Greece

[Endovelico]

Yanis Varoufakis full transcript: our battle to save Greece
The full transcript of the former Greek Finance Minister's first interview since resigning.
by Harry Lambert Published 13 July, 2015 - 17:37
http://www.newstatesman.com/world-affai ... ave-greece

This conversation took place before the deal.

Harry Lambert: So how are you feeling?

Yanis Varoufakis: I’m feeling on top of the world – I no longer have to live through this hectic timetable, which was absolutely inhuman, just unbelievable. I was on 2 hours sleep every day for five months. … I’m also relieved I don’t have to sustain any longer this incredible pressure to negotiate for a position I find difficult to defend, even if I managed to force the other side to acquiesce, if you know what I mean.

HL: What was it like? Did you like any aspect of it?

YV: Oh well a lot of it. But the inside information one gets… to have your worst fears confirmed … To have “the powers that be” speak to you directly, and it be as you feared – the situation was worse than you imagined! So that was fun, to have the front row seat.

HL: What are you referring to?

YV: The complete lack of any democratic scruples, on behalf of the supposed defenders of Europe’s democracy. The quite clear understanding on the other side that we are on the same page analytically – of course it will never come out at present. [And yet] To have very powerful figures look at you in the eye and say “You’re right in what you’re saying, but we’re going to crunch you anyway.”

HL: You’ve said creditors objected to you because “I try and talk economics in the Eurogroup, which nobody does.” What happened when you did?

YV: It’s not that it didn’t go down well – it’s that there was point blank refusal to engage in economic arguments. Point blank. … You put forward an argument that you’ve really worked on – to make sure it’s logically coherent – and you’re just faced with blank stares. It is as if you haven’t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem – you’d have got the same reply. And that’s startling, for somebody who’s used to academic debate. … The other side always engages. Well there was no engagement at all. It was not even annoyance, it was as if one had not spoken.

HL: When you first arrived, in early February, this can’t have been a unified position?

YV: Well there were people who were sympathetic at a personal level – so, you know, behind closed doors, on an informal basis, especially from the IMF. [HL: “From the highest levels?” YV: “From the highest levels, from the highest levels.”] But then inside the Eurogroup, a few kind words and that’s it, back behind the parapet of the official version.

[But] Schäuble was consistent throughout. His view was “I’m not discussing the programme – this was accepted by the previous government and we can’t possibly allow an election to change anything. Because we have elections all the time, there are 19 of us, if every time there was an election and something changed, the contracts between us wouldn’t mean anything.”

So at that point I had to get up and say “Well perhaps we should simply not hold elections anymore for indebted countries”, and there was no answer. The only interpretation I can give [of their view] is “Yes, that would be a good idea, but it would be difficult to do. So you either sign on the dotted line or you are out.”

HL: And Merkel?

YV: You have to understand I never had anything to do with Merkel, finance ministers talk to finance ministers, prime ministers talk to Chancellors. From my understanding, she was very different. She tried to placate the Prime Minister [Tsipras] – she said “We’ll find a solution, don’t worry about it, I won’t let anything awful happen, just do your homework and work with the institutions, work with the Troika; there can be no dead end here.”

This is not what I heard from my counterpart – both from the head of the Eurogroup and Dr Schäuble, they were very clear. At some point it was put to me very unequivocally: “This is a horse and either you get on it or it is dead.”

HL: Right so when was that?

YV: From the beginning, from the very beginning. [They first met in early February.]

HL: So why hang around until the summer?

YV: Well one doesn’t have an alternative. Our government was elected with a mandate to negotiate. So our first mandate was to create the space and time to have a negotiation and reach another agreement. That was our mandate – our mandate was to negotiate, it was not to come to blows with our creditors. …

The negotiations took ages, because the other side was refusing to negotiate. They insisted on a “comprehensive agreement”, which meant they wanted to talk about everything. My interpretation is that when you want to talk about everything, you don’t want to talk about anything. But we went along with that.

And look there were absolutely no positions put forward on anything by them. So they would… let me give you an example. They would say we need all your data on the fiscal path on which Greek finds itself, we need all the data on state-owned enterprises. So we spent a lot of time trying to provide them with all the data and answering questionnaires and having countless meetings providing the data.

So that would be the first phase. The second phase was where they’d ask us what we intended to do on VAT. They would then reject our proposal but wouldn’t come up with a proposal of their own. And then, before we would get a chance to agree on VAT with them, they would shift to another issue, like privatisation. They would ask what we want to do about privatisation, we put something forward, they would reject it. Then they’d move onto another topic, like pensions, from there to product markets, from there to labour relations, from labour relations to all sorts of things right? So it was like a cat chasing its own tail.

