also put Iceland with them.
posted by rmhsinc at 7:41 AM on February 15, 2015


"but do you honestly think they'd have had the same problems if they hadn't joined the euro?" I am not sure I know enough to answer that but I bet they could not have run up as much government, commercial and private debt. Iceland was not a Euro country and certainly experienced their own problems when the debts were called in--it is hard for any small trading country to fare well when the US and Europe falter. But I will give you that you appearto have a much better understanding of this than i do
posted by rmhsinc at 7:46 AM on February 15, 2015


But in many ways Ireland (where I live) strikes me quite different from the Med. countries, and I think they see themselves as very different from a cultural, ethnic, historical and economic perspective. Would you also put Iceland with them.

I dunno about Segundus, but I would. It's not about culture, it's not about ethnicity. It's about structural imbalances of flows in a currency union between the periphery and the center. They can either be resolved by big financial blowups every few years or so, or by fiscal transfers. Crucially, they cannot be resolved by "structural reform" within the periphery, whether that is a good idea or not.

This is a really boring story. This is what always happens to currency unions.
posted by PMdixon at 7:49 AM on February 15, 2015 [8 favorites]


(Iceland wasn't on the euro but the weird way that it was an Internet banking provider (who thought that was a good idea?) put it in basically the same role)
posted by PMdixon at 7:51 AM on February 15, 2015 [2 favorites]


Finally, Segundus--I said "I have a great deal of sympathy for many of the Greek people--but very little patience or sympathy for trying to ecplain away how they got into this situation." I don't believe "explaining away" is the same as punishing poor and rewarding the rich. I happen to think the push towards extreme austerity was a serious mistake on both humanitarian and economic grounds--would have much preferred government reform and stimulus. But I do have patience with the people in Northern Europe who are struggling in their own lives and are not particularly sympathetic with the Med. countries. Talking about people not governments.
posted by rmhsinc at 8:00 AM on February 15, 2015


As an outsider, it does seem fair to me to point out that when things were reversed, you were reasonable and expecting similar consideration is not insane.

The two situations are not comparable though. There was flexibility about Germany's war debts only because that was a condition of receiving Marshall Plan aid. Also Germany as was - the Third Reich - had been comprehensively destroyed and replaced by two new polities (the DDR and Federal Republic) being occupied by the Allied powers.

To say that modern Germans are morally obliged to pay off debts resulting from a murderous illegal dictatorship 70 years ago, but modern Greeks are not responsible for debts run up by its recent democratically elected governments just seems surreal.
posted by sobarel at 8:04 AM on February 15, 2015 [4 favorites]


The man on the street did not invite Goldman Sacks to fiddle the books.

The government the men on the street voted in certainly did.
posted by jpe at 8:17 AM on February 15, 2015


This piece by Michael Pettis looks at the results (bad) of the German receipt of the war indemnity in 1871, which was completely disbursed through the state, to argue that to the extent that "responsibility" is meaningful, it's completely unreasonable to expect it to happen in any kind of distributed system of capital flows.
posted by PMdixon at 8:21 AM on February 15, 2015 [2 favorites]


They got into this situation by having the least developed economy in a currency union. It has nothing to do with their moral failings.

Well, by all accounts they did cheat in order to get into the Eurozone in spite of having a poorly developed economy.
More specifically, they lied about their balance sheet, i.e. income (= mostly taxes) minus expenses, and I don't think it was Goldman Sachs' idea to do so. More here. So they did lie about their tax situation and in the meantime have done preciously little to address this problem. Hopefully Syriza will do a better job.

But it's too late to complain about the Greek lies that got them into the trouble in the first place. Pointing a finger at the moral failings of the Greek will not get them out of this mess now. Just like the Greeks blaming the Nazis or the EU (a fine distinction that is not always made in Athens) for their predicament won't.
posted by sour cream at 8:22 AM on February 15, 2015 [1 favorite]


They got into this situation by having the least developed economy in a currency union.

