Greece’s Drachma Drama: Why Planning Is Too Important to be Left to Economists

By Lambert Strether of Corrente.

As Yves linked yesterday, details of Syriza’s “Plan B” are beginning to emerge, or, more plausibly, their “Plan Bs,” or even their “Plan to Have Plan Bs,” given that so many important details vary across accounts. It’s worth noting that the Telegraph’s Ambrose Evans-Pritchard, who is close to Syriza, had the broad outlines first, on June 14:

The radical wing of Greece’s Syriza party is to table plans over coming days for an Icelandic-style default and a nationalisation of the Greek banking system, deeming it pointless to continue talks with Europe’s creditor powers.

Syriza sources say measures being drafted include capital controls and the establishment of a sovereign central bank able to stand behind a new financial system. While some form of dual currency might be possible in theory, such a structure would be incompatible with euro membership and would imply a rapid return to the drachma.

The confidential plans were circulating over the weekend ….

In this post, I’ll summarize the main points from yesterday’s story in the Financial Times, and today’s important story from Ekathimerini, which provides insight into the IT dimensions of the “Plan Bs,” and further insight into the politics of it. Then I’ll raise a few issues, and conclude with the moral of the story on planning. (Let me caveat by saying that the whole drama feels to me like it’s being told by unreliable narrators. The foreign tongue and different alphabet don’t help this monolingual American much, either, but I suspect even sophisticated Europeans experience communications barriers with this material.) Since there’s been so much talk about democracy, let’s check popular opinion on a return to the drachma:

According to a poll by Metron Analysis for Parapolitika newspaper on Saturday, 61% of Greeks had a positive view of Tsipras, compared with 36% who disapproved. An overwhelming majority – 78% – still wanted Greece to stay in the eurozone against 19% in favour of going back to the drachma.

(Kudos to Tsipras, who whatever else he may be, has demonstrated amazing abilities as a politician.) Even talking Greek polling with a dose of salts, the Greek people clearly don’t want to return to the drachma; double the 19% in favor, and you don’t have anything like a majority.

Groundwork laid, let’s look at the FT story from links yesterday, July 25, first disposing of the Sun- or New York Post-style headline:

Syriza’s covert plot during crisis talks to return to drachma

First, the “plot” wasn’t Syriza’s as such; it was a work product “hatched” by a faction, as the story itself says. Second, “covert” plots tend not to involve  briefing “sympathetic journalists”  “waiting outside the gathering.” Can do better, pink paper!  That said, here are the main points of the FT’s Plan B, discussed July 14 in a meeting “at the Oscar Hotel in a shabby downtown district of Athens.” It’s not clear who authored the plan, though Panayotis Lafazanis, the former energy and environment minister and leader of Syriza’s Left Platform, advocated for it. Of the three points, #2 holds the most interest for us:

1) Arresting the central bank’s governor.

Meanwhile, the central bank would immediately lose its independence and be placed under government control. Its governor, Yannis Stournaras, would be arrested if, as expected, he opposed the move.

I pause to admire the piety of the FT’s claim that the Greek Central Bank is independent, when in fact it’s a mere creature of the ECB. And though the FT clearly means this text to be shocking, I don’t have any principled objection to arresting bankers; in fact, we should arrest arrest more of them. 

2) Emptying the central bank’s vaults.

[T]he Syriza government should seize control of the Nomismatokopeion, the Greek mint, where the bulk of the country’s cash reserves are kept.

Mr Lafazanis said the reserves, which he claimed amounted to €22bn, would pay for pensions and public sector wages and also keep Greece supplied with food and fuel while preparations were made for launching a new drachma.

3) Appealing to Moscow for help.

Given the communist past of Mr Tsipras and other leading government figures, Athens [not Syriza? Not the Left Platform?] believed it would be a simple matter to win $5bn to $10bn in financial backing from Vladimir Putin, the Russian president.

Highly dubious; the Greek government kept going to Moscow and coming back with, well, a plan to have a plan. As Yves wrote: “Putin has been quite pointedly avoided being seen as meddling in Greece now; he can always pick up any pieces later.”

So let’s focus on #2. After all, it’s easy to arrest a banker, and trivial to issue an appeal. But paying for pensions and launching a new drachma takes what Nathan Tankus calls “organizational capacity” (here, here; and here) and that’s what the FT hones in on:

The plan demonstrates the apparently ruthless determination of Syriza’s far leftists to pursue their political aims — but also their lack of awareness of the workings of the eurozone financial system.

For one thing, the vaults at the Nomismatokopeion currently hold only about €10bn of cash — enough to keep the country afloat for only a few weeks but not the estimated six to eight months required to prepare, test and launch a new currency.

Pausing to admire how the FT characterizes Syriza as “ruthless” — By what standard? The gentle ministrations of the troika? — we come away with two problems: (1) Syriza is apparently $12 billion off in its estimates of cash on hand, and (2) introducing a drachma takes months, not days or weeks, as we have shown here. There’s not enough runway. Once again, financial time moves more rapidly than political times.

Could there have been more to “Plan B”? Additional detail emerge in Sunday’s Ekathimerini. Here’s the page as it ran in the printed edition (page 12):


And here is the English edition from Ekathimerini — which appeared after I made that screen capture! Caveat: I don’t know if the English edition is an abridged version of the Greek; I suspect that it is, since it seems shorter, and the Greek headline begins with “Plan B,” and the English headline doens’t. [1]. The Sunday Ekathimerini story was also covered, in English, by Protothema, and in Greek by ΣΚΑΪ.)

In a teleconference call with members of international hedge funds that was allegedly coordinated by former British Chancellor of the Exchequer Norman Lamont, Varoufakis claimed to have been given the okay by Tsipras last December – a month before general elections that brought SYRIZA to power – to plan a payment system that could operate in euros but which could be changed into drachmas “overnight” if necessary

Varoufakis worked with a small team to prepare the plan, which would have required a staff of 1,000 to implement but did not get the final go-ahead from Tsipras to proceed, he said.

(Note that spinning up a staff of 1,000 involves both organizational capacity and time, and that the story says “plan” and not “build.” Perhaps if Syriza had gone on a war footing immediately upon their election, this might have been possible “with a level of effort,” as we say.) The teleconference was recorded, and Varoufakis had this to say:

[VAROUFAKIS:] The work was more or less complete: We did have a Plan B but the difficulty was to go from the five people who were planning it to the 1,000 people that would have to implement it. For that I would have to receive another authorisation which never came.”

(As an IT person manqué, I really don’t like the sound of that “more or less complete.” I don’t think the 1,000 new hires would like it much, either.)

Here are the three steps in Varoufakis‘s Plan B, with the text taken from the recording:

1) Hack into the General Secretariat of Public Revenues website and steal taxpayer registration numbers (AFMs).

[VAROUFAKIS:] The General Secretary of Public Revenues within my ministry is controlled fully and directly by the troika. … The general secretary of information systems on the other hand was controlled by me, as minister. … [H]e said: “Listen, if I ask for permission from [the troika] to start implementing this program then the troika will immediately know we are designing a parallel system.”  [S]o we decided to hack into my ministry’s own software program in order to be able break it up to just copy just to copy the code of the tax systems website onto a large computer in his office so that he can work out how to design and implement this parallel payment system.”

Caveat: If you read Varoufakis carefully, the text does not say what Ekathimerini says it does.  Ekathimerini: “The plan would involve hijacking the AFMs of taxpayers and corporations by hacking into General Secretariat of Public Revenues website, Varoufakis told his interlocutors.” That’s not at all the same as “copying the code of the tax system’s website.” However, since both Protothema and ΣΚΑΪ support Ekathimerini’s summary — both having “hacking” in their URLs — I’m going to assume there are communications issues here, either in translation, or between Varoufakis and his technical team, or both.)

2) Map each AFM to a newly created, “parallel” electronic bank account, one for each AFM.

[VAROUFAKIS:] We were planning to create, surreptitiously, reserve accounts attached to every tax file number, without telling anyone, just to have this system in a function under wraps.

3) If Plan B is activated, send each taxpayer a special PIN number so they can transact with their (hitherto secret) “parallel account” (thereby bypassing the banking system controlled by the ECB).

[VAROUFAKIS:]  And, at the touch of a button, to allow us to give PIN numbers to tax file number holders, to taxpayers. So let’s take for instance the case the state owed 1 million euros to some pharmaceutical company for drugs purchased on behalf of the National Health Service. We could immediately create a digital transfer into that reserve account of the tax file number of the pharmaceutical company and provide them with a pin number so that they could use this as a kind of parallel payment mechanism by whichever partof that digital monies to any tax file number for whom they owed money or indeed to use it to in order to make tax payments to the state. That would have created a parallel banking system while the banks were shut as a result of the ECBs aggressive action to deny us some breathing space.”