We felt, the government felt, that we couldn’t discontinue the process. Look, my suggestion from the beginning was this: This is a country that has run aground, that ran aground a long time ago. … Surely we need to reform this country – we are in agreement on this. Because time is of the essence, and because during negotiations the central bank was squeezing liquidity [on Greek banks] in order pressurise us, in order to succumb, my constant proposal to the Troika was very simple: let us agree on three or four important reforms that we agree upon, like the tax system, like VAT, and let’s implement them immediately. And you relax the restrictions on liqiuidity from the ECB. You want a comprehensive agreement – let’s carry on negotiating – and in the meantime let us introduce these reforms in parliament by agreement between us and you.

And they said “No, no, no, this has to be a comprehensive review. Nothing will be implemented if you dare introduce any legislation. It will be considered unilateral action inimical to the process of reaching an agreement.” And then of course a few months later they would leak to the media that we had not reformed the country and that we were wasting time! And so… [chuckles] we were set up, in a sense, in an important sense.

So by the time the liquidity almost ran out completely, and we were in default, or quasi-default, to the IMF, they introduced their proposals, which were absolutely impossible… totally non-viable and toxic. So they delayed and then came up with the kind of proposal you present to another side when you don’t want an agreement.

HL: Did you try working together with the governments of other indebted countries?

YV: The answer is no, and the reason is very simple: from the very beginning those particular countries made it abundantly clear that they were the most energetic enemies of our government, from the very beginning. And the reason of course was their greatest nightmare was our success: were we to succeed in negotiating a better deal for Greece, that would of course obliterate them politically, they would have to answer to their own people why they didn’t negotiate like we were doing.

HL: And partnering with sympathetic parties, like Podemos?

YV: Not really. I mean we always had a good relationship with them, but there was nothing they could do – their voice could never penetrate the Eurogroup. And indeed the more they spoke out in our favour, which they did, the more inimical the Finance Minister representing that country became towards us.

HL: And George Osborne? What were your dealings like with him?

YV: Oh very good, very pleasant, excellent. But he is out of the loop, he is not part of the Eurogroup. When I spoke to him on a number of occasions you could see that was very sympathetic. And indeed if you look at the Telegraph, the greatest supporters of our cause have been the Tories! Because of their Eurosceptism, eh… it’s not just Euroscepticsm; it’s a Burkean view of the sovereignty of parliament – in our case it was very clear that our parliament was being treated like rubbish.

HL: What is the greatest problem with the general way the Eurogroup functions?

YV: [To exemplify…] There was a moment when the President of the Eurogroup decided to move against us and effectively shut us out, and made it known that Greece was essentially on its way out of the Eurozone. … There is a convention that communiqués must be unanimous, and the President can’t just convene a meeting of the Eurozone and exclude a member state. And he said, “Oh I’m sure I can do that.” So I asked for a legal opinion. It created a bit of a kerfuffle. For about 5-10 minutes the meeting stopped, clerks, officials were talking to one another, on their phone, and eventually some official, some legal expert addressed me, and said the following words, that “Well, the Eurogroup does not exist in law, there is no treaty which has convened this group.”

So what we have is a non-existent group that has the greatest power to determine the lives of Europeans. It’s not answerable to anyone, given it doesn’t exist in law; no minutes are kept; and it’s confidential. So no citizen ever knows what is said within. … These are decisions of almost life and death, and no member has to answer to anybody.

HL: And is that group controlled by German attitudes?

YV: Oh completely and utterly. Not attitudes – by the finance minister of Germany. It is all like a very well-tuned orchestra and he is the director. Everything happens in tune. There will be times when the orchestra is out of tune, but he convenes and puts it back in line.

HL: Is there no alternative power within the group, can the French counter that power?

YV: Only the French finance minister has made noises that were different from the German line, and those noises were very subtle. You could sense he had to use very judicious language, to be seen not to oppose. And in the final analysis, when Doc Schäuble responded and effectively determined the official line, the French FM in the end would always fold and accept.

HL: Let’s talk about your theoretical background, and your piece on Marx in 2013, when you said:

“A Greek or a Portuguese or an Italian exit from the Eurozone would soon lead to a fragmentation of European capitalism, yielding a seriously recessionary surplus region east of the Rhine and north of the Alps, while the rest of Europe is would be in the grip of vicious stagflation. Who do you think would benefit from this development? A progressive left, that will rise Phoenix-like from the ashes of Europe’s public institutions? Or the Golden Dawn Nazis, the assorted neofascists, the xenophobes and the spivs? I have absolutely no doubt as to which of the two will do best from a disintegration of the eurozone.”