It's maybe worth pointing out that - even after years of austerity - Greece is a richer country than Estonia, Latvia, Lithuania or Slovakia. All of whom joined the Eurozone without fiddling the books.
posted by sobarel at 8:30 AM on February 15, 2015 [4 favorites]


The man on the street did not invite Goldman Sacks to fiddle the books.

The government the men on the street voted in certainly did.


I'm sure you wish to be held personally responsible for every action undertaken by your own democratically elected government, too. Sometimes I wonder if the only reason elections occur is to let Serious Men go, "Harrumph, harrumph, well, they voted for these people, didn't they?" As though governments lay out a strict plan of every action they will take for X years in office and follow it to the letter, as if lies aren't uttered and promises broken at every opportunity. What utter bullshit.
posted by Steely-eyed Missile Man at 9:22 AM on February 15, 2015 [10 favorites]


Again. The derivative stuff is a side show. Almost none of the members would have hit the Maastricht Criteria without fiddling the numbers.

The logic path wasn't

-"hey you want to be part of this currency union these smart and thrifty northern Europeans are doing"
"We'd love to but we're profligate swarthy Southern Europeans. We can't balance the books so the Germans wont let us in"
"Uh we can take careathat for a fee of course"

It was really
Dutch, Germans, French "hey you guys should come do this thing with us. Its gonna be awesome."
Greece, Spain, et all." Sounds great. Let's do it "
"Cool cool - hey here are the rules is that gonna be a problem"
" oh yeah. Hmm about that...."
"Cool cool no worries. Pierre over there had to do a sham sale of his telephone company to make his numbers work. Can you guys do that. I mean this thing is gonna be awesome."
" er well we need a little more help than that. "
"Ok cool let's think about it. Hey I wonder if you should call your college roommate who moved to London. I bet they could help"

Soon after

"Hey guys. We made it. Let's put Alexander on the 50"
"Cool. That's great. I'm sure its totally above board. Hey My boring cousin in the finmin wanted d me to ask how you managed to cut 2% of GDP in debt in a year where you Ran a deficit- but I think that would be rude to ask. What do you think of the blueprint for this awesome building in Strasbourg? Hey do you need some cash so you can build a new highway?"
posted by JPD at 9:55 AM on February 15, 2015 [4 favorites]


PMDixon, I'm not sure that people in this thread understand what you mean by fiscal flows. I think I do, but I read this literature all the time.

What I think you're driving at is the idea that not every EU nation can have a net positive euro account, right?
posted by wuwei at 10:08 AM on February 15, 2015


Here's a video of Varoufakis in 2011 speaking at Richard Wolff's Global Capitalism Update. It's interesting to watch this now that he's finance minister.
posted by bstreep at 10:52 AM on February 15, 2015


I never said that I think that the Greeks are lazy. Also, they weren't bailed out by Germany but by the EU.

I think the main problems, as pointed out by others above, are that (a) the entire country is corrupt to the bone and noone pays their taxes, and (b) there is a culture putting the head into the ground and blaming it all on the evil foreigners.

There is no sense of a greater good in Greece. As someone pointed out above, the idea of paying taxes seems downright laughable to most Greeks. So everyone just looks out for themselves, or possibly their families.


You realize, I hope, that blaming "the culture" of those people, as an argument for explaining economic hardship, has a pretty consistent record of never identifying the real problem while vilifying the people who have the least power.
posted by clockzero at 10:54 AM on February 15, 2015 [13 favorites]


And now for a break...

Yanis Varoufakis is... THE END OF AUSTERITY
posted by pravit at 11:02 AM on February 15, 2015


What I think you're driving at is the idea that not every EU nation can have a net positive euro account, right?

Yeah, in the same way that not every state in the US can have a net positive dollar account. It's important to note, too, that this isn't an accounting fiction --- this is a real transfer of resources. The Bavarian housewife is totally right to think she's subsidizing the shiftless southerner. This is a pretty inevitable effect of being in a currency union, through a bunch of pathways that amount to vendor financing.