So, there are several interesting features to this new revelation of Plan B. One is the sheer audacity of it (though I’m sure the Eurogroup would prefer the phrase “breathtaking effrontery”). More importantly, it sheds light on the two issues of organizational capacity mentioned above. First, cash on hand: Could Varoufakis have planned on plugging that $12 billion hole via, er, fiat? (Here again, the dichotomy between audacity and effrontery seems relevant.) Second, runway: At least Varoufakis and company were planning earlier than we had previously thought they were (though in all likelihood not early enough). So in these ways, the Ekathimerini story may complement and extend the FT story.

* * *
However, the Ekathimerini story also raises a number of questions that I will simply ask in the order that they occurred to me.

1) Why the heck did “former British Chancellor of the Exchequer Norman Lamont” co-ordinate the conference call? What was in it for him?

2) Why the heck was Varoufakis talking to hedgies? What was in it for them? Yves writes: “These clowns all use prime brokers or buy those services unbundled, so they know zip re ops,” and Plan B is all about operations. And: “[Hedgies] don’t make markets in currencies. They don’t support the efforts of central banks; in fact they undermine them when profitable.” (And if you’re thinking, as I thought, of Soros taking on the Bank of England and betting against the pound, that works when the central bank is trying to support the currency; but Draghi is happy to have the Euro fall, since it boosts exports. And is a modern-day Soros — were he to exist — likely to bet that the Euro will rise if Greece goes back to the drachma? How would that work? How big is the bet? Worth a conference call to hedgies, plural?)

3) Who exactly would the parallel accounts serve? The use case Varoufakis gives is for 1 million Euros, which is not a transaction Joe Ouzos typically performs. Protothema and ΣΚΑΪ, however, are clear that the parallel accounts apply to all taxpayers. Varoufakis seems to think that at some future date, they would:

“This was very well developed and I think it would have made a very big difference because very soon we could have extended it, using apps on smartphones and it could become a functioning parallel system and of course this would be euro denominated but at the drop of a hat it could be converted to a new drachma.”

Leading me to my next two questions:

4) Can Varoufakis possibly believe that with “apps on smartphones and it could become a functioning parallel system” when cellphone penetration in Greece was 32.5% in 2013? And while we’re at it, how do people without smartphones get their PINs? And what do they do with them once they have them?

5) Can Varoufakis possibly believe that “at the drop of a hat it could be converted to a new drachma”? Again, see here and here. Sure, flipping the switch is the work of an instant; but Varoufakis, with his crew of five, is nowhere near having done the design, engineering, and wiring that are behind that switch.

Finally, the digital money in the parallel accounts is a cash equivalent (and so the usual qualifications about foreign exchange in oil and pharmaceuticals apply). But Greece already has cash: The Euro. Granted, it doesn’t have enough cash in Euros, but it does have cash, if only in the mattress or offshore. Suppose we think of this digital money as scrip; the scrip will trade at a discount to the Euro, just as scrip did against the dollar in California, when the state issued scrip to workers because of a budget imbroglio. So — I hope I have this right — if I’m owed, I’m going to want to be paid in Euros. If I owe, I’m going to want to use my parallel account. How does that work?

* * *
At the beginning of this post, I mentioned that 19% of the Greek people favor returning to the drachma. Here’s what Varoufakis thinks about that:

[VAROUFAKIS:] I have to admit we did not have a mandate for bringing Greece out of the euro. What we had a mandate to do was to negotiate for a kind of arrangement with the Eurogroup and the ECB that would render Greece sustainable within the eurozone. The mandate went a bit further, at least in my estimation. I think the Greek people had authorised us to pursue energetically and vigorously that negotiation to the point of saying that if we can’t have a viable agreement, then we should consider getting out.

Varoufakis contradicts himself. He says: “I have to admit we did not have a mandate for bringing Greece out of the euro.” And one sentence later he takes back the admission: “The mandate went a bit [!] further, at least in my estimation….” I’ll pass over the idea that there’s only “a bit” of difference between staying in the Euro or leaving it; the essential point is that Varoufakis, and Syriza, were never honest with the Greek people about what they were planning. Looking on the bright side, at least we don’t have to listen to any more yammering about democracy; the informed consent of the Greek people was clearly not a concern; if it were, it would have been quite simple for Syriza — given Tsipras’s political abilities — to elict that consent. That was never done.

Academics often have a tragic flaw: over-confidence that their theory will prove out. From that flaw comes their tendency to view people as experimental test subject, essentially as lab rats, and failure of empathy for those to whom they owe a duty of care; thinking all transactions in the parallel accounts can take place via smartphones is a small example of this. Hubris is especially characteristic of economists, as two generations’ worth of dominance by neoliberals in academia has shown. Sadly, I believe a different school of economics has shown itself susceptible to the same flaw.


[1] There are surely some translation issues. The story reads “a parallel payment system that would operate using wiretapped tax registration numbers (AFMs),” but whatever AFMs are, they aren’t “wiretapped.”

* * *
Comments are on because I asked so many questions, and there are also possible translation issues. Please stay on point!

UPDATE From Ambrose Evans-Pritchard:

And AEP’s follow-on here.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. Dimitri Lascaris

    Metron Analysis? Hmmm, where have I heard that name before?

    On the day of the July 5 referendum in Greece, Metron Analysis published a poll showing that the OXI (no) camp would win by 3 points: However, the OXI vote won by over 22 points.

    In fact, no domestic polling agency in Greece came close to predicting the final margin of victory for the no camp in the July 5 referendum. In this informative piece in Le Monde Diplomatique, Alain Garrigou explores the pathetic record of inaccuracy of Greek polling firms:

    Moreover, the mainstream media ignore independent polls showing majority support for a Grexit. For example, this December 2014 poll by Gallup International: See also two polls done by Bridging Europe in March and June 2015: and

    Notably, all 3 of these polls were conducted before the ‘mental waterboarding’ of Tsipras in Brussels on July 13, a sordid exercise in national humiliation that almost certainly intensified hostility to the Eurozone in Greece.

    Quite apart from all of this, days before the referendum, Greeks were told by a procession of European leaders that a no vote amounted to a rejection of the Eurozone, and yet Greeks resoundingly voted OXI.

    It is thus far from clear that a majority of Greeks would choose the toxic Brussels diktat over a Grexit, were they put to that choice. Typically, Greek polls explore whether Greeks wish to remain in the Eurozone without asking Greeks whether they want to remain in it AT ANY COST. Clearly, the cost of Greece remaining within the monetary union has become extraordinarily high.

    This report I did from Athens for the Real News several days ago offers a sample, albeit a very small one, of the views of those who are confronted with that question:

    1. Lambert Strether Post author

      OK, Metron has a discount. Even if we mentally double drachma support, there’s no majority. That’s an error that’s bigger than the admittedly big errors on referendum night, is it not?

      1. Dimitri Lascaris

        I do not purport to know whether most Greeks still want to remain in the Eurozone. My argument is simply that we cannot say with confidence whether most Greeks still want to remain in the Eurozone or not. I say this for several reasons.

        First, domestic Greek polling agencies have a pathetic record of inaccuracy.

        Second, these polling agencies typically do not ask Greeks the right question. Rather than ask “Do you want Greece to remain in the Eurozone” (or words to that effect), these polls should ask something along the lines of “Do you want Greece to remain in the Eurozone even if remaining in the Eurozone will require the Greek government to implement fully the terms agreed to by the government on July 13, 2015?”

        Third, and as I point out in my initial comment, there are polls by independent polling agencies, including Gallup International, which show majority support for a return to the drachma.

        Having said that, let’s assume that a majority of Greeks wish to remain in the Eurozone even if the Greek government will be required to implement the terms of the July 13 bailout agreement, but that it is a much smaller majority than we are led to believe. Obviously, this would not mean that the Greek government has a mandate for Grexit, but in my view, it would still have implications for how the Greek government conducts itself. At the moment, Syriza’s leadership is acting as though any talk of Grexit is heresy, and it does so on the basis that (purportedly) the vast majority of Greeks want to remain in the Eurozone even after 5 years of punishing austerity, and even with the prospect of worse austerity to come. Syriza’s leadership therefore has refrained from promoting an open and informed debate on the costs and benefits of Grexit versus capitulation to the Brussels diktat. Were such a debate to occur, it might well be sufficient to tip the balance in favor of Grexit.

        P.S. My thanks to TheCatSaid for his/her words of encouragement. I will pass the message along to my colleagues at The Real News.