…so would a Grexit inevitably help Golden Dawn, do you still think that?

YV: Well, look, I don’t believe in deterministic versions of history. Syriza now is a very dominant force. If we manage to get out of this mess united, and handle properly a Grexit … it would be possible to have an alternative. But I’m not sure we would manage it, because managing the collapse of a monetary union takes a great deal of expertise, and I’m not sure we have it here in Greece without the help of outsiders.

HL: You must have been thinking about a Grexit from day one...

YV: Yes, absolutely.

HL: ...have preparations been made?

YV: The answer is yes and no. We had a small group, a ‘war cabinet’ within the ministry, of about five people that were doing this: so we worked out in theory, on paper, everything that had to be done [to prepare for/in the event of a Grexit]. But it’s one thing to do that at the level of 4-5 people, it’s quite another to prepare the country for it. To prepare the country an executive decision had to be taken, and that decision was never taken.

HL: And in the past week, was that a decision you felt you were leaning towards [preparing for Grexit]?

YV: My view was, we should be very careful not to activate it. I didn’t want this to become a self-fulfilling prophecy. I didn’t want this to be like Nietzsche’s famous dictum that if you stare into the abyss long enough, the abyss will stare back at you. But I also believed that at the moment the Eurogroup shut out banks down, we should energise this process.

HL: Right. So there were two options as far as I can see – an immediate Grexit, or printing IOUs and taking bank control of the Bank of Greece [potentially but not necessarily precipitating a Grexit]?

YV: Sure, sure. I never believed we should go straight to a new currency. My view was – and I put this to the government – that if they dared shut our banks down, which I considered to be an aggressive move of incredible potency, we should respond aggressively but without crossing the point of no return.

We should issue our own IOUs, or even at least announce that we’re going to issue our own euro-denominated liquidity; we should haircut the Greek 2012 bonds that the ECB held, or announce we were going to do it; and we should take control of the Bank of Greece. This was the triptych, the three things, which I thought we should respond with if the ECB shut down our banks.

… I was warning the Cabinet this was going to happen [the ECB shut our banks] for a month, in order to drag us into a humiliating agreement. When it happened – and many of my colleagues couldn’t believe it happened – my recommendation for responding “energetically”, let’s say, was voted down.

HL: And how close was it to happening?

YV: Well let me say that out of six people we were in a minority of two. … Once it didn’t happen I got my orders to close down the banks consensually with the ECB and the Bank of Greece, which I was against, but I did because I’m a team player, I believe in collective responsibility.

And then the referendum happened, and the referendum gave us an amazing boost, one that would have justified this type of energetic response [his plan] against the ECB, but then that very night the government decided that the will of the people, this resounding ‘No’, should not be what energised the energetic approach [his plan].

Instead it should lead to major concessions to the other side: the meeting of the council of political leaders, with our Prime Minister accepting the premise that whatever happens, whatever the other side does, we will never respond in any way that challenges them. And essentially that means folding. … You cease to negotiate.

HL: So you can’t hold out much hope now, that this deal will be much better than last week’s – if anything it will be worse?

YV: If anything it will be worse. I trust and hope that our government will insist on debt restructuring, but I can’t see how the German finance minister is ever going to sign up to this in the forthcoming Eurogroup meeting. If he does, it will be a miracle.

HL: Exactly – because, as you’ve explained, your leverage is gone at this point?

YV: I think so, I think so. Unless he [Schäuble] gets his marching orders from the Chancellor. That remains to be seen, whether she will step in to do that.

HL: To come back out again, could you possibly explain, in layman’s terms for our readers, your objections to Piketty’s "Capital"?

YV: Well let me say firstly, I feel embarrassed because Piketty has been extremely supportive of me and the government, and I have been horrible to him in my review of his book! I really appreciate his position over the last few months, and I’m going to say this to him when I meet him in September.

But my criticism of his book stands. His sentiment is correct. His abhorrence of inequality… [inaudible]. His analysis, however, undermines the argument, as far as I am concerned. Because in his book the neoclassical model of capitalism gives very little room for building the case he wants to build up, except by building upon the model a very specific set of parameters, which undermines his own case. In other words, if I was an opponent of his thesis that inequality is built into capitalism, I would be able to take apart his case by attacking his analysis.

HL: I don’t want to get too detailed, because this isn’t going to make the final cut...