Since the sub-units can't issue their own currency, something has to make up the difference. Either a) a bunch of loans go bad at once and you have a financial crisis and an ugly, brinksmanship-prone political argument about who eats the cost or b) you have structural transfers through the state and a normalish tax and spend political argument. But the EU is Not A Fiscal Union so they can't do b.
posted by PMdixon at 11:21 AM on February 15, 2015 [2 favorites]


The Bavarian housewife is totally right to think she's subsidizing the shiftless southerner.

No, she's really not. She's not right about the subsidizing part, nor about the "shiftless" part.

New policies engender new politics. This variety of the politics of economic resentment, where the well-off are encouraged to develop bitter feelings towards people who are at a massive structural disadvantage, is a classic strategy for promoting division between non-elites who otherwise might start to wonder why the wealthiest and most powerful people and institutions never seem to lose, even with those shiftless Negroes Greeks laying about all day and failing to pull themselves up by their boot-straps.
posted by clockzero at 11:45 AM on February 15, 2015 [6 favorites]


Ironically the "scofflaw" countries were taking money from that Bavarian housefrau and using it to buy things from her family's factory that could no longer be profitably made in their home country because of the change in the terms of trade that came with the Euro.
posted by JPD at 12:19 PM on February 15, 2015 [5 favorites]


I've heard from Valve employees that Varoufakis only spent two days on-sight and did not mesh with their flat management structure.

Ain't too surprising that article lauding him might omit the fact that he couldn't cope with a flat management structure. I've heard honest but charitable accounts claim that he learned from Valve though.
posted by jeffburdges at 12:32 PM on February 15, 2015


The Bavarian housewife

This is 2015, not 1958.
posted by colie at 12:33 PM on February 15, 2015


It's a Merkel line.
posted by PMdixon at 12:38 PM on February 15, 2015 [3 favorites]


When you talk about "the debt" you should keep in mind where that debt came from. This was private, for-profit banks lending to the Greek government. This wasn't charity. It was a business. No one held a gun to the bankers' heads or twisted their arms. They made the loans because there were big profits to be made. The German private bankers could have bought safe German bonds, but they paid very low interest. Instead they wanted to buy Greek bonds because they paid higher interest. And they knew the reason they paid higher interest was because there was a higher risk of default.

But when push came to shove and the defaults showed up, as we saw in the U.S., the banks can never be allowed lose no matter how irresponsible and reckless they are. So they got the European Central Bank (which just happens to be dominated by German bankers) to bail out the German bankers for their failed investments. This wasn't charity going to Greece. This was charity going to rich German bankers. Greece isn't getting the bailout. The German private bankers are getting the bailout.

So the European Central Bank is acting like those skeevy debt collection agencies that buy up bankers' credit card debt and then harass and intimidate debtors until they pay up.
posted by JackFlash at 2:20 PM on February 15, 2015 [20 favorites]


I think there are enough bad actors to go around without pinning the responsibility on any one group. The banks played their part as did higher-ups in the EU. But Greece itself cannot be absolved of responsibility and fucked up things right well. And will continue to do so unless they reform their tax and tax-collection system.
posted by Justinian at 3:29 PM on February 15, 2015 [1 favorite]


It's not like Greece's difficulties collecting taxes suddenly arose after European banks gave them money. Just as with subprime lending in the U.S., there was a lust for higher rates of return that caused bondholders to ignore obvious warning signs and assume that "default risk" meant "someone will be on the hook if this goes south, but it won't be us."

Nobody here is saying that Greece deserves no blame, but with so much focus on the things Greeks need to do, there's value in pointing out that none of this could have happened without at best incompetence, and at worst willful blindness.
posted by tonycpsu at 3:42 PM on February 15, 2015 [2 favorites]


I think there are enough bad actors to go around without pinning the responsibility on any one group. The banks played their part as did higher-ups in the EU. But Greece itself cannot be absolved of responsibility and fucked up things right well. And will continue to do so unless they reform their tax and tax-collection system.

I'm pretty tired of these false equivalence arguments -- "they are all at fault".

