Yanis Varoufakis

Yanis Varoufakis will be confirmed as the new Greek finance minister later today.  He “is no extremist.” [EDIT: The Guardian think “radical”.]

Here is a recent interview with him and ‘A modest proposal for resolving the eurozone crisis’ is here.  Back in September a document on ‘What the Syriza government will do’ was published.

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81 thoughts on “Yanis Varoufakis”

  1. Maybe Alexis Tsipras, the new prime minister, is not an extremist either.

    A profile by the FT’s Peter Spiegel, suggests that he maybe more a pragmatist than firebrand.

    The original pre-1973 six countries became part of the single currency area and in terms of standard of living per capita they remain among the richest in the Euro Area (inc Italy).

    The myth of rapid economic convergence coupled with a toothless regime for enforcing rules, gave countries the impression that joining the single currency was a route to become rich in a short time.

    http://www.finfacts.ie/irishfinancenews/article_1028547.shtml

    Nobel-winning economist Christopher Pissarides who is a Greek Cypriot, and others have proposed linking debt repayments to GDP growth and excluding interest payments, the economy may produce a surplus this year.

    A few billion to alleviate hardship is not a big deal to get agreement on while Christine Lagarde has highlighted how for example reform of the tax collection system will help the country.

    The journey from campaign poetry to governing prose will not be easy but it may not end in tears.

  2. He speaks a lot of sense. It would be best for the EZ to reform now before it has no choice and has to decide things in a panic.

    http://www.ft.com/cms/s/2/721b67f4-73bc-11e4-82a6-00144feabdc0.html

    John Authers, FT ModeratorFT
    Nov 25, 2014
    @Arjen van der Woerdt @AdamSmith66 @John Authers, FT @BajanBoy
    “Sure there’s a chance the Fed doesn’t raise rates as fast as many now expect, particularly if the US economy turns out to disappoint on growth. At which point all bets are off. The main point of this article, I hope, is that we are all dangerously over-exposed to a particular version of the US economic story and its divergence from the rest of the world. As it happens that story isn’t wildly implausible, and recent events give it some support; but things could go horribly wrong for the markets if we deviate in either direction from that story. “

  3. http://www.theguardian.com/world/2015/jan/27/greek-pm-alexis-tsipras-economist-yanis-varoufakis

    “But the UK chancellor, George Osborne, said Syriza’s promises to voters appeared “very difficult to deliver””

    http://www.wsj.com/articles/SB10001424052702304512504579493343009578478

    What the Economic Pessimists Are Missing

    The recoveries under way in the U.S. and especially in the U.K. are a repudiation of ‘secular stagnation.’

    George Osborne

    April 10, 2014 6:47 p.m. ET

    The U.K. and U.S. economies are recovering, and pessimistic predictions that fiscal consolidation was incompatible with economic recovery have turned out to be comprehensively wrong.
    Now many of the same pessimists have turned to new, equally gloomy arguments. They say that we in the U.K. and the U.S. face a prolonged period of weak growth, or “secular stagnation.” The gains from any growth will not be widely shared, they claim, so the historic link between economic growth and the general prosperity of the population has somehow been broken”

    http://www.ft.com/cms/s/0/f89e774a-7956-11e4-9567-00144feabdc0.html

  4. I wish Yanis Varoufakis well in this most challenging position.

    He has been one of the most pragmatic economic commentators in recent years – as any search of this blog, and nakedcapitalism.com, will confirm.

    Methinks he may also have read Swift’s ‘Modest Proposal’ which bears a striking parallel with the state of the Greek Citizenry at the mo.

    In solidarity.

  5. A cabinet of community activists, academics and the odd anti semite. Seriously short of “senior hurling” experience. How can they possibly fail?

  6. One thing the Greeks should do that might help a little is to demand back the Elgin Marbles, which were stolen from them by England. This would give their tourist industry a boost. While it would only make a modest dent in their problems, it would be a start.

  7. @ tull

    Depends on how you define ‘senior hurling’.

    It’s quite extraordinary, and hopeful, IMHO, that someone as intelligently critical of financialisation and the global elites, like Varoufakis, should have attained the position of finance minister. As the late political commentator John Healy used to say, ‘the granite block of power’.

    The Greeks, fair play to them, invented democracy. Perhaps this tale also will end, as the classics describe, in anarchy. Or maybe something has been learned over the millennia.