        1. Lambert Strether Post author

          “Syriza’s leadership therefore has refrained from promoting an open and informed debate on the costs and benefits of Grexit versus capitulation to the Brussels diktat.”

          Here we agree. Again, it seems to me, and clearly we can go around on this for a long time, that the margin in favor of the Euro is so great it would be hard to fake.

    2. TheCatSaid

      Thanks for your comment here about the polls.

      The coverage by you & your colleagues at The Real News Network has been excellent, with in-depth interviews and discussions with a wide range of players from different points of view.

      It was also amazing seeing the live coverage on TRNN of the speeches in the lead-up to the referendum vote.

  2. alex morfesis

    arithmo forologico mitro

    Arithmo is number (think arithmetic)

    Forologico …foro being taxes

    Mitro …like metropolitan or omnibus

    basically an fein or tin for the us readers…

    it is a number that follows you or your enterprise(company, partnership, etc)

    a tax id number

    individually it is like a social security number and once issued follows you to the grave

    it is a 9 digit number

  3. alex morfesis

    reading kathimerini story went slow and my greek reading skills have always been a bit pedestrian…but it seems he does say hacking…and that his friend he mentions was someone from columbia univ in nyc…but the story also mentions, for dramatic purposes perhaps, that the nite when tsipras did the deal with muti, he had talked to bill clinton, who purportedly said, no matter what happens or what you are being told…do not be the one that leaves the room…and that obama called muti and put the squeeze on her in the end to not push greece out of the euro and to ” work it out”…

    also…the articles reads to me in my broken geeek not that plan b was to use to walk away from the euro…but to use if the ecb and eu throw the greeks out and shut down the system….and it would be only electronic…no currency…also forcing everyone to use the afm would quickly force most of the black market economy to go electronic and up into the daylight…or push it deeper underground…maybe creating a dollarized black market economy as used to exist before the euro in greece

  4. Geoffrey de Galles

    As for intra-Greek (and not international) commerce, all that was (still is?) needed to tide Greece over pending a re-introduction of the drachma (or such) are a few billion units denominated on paper bills not vulnerable to being counterfeited. I assume a nation like Russia would presently have to hand, in its bank-vaults, plenty of billions of such units in the form of paper rubles (or whatever) — each & every note of which could easily and urgently enough be over-stamped in Greek script in indelible ink before bulk delivery to Athens: “Redeemable only within Greece”. Thus, such a nation would not be issuing any credit to Greece (beyond the comparatively trivial costs of paper, printing, and shipping), but simply obliging its people with a friendly favor at a moment of dire emergency in the hope, perhaps, of cultivating future favor in its own interests. Of course, prospectively in due course, such a stop-gap currency, serving functionally as IOUs, would then one day sooner or later be subject to exchange at Greek banks and post-offices for Greece’s newly minted legal tender at a stipulated rate of exchange. And so, with a little help from such a friend, could Greece overcome its current dilemma — simply that of not having a few billions of units, denominated on pieces of paper resistant to any counterfeiting, to urgently serve ad hoc as a substitute currency.

    1. Lambert Strether Post author

      It’s an idea, I’ll say that; presumably Greeks would be able to pay their taxes with these “Grubels?”

      We may have more to say on IOUs later in the week.

  5. Jim

    Tsipras and Varoufakis would have done an excellent job playing the roles of “revolutionaries” in a Monty Python sketch. But in real life not so good.

  6. Link

    Yves, regarding Kathimerini, they report differently in English and in Greek. In Greek edition, Kathimerini very often uses provocative, propagandizing and scaremongering language in titles and text but in the English version it translates into very moderate articles leaving outside any of the aforementioned characteristics

    As an aside, Kathimerini is owned by one of the very known Greek oligarchs, named Alafouzos who is very active in the media and shipping sector among others.

    1. philippe kieffer

      I am half greek, fluent in Greek and have been watching and reading the greek media for a while. I’ve been in Athens for the past 2 weeks and I can tell you the conventional media are running a proper witch hunt against Varoufakis (Skai in particular). He is either being scapegoated to divert the attention from the terms of the new bailout or because (IMHO) the old political parties view him as a major threat (he is rumoured to start a new party nationally or at the european level)…Sadly the level of debate in Greece is so abysmal that unsubstantiated mud throwing wins elections…

      1. philippe kieffer

        PS: Kathimerini used to be serious newspaper until it was sold to the current owner. Its really a rag now…like the FT (I read it for 20 years like everyone in WS and the City)

      2. Cos67

        I agree with you about the Kath (still linked to Skai?). It is no better than the rest of Greek MSM, all of which are oligarchs’ toys. I also thought that the old parties were waiting in the wings in Brussels to be handed the government in a coup “de troika”.
        I disagree on the political landscape in Greece. The bullshit of ND/Pasok/Potami is no longer for public consumption. Nobody trusts them. This is why, despite the rocky road so far, people are giving Tsipras/Varoufakis the benefit of the doubt. He seems to be fighting the good fight, even during a tactically retreats, like last week.
        and, Plan Bs require money. Greece has none to play with

        1. philippe kieffer

          I don’t think we disagree in respect of the continuing popular support for the government and Tsipras. However I do think that that both the old parties AND the current government are scapegoating Varoufakis to play the “credibility” card (I am not talking about the left platform loonies). In the case of the old parties I agree that its not going to work as per your comments (IMHO these parties should be disbanded and new parties formed by their less corrupt members). It is disappointing though that an increasing number of the government ministers are disavowing Varoufakis (although initial comments by Tsipars were measured)…

    2. prostratedragon

      An aside in Stiglitz’s article in today’s NYT mentions connected lending to media companies, among others, as a thing that would have been stopped by earlier attempts at reform that the troika seems uninterested in backing:

      As it became clear early on in the crisis that the Greek banks would have to be recapitalized, it made sense to demand voting shares for the Greek government. This was necessary to ensure that politically influenced lending, including to the oligarchic media, be stopped. When such connected lending resumed — even to media companies that on strictly commercial terms should not have gotten loans — the troika turned a blind eye.

      1. Yves Smith

        I have to tell you this is backwards. I know people who have spoken to Syriza officials in May and asked why they had not gone after the oligarchs. They didn’t have a good answer. They were kind-sorta thinking about pulling the licenses of the big media owners.

        The inaction has nothing to do with the Troika.

  7. Dr. George Oprisko

    I spent 40 years as a consulting systems engineer. In that capacity i created real-time industrial automation systems, telephony systems, and financial systems.
    Were I faced with this dilemma, i’d do the following:
    1. Create an Ex-Im Bank to act as a firewall between the Greek payments system and ROW.
    2. Create a Bureau of Electronic Money in the Finance Ministry, under a “Comptroller of the Currency”
    3. Move the Bureau of the Mint to the Finance Ministry under a “Comptroller of the Currency”
    4. Announce to the Troika this structure to ensure Greece has a positive balance of payments in it’s current account, elminating the need for further infusions of Euros
    5. Break the link between the GCB and the ECB at the Bureau of Electronic Money, with the source of electronic euros shifted from the ECB to a computer in the Bureau, with the rest of the reserves infrastructure within Greece remaining extant.
    6. Turn up production of notes and coin adding 500, 1000, 10000 and 100000 Euro notes to reduce the volume required to support transactions within Greece.
    7. Use the ExIm Bank to literally stop the flow of Euros out of Greece.
    8. Negotiate Currency Swaps with Russia/China/India/Iran sourcing pharmas, energies at discount prices.
    9. Eliminate sanctions vis a vis Russia
    10. Pass a tax on debt instruments at 10% of the face value / month, with immediate surrender for payment in GEUROS less tax and penalties owed on offer, this includes sovereign debt.
    11. Use the media to generate a furor against the Germans for WWII atrocities, to justify the above.


    1. Lambert Strether Post author

      I hope Clive weighs in on this, but I’m not sure how the ECB would feel about “electronic euros.” My guess is that they’d feel about as positive about them as they would feel about the Greeks printing physical Euros. They’d also be unhappy about #6. How will your ideas handle their counter-moves?

      On the media, I’d do present-day atrocities, with elders rooting in garbage, and so forth. I’d also focus it on the banks, not on the Germans.

    2. Older & Wiser

      So push has gotten to shove, right ?
      Then how about printing Euros with an “X” prefix (today only Germans prints them) rather than a “Y” prefix ?
      Mind you, Greece has excellent Euro printing capacity, and printing “X” prefix Euros would be the decades-old revenge come true…

      1. Yves Smith

        We’ve already said, and official sources have confirmed in media stories over the weekend, that this would be treated as forgeries and Greece would immediately get the North Korea treatment, as in would be cut off from international payment systems.