YV: Yes…

HL: ...but it’s about his metric of wealth?

YV: Yes, he uses a definition of capital which makes capital impossible to understand – so it’s a contradiction of terms. [Click here—link to add: http://yanisvaroufakis.eu/2014/10/08/6006/—for Varoufakis’ critical review of Piketty’s Capital.]

HL: Let’s come back to the crisis. I really understand very little of your relationship with Tsipras…

YV: I’ve known him since late 2010, because I was a prominent critic of the government at the time, even though I was close to it once upon a time. I was close to the Papandreou family – I still am in a way – but I became prominent … back then it was big news that a former adviser was saying “We’re pretending bankruptcy didn’t happen, we’re trying to cover it up with new unsustainable loans,” that kind of thing.

I made some waves back then, and Tsipras was a very young leader trying to understand what was going on, what the crisis was about, and how he should position himself.

HL: Was there a first meeting you remember?

YV: Oh yes. It was late 2010, we went to a cafeteria, there were three of us, and my recollection is that he wasn’t clear back then what his views were, on the drachma versus the euro, on the causes of the crises, and I had very, well shall I say, “set views” on what was going on. And a dialogue begun which unfolded over the years and one that… I believe that I helped shape his view of what should be done.

HL: So how does it feel now, after four-and-a-half years, to no longer be working by his side?

YV: Well I don’t feel that way, I feel that we’re very close. Our parting was extremely amicable. We’ve never had a bad problem between us, never, not to this day. And I’m extremely close to Euclid Tsakalotos [the new finance minister].

HL: And presumably you’re still speaking with them both this week?

YV: I haven’t spoken to the Prime Minister this week, in the past couple of days, but I speak to Euclid, yes, and I consider Euclid to be very close to be, and vice-versa, and I don’t envy him at all. [Chuckling.]

HL: Would you be shocked if Tsipras resigned?

YV: Nothing shocks me these days – our Eurozone is a very inhospitable place for decent people. It wouldn’t shock me either to stay on and accepts a very bad deal. Because I can understand he feels he has an obligation to the people that support him, support us, not to let this country become a failed state.

But I’m not going to betray my own view, that I honed back in 2010, that this country must stop extending and pretending, we must stop taking on new loans pretending that we’ve solved the problem, when we haven’t; when we have made our debt even less sustainable on condition of further austerity that even further shrinks the economy; and shifts the burden further onto the have nots, creating a humanitarian crisis. It’s something I’m not going to accept. I’m not going to be party to.

HL: Final question – will you stay close with anyone who you had to negotiate with?

YV: Um, I’m not sure. I’m not going to mention any names now just in case I destroy their careers! [Laughing.]

I'm not going to say that leftists are more intelligent than rightists, although one might be excused to think so, by reading this interview. But it is definitely easier for a leftist to have his opinions stay in tune with his intelligence than for a rightist to do so. The rightist is often at pains to say things that are not supported by his intelligence, in order to protect his personal or political interests...

[noddy]

if only they learnt how to count.

[Simple Minded]

if only they learnt how to count.

Are you talking about the borrowers or the lenders?

Come to think of it, either one would have been sufficient.

Both would have been fantastic!

"Two small children will walk hand in hand thru the dark where neither one would venture alone."

[YMix]

[But] Schäuble was consistent throughout. His view was “I’m not discussing the programme – this was accepted by the previous government and we can’t possibly allow an election to change anything. Because we have elections all the time, there are 19 of us, if every time there was an election and something changed, the contracts between us wouldn’t mean anything.”

So at that point I had to get up and say “Well perhaps we should simply not hold elections anymore for indebted countries”, and there was no answer. The only interpretation I can give [of their view] is “Yes, that would be a good idea, but it would be difficult to do. So you either sign on the dotted line or you are out.”

We have a problem.

[noddy]

if you borrow money off anyone you have given them power over you.
if you join a larger political grouping then you have given them power over you.

if you do both, you have pretty much given up any pretense of self sufficiency.

this was all known from day one and was part of the original arguments, i have never understood the people that had john lennon viewpoints on this, its always been a confusing set of arguments.

[Heracleum Persicum]

.


NYT
Economists Were Right to Doubt the Euro


.

[Doc]

.


NYT
Economists Were Right to Doubt the Euro


.