    Game on, as they say 🙂

  8. Yanis, one N, not the traditional 2 is clearly so enamoured of himself that if he was chocolate he would eat. To quote Topper Harley, his mouth is writing cheques his body will not be able to cash. The poor man carries the hopes of the Grauiniad, and bleeding hearts everywhere. He is so massively hyped that it cannot but end badly,

  9. @ colm mccarthy

    Sometimes the only way is Essex. Sometimes Essex is a trailblazer.

    I don’t know how au fait you are with popular culture but there has been an interesting Zeitgeisty precedent set regarding Jordan and overblown assets which is very germane to the issue of how to deal with the Eurozone debt bubble. Especially given the fact that it won’t be possible to repay all EZ public debt in full. Deflation is more than just an issue for the common man or woman.

    http://tinyurl.com/mnahaos

  10. Last gasp of Greek kleptocracy?: The Guardian reports that the ex-PM’s staff stole computers, paper & toiletries from the official residence before they left on Monday.

    In 1977 a professor of economics became a minister on his first day in the Dáil.

    Roy Foster says in his book ‘Luck and the Irish: a brief history of change from 1970‎,’ that in December 1977, Martin O’Donoghue, a former Trinity College professor of economics, who was then minister for economic planning and development, promised an “‘everlasting boom.”

    In 1978, a public spending fuelled boom in Ireland resulted in a budget deficit of 17.6% of GDP – a record for developed countries according to the International Monetary Fund, for the period 1970-2008.

    Foster terms O’Donoghue, the Mephistopheles to his taoiseach Jack Lynch’s Faust and Charles Haughey on becoming taoiseach in late 1979 both fired O’Donoghue and abolished his department.

    O’Donoghue had been an economic adviser to Lynch prior to the infamous Dutch auction general election of 1977.

    1979 was the worst year ever for industrial disputes in Ireland.

  11. @ Tull

    It’s all financial kabuki
    The world will end if Greece’s debt is rescheduled down to sustainable levels yada yada . Loads of other debt won’t ever be repaid in full either.

    Eugene Ionescu was a total lefty but he had some interesting insights all the same

    “Everything that has been will be, everything that will be is, everything that will be has been.”

    Greece is just another version of Detroit

    http://www.ft.com/intl/cms/s/0/20f8e8fe-f093-11e2-b28d-00144feabdc0.html?siteedition

    “Mr Orr says that such jockeying is all part of the political theatre that accompanies the filing. “Everyone has to show that their back is against the wall before they can make concessions,” he said.”

  12. The ideas contained within the two documents cited by Seamus above, whilst appearing meaningful and sensible – are both deeply political. Nothing wrong about being political, but what they are taking aim at, and hoping to reverse, are the accumulated economic and social outcomes of four decades of creeping financilization of our western developed economies, aggravated by the huge influx of additional labour (since 1980) from Asian countries into the global economy. This new supply of labour was rapidly supplied with the most advanced and up-to-date productive technology available – hence they were immediately able to out-compete most western developed economies in almost all areas of productive enterprise. Essentially, millions of well-paid manufacturing jobs were ‘transferred’ from western economies – and replaced, in part, with lower paid service-type employments. Contrary to Labour Market theory, it was the employment positions which became mobile, whereas the workers remained in their original locations. We simpy have a huge surplus of potential supply – output potential, but consumer demand is stagnant due to large debt accumulations.

    The logic of ‘offshoring’ of millions of waged-labour positions from ‘west’ to ‘east’ is not, as the global free-trade advocates assert – “There will be winners and there will be losers, but everyone gains!” They most certainly will not gain.

    There are significant economic losses in our western economies and marginal economic gains for the eastern ones. The marginal value-added and investment surpluses achieved by ‘barging’ productive activity to the east have not been repatriated back into our western economies, but have been captured and sequestered by a small number of supra-national financial enterprises. This unwelcome, but foreseeable outcome, points to serious flaws in the economic theories of Free Trade and Labour Mobility and Productivity.

    No amount of competitive or productive improvement on the part of our western developed economies will reverse our nett economic losses: they’re permanent. Yet the following is one of the political chants we hear on a regular basis: “We must enhance our competitiveness, we must be more productive!” “Yes indeed; but more competitive compared to whom? More productive with what?”.