The bankers are the billionaires. The bankers are the ones paid millions each year for their presumed banking skills. The bankers are the ones employing all of the Ivy League quants and running the supercomputers to calculate their bets and estimate their risks. The bankers are the ones who write the rules for finance. The bankers are the ones who write the debt laws. The bankers are the ones who have the political leaders on speed dial when they get into trouble. Everyone else is just trying to get on with their lives.

As far as Greece getting their act together, they are running a budget surplus right now, excluding the extortion payments to the European Central Bank. And who are running deficits? The UK, Germany, France, Belgium, Denmark, Netherlands, and the U.S among many others. So much for the tedious moralizing.
posted by JackFlash at 4:59 PM on February 15, 2015 [7 favorites]


Let's talk about morality:
Austerity measures were introduced in June 2011 and coincided with an increase in suicides of over 35% - an average of an extra 11.2 suicides a month - which was sustained all the way into the following year.
Link
But fuck them right? The most important thing to do is to make sure that Greece takes blame and pays back 100% of its debts.
posted by wuwei at 5:12 PM on February 15, 2015 [5 favorites]


What kind of economist puts points in Strength, Constitution, and Charisma?
posted by um at 5:57 PM on February 15, 2015 [3 favorites]


This is a fine time to be finally getting around to finishing Graeber's Debt, I can tell you.
posted by Steely-eyed Missile Man at 7:46 PM on February 15, 2015


Graeber.
posted by Sir Rinse at 10:36 PM on February 15, 2015


Urgh, nations. The Greeks are lazy, don't pay their taxes, liars. The Germans are cruel, heartless, living off the oppression of others. At least part of the idea of the EU was to avoid this bullshit, this idea of a national character, that one nation should fight another. Because that kind of thinking? It leads to millions of blameless people dying in wars so that a piece of soil can be ruled by a different set of people.

No, I don't think a conflict on the scale of the world wars is very likely in at least the immediate future, but let's have some compassion here. It's so lazy to point at a group of people and proclaim that they brought it on themselves. Well, maybe they, collectively did: they were probably inclined to do so by being given bad incentives. The solution isn't necessarily collective punishment, because unsurprisingly they might rebel somewhat at that.
posted by Cannon Fodder at 12:20 AM on February 16, 2015 [1 favorite]


What kind of economist puts points in Strength, Constitution, and Charisma?

Game theorist: the optimal strategy is to agree with the nice man, because he could take you, and you can't outrun him.
posted by Dr Dracator at 1:18 AM on February 16, 2015 [2 favorites]


And there is Estonia--A small corner of Europe taking a different direction than Greece
posted by rmhsinc at 2:30 AM on February 16, 2015


As far as Greece getting their act together, they are running a budget surplus right now...

Yeah, that's exactly what they said before being accepted into the Eurozone. You think we can believe them this time?
posted by sour cream at 2:52 AM on February 16, 2015


If you can't trust the Greek budget numbers then, really, what can you trust? 🍔
posted by Justinian at 2:04 PM on February 16, 2015


the Greeks who are suffering are not the ones who caused the problems: the rich oligarchies, the corrupt kleptocrats who ran the country, have been overthrown and Syriza and other parties are the representatives of those who never got heard before. Going "Greece this" and "Greece that" like Papadopoulos and Goldman-Sachs were the same people as those now abandoning their kids in kindergartens so they'll get fed is missing the whole point. If Syriza had come in by a revolution or happened in a former USSR country people would talk differently.

The majority of doctors and university students have left Greece and a huge number - maybe a majority - are now working in Germany. Greece paid to train them, Germany benefits (it's 130,000 doctors i believe). This is a massive subsidy and Greece should demand it is recognised
posted by maiamaia at 2:48 PM on February 16, 2015 [2 favorites]


Yanis Varoufakis: No Time for Games in Europe
The trouble with game theory, as I used to tell my students, is that it takes for granted the players’ motives. In poker or blackjack this assumption is unproblematic. But in the current deliberations between our European partners and Greece’s new government, the whole point is to forge new motives. To fashion a fresh mind-set that transcends national divides, dissolves the creditor-debtor distinction in favor of a pan-European perspective, and places the common European good above petty politics, dogma that proves toxic if universalized, and an us-versus-them mind-set.