        You’ve raised this issue in the past and we’ve already addressed it. Your repetition is called “broken record”. It’s against our comment policies and when done with the insistence that you’ve done it, it looks like an effort at propaganda rather than a valid question. You are already in moderation for past violations of our comments policy. One more and you will be banned.

        1. gallam

          Yves, Older and Wiser is not the only person to have suggested this. I have done so on a couple of occasions. It is important to keep in mind the context here – Greece is in a situation that will soon be considerably worse than the Great Depression in the US. The US responded to this situation by, amongst other things, confiscating private gold holdings.

          Greece could easily become a failed state. If Somalia could print Euros, do you think they would?

          I personally prefer the “Greek Euro” alternative, but anything is possible at the moment.

          1. alex morfesis

            one can do many things, but it CAN NOT be called a “euro”…the euro is a currency that all the governments in europe tied to it have called LEGAL TENDER…meaning it is a MUST be used instrument which must be accepted (too many more caps will set off the bot blockers)…to pay off debts…

            legal tender…must be accepted…like US Federal Reserves Bills and notes…that is why it is called a dollar Bill…not just a dollar…(or thaler of silver)

            up until 2002 the euro was a currency of convenience…it became Legal Tender thereafter…and it belongs to the ECB not the governments involved…

            there is a greyish area in respects to issuance of coinage…that is controlled usually by the respective governments who technically could issue all the coinage they wanted and denominations that would not confuse them with existing Central Bank Notes and Bills…but that would leave the impression that there was some form of cooperation…

            no government today dares issue coinage in amounts that would challenge the status quo..

            the eu and ecb rules allow other currencies to be used inside of a country…but they can not be Forced to be accepted…which is what the term Legal Tender means…if I give it to you, you can not say you do not want to accept it to pay off debts…technically you can say you don’t want to accept it when selling something…but Legal Tender is about paying debts…that is why German will always have a better hand to play than anyone else in europe…

            the german government can issue all the TAN’s they want…since they control so many of the institutions in germany directly or indirectly…meaning ownership…not regulation….so the german government can get local co-op and landesbanks to issue money in the form of loans…and just keep rolling them over at german prime…which I think maybe is less than 1% per year…me thinks most enterprises can keep muddling along if they got basically free money issued by government controlled entities…

            greece on the other hand only has a few financial institutions that can hand out euros so shutting down greece economically is easy…

            but you can print your own “bills” tomorrow…you just can not call them dollars in the USA…nor Euros in the EU…and you can not present them as if it is Legal Tender without describing to the person you are handing them to that they are Not Legal Tender…and they can not be of the same dimensions as current Legal Tender bills, otherwise they can be considered counterfeit…(in the usa it is 85% or 120%…more or less)..which brings one back to the logistical nightmare of all types of equipment that will not accept the new “bill” that would be introduced…but all the workarounds in the world do not matter as they will not be allowed to prosper if they are large enough to be a threat to the existing Euro Legal Tender structure…

            if the ECB and company will not cooperate with being nice to greece Inside the EU and the euro…what do you think they will do to anyone who dares think about helping greece if she stepped away from the euro…???

            Tsipras did the right thing…when the bad guys have a gun to your daughters head and start undressing your wife, the moment to act like clint eastwood is not right now…

            sounds like you have never bumped into this crowd in a dark alley before…they do not play nice…but sometimes they over play the hand they have…

            Schaeuble will not be around forever, and that is why he is suddenly running to integrate the EU and the ECB more these last few days…he knows his days are passing and he will not be around to worry about greece…

          2. Yves Smith

            Greece is NOW in a condition that is at Great Depression levels.

            Do you think killing 18% of the remaining economy, which is what going to drachma would do, is a sound move? And that’s before you get to the impact on imports, the certain death of importers, and protracted shortages of food and medicine, as in famine and unnecessary deaths unless the EU provides enough charity.

            We are not talking it taking months to get this sorted out. We are talking years.

    3. TheCatSaid

      Re: No. 10, can you please give an example? Who would be paying whom–the creditors pay the Greek government? Is it only certain kinds of debt? Is this only for debts with Greek-based creditors, or for any debts by Greek citizens?

      It’s an intriguing idea.

    4. Yves Smith

      This does not work, and we’ve explained why at GREAT length in previous posts.

      Greece’s banking system need to be able to interface with international banking systems, which included electronic point of sale terminals, which involves a large industry of fragmented intermediaries.
      So Greece needs to make changes on its end in all its systems to be able to interface to Swift and other systems. and it won’t be allowed to do so until things on its end are up to the very high standard required.

      Moreover. tourists require access to EPOS systems. Tourists expect to be able to use credit cards and get cash with their ATM cards. Not having that pretty much kills Greece’s tourism industry, which is 18% of GDP. And Greece has NO power over how quickly all those fragmented service providers get around to doing what they need to do to allow for conversion from drachma in Greece to other currencies.

      Not having a banking system that connects to Swift means no import , unless you think trucking cash across the border and opening banking accounts and making transfers there is a reasonable way to do business. And that assumes that those banks will allow for accounts to be opened with Greece’s new parallel currency and will accept it for foreign exchange transactions. Branches won’t have the latitude to do it until head office has the requisite systems in place.

      No/restricted imports means shortages of food, petroleum, and drugs. Those are all essentials.

      Large denominations solve no known problems. I have no idea why that is on your list. And in any event, the problem with introducing a new currency is more distribution than printing, as we have also explained.

  8. Matt Usselmann

    Some thoughts on the Varoufakis money system.

    It would have been a quick way of giving each tax payer in Greece an immediate unique account. That would have been it. Not more, and not less.

    That account could have been used to credit Euro from the government to government employees, government suppliers, and pensioners. A PIN could have been issued, and payments could have been made. Greeks could have paid each other through these accounts. A Payment system for Euro. Nothing more. As an alternative to the banking payment system.

    How would we get a PIN number without smart phones? I usually get mine from bank cards through the post, so I presume that could have worked. Or they will be available from a secure depository. (Police stations – if they have to be issued quickly)

    How would we get money into the accounts to make them useful for everybody. Maybe in order for that system to work, everybody gets an overdraft limit of 500 Euro. A Euro 500 credit line. Companies, of course, bigger ones. The government would run a billion Euro overdraft on it.

    All while the banks were closed.

    This system would of course only be used if the ECB forces a bank closure on Greece, the banks would then be shut. They would then be nationalised, and put under the control of the Greek Central bank. That would then allow the banks to be restructured, splitting between good banks and bad banks.

    That might take one week, two weeks, or 1 month.

    The good banks could then be opened again, the bank payment system resumed.

    After that, the Varoufakis payment system would have been redundant, all balances would be credited back into the normal banking system. Or, more likely, the overdrafts would need to be repaid from the balances of real bank accounts, to repay the Varoufakis money system. All of this would happen with the Euro. Greece still using the Euro, outside the Eurozone, like Montenegro.

    However, Greece would then have a ready made payment system for an alternative currency. That could then be credited with G-Euro. A type of electronic tally-stick.

    The real question is, as you say, why are the hedgefunds involved? What do they bring to the party? What were they doing there anyway?

    It is purely a computer system which would need a maximum of 20 people to design and run. Maybe 50 at a push. Never, ever 1000. It just adds numbers to accounts, subtracts, and transfers. It has to do that securely, though.

    More on alternative parallel currencies: and look for “Tax Credits and Parallel Currencies”

    1. Clive

      It is a very bad idea to mail out account goods such as PIN numbers without being absolutely sure that you have identification and verification checks in place for your customers first. If PIN numbers were to be mailed, as you suggest, the Greek government would have to have a 99.9% validated name and address list for the population all ready to go in order to make a safe, secure unsolicited mass mailing.

      Even if it was up to date on Monday, by Tuesday it would start to drift. People die. People move. People have marital tiffs and check into motels or crash with a friend for a while. And not everyone has a single property, a minority (small but not ignorable) have multiple properties and the government would not know what their “main” address is. Or where they are when they mail the PINs.

      And banks do not trust all addresses as being is nice, safe low crime areas. Quite the opposite. Banks maintain lists of fraud prone districts and do not mail high risk account goods like PINs and credit card to these addresses. The monitoring is very sophisticated (e.g. or similar products) so the Greek government, if it was acting responsibly, could not use less robust methods for preventing fraudulent takeovers of these new accounts. So postal distribution is not a universal option.