    The foundation (theoretical) concepts of modern economics assert the presence of a self-organizing, self-correcting and self-equilibrating ‘market’. For market you might substitute economic activity – I presume. There is one real difficulty with this theoretical concept of a virtual, self-organizing market: it has to occur in a real physical system which is subject to immutable physical laws and iron rules of math. It is only possible to achieve a steady annual advance in such a physical economy for a finite length of time (350 years?). At some tipping point your physical resources become limiting and your steady economic advance falters; basically you have reached the marginal (physical) limits of your economic enterprise.

    Its possible to ‘extend-and-pretend’ by switching from a productive economy to a financialized one. You get a temporary (five decades?) reprieve. Eventually however, you end up at a new boundary. And that is where we are to-day – at the outer margin of our ability to achieve further, nett-positive, aggregate economic ‘growth’. We are like a herd of wild horses milling about at the distal extremity of a dead-end canyon. Mindless hubris. No way out.

    As for Greece? Maybe a significant cut in their military expenditures would be a useful place to start. Do they really need all those tanks and aircraft? An offensive-style Navy?

    Anyways, its all quite interesting.

  13. This CIGI (the Canadian backed Centre for International Governance Innovation) paper gives a blow by blow account of events.

    https://www.cigionline.org/publications/sovereign-debt-crisis-management-lessons-2012-greek-debt-restructuring?gclid=CLrX79O2tsMCFWOx2woduYAATg

    The author is Greek with insider knowledge of the matter. What she fails to detail in any way, however, is the failure by successive Greek governments to actually introduce the bulk of the structural reforms which would have helped turn around the economy and with it make the country’s debt burden sustainable. She simply adverts to it. This oversight undermines her general conclusion that the current policy is one of “extend and pretend” and doomed to failure. The question will be answered not by the performance of the Greek economy under the new government but by the performance of the other highly indebted ones, Ireland included.

    Martin Wolf would also find the paper informative.

    http://www.ft.com/intl/cms/s/0/44c56806-a556-11e4-ad35-00144feab7de.html#axzz3Q6mSK9XD

    If there is a failure in statesmanship, the bulk of it must surely lie in Greece.

    As to morality, if it applies to creditors it must apply with equal measure to debtors. In fact, it applies to neither other than to the extent that both, one or the other, or neither abide by lawfully concluded contracts.

  14. The argument that Greece should not have been let into the Euro is second only to the argument that the euro was one big inherent mistake

  15. Criticism of the Greeks is all very well. However, at least they are doing something, or at least trying to do something. What about the Irish?

    http://www.independent.ie/opinion/columnists/colette-browne/heroes-of-europe-dont-do-debt-deals-just-the-greeks-30943955.html

    Shower of cowards it would appear. Ireland “living in the cracks”, waiting for the lead from elsewhere to bubble up. Ireland doesn’t do leadership. “Best little country” for what…..?

  16. @ DOCM – Goldman Sachs? (GS International, chaired by ?)

    Re the ‘kleptocracy’ – time for the pitchforks….along with the continued clean-up of the rotten bureaucracy and political connivance…

    The locals have to start paying their taxes – professions, business owners etc…stop being like we were up to recently…

    Greece still in NATO?….hhhmm…

    German default/debt forgiveness record/Marshall Plan etc – quite impressive…not given much media prominence..

    Eventually we will piggyback once again on the new debt repayment concessions – terms extended into the next two generations…wonderful result for our senior bureaucrats – their fat pensions are safer…

  17. Paul W,

    SEE BEB on other thread, net debt GDP (excluding excess cash) is in the 90s. Exclude the CB held debt and debt to be bought and you are heading towards 70s. Debt service costs net of CB at 8bn less about 1.4bn or 3-4% of GDP.
    All this done without histrionics and through clever back door dealing by CBI, NTMA, DOF etc. of course that does not make for a good newspaper opinion column.

  18. @Tull

    Good work as you said by various players

    “Stock markets are in a sour mood as investors infer that the US Federal Reserve remains on course to start raising interest rates around the middle of this year.”

    Do you think they can ?

    If they do a lot of debt is going to be repriced including IE. Exports depend on how well UK and US doing too. Lots of uncertainty out there.

  19. @ Tull
    I’m not on the left. However, not even Noonan claims net in the 90s. NPV does add some “defense”. However, that assumes rates will stay at these extreme low levels, indefinitely. Who knows. Not if Grexit happens.

    However, I do accept that the rules are being made up “on the wing”.