Supporters of the treaty, including President Woodrow Wilson, are adamant that Germany pay sizable reparations for its previous misbehavior. Mr. Keynes, however, is looking forward rather than backward, and he is more concerned about ensuring prosperity for all European nations. While Wilson seeks contrition, Keynes seeks mercy.

hmmmm....

https://en.wikipedia.org/wiki/Treaty_of ... een_Points

Before the end of the war, President Woodrow Wilson put forward his Fourteen Points, which represented the liberal position at the Conference and helped shape world opinion. Wilson was concerned with rebuilding the European economy, encouraging self-determination, promoting free trade, creating appropriate mandates for former colonies, and above all, creating a powerful League of Nations that would ensure the peace. He opposed harsh treatment of Germany but was outmanoeuvered by Britain and France.

[YMix]

if you borrow money off anyone you have given them power over you.
if you join a larger political grouping then you have given them power over you.

if you do both, you have pretty much given up any pretense of self sufficiency.

this was all known from day one and was part of the original arguments, i have never understood the people that had john lennon viewpoints on this, its always been a confusing set of arguments.

How much power and what is the creditor allowed to do with it?

[Nastarana]

if you borrow money off anyone you have given them power over you.
if you join a larger political grouping then you have given them power over you.

if you do both, you have pretty much given up any pretense of self sufficiency.

this was all known from day one and was part of the original arguments, i have never understood the people that had john lennon viewpoints on this, its always been a confusing set of arguments.

Please do help me understand here.

If I borrow money I have to pay it back. No argument. If that means brown bag it, take the bus to work, sell the car, etc., too bad, I should have thought of that before borrowing.

So, let us say I am a nice little goody twoshoes, and I make those payments like clockwork, and, because I am not a dummy, send them by certified mail so the finance company can't pretend they didn't receive them. BTW, PLEASE do not insult my intelligence by trying to pretend finance companies would not do that. So, let us say that the finance company decides they are not making enough money on the twoshoes account because of not collecting late fees, and they activate paragraph x of clause yy, which I never bothered to take out a magnifying glass and read, which says they get to raise the payments whenever they feel like. Too bad, I still have to pay.

So, here is what I do not understand.

1. I have to pay, no question about that, but the finance company, Sociopaths Unlimited, does not get to tell me how to pay. I might sell off the family antiques, take a second job, or knock over a liquor store, none of their concern, right?

2. Sociopaths Unlimited also does not get to tell me how to live. They can tell me you have to pay up or else, but they don't get to say you have to shop at our subsidiary, Sociopath Retail.

[noddy]

if you borrow money off anyone you have given them power over you.
if you join a larger political grouping then you have given them power over you.

if you do both, you have pretty much given up any pretense of self sufficiency.

this was all known from day one and was part of the original arguments, i have never understood the people that had john lennon viewpoints on this, its always been a confusing set of arguments.

Please do help me understand here.

If I borrow money I have to pay it back. No argument. If that means brown bag it, take the bus to work, sell the car, etc., too bad, I should have thought of that before borrowing.

So, let us say I am a nice little goody twoshoes, and I make those payments like clockwork, and, because I am not a dummy, send them by certified mail so the finance company can't pretend they didn't receive them. BTW, PLEASE do not insult my intelligence by trying to pretend finance companies would not do that. So, let us say that the finance company decides they are not making enough money on the twoshoes account because of not collecting late fees, and they activate paragraph x of clause yy, which I never bothered to take out a magnifying glass and read, which says they get to raise the payments whenever they feel like. Too bad, I still have to pay.

So, here is what I do not understand.

1. I have to pay, no question about that, but the finance company, Sociopaths Unlimited, does not get to tell me how to pay. I might sell off the family antiques, take a second job, or knock over a liquor store, none of their concern, right?

2. Sociopaths Unlimited also does not get to tell me how to live. They can tell me you have to pay up or else, but they don't get to say you have to shop at our subsidiary, Sociopath Retail.

1 - depends on the terms and conditions of the loan actually - they might be able to come in and strip you of any assets they see fit, including your home and livelihood.
2 - they do when you have given them authority to do so by joining a larger union and agreeing to the rules that come out of that union

so yes, on both counts..

im not on the side of sociapaths unlimited, im on the side of government not aggregating massive debt in my name and then leaving me paying taxes to sociopaths unlimited - just a small clarification to the fact i would be furious at the greek government, not the people.

its only so much the mafias fault that you get involved with them - a certain level of adult accepts its perhaps best not to get involved with the mafia.

they did join the EU you know, they did accept all this money with terms and conditions, they are not innocent victims that lost their sovereignty by surprise, they gave it away and blew it all on consumption and corruption and didnt spent one cent on investment.

its horrid the people need to suffer for their governments stupidity but agreements made by previous governments absolutely apply to following governments, unless you want to default - which is the critical point here.