      And as for having police stations, bank branches or other “safe” channels used to distribute the PINs, with a population of 8+ million adults presumably for whom the two thirds who don’t have smartphones needing to get them in a pretty short space of time, I hope everyone in Greece likes queuing, there would be a lot of it.

      Plus printing secure PINs is a specialised process with a finite capacity at the very limited number of printers who are capable of producing the tamper evident letters. The print house that I’m familiar with (and it is one of a tiny handful here in the UK who can handle this work, and the UK will have more than Greece can produce 20,000 units over days working three shifts at full tilt. I’d estimate the UK capacity for secure PIN printing is 100,000 a day max. So that’s two months plus solid work to do what Greece would need to produce. And like I say, the U.K.’s capacitity would dwarf that available in Greece.

      I do wish that people would think through the practical implications of what they are suggesting.

      1. Ben Wolf

        Yes, it means people will have to go places and do things over a period of time. That doesn’t make it impossible.

        1. Clive

          No-one said anything about impossible. But chaotic, unreliable, fraud-prone and disruptive to people’s lives are all words and descriptions which come readily to mind. Don’t governments have a basic duty to act responsibly and not inflict arbitrary mismanagement on the people they are supposed to be safeguarding ?

          1. alex morfesis

            clive it is worse than you think…

            and maybe someone living there now can adjust what i am about to say…but when i lived in athens….there were no mailboxes…the post office just dumped the mail in a bin or a big pile and you got to look thru everyones mail to find yours…so “mailing out” pin numbers would not work…

        2. Lambert Strether Post author

          It’s nice that no matter where you set your organizational capacity knob, whether at zero or infinity, the effect on people’s lives is still the same!

  9. Jim

    “Hubris is especially characteristic of economists, as two generations worth of dominance by neoliberals in academia has shown. Sadly, I believe a different school of economics has shown itself susceptible to the same flaw.”


    But besides awareness of hubris it is also necessary to describe and critique the exact nature of the power dynamics (who ends up making the key operational decisions) embedded (but not often publicly discussed) within each of the different theoretical schools of economics.

    These power dynamics may be the largely unspoken foundation for much of the hubris.

    1. Oregoncharles

      What is the difference between “audacity” and “hubris”?

      And incidentally: we can’t even talk about this without reaffirming the huge debt of Western culture to Greece. That makes it even more morally confounding that the rest of Europe is willing to do this to its creator.

      Not the most immediate moral issue, I guess, but still one that rankles deeply.

  10. Harry Shearer

    I think you misinterpret Varoufakis’ “bit more” mandate. He says:
    |I think the Greek people had authorised us to pursue energetically and vigorously that negotiation to the point of saying that if we can’t have a viable agreement, then we should consider getting out.”
    He does not say Syriza had a mandate to get out of the euro. But the governing faction made a habit of saying that Greece would not leave the EZ, didn’t want to leave the EZ. VF was saying, I think, that, to have any hope of succeeding in the negotiations, Greece needed a credible threat, and that Syriza’s repeated fealty to the EZ negated any such credibility. His plan would have represented that, nothing more–if you take his words at face value.

    1. Lambert Strether Post author

      The problem is that for a threat to be credible, your opponent has to know about it. All the more reason, then, for Syriza to have leveled with the Greek people about the real stakes and the options ASAP.

  11. ennui

    there was never any “plan b”, this was a classic tactic to sideline Varoufakis: “Sure, Yannis, why don’t you come back in a week and submit your plan.”

    but that just illustrates than no amount of careful technocratic planning is going to upset the apple cart. apple carts get upturned because the conflicts and contradictions of the circumstances make it impossible not to. no plan submitted to a committee will lead to a exit and return to the drachma, no matter how knowledgeable and responsible. the political consequence of this is that talking about a plan is about reinforcing it’s impossibility.

    did the left-bloch need a plan? absolutely. but an exit will occur in a state of crisis and emergency and the most important details of that plan will be about how to create and manage that emergency, without which all technocratic planning is useless: see Allende.

    1. FedUpPleb

      but an exit will occur in a state of crisis and emergency

      The way modern “leaders” make their decisions, I think Athens will become a post apocalyptic wasteland with cigarettes as currency long before the current geniuses sort out the computer code in time for a Drachma to be brought in.

  12. Dan Lynch

    As Ian Welsh put it, Syriza does not seem capable of managing a lemonade stand, let alone an abrupt transition to a new currency & banking system. So sure, there would have been problems and suffering if Greece left the Euro. I’m not seeing any alternative, though?

    Re: public opinion. Good thing FDR & Nixon didn’t follow Naked Capitalism or else they may never have left the gold standard, since they didn’t have a mandate to do so and Naked Capitalism seems to hold that leaders of fake democracies should meekly follow public opinion. In fact, a recent poll claims 69% of Americans want to return to a gold standard. Sounds like a mandate to me!

    Another poll shows 74% of Americans favor a balanced budget amendment. Hey Naked Capitalism, how ’bout NC get on the balanced budget bandwagon because mandates?

    Personally if I were a leader, I would do what I thought was best and let history be the judge, but that’s just me.

    1. Jim Haygood

      ‘Good thing FDR & Nixon didn’t follow Naked Capitalism or else they may never have left the gold standard, since they didn’t have a mandate to do so.’

      One detects a subtle note of sarcasm here. Nixon’s anti-democratic, Sunday night diktat in August 1971 was followed by a lost decade of poor economic performance, culminating in a record-high misery index (unemployment + inflation) of 21.98 in June 1980.

      How much better it would have been for the U.S. to get its finances under control in 1971, instead of printing without restraint to finance a war in Vietnam and other useless debacles.

      Fiat currency is permanent war finance.

      1. BadBentham

        Can you eat the cake and have it, too ? As holder of the reserve currency, the US structurally even has to bring its money abroad and consume goods for it. (-As so-called “motor” of the world economy-) And it makes quite some economic sense (for the US, that is, -but not only) to literally force the rest of the globe to accept the status quo, as perverted as it is. Gold standard and reserve currency in the long run arguably bite each other big times. That is why Keynes himself promoted a different , more complicated, system in Bretton Woods than the flawed one that was actually implemented. It was not only Nam that practically forced the Nixon administration out of the -broken, like the Euro,- system.

    2. Lambert Strether Post author

      The alternative is to stay in the EZ.

      “Personally if I were a leader, I would do what I thought was best and let history be the judge.” There’s a name for that theory, I’m sure it will come to me in a moment…

      1. paulmeli

        “The alternative is to stay in the EZ.”

        …until the EU collapses, which is likely, Then what?

        Greece will still have to do what they haven’t yet done and is unlikely to be prepared for that either.

    3. TheCatSaid

      Doing what the people want also depends hugely on what the people do/don’t know, and the extent to which their opinions are based on misinformation, lack of information, fear-mongering, etc.

      Information flow–as distinct from propaganda flow–in most countries is exceptionally poor. That doesn’t mean people’s will doesn’t matter or shouldn’t be asked, but one also needs to consider the context.

      The fog of propaganda and the difficulty of getting good information presents a grave risk to meaningful democracy.

  13. Goldcap

    While VF is a brilliant thinker, (Tsipras as well, but in a different vein), what I observed from Syriza was simply stunned confusion. I think (as Yves and others have pointed out repeatedly) they sadly “misread the room”, misunderstood the EU as an actual “union”, and I think fully expected the ECB and IMF to support some form of restructuring. What was revealed was a punitive regime supporting unrealistic policy meant to support the core domestic economies at the expense of the periphery. The EU has always been a hegemonic play, or certainly evolved into one post 2008, and it looks as if the play has succeeded.

    So any “planning” on the part of Syriza was at best abstract. VF never got a “mandate”. It was never “real”. One wonders if Tsipras had known the real environment in which he was swimming, would he have even tried to negotiate with the Troika at all. Doubtful. It would have made the “war footing” frame the only viable option, and I see little in anything the Greeks have done that suggests they have a stomach for that. I know I wouldn’t.

    1. financial matters

      The stomach or maybe the economic/political power. This may be left to bigger economies such as Spain or Italy.

      I agree that Tsipras is a good politician but I think in a good way as he seemed to recognize the wants/needs of the population. I think this is why he has a high rating and got them the best deal he could under the circumstances. And it may work out if the troika wants to make them a ‘good example’.

      I see Varoufakis as getting caught up in the frustration and voting no in the first vote and yes in the second.

      I think these lessons learned are important but now may be more relevant to Spain and Italy. If the troika wants to continue the austerity mantra with them the heavy handed techniques may not work as well. The path that austerity is taking is leading to more discontent and to more abusive use of authority to enforce.