  20. @ Tull

    If Greek debt and debt service is kicked off to the never never, Irish govt “strategy” will be seen (again) for the shambles that it is /has been. “Begging bowl leadership”.

  21. Great news, Tull!

    Like most public-sector workers, I’ll be looking forward to having some of the recent pay cuts reversed.

  22. @seafoid

    Exactly — if one accepts that Greece should not have been in the Euro then why on earth should Portugal be in the Euro, or Ireland, or -better yet- Cyprus! and even Italy. Chart trade balances for those countries before the Euro and after the Euro and compare and contrast with Germany over same period….. rather revelatory……

  23. Paul W,
    if i recall correclt 110% is the current ratio, knock off the cash buffer and it is below 100%, then knock off what the ECB and CBI will buy and it is below 90%, then knock off another 10% for the PNs held by the CB and where are you?
    That is before nominal growth. Sovereign debt ratios and service ratios everywhere are distorted by all the CB activity of recent years.

    Even Greece’s 170% is distorted as well, although with a Nationalist Socialist Govt in power it will not fall.

    The conduct of Irish policy since the bust has delivered a better outcome than the conduct of Greek policy. I am betting that will not change unless the Irish Syriza win power next year.

  24. @ Paul W

    “However, not even Noonan claims net in the 90s”

    Well, that’s where you are quite clearly demonstrably wrong. It’s ok, we’ll take your grovelling apology as a given.

    “The Dáil heard today that the forecast debt to GDP ratio for the end of 2014 is 111%. When account is taken of cash balances and other financial assets, the 2014 net debt forecast is just below 91%. But Mr Noonan said that the country’s debt level is still high compared to other European countries and so we need to continue to reduce debt”

    http://www.rte.ie/news/business/2014/1014/652230-budget-noonan/

  25. @Tull

    Amazing how you just “wish” away 40%(+)…

    Hope the deflation effect doesn’t dampen your “enthusiasm”. Plus don’t forget all the personal Irish debt.

    As Ernie says “Great news, Tull!”

  26. The parties that were involved besides West Germany included Belgium, Canada, Denmark, France, Great Britain, Greece, Iran, Ireland, Italy, Liechtenstein, Luxembourg, Norway, Spain, Sweden, Switzerland, South Africa, the United States, Yugoslavia and others. The states of the Eastern Bloc were not involved. The negotiations lasted from February 27 to August 8, 1953.[1]

    The total under negotiation was 16 billion marks of debt resulting from the Treaty of Versailles after World War I which had not been paid in the 1930s, but which Germany decided to repay to restore its reputation. This money was owed to government and private banks in the U.S., France and Britain. Another 16 billion marks represented postwar loans by the U.S. Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.[2]

    An important term of the agreement was that repayments were only due while West Germany ran a trade surplus, and that repayments were limited to 3% of export earnings. This gave Germany’s creditors a powerful incentive to import German goods, assisting reconstruction.[3]

    The agreement significantly contributed to the growth of the post-war German economy and reemergence of Germany as a world economic power. It allowed Germany to enter international economic institutions such as the World Bank, International Monetary Fund and World Trade Organization

  27. paul W,

    Good to see some facts from BEB above. Now exlclude the debt held by the CB and soon to be held by the CB which is going to be close on 20% of GDP. I suspect it will exceed 20% in time as the ECB will have to dig a big firebreak to protect the EZ when Greeces goes kaput.
    Personal debt still a problem but rising asset values, low rates and falling unemployment all helping that situation.
    It is a pity you dont examine the facts as opposed to talking through your H..p

  28. @ John Corcoran

    Thank you for fleshing out this part of the German record of debt repayment agreements – were the agreements honoured?

  29. As Varoufakis says Greece will not deal with the troika, Dijsselbloem draws the unavoidable conclusion and, rightly, walks out (cf. video embedded in this coverage).

    http://www.nytimes.com/

    Interesting weekend ahead; especially for Greek banks; and their customers!

  30. @ DOCM: Its Germany as a major global exporter* which is the manufacturing (supply) canary in the global slow-down (demand) coal mine. Greece is a side-show by comparison. Interesting though.

    And don’t you just love that hissy fit by Dijsselbloem! What might have been the late Jonh Healy’s comment: “He was given a swift and thoroughly deserved kick in the crotch!”