[Parodite]

Quite right Noddy.

Another thing to take notice of is that most money (around 70% I believe) that went to Greece is used to pay other creditor banks that want their money back from Greece. Of the remaining 30% not much went as an investment into actual Greek economic activity.

So we see something that has been happening quite frequently in the recent past: citizens bail out mismanaged and failing banks whose managers make loads of money even if their ship is sinking. They are rewarded for bad performance. This is the wrong incentive in general.

[Parodite]

A New Beginning for Greece – and Europe

KIEL – Greece is in urgent need of clear thinking. The only reason the country has not long since defaulted on its debts is that the European Central Bank continues to provide funds to the Greek central bank through its emergency liquidity assistance (ELA) scheme. The Greek central bank, in turn, lends money to the country’s commercial banks, which lend it to Greek citizens and foreign creditors. The problem is that both groups of borrowers have been transferring large sums of money to other countries.

The result is that overdraft credits to the Greek central bank have grown by nearly €1 billion a day in recent months. If Greece defaults and leaves the eurozone, these overdrafts will not be repaid.

ELA funding assumes that the Greek economy is temporarily illiquid, but not insolvent. This assumption is patently false. Despite all the pain Greece has suffered – a 30% drop in aggregate demand since the last cyclical peak and a rise in unemployment to more than 25% of the workforce – the Greek economy is still nowhere near competitive enough to repay its debts.

Part of the reason is that corruption remains high and administrative capacity to levy taxes remains woefully limited. Meanwhile, low-income Greek households have borne the brunt of austerity. In short, the mess continues.

But allowing Greece to default and still remain in the eurozone is not an option: it would signal that other eurozone countries could amass huge debts, funded by the ECB, without having any intention of repaying. Fiscal responsibility in the eurozone would be fatally undermined.

Yet forcing a defaulting Greece out of the eurozone – against its will – is not an option, either: it would plunge the country into economic, social, and political instability, and there would doubtless be serious repercussions beyond the country’s borders.

In my judgment, there are only two viable options left. The first – and more desirable – is for the ECB to assess realistically Greece’s lack of solvency and so stop providing ELA funds to its banking system. This would precipitate a payment crisis for Greece. But, recognizing the impending disaster, Greece would genuinely commit itself to the structural reforms that are in its own long-term interests: boosting the labor market’s flexibility, selling state-owned enterprises that most other European countries have already placed in private hands, and spending less on public-sector bureaucracy.

At the same time, Greece would ensure that these reforms do not hurt the poorest by introducing active labor-market policies (such as subsidies to train and hire the long-term unemployed). Furthermore, Greece would commit itself to an automatically implemented fiscal plan, specifying the long-run ratio of national debt to GDP, the convergence rate to this ratio, and the degree of fiscal counter-cyclicality.

So much for what Greece must do. In return, its creditors would agree to another one-time debt write-off – large enough to enable Greece realistically to repay its debts in the future, but small enough to avoid unnecessary transfers of credit. Greece would remain within the eurozone, having lost some of its fiscal and structural sovereignty.

If this first option is not taken – the likely outcome, given the current game of political brinkmanship – Greece will default. But that could set the stage for the second option, which I would call the “New Beginning Program.”

Under this program, creditor countries would write off Greece’s debts, on the condition that the country left the eurozone voluntarily. This would give Greece the opportunity to start afresh from outside the monetary union: it could restructure its economy without outside interference, and could be ready to re-enter the eurozone at a later point under new conditions – this time without false statistical pretenses or unrealistic expectations.

Such an option would allow the Greek government to make a new start in stimulating competition, fighting corruption, and otherwise building a basis for long-term growth. This would not be easy, but it would no longer be a process that Greece finds humiliating and creditor countries find exasperating.

This second option would be less desirable than the first. The speculative uncertainties associated with a “Grexit” might well threaten other eurozone economies (for example, Cyprus and Portugal), while Greece, with a devalued drachma, would find it painfully expensive to import the capital goods it needs to generate a broad base of high-wage jobs.

But the second option would also be a new beginning for the whole eurozone. Its member states would accept that monetary union is impossible without fiscal and structural coordination. The minimum fiscal coordination needed would involve automatically implemented national plans, formulated by each government in advance.

As a counterpart, structural coordination must, at a minimum, focus European Union funds on countries with long-term current-account deficits, the aim being to improve their competitiveness through investments in their human capital. Given that its current arrangements are neither credible nor sustainable, the eurozone needs this “new beginning,” regardless of which option Greece eventually takes.