As finance minister of a small, fiscally stressed nation lacking its own central bank and seen by many of our partners as a problem debtor, I am convinced that we have one option only: to shun any temptation to treat this pivotal moment as an experiment in strategizing and, instead, to present honestly the facts concerning Greece’s social economy, table our proposals for regrowing Greece, explain why these are in Europe’s interest, and reveal the red lines beyond which logic and duty prevent us from going.

The great difference between this government and previous Greek governments is twofold: We are determined to clash with mighty vested interests in order to reboot Greece and gain our partners’ trust. We are also determined not to be treated as a debt colony that should suffer what it must. The principle of the greatest austerity for the most depressed economy would be quaint if it did not cause so much unnecessary suffering.
posted by standardasparagus at 5:26 PM on February 16, 2015 [3 favorites]


Paul Krugman: Athenae Delenda Est
OK, this is amazing, and not in a good way. Greek talks with finance ministers have broken up over this draft statement, which the Greeks have described as “absurd.” It’s certainly remarkable. On my reading, here’s the key sentence:

"The Greek authorities committed to ensure appropriate primary fiscal surpluses and financing in order to guarantee debt sustainability in line with the targets agreed in the November 2012 Eurogroup statement. Moreover, any new measures should be funded, and not endanger financial stability."

Translation (if you look back at that Eurogroup statement): no give whatsoever on the primary surplus of 4.5 percent of GDP.

There was absolutely no way Tsipras and company could sign on to such a statement, which makes you wonder what the Eurogroup ministers think they’re doing.

I guess it’s possible that they’re just fools — that they don’t understand that Greece 2015 is not Ireland 2010, and that this kind of bullying won’t work.

Alternatively, and I guess more likely, they’ve decided to push Greece over the edge.
posted by standardasparagus at 5:32 PM on February 16, 2015


Is there a scenario in which Greece defaults without immediately exiting the Euro? If they defaulted sooner rather than later, the budget surplus would accrues in their coffers instead of foreign banks, allowing them to continue running the country without non-tax financing, right? All this might depend upon when they collect taxes however.
posted by jeffburdges at 6:22 AM on February 17, 2015


George Monbiot: A maverick currency scheme from the 1930s could save the Greek economy.
posted by adamvasco at 12:34 PM on February 17, 2015


The majority of doctors and university students have left Greece and a huge number - maybe a majority - are now working in Germany. Greece paid to train them, Germany benefits (it's 130,000 doctors i believe). This is a massive subsidy and Greece should demand it is recognised.

Seriously? Do you also believe that the US should pay for all the immigrants that came there?

Whatever happened to "Give me your tired, your poor, give me your huddled tourist guides and goat herders"?
posted by sour cream at 2:29 PM on February 17, 2015 [1 favorite]


And your highly trained doctors.
posted by Justinian at 6:13 PM on February 17, 2015


Yanis Varoufakis: How I became an erratic Marxist

Let me now conclude with two confessions. First, while I am happy to defend as genuinely radical the pursuit of a modest agenda for stabilising a system that I criticise, I shall not pretend to be enthusiastic about it. This may be what we must do, under the present circumstances, but I am sad that I shall probably not be around to see a more radical agenda being adopted.

My final confession is of a highly personal nature: I know that I run the risk of, surreptitiously, lessening the sadness from ditching any hope of replacing capitalism in my lifetime by indulging a feeling of having become agreeable to the circles of polite society. The sense of self-satisfaction from being feted by the high and mighty did begin, on occasion, to creep up on me. And what a non-radical, ugly, corruptive and corrosive sense it was.