    Would folk be as ‘commenty’ if Nigle Farage got his boots under the cabinet table in No. 10?

    * The similarity is to the situation in the US after 1930 when its global exports were sharply curtailed. History rhymes they say.

  31. From the Irish Times website today:

    Mr Varoufakis, an economics professor who has written extensively against his country’s memorandum since it was signed in 2010, said his government had to respect its winning election platform.

    I imagine that such a notion would have an effect on Mssrs Howlin and Noonan similar to what a bright red rubber ball would have on one of the lower primates.

  32. @ BWS

    People can watch the video and come to their own conclusions. My reading is that Dijsselbloem knew he was being set up and he pulled the carpet from under Varoufakis by simply walking out; leaving Varoufakis with little option but to do the same.

    The professor is now heading today for Paris in a hurry to meet the French finance minister no doubt prompted by the fear of what may happen when Greek banks open on Monday. Merkel has also publicly said Nein.

    As Cliff Taylor points out pertinently in today’s IT, the Greek government, or at least Varoufakis, wants to tear up the rule book. Not a good approach!

  33. Dijsselbloem was met with courtesy by Tsipras and Varoufakis but got a hissy-fit when he was presented with the logic of Greek democracy.
    Bullies never have an answer when somebody stands up to them. He ran out and ran back to Schaeuble for his next instructions.

    As for Greek banks, Greece should implement capital controls immediately, and announce the scaled confiscation of all foreign (tax evading ) liquid assets not repatriated within 30 days.

    If the Irish Finance minister had any guts, he should state the obvious. There is no popular support in Ireland, or in most sane European countries, for crucifying Greece with failed economic dogma. If Ireland’s piece of Greek debt is approx €375 million, then Ireland should forego it, recognising that ‘ too long a sacrifice makes a stone of the heart’.
    If this country could pay the damned bust bank bondholders up to €40 billion, then €375 million to Greece is peanuts.

    Ireland has managed to scrape its way out difficulty, with a wounded and angry populace. But bad and galling as Ireland’s burden was to bear, it was nothing by comparison to that which Greece was forced to bear, by colonial powers who know their policies would not work.

    The European imposition on Greece is a very ugly stain on the moral and political character Europe.

  34. @ DOCM: Got all that. “Whose Rule Book?!!” And its all a lot more relative in politics than it is in physics. Bullies eventually get thumped.

    I assume both gents are ‘big boys’. So if you come to a public meeting about something controversial – “Be prepared!” Its known in the trade as being able to establish editorial control. However, one is the elected PM of a sovereign; whilst the other is a ‘messenger boy’. Very unequal match. D-lad is either a fool or an arrogant SOB.

    I suppose capital controls were deemed unecessary for the EZ: but, for whose protection? It sure was not the citizen. The EZ is becoming one bad financial mess. But remind me again about G W Bush and his outright rejection of any notion of any impediment against the US ‘national interest’. Big boys (and girls) do behave that way. Or is national interest only for big folk; us sparrows can just suck it up? Seems so. Until it is not!

    As I said: its the German economy (exports) you should keep a keen eye on. The EU demand is flat(ish) so if the global also go into a swoon ….

  35. JR,
    Good luck with confiscating assets beyond the Greek border. They are not going home to Greece anytime soon. Capital controls look certain after depositors have been haircut. No European tax payer will put a red cent into Greek banks. The Greek loons are going to have to capitulate in a matter of weeks or they are going to leave Europe.

  36. For me the telling moment was Varoufakis’ comment that the Troika is an “anti-European” committee. It’s not often that you get to see the finance minister of one EZ country insult another one to his face in public.

  37. The ever reliable Peter Spiegel, and others, of the FT.

    http://www.ft.com/intl/cms/s/0/baf9d212-aa17-11e4-8f91-00144feab7de.html

    As Sapin is close to Hollande, and to the left of him, without his support, Varoufakis is not on a winning streak, to put it mildly. However, as his approach – that of Varoufakis, that is – has a very high level of support among the Greek public, the risk of a major accident seems high.

    @ skeptic01

    Exactly! When it came to the right political reaction, Dijsselbloem played a blinder.

  38. Impressive press conference by Varoufakis and French Finance Minister in Paris – I watched it live on France24.

    The ‘European’ nature of Varoufakis’ arguments, his identification of the EZ Austerity Deflation policy as an abject failure, and his willingness to engage with European partners.

    Irish Revenue could certainly assist.