Just posting this because it is so right.. and so wrong. The good part is the 101 assessment that Greece needs to reform and modernise anyways... inside or outside the Eurozone doesn't change the necessity.

But then the writer dreams on about how the Eurozone should also do better as a whole: "Its member states would accept that monetary union is impossible without fiscal and structural coordination. The minimum fiscal coordination needed would involve automatically implemented national plans, formulated by each government in advance." In other words.. you need a United States of Europe with a stronger EU Gvt to do the fiscal and structural coordination needed. Problem: most EU citizens don't want their national autonomy being even further eroded.

All we need here in Europe is a big as possible free trade zone with automous nation states. Some countries might as well form a monetary union.. if they are similar enough (for instance Gerrmany, Benelux, Denmark and Austria could form a union), but this is certainly not a requirment at all. In the mean time the pro United States of Europe centralists are pushing and feeding that growing monster Burocratix Rex in Brussels.

[Endovelico]

In my judgment, there are only two viable options left. The first – and more desirable – is for the ECB to assess realistically Greece’s lack of solvency and so stop providing ELA funds to its banking system. This would precipitate a payment crisis for Greece. But, recognizing the impending disaster, Greece would genuinely commit itself to the structural reforms that are in its own long-term interests: boosting the labor market’s flexibility, selling state-owned enterprises that most other European countries have already placed in private hands, and spending less on public-sector bureaucracy.

At the same time, Greece would ensure that these reforms do not hurt the poorest by introducing active labor-market policies (such as subsidies to train and hire the long-term unemployed). Furthermore, Greece would commit itself to an automatically implemented fiscal plan, specifying the long-run ratio of national debt to GDP, the convergence rate to this ratio, and the degree of fiscal counter-cyclicality.

This is the most unbelievable nonsense I have read about the Greek crisis in quite a while. Only an i-d-i-o-t or a very mischievous person would suggest anything like this...

[YMix]

This is the most unbelievable nonsense I have read about the Greek crisis in quite a while. Only an i-d-i-o-t or a very mischievous person would suggest anything like this...

It's pretty much standard neoliberal stuff.

[Parodite]

This is the most unbelievable nonsense I have read about the Greek crisis in quite a while. Only an i-d-i-o-t or a very mischievous person would suggest anything like this...

It's pretty much standard neoliberal stuff.

Here it is rather center politics.

[noddy]

This is the most unbelievable nonsense I have read about the Greek crisis in quite a while. Only an i-d-i-o-t or a very mischievous person would suggest anything like this...

It's pretty much standard neoliberal stuff.

Here it is rather center politics.

same.

[Typhoon]

This is the most unbelievable nonsense I have read about the Greek crisis in quite a while. Only an i-d-i-o-t or a very mischievous person would suggest anything like this...

It's pretty much standard neoliberal stuff.

Here it is rather center politics.

same.

Japan could benefit from that neoliberal prescription.

[noddy]

boosting the labor market’s flexibility

is one of those critical points i feel the socialist types are their own worst enemy.

their is nothing that can make the worker more empowered for wage negotiation and conditions than having the ability to walk away from an exploitive employer - making it easy to change industry and start new companies is the absolute best thing that can happen - its a fundamental difference between the golden age of the west and the stagnant guild era.

if you want a scared dependant worker who can be exploited, then make it difficult to change industry and propping up well connected zombie companies with other workers taxes is only a good thing to the zombie companies bosses.

its a funny thing some cant see that.



selling state-owned enterprises that most other European countries have already placed in private hands, and spending less on public-sector bureaucracy.

in my country privatization has either meant no change in services or improved services, it hasn't resulted in worse services for anything i know or care about.

its a net win because some (not all :/) of those services now have competition and we now have insulation against incompetency in any one company.

nothing worse than only having one option - when you have only one option then private is the same as public, a corruption waiting to happen.

[Heracleum Persicum]

2392568_pic_970x641 (1).jpg (77.01 KiB) Viewed 1053 times

[Endovelico]

This is the most unbelievable nonsense I have read about the Greek crisis in quite a while. Only an i-d-i-o-t or a very mischievous person would suggest anything like this...

It's pretty much standard neoliberal stuff.

Here it is rather center politics.

same.

Japan could benefit from that neoliberal prescription.

Japan's enemies hope it will...