Radical confessions, like the one I have attempted here, are perhaps the only programmatic antidote to ideological slippage that threatens to turn us into cogs of the machine. If we are to forge alliances with our political adversaries we must avoid becoming like the socialists who failed to change the world but succeeded in improving their private circumstances. The trick is to avoid the revolutionary maximalism that, in the end, helps the neoliberals bypass all opposition to their self-defeating policies and to retain in our sights capitalism’s inherent failures while trying to save it, for strategic purposes, from itself.
posted by standardasparagus at 8:32 AM on February 18, 2015 [4 favorites]


Greece -- It's a Revolution, Stupid
"What has been a true disgrace is the role of the German people, who sincerely believe that they are the “Good Guys”, championing democracy and justice wherever they tread. There is a saying in German that should not to be underestimated: “Am deutschen Wesen mag die Welt genesen” (The German character will heal the world). In Germany, where the banks are held in awe, the government is dictated by vested interests and the Germans lay claim to a very high social morality, the true reasons for the so called Greek bailout – saving German banks – would not do.

Thus the government, assisted by the media, utilised old political tools: nationalism and racism. The financial crisis in Europe and Greece was no longer a narrative of profligate, lying, cheating, corrupt private banks, but of profligate, lying, cheating, corrupt Southern Europeans. It is surprising, if not shocking, how prepared the Germans, many of whom normally possess a very high political acumen, were prepared to embrace this discourse. A climdown by the German government in what has become such an emotionally laden issue will be difficult.

Add to this, that no nation has profited more from the Euro crisis than Germany, catapulting it to its new hegemonic role in the EU. According to the Bundesbank the German government had by the conclusion of 2014 saved 152.4 billion Euros in debt payment due to the low interest rates it pays for credit since the crisis began. The depressed value of the Euro, also a product of the crisis, has been a boon for Germany’s export oriented economy and returns from overseas investments. Thus the Germans have ignored the humanitarian crisis developing at its doorstep."
posted by wuwei at 10:57 PM on February 18, 2015 [1 favorite]


A Darwinian Left by Peter Singer is a nice read if you liked Varoufakis' comments on Marx.
posted by jeffburdges at 1:52 AM on February 19, 2015




Interesting. I'd agree with the commenter who though this might be a tactical retreat. And Greece could spend the time arranging alternatives. There is otoh no shortage of governments who spend their entire time in such "tactical retreats" without ever making a longer term play.

Also : How Greece Folded To Germany
posted by jeffburdges at 12:16 AM on February 22, 2015


Who Blinked?
So, the latest round of the Greek debt crisis has ended in a typical European combination of delay and compromise, much as Yanis Varoufakis predicted a week ago. But in view of the obvious incompatibility of the positions put forward, someone must have given a fair bit of ground. The Greeks wanted continued EU support, and an end to the Troika’s austerity program. The Troika (at least as represented by German Finance Minister Schauble) wanted Syriza to abandon its election program and continue with the existing ND/Pasok policy of capitulation to the Troika.

Put that way, I think it’s clear that the Troika blinked. The new agreement allows Syriza to replace the Troika’s austerity program with a set of reforms of its choice, focusing on things like tax evasion. Most of Syriza’s election platform remains intact. Of course, it’s only for four months, and none of the big issues has been resolved. But four months takes us most of the way to the next Spanish election campaign, hardly an opportune time to contemplate expelling a debtor country from the eurozone with utterly unpredictable consequences.
Did Syriza get owned?
The details of the Syriza request to the Troika are here, for those who want to read the actual list. The public statement is here.

The best analysis I’ve read of the deal, as compared to Syriza promises, is by Stathis Kouvelakis, in the Jacobin Magazine.

Kouvelakis makes the case, convincingly to me, that Syriza caved, and got virtually nothing of what it wanted.
posted by the man of twists and turns at 9:21 PM on February 24, 2015


Greek Finance Minister Varoufakis Wants Austerity… For the Rich
posted by adamvasco at 1:30 PM on February 25, 2015 [2 favorites]




The Noose Around Greece: How Central Banks Harness Governments
posted by adamvasco at 8:00 AM on March 13, 2015 [2 favorites]


HOw I Became an Erratic Marxist by Varoufakis
posted by lalochezia at 9:03 PM on March 13, 2015


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