    Has Minister Noonan (or Taoiseach Kenny’s ordoliberal ‘sound-bite’ handler) had the courtesy to invite Yanis to Dublin?

    He is no stranger here – he spoke at Sinn Fein Ard Fheis in 2011 I think.

    @Greeks

    In Ciceronian Solidarity. Democracy must prevail or the EZ ain’t worth a dodgy financial system derivative.

  39. Tull, it may have just escaped your notice, but the so-called “Greek loons” were voted out of office last week. For close on two decades they conspired with international finance houses to conceal the true magnitude of the problems with the Greek economy. Effectively both parties conspired together to cheat and lie. I believe ‘loons’ is altogether too polite a term for them.

    The finance minister I heard and saw on the BBC NewsNight clip came across as a very polished, well mannered, in control and knowlegable politician. He gave sensible – if quite inconvenient, political answers; that is, answers that his interrogator neither wanted nor needed. She appeared crass by comparison.

    Here’s a short bio of the man.

    “After training in mathematics and statistics, Varoufakis received his economics doctorate in 1987 at the University of Essex. Before that he had already begun teaching economics and econometrics at the University of Essex and the University of East Anglia. In 1988, he spent a year as a Fellow at the University of Cambridge. From 1989 until 2000 he taught as Senior Lecturer in Economics at the Department of Economics of the University of Sydney. In 2000, he moved back to his native Greece where he became Professor of Economic Theory at the University of Athens. In 2002, Varoufakis established The University of Athens Doctoral Program in Economics (UADPhilEcon), which he directed until 2008. From January 2013 he taught at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin.”

    Some loon. So how would you describe Michael Noonan then? Ease up!

  40. @DOCM
    re your link above with quotes from Manuel Valls, the French prime minister.

    I am not a student of French, but with my limited knowledge of it, and a little help from Google translate, I would say that the Greek position is not without sympathy in some capitals.

    ” “Il faut saluer, respecter et comprendre le choix du peuple grec. Il a été laminé par la crise économique et la violence de l’austérité qu’on lui a imposée. Il a décidé souverainement de porter la gauche aux responsabilités”, a relevé Manuel Valls.

    “Chacun comprend que les politiques punitives d’austérité ne peuvent plus être, ne peuvent pas être un projet pour l’Union. Il faut continuer et convaincre que nos thèses, nos propositions, celles défendues par François Hollande, sont indispensables pour que l’Europe” sorte d’un “niveau de croissance trop faible et (d’)un chômage dramatiquement trop élevé” comme aujourd’hui, “pour que l’Europe retrouve son souffle”, a-t-il affirmé.

    “L’Europe, a-t-il insisté, doit retrouver un projet politique, un projet citoyen, un projet humain.”

    When I see the French prime minister refer to the ‘violence of austerity that has been imposed on the Greek people’, I have some hope that the winds of reason and humanity are finally beginning to blow towards the cold and frozen heart of the new Europe.

  41. @ JR

    What did you expect him to say? He is, after all, a Socialist PM charged with pulling France out of economic depression. But, to coin a phrase, where is the beef? His finance minister has just said that there can be no question of a haircut on Greek debt. Varoufkis now proposes to ask the ECB to do the one thing it cannot do, or even be seen to be doing, bend its rules.

    http://www.bloomberg.com/news/articles/2015-02-01/greece-wants-special-ecb-help-while-going-cold-turkey-on-aid

  42. Angie has painted herself into a corner.
    Deflation is the end logic of “save your banks” and “all debt is saved”.

    I don’t understand how the Germans turned a blind eye to so much private debt creation in the run up to 2008.

    George Kennan would be great to have around now

    “there is more respect to be won…by a resolute and courageous liquidation of unsound positions than by the most stubborn pursuit of extravagant or unpromising objectives.”

    Debt is Germany’s Vietnam

  43. @ Tull “Personal debt still a problem but rising asset values, low rates and falling unemployment all helping that situation.”

    Asset values can fall as well as rise
    Low rates are a function of the chronic macro outlook
    Unemployment is ok for the moment but a thin reed against which to lean after the latest US growth numbers.

    As John Authers noted recently

    “we are all dangerously over-exposed to a particular version of the US economic story and its divergence from the rest of the world.”

    Deflation is really going to hurt personal debt.