      I thought J. W. Mason had an interesting article in Jacobin ‘What Greece Could Do’. He also advocated retaking control of the BOG. Even though Greece (and other countries) gave up some sovereignty I think they may have a case to challenge that if the powers that be abuse their authority.

      “7. The Greek government must be prepared for declarations from the creditors that its actions are illegal, and for possible retaliation. Rhetorically, it may be helpful to emphasize that Greece remains sovereign and Greek law continues to control the Greek central bank and private banks; that the ECB (and its agents at the Bank of Greece) have abused their authority to advance a political agenda; and that the wellbeing of the Greek people must take priority over treaty obligations. But framing may not make much difference here and, anyway, these kinds of tactical-political questions are for the Syriza leadership and not for an American sympathizer.”

    2. different clue

      And given that the Greek people were desperate to have their self-image as White European Westerners supported and validated by staying in the EuroZone at all costs, what was Syriza or any other political party supposed to do?

      When an overwhelmingly vast majority of the Greek people are ready to consider Europe as being Greece’s blood enemy, and ready to resign themselves to membership in the non-White political brotherhoods of the world such as the Shanghai Cooperation Organization, then they will be ready for the “mortal kombat” war footing necessary to survive their encounter with Europe.

  14. susan the other

    When Europeans, most obviously Djsselbloem, say that the problem is that the EU was put together politically but lacked a viable economic model, it indicates the direction they are taking. They don’t think politix – aka fiscal equalities – is the thing that needs to be redesigned. They think economix is. Simultaneously the Germans are pushing for core countries to be the foundation of the EU, implying the resolution to the inequality caused by the economix will be understood as the model going forward. In order to protect the core. From what? And why was it so imperative to keep Greece in the EU. Everyone but Schaeuble was panicked at the thought of a grexit. That doesn’t really sound like colonialism. Was Schaeuble bluffing? He offered them 50Bn to leave. Now he’s offering to resign – maybe his goal was to protect the core at the expense of the periphery and he feels he succeeded. And Greece, for its part, truly did not want to leave the EU, nor did they want to blow up the EU Project, no matter how currently conflicted the whole thing is.

  15. David

    1) Why the heck did “former British Chancellor of the Exchequer Norman Lamont” co-ordinate the conference call? What was in it for him?

    Lamont has been anti-Euro since the 70s. He took a lot of stick back in the 90’s for taking Britain out of the EMU and ERM. In January, he said the following after Syriza’s victory;

    If the euro survives, the experience will be like a painful, ill-fitting shoe. Over time the foot becomes so twisted out of shape that the shoe eventually fits. But it will be a pointless, painful process over many years. Far better not to have bought the wrong-size shoe in the first place.

    He doesn’t appear to be a member of the IBGYBG club.

  16. Cugel

    The fact that 80% of Greeks still want to remain in the EU DESPITE the constant beatings and the prospect of move severe beatings to come proves that it you are utterly wrong that “it would have been quite simple for Syriza — given Tsipras’s political abilities — to elict that consent [to exit the Eurozone].”

    What makes anybody think that voters want honesty? The Greeks wanted a better life. They know that Grexit would be horrific and Tsipras’ “political abilities” amounted to no more than telling people exactly what they wanted to hear – that somehow negotiations would lead to a lifting of Austerity and a better economy in the future. Syriza would never have won power in the first place, and would never have kept it had they told people “we have to prepare to exit the EU.”

    Meanwhile, everything Varoufakis said in his interview only proves how hopelessly out of their depth Syriza was in managing a transfer to a new Drachma. Varoufakis pointed out last year and has repeated over and over that it took a year and a half in Iraq to implement a new currency, and that was with the full backing of the United States government and military, and ZERO international opposition. Can you imagine Greece managing to do this in six months amid massive and sustained EU and probably U.S. attack?

    A much better plan than this one would have failed. Probably, it’s a good thing they didn’t try. Right now Germany is coming in for massive political fallout for being brutal and cruel. If Syriza had forced Grexit, the entire blame for the economic collapse would have been on them. The entire narrative would have been “stupid leftist academics utterly destroyed the Greek economy! This is what happens when you trust the left!”

    As for Syriza misunderstanding the nature of their opponents, they didn’t at all as Varoufakis proved in his recent statements. What they did was desperately try whatever they could in negotiations in which they had ZERO leverage. Varoufakis has stated publicly that Schäuble was running the negotiations and that the other ministers all deferred to him. And he WANTS Grexit!

    Threatening to blow up the Eurozone doesn’t work at all with someone who sees destruction of the Eurozone as an opportunity, not a threat. Tsipras meanwhile spent all his time trying to circumvent the Troika and being constantly told by the EU politicians that there could be NO political deal, that he had to go back to the Troika and take more beatings from Schäuble.

    Syriza certainly should have done a better job planning for Grexit, because it’s being forced on them. But, to pretend that voluntary Grexit was an option? That’s delusion. Even with 100% better planning, they could never pull it off given the immediate counter-revolution that would be instituted by the EU and U.S. And Russia never was going to get into a situation, like Cuba in the 1960s, where it was responsible for sustaining and supporting Greece against violent European and U.S. counter-action.

    1. Lambert Strether Post author

      It seems to me that Tsipras is able to get a mandate pretty much no matter what. (Granted, he’s very lucky in his enemies, especially in Greek domestic politics.) So, call me crazy, so why not level with the Greek people?

  17. Cos67

    Please be careful (as you seem to be, above) with anything tantalising emanating from a Greek MSM. They all lie regularly, and as part of the oligarchy, they hate Syriza. This particular text is also being studied by a Telegraph journalist (whom I follow on Twitter). I’m also thinking that , although I have no proof of malfeasance (unlike the Greek MSM), the polls could be a stitch-up designed to dissuade Greeks from pushing for grexit, something which may go against the oligarchs’ wishes.

  18. FedUpPleb

    I honestly think the most realistic option for Greeks, and for banks in general, is to go back to paper ledgers. Say what you will about “efficiency”, but at least paper account books can’t be shut down at the click of a button by a petulant foreign institution.

    OK, maybe you could use Excel sheets to tally up accounts or whatever. My basic point is: If the computer systems (might) stop working, then stop using them.

    1. Yves Smith

      You can’t use paper ledgers to conduct transactions with suppliers of imports, or have tourists use their ATM and debit cards in Greece. You lose huge swathes of the economy that way. We’ve been stressing that the IT issues map directly onto serious real economy issues.

  19. Oregoncharles

    ” (1) Syriza is apparently $12 billion off in its estimates of cash on hand, ”

    Or the FT is. Unreliable narrators, remember?

    1. Lambert Strether Post author

      Fair enough. However, AEP frames the issue as “creating Euro liquidity.” So it sounds like they either didn’t have enough in the vault, or were worried about not having enough..

  20. Oregoncharles

    “f I’m owed, I’m going to want to be paid in Euros. If I owe, I’m going to want to use my parallel account. How does that work?”

    There’s what you want, and there’s what you can get. So the answer is: either by negotiation, or by government fiat. Greece would be restoring its sovereignty, no?

    And it still needs to, and still ultimately will have to, despite the high price (which I’m not denying) – as every prominent Keynesian or MMT economist insists. That’s why this is interesting.

      1. Amir S

        Well, if I have a business selling goods, and some of my customers

        a) do not have any Euros (either they’re broke or the banks are shut)
        b) but can pay me in the new currency (Geuros?), which I can use to pay my taxes with

        do I make the sale and record a profit and keep my business going, or do I refuse and watch my business die slowly for lack of Euros in Greece? Of course this is more complicated if I’m an importer and need to pay foreign suppliers in hard currency, (but this is a problem whether the new currency is introduced or not), but for all domestic businesses the choice should be clear.

        Maybe the government could encourage use of the new currency by setting a lower rate of VAT for payments made with it …

  21. ira

    Forgive my naivete, but why would they have to hack into the General Secretariat of Public Revenues website?

    Syriza WAS (and obviously still is) the legally elected government.

    1. TheCatSaid

      Because the software used was controlled by the troika.
      Appalling state of affairs.

      In the Irish bail-out, did the troika control the Ministry of Finance and use the troika’s own software?

        1. TheCatSaid

          It was quoted in an interview with YV; he said he discovered this was the case (i.e., that software was owned by troika, hence it would not be straightforward to get the code & copy it & have it ready for his plan b scenario without the troika being forewarned).

          The interview was quoted on this page, or one of the links someone mentioned here, or a link on the NC links page.

          I don’t know what the case was in Ireland. Hence my question.

          1. IsabelPS

            Yes, I know it was quoted in an interview with Varoufakis. My point is that it is so, but so obnoxious, that I doubt it is true. I can’t imagine it being the case in Portugal (or Ireland for that matter). The only way I can imagine it being true in Greece is if such thing didn’t exist at all at national level (which is about as obnoxious).