[YMix]

boosting the labor market’s flexibility

is one of those critical points i feel the socialist types are their own worst enemy.

their is nothing that can make the worker more empowered for wage negotiation and conditions than having the ability to walk away from an exploitive employer - making it easy to change industry and start new companies is the absolute best thing that can happen - its a fundamental difference between the golden age of the west and the stagnant guild era.

if you want a scared dependant worker who can be exploited, then make it difficult to change industry and propping up well connected zombie companies with other workers taxes is only a good thing to the zombie companies bosses.

Yes and no. The ability to walk away from an exploitative employer is the icing on the labor market cake. It took many decades of leftist and labor struggle to turn the capitalism of Dickens-era Britain into today's system. It took decades of coordinated action on the workers' part to force employers to part with a bigger share of the profits and to bring about things like pensions, overtime, benefits and health insurance. As neoliberals push for "flexibility", I fear that the current system will die. It's already dying anyway for lack of international action. And the world will return to the conditions that led to Marxism in the first place: some people will diligently work all their lives and die poor.

Perhaps the European safety net is untenable. Certainly the union system is as open to abuse as any other man-made system. Maybe you can get a better deal on your own; good programmers earn 2,000-3,000 euros per month even in Romania and can always dump an abusive employer. But what about the rest? Should we simply accept the fact that a person who is not in high demand deserves nothing? Is the basis of personal merit in our society simply the amount of money that an employer and some retailers can make off me?

[noddy]

Yes and no. The ability to walk away from an exploitative employer is the icing on the labor market cake. It took many decades of leftist and labor struggle to turn the capitalism of Dickens-era Britain into today's system. It took decades of coordinated action on the workers' part to force employers to part with a bigger share of the profits and to bring about things like pensions, overtime, benefits and health insurance. As neoliberals push for "flexibility", I fear that the current system will die. It's already dying anyway for lack of international action. And the world will return to the conditions that led to Marxism in the first place: some people will diligently work all their lives and die poor.

i think thats mixing cause and effect - or atleast it is in my country.

none of the old industries are proving very sustainable in the face of automation and globalisation and this is destroying job security and leaving vast amounts of the population unemployed or unemployable.

flexability is perhaps a word that ends up meaning nothing but at heart its acknowledging the death of the mass employment industrial age and actually allowing for a work less, more flexable age, grab new jobs as they show up with as few barriers to entry as possible, with as many new startups as possible.

the trick is the governments and other entrenched interests are not ready to allow this flexability because it will upset all the status quos of housing and wages and taxes - adjusting the cost of living in a complex society is very hard to do and tends to happen via shocks and doom.

Perhaps the European safety net is untenable. Certainly the union system is as open to abuse as any other man-made system. Maybe you can get a better deal on your own; good programmers earn 2,000-3,000 euros per month even in Romania and can always dump an abusive employer. But what about the rest? Should we simply accept the fact that a person who is not in high demand deserves nothing? Is the basis of personal merit in our society simply the amount of money that an employer and some retailers can make off me?

seperate question to my mind.

why do i lose 60-80% of my money on taxes just so i can live under a bridge and beg at soup queues when i lose my job - to my mind the socialist stuff is a lie upon lies and all it does is fund another corporation provding comfy middle class jobs to those lucky enough to have the right degrees and connections to get them.

i want as much of government gutted as possible so that money can make it out to the people and not just fund the lifestyles of government workers - this would give me more flexbility to work less and do risky startups

id rather all that tax money went on a minimum wage for everyone, that would be fairer to the unemployed and poor and that would give me confidence in the system for the next downturn that steals all my contracts - i currently have taken a 20% paycut due to downturn and may lose my job if it gets any worse, i have no security, the government will do nothing to help me, i dont understand the nonsense that they will.

my city has sprinklers installed to hose the homeless off the streets! i hear you and endo talk about giving the government more resources, more power, it makes no sense to me.

as it stand the only difference between a corporate scum and a government scum is the latter controls the legal system and will throw me in gaol if i dont purchase their unwanted product.

how much of the greek bailout money went on governments and banks and how much actually made it out as payments to the greeks ?

[Parodite]

Every society needs a safety net of sorts, especially modern societies where you can't just go on hunting anymore or cut some trees and build a shed without some property owner or armed gvt official stops you in your tracks.

I'm not a fan of minimum wages but a big fan of an unconditional basic income for everyone via the tax system. The height of a basic income of course has to be some sort of product of the moral-social fiber of a culture and what is sustainable economically.

Big gvt and too big too fail big banking are two separate evils, and when they join forces...

[noddy]

i meant guaranteed income, not minimum wage, you are quite right.

[Parodite]

i meant guaranteed income, not minimum wage, you are quite right.

ok..suspected you meant that