  44. BW,
    We clearly were not looking at the same interview. To me he came across as arrogant, petulant and unwilling to contemplate the prospect of an alternative view. I suppose that makes him a classic academic. Are you one of that ilk?

  45. ‘DJiesselboom played a blinder’!

    No wonder the EZ is in the deflationary quagmire it is with performances like this from him and his seniors!

    ‘There are none so blind….’

  46. The BBC interviewer was arrogant, petulant, constantly interrupting Vanoufarakis who made every effort to fully explain his governments positions and not allow himself be bullied into sound bites…

  47. It’s going to be extend and pretend for Greece. No debt writedowns. Somewhere on the Consols scale, closer to infinity

    Greece is a canary in the coal mine for core debt/crisis issues. Remember when the first Greek rescue happened and afterwards SNS Reaal went t*ts up. The Dutch can concentrate all they want like good protestant burghers but the notion that the core can hedge itself against the virus in the system is deluded.

    Financial soma – extend and pretend. For all debt. Plámás the modellers and the MBAs and S&P and all the rest of them. They’ll believe anything from the CBs as they plug the growth numbers into their excel models

    Everyone sing along now

  48. Tull, thanks for the comment. Lets agree to differ on the interview, OK.

    Yes, I am an academic. But as a Biochemist I can hold several conflicting experimental views (opinions or beliefs) simultaneously. That is, I can believe they are all simultaneously un-true. Null Hypothesis sort of stuff.

    However wearing my economic hat (I’m an econ as well) I can hold multiple conflicting views: that’s the charm of Positive Economics. No worries there, as they say.

    Whatever the political scientists (I’m one of those as well) might have to say on the matter of Greece v EU or EZ – in the end the elected politicians will agree a mutually disagreeable result. Stuff happens.

    However – what none can accomplish is to wish-up an accelerated economic Rate-of-Growth such that it becomes possible to repay (a) the existing debt; (b) the rolled-over debt; and (c) any new and additional debt. That’s the crux of the issue. That’s what Varoufakis’ main point was. The one which his interrogator had no interest in. Governments and CBs can implement QEs, but that simply debases their currencies – that is, it destroys both value and wealth – the very foundations of capitalism itself. That’s nice, that is. An alternate option? Jubilee the debts.

    Our existing economic paradigm, which transports along all forms of economies is embedded in an immutable foundation of physical law. No one can negotiate away that physical law. Our “steady economic advance” has faltered. Its just that simple. Potential economic supply now exceeds potential economic demand – by a wide margin. And how is that gap to be narrowed?

    Well, you could remove the excess potential supply (ie: the USA 1930 – 1933) or increase potential demand using additional fiat credit. Rock v Hard Place?

  49. @ Vinny

    If you are going to quote me, please do so in full. “When it came to the right political reaction, Dijsselbloem played a blinder.” To agree to play the punch ball for a loose cannon of a Greek minister by continuing the press conference would have been the wrong one.

  50. @DOCM
    Good link to NY Times Landon Thomas article.

    Its a game of chicken, as to who will pull the plug. That is all that is at issue now for Greek banks.

    The Greeks want to make sure, if possible, that it is the ECB that shuts down the Greek banking system, not the government.
    Greece will then do an Iceland with the local deposits and leave bank creditors including the ECB to take their losses, for once; while still inside the euro.

    And if hung out to dry by the ECB, then the Greeks have no option but to leave the euro; no doubt the solution favoured by the creditor bloc. Ironically Greece out of the euro may well suit Draghi.
    Draghi can argue that he tried his best too, call it a day, and help lead Italy out of the currency.

    Everything to play for!

  51. @ JR

    It is a game of chicken alright but with an identifiable loser. The new Greek government is busily snatching defeat from the jaws of victory unless it signals a change in direction more clearly than has done up to this point. The question is whether there will be contagion. When canon are loose on the deck, sensible sailors run for cover.

    Not just the NYT but also the WSJ take a birds eye view, a feat which seems beyond the range of not just Irish but European media.

    http://blogs.wsj.com/brussels/2015/01/29/on-greek-debt-feeling-like-its-2012/

    http://blogs.wsj.com/brussels/2015/01/29/on-greek-debt-feeling-like-its-2012/

  52. @DOCM, Tull, The Second et al.