            The audio was uploaded on the internet with Varoufakis permission, apparently:


            1. IsabelPS

              Someone else puts it well:

              “The way Varoufakis explains it sounds simply too far-fetched. If only the Troika had control over revenues, why would the Troika have insisted for months to get up-to-date data about tax revenues? How could the Finance Ministry control the payment of public bills when it had no control over revenues?”

              1. TheCatSaid

                I don’t have personal knowledge of the truth of anything but the limited slice of life where I have first-hand experience. Even that is inherently limited by the accuracy of the lens through which I view the world and my ability to accurately perceive and interpret my experiences. As I’ve no personal knowledge of the Greek finance ministry’s computer programs, I cannot enlighten you regarding the accuracy of YV’s claim.

                Whatever the truth of the matter may be, I try to avoid tossing out an idea only because it seems far-fetched. Time after time I discover the truth is MUCH more far-fetched than anything I ever imagined.

    2. Tsigantes

      Good question.
      The Troika controls the public revenue section of the Greek Finance ministry, meaning, all Greek bank accounts. The purpose of this is in case they decide on a bail in.

      1. Yves Smith

        This is close to a finance word salad, and more of the sort of “making stuff up” we warned you about.

        Bank accounts do not sit at the Finance Ministry. Bank accounts reside at either private banks or the Bank of Greece.

  22. ess emm

    “…the essential point is that Varoufakis, and Syriza, were never honest with the Greek people about what they were planning.”

    Huh? This was simply a contingency plan that would have been implemented only if the politics had changed. And a contingency plan that had to stay secret because of the Troika’s ability to take punitive action against the Greek government. I don’t think it justifies your calling them liars.

    1. Lambert Strether Post author

      Varoufakis didn’t seem to think so. From the Telegraph:

      He was ready to activate the mechanism the moment he received a “green light” from the prime minister, but the permission never came.

      “I always told Tsipras that it not be plain sailing but this is the price you have to pay for liberty,” he told the Telegraph.

      I’m trying to picture the speech where Tsipras explains to the voters that he’s hacked all their tax ID numbers and set up new bank accounts for them and is sending PINs to their cellphones or by mail. Maybe Tsipras pictured it too.

  23. paulmeli

    You’re trapped at the bottom of a deep well. Climbing out will be very difficult…

  24. Ologistis

    Yianis introduce his colleagues. 05/03/2015

    “Michael Chatzitheodorou is a graduate of Athens University, also in the Department of Mathematics. The PhD is from the United States Columbia University in Information Systems in Computer Systems. Therefore I am very happy and grateful to him, who has agreed to do the General Secretariat for Information Systems aimed at real highlight of this Secretariat and of the potential of the pre-eminent object. The information systems of the Ministry of Finance form the “backbone” on which to build, built and will build further the capacity of the Ministry of Finance, but also of the Greek state, to support its tax system, the payment system to new technological structures which will grow endogenously through the Ministry in cooperation with the private sector, but without dependence on particular companies without continuing a situation often observed in Greek public. The officials of technological services to be in the background. Michael if you is a writing sample of our choice not to choose people of the party tube, people who go through these “revolving doors” that usually characterize the ways of appointments. He is a man who has never worked in public. He is a technocrat and undertakes information systems as “pliroforikarios”.”
    (pliroforikarios means “IT person” and never 4 ever “Hacker” – translator note )

    “M. Chatzitheodorou: I want to thank you for honoring me and you was coming. Since my field (article 4google.translate) is too technocratic, a few things I have to tell you. What I will say is that the Computer has entered the public for good, as in our flow of course, you know that.
    The exploitation is not to the extent that they should, but I think this is our goal: to make it become a tool for the government and the Ministry specifically.
    I have to say many things, I would prefer a later interview in any quarter, I do not know if you want to hear me talk about technology, but you’re all welcome after I formatted my opinion on where we are going.
    Thank you very much.”

    Source: © Taxheaven See more

    Yianis speak about his work in FinMIn 6/07/2015

    “A second objective of the Ministry and the work of the Ministry during these months the structure of tax administration. The organizational structure of our ministry, which inherited the January 25, provides a semi (-autonomous) Secretariat of Public Revenue, if you want a regime which in my view is problematic.
    And is problematic because this independence is within the Ministry, it means that the Minister receives the political costs without the necessary intervention possibilities should have someone who paid the political price.”

    “I move on to something which sounds technocratic, but it is not. It is important to General Secretariat for Information Systems has started to process how the “taxisnet” can become something more than what it is, be a payment system and to third parties, a system that increases efficiency and minimizes overdue debts government to citizens and to businesses.”


    After all, I rest my case…

    ps. The brainstorming was enormous the last six months. Now it is a history…

    1. Lambert Strether Post author

      Thanks for the translations! I agree completely on the brainstorming, and it’s not that there haven’t been creative ideas put forward by clever people. Hopefully we call can learn from history. That said, brainstorming is a very early stage in planning….

  25. Lune

    These after-the-fact revelations do nothing to rebut the conclusion that YF and Tsipras were stunningly poor negotiators. These past several months have seen people scratch their heads over the Greek negotiating stances where they failed to properly read their opponents and also failed to understand how to maximize their own leverage.

    This is yet another example. The point of having continency plans is to make the EU aware of them. Otherwise, it does nothing for your negotiating leverage. I’m reminded of the famous scene in Dr. Strangelove where the Russian Ambassador described the Russian’s secret Doomsday device as a means to deter any U.S. invasion, to which Dr. Strangelove replies: “Of course, the whole point of a Doomsday Machine is lost, if you *keep* it a *secret*! Why didn’t you tell the world, EH?”

    Now I understand the concern that any admission by the Greek govt that they’re already planning for a Grexit might spark bank runs, etc. But that’s a poor excuse, since even average Greeks were already aware of the possibility of a Grexit and were already withdrawing money as fast as they could. I seriously doubt that there would have been more disastrous consequences than have already occurred had the Greek govt let it be known that they were already making continency plans for a Grexit, and it would have provided them at least some leverage in their negotiations with the Troika.

    1. FedUpPleb

      The point of having continency plans is to make the EU aware of them.

      Why would you tell the Germans you have radar to detect their bombers?

      1. Lexington

        Radar isn’t going to stop the bombers, so whether you tell them or not is moot.

        A better framing would be: “Why would we tell the Soviets we have 10 000 nuclear warheads so if the nuke us into oblivion we’re going to do the same to them?”

        Your logic amounts to the argument that MAD somehow works better if the other side doesn’t know we have the capacity for massive retaliation.

      2. Lune

        Two different situations.
        You don’t want Germans to know you can detect their bombers, so that they will send them over, and you can shoot them down.

        In Greece’s situation though, you do want the EU to know that you’re prepared to exit the Euro and making plans to ease that transition. That gives you negotiating leverage. If the EU feels that they can cram whatever they want down Greece’s throat and they’ll accept it because they have no alternative, the only way to negotiate is to show that you *do* have an alternative, and that you’re preparing to accept that and cram the ECB and German and French banks with losses when they (the Greeks) default.

        There’s no point in secretly having an alternative but telling the EU that your only option is their mercy. That’s not a negotiation. That’s begging.

  26. financial matters

    This is an interesting quote from Geoffrey Ingham’s ‘The Nature of Money’

    “The capitalist monetary system’s distinctiveness is that it contains a social mechanism by which privately contracted debtor-creditor relations – for example, bank loans, credit card contracts – are routinely monetized. Private debt in its various forms (cheques, credit cards, promissory notes and so on) are converted into the most sought-after ‘promise to pay’ at the top of the hierarchy of promises. This is the state’s issue of money that is accepted in payment of taxes and final settlements.”

    We have a situation now in western banking where this private debt was allowed to turn largely predatory and fraudulent.

    This has disrupted this social mechanism and led to destructive practices such as austerity and elevated home prices rather than attempts to deal with it head on and re-establish the social contract. The creditors still have the power to force this issuing of state money to them rather than education, medical care etc.

    I think the financial crisis can be seen as a breakdown of this social mechanism. The trust inherent in this social mechanism is what gives legitimacy to these bank/government interactions.

  27. Chris Geary

    On the side issue of cellphones and money transfer systems etc. it is perfectly plausible to have a functioning system without high smartphone penetration. The M-PESA system in Kenya for example, works on dumb phones pretty fine.

    Not that I’m advocating this for Greece.