    The elections in Greece: A clear message to the European Union

    The working people of Greece have delivered a clear message to the European Union, to the International Fund and to the Greek oligarchs that they have had enough of “austerity,” enough of being bullied, enough of being dictated to by these forces.

    http://www.communistpartyofireland.ie/sv/05-greece.html

  53. @ DOCM

    Review Munchau comment on Dieselboom and Guardian blog on his career prospects following his performance with Van the Man!

  54. Le Monde draws attention to a fact that may have been overlooked i.e. that the days of the troika are almost certainly numbered irrespective of the attitude now adopted by Greece.

    http://www.lemonde.fr/economie/article/2015/02/02/troika_4568344_3234.html

    Osborne urging Varoufakis to “act responsibly”, the reported reference by Varoufakis to an “early” agreement (rather than “end May”) and the confirmation by Tsirpas in Cyprus that Greece would not be seeking a loan from Russia are all elements which suggest that the reality of the Greek situation may be sinking home; and the possibility of a deal that can be sold as a success by all concerned, but without any major change of substance, increasing.

  55. @ Vinny

    See above!

    If you were urged to act responsibly, what inference would you draw from that urging?

  56. fyi

    Greece’s New Economics Minister: ‘Europe Doesn’t Need To Be Afraid’

    Interview by Manfred Ertel

    Greece wants to remain in the euro zone, but Athens wishes to renegotiate everything relating to the current austerity regime. SPIEGEL spoke with Economics Minister Giorgios Stathakis about how the new government intends to address that challenge.

    Stathakis: Afraid of what? No, you don’t need to be afraid. Syriza was all along arguing that the terms imposed by the troika have extremely negative effects on our economy and on our people and that they must be changed. The same is also true of Europe.

    SPIEGEL: How do you mean?

    Stathakis: By way of changes to financial policy toward a more expansive public monetary policy. Our citizens are tired after five years of strict austerity; they feel as though they have been punished by Europe. We need a new agenda for a healthy economic development and a sturdy fiscal framework that alleviates the negative social effects of the crisis. That is why Syriza’s election victory could help push through a new type of crisis management in Europe.

    SPIEGEL: Still, with his demands for a debt cut and promises of billions in gifts to Greek voters, Alexis Tsipras has frightened his European partners.

    Stathakis: We have always said that the solution to our problems must be a European one, with agreement from Europeans on the basis of a very sound idea of mutual interests. That’s why we have partners. On the other hand, it has to be a major policy shift to be made in Greece. That is unavoidable.

    http://www.spiegel.de/international/europe/interview-with-new-greek-economics-minister-stathakis-a-1015956.html

    Georgios Stathakis, 61, is an economist by training and will be in charge of the economics, infrastructure, tourism and shipping portfolios in the cabinet of newly elected Prime Minister Alexis Tsipras. He will lead negotiations with Brussels together with Deputy Prime Minister Giannis Dragasakis and Finance Minister Giannis Varoufakis. The son of a shipping magnate, Stathakis used to be a communist and taught Marxist theory at the University of Crete prior to joining Tsipras’ cabinet. He tends to avoid shrill tones, instead favoring more moderate ones.

  57. DOD,
    The Germans had elections as well as did the rest of the core and those electorates voted for parties that do not favour debt write does. Does that not count or do we only have to respect the mandate of those who vote for magic beans. If the Greeks want to escape the shackles of EZ membership, the door is over there,

  58. @Tull

    And did the Hibernians vote for ‘policy change’ in last general election? Did they get it?

    Methinks Tull you have been re_ass_imilated to the Financial System Borg.

    Perhaps you were always Borg?

  59. DOD,
    I see Tsipiras has capitulated on his central demand of a haircut. Your hero did not last long did he. It is now a messy NPVOF adjustment as it was always going to be or a GREXIT which would destroy the fabric of Greek society.

    Yet again a populist spoofer folds like a cheap deck chair.

  60. Greece blinked first. And, for their own sake, thank God for that. Populist rabble rousing only makes sense when u actually have some decent cards to play. Greece really doesn’t. They don’t need to fold, but going all-in on Grexit, when you have a 6 and a 10, is rarely likely to work.

  61. “Populist rabble rousing only makes sense when u actually have some decent cards to play”

    I dunno. Deflation is hardly going to be a bed of roses for Germany.
    The EZ is run by the insane. Not good for bonds long term either even if yields are at record lows.

    One quarter of EZ sovs are priced at negative yields now. That says a lot about how people perceive the competence of the EZ leadership.

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