    1. Yves Smith

      It is only for small value transactions within the country. It’s basically a retail service for locals. It will not work for tourists who want to use their credit or debit cards,, nor will it do anything for importers.

  28. Lexington

    You have to hand it to Varoufakis, he has all the skills necessary to make it to the top of the greasy pole: overweening self confidence, a certain facility for manipulating the truth, and a genius for self promotion. It’s truly remarkable that even while burning the Greek government’s bridges with its creditors and posing for vanity photo shoots in Paris Match he simultaneously found time to secretly orchestrate a Plan B in case negotiations with the troika fell through. This part is particularly priceless:

    “The work was more or less complete: We did have a Plan B but the difficulty was to go from the five people who were planning it to the 1,000 people that would have to implement it. For that I would have to receive another authorization which never came.”

    See, it’s not like as finance minister Varoufakis was the government’s most prominent member next to Tsipras himself, or that he was part of the inner circle directing Greek policy. Rather he was just a lowly functionary dutifully anticipating the needs of the heavy lifters in the government and waiting patiently in his tiny office in the basement of the finance ministry for the call that unaccountably never came. If Syriza first called a snap referendum to obtain a mandate to defy the troika and, having received it, then immediately turned around and betrayed voters by accepting another bailout well, that’s got nothing to do with Varoufakis. He had his plan, if only Tsipras and other Syriza bigshots had given it a chance.

    In short, what Varoufakis is doing is carefully curating history to try to ensure that when the definitive account is given of Syriza’s disastrous mishandling of the negotiations with the troika as little mud as possible will stick to him personally.

    I have to say that for all the bile ritualistically directed at the Eurocrats in this case it’s hard not to sympathize with their antipathy for the guy.

    1. IsabelPS

      Yes. Ever since I read in his blog how he congratulated Stournaras for the way he fixed the numbers for the Maastricht criteria, I made my mind about his character. I really think that his main concern, right now, is his legacy in history. Unfortunately, there is always somebody ready to give him a stage for his performances.

  29. docg

    First of all I would like to formally congratulate myself for so accurately predicting that Greece would get its bailout. I also predicted that it would most likely be covered by some sort of euphemistic fig leaf, and that too was accurate. It’s being called an “emergency carry loan” or something like that — but the effect is the same, i.e, to forestall default at all costs.

    I also predicted that it wouldn’t matter as far as Greece itself is concerned, as it would do the Greeks no good at all. And that too is proving to be the case.

    And to top off my triumph I also predicted that this last minute act of desperation on both sides would be unenforceable — which is becoming increasingly obvious with each passing day.

    Now, to deal with the current situation, I must ask: what would Fidel do in this situation? And the answer is clear. He would never have allowed things to come to such a pass from the start. Fidel would immediately have nationalized the banks and then defaulted 100% on all loans. He would immediately have arrested every wealthy citizen suspected of tax fraud and confiscated their wealth until they agreed to pay all taxes owed plus a stiff penalty. He would have divorced his country from the Eurozone completely, calling on Russia and China to offer assistance to an “independent” Greece.

    I’ve heard that Greece is incapable of feeding itself, but you know something? I went to a Greek fast food joint the other evening and noticed a map of Greece on the wall and lo and behold, the place is almost nothing but coastline and islands. So how can Greece fail to feed itself with such an abundance of marine resources, i.e.: seafood galore! I’ve also heard rumors that there are farmers in Greece as well, with lots of sheep, goats, cattle, etc., not to mention grains in abundance — also fruits. Greece can feed itself for sure.

    What else? With huge amounts of foreign currency from the tourist trade, plus additional wealth extorted from soaking the rich, Greece will be able to buy medical supplies, most likely from Cuba, famous for its outstanding medical system. Oil and other fuels will no doubt be easily obtained at cut rates from Russia, once Greece agrees to leave NATO, which Fidel would certainly endorse.

    Finally, Fidel would institute a socialist system, why not? Based on human values, not the values of the “free market.” Why on Earth should a country like Greece be “competitive” anyhow? It has so much more to offer the world and the world should be grateful for what it is, not what neocons expect it to be. Ever been to Bali? How many manufacturing plants did you see there?

    If the Cubans could do it, then why not the Greeks?

    1. IsabelPS

      They probably could. But I don’t think that the Greeks would like it. It’s a lot easier to remain in a 60’s time-warp than to go back 50 years or so (which is what it would amount to “Greece feeding itself”). Of course, one may if one must, but that’s about it, as I see it.

      1. Yves Smith

        Greece is most assuredly not self sufficient in food. I suggest you bone up on this matter. If all calories in Greece were distributed equally, it would feed the population at the threshhold of starvation. You aren’t going to get equal distribution of calories at that level. Moreover, going to the drachma would lead to shortages of petroleum and an great increase in its cost to the extent it was available. That would cut into the amount of commercial fishing, reducing food production

        Stop making stuff up. You’ve been aggressive and wrong in the past (insisting Tsipras would never turn to To Potami to get legislation passed, when he solicited the support of the opposition the morning after the referendum). This site is not a chat board and your undocumented views don’t have a good track record.

    2. TheCatSaid

      Your point is valid that it is possible. It would probably suit some people and not others, but indeed it should be possible and I suspect this approach will have increasing appeal.

      It reminds me of the Anastasia series of books by V. Malgre. Apparently many people have been inspired by them to establish more balanced lifestyles in the Russian countryside, where they grow their own food and rear their own children and build their own homes. It has the flavor of moving forwards, not backwards, though it does include a strong link to their traditions. It arises out of a different set of values, it could not be imposed on anyone and succeed. The fact that there are many such communities now, with hundreds of self-sufficient families even in areas with poor land and limited growing seasons, does indicate that such approaches are indeed possible.

  30. Bun

    YV is tweeting about this “story”. Why not hear what he has to say, rather than just hearing from his enemies?
    don’t forget Kahneman’s advice about avoiding ‘being anchored”…

    If there a native speaker reading this, can you perhaps translate ? seems quite a lively conversation going – unfortunately its all greek to me…

    1. Yves Smith

      Varoufakis has a long history of telling obvious lies, such as telling Greek voters right before the referendum that Greek banks would open no matter what the Tuesday after the Sunday referendum. He has no regard for or concern with accuracy. Ambrose Evans-Pritchard says that two sources at the meeting have confirmed the Kathimerini story. And AEP has regularly done stories with Syriza officials, including Varoufakis, as sources. He’s not a creditor-friendly reporter.

      1. Bun

        And Ekathimerini is a paragon of truthful virtue? It would have been irresponsible for YV to say anything other than ‘everything would be OK with the banks” since FinMin words carry considerable weight. Not that he was in any position to stay true to his statement, seeing as he was no longer the FinMin that Tuesday…

        I’ll see your AEP (working for, you know, that well-known labour rag, The Telegraph) and raise you a Galbraith:

        So back to my original question: why not hear what the man himself is saying, rather than what some person who heard from another person said that he said?

        Varoufakis made no secret of his plan B in statements and interviews after he resigned. I do not see at all what the hysterics are all about here. AFACIT the story seems to hinge on certain statements whose meaning which depend crucially on the translation, like ‘hack’, which AFAICS differs wildly.

        where’s the beef in this story??

        1. Yves Smith

          Varofakis proposed hacking into servers, distributing sensitive information in a wildly irresponsible manner, and discussed his plans with hedge funds, who have no reasons to befriend the Greek government. If you can’t see the problem with that, I certainly can’t help you.

          And your comment on Ambrose Evans-Pritchard is an ad hominem attack and against our site policies. It also apparently does not occur to you that AEP has run more pro-Syriza stories than just about any MSM reporter, and he’s a long-standing Euroskeptic.

        2. Lambert Strether Post author

          “why not hear what the man himself is saying” You have. That’s why there are extensive quotations from the Varoufakis transcript, and why I adopted the convention of putting the speaker’s name in all caps, thus: “VAROUFAKIS.”

  31. Amir S

    4) Can Varoufakis possibly believe that with “apps on smartphones and it could become a functioning parallel system” when cellphone penetration in Greece was 32.5% in 2013? And while we’re at it, how do people without smartphones get their PINs? And what do they do with them once they have them?

    You don’t even need smartphone apps on day 1. Just a website would do, allowing you to log in (with your tax identifier and PIN) and make a transfer to any other account. Don’t have a smartphone? Use the internet from home or work. Don’t have internet access? You’ll have to go to an internet cafe or public library. Need to pay someone else in person without ‘net access? You’ll still need Euro cash. But for paying your electricity bills, taxes etc this system should suffice to get started. Maybe also a touch-tone phone system to cover people who really can’t or are unable to access the internet.

    I think a key point is that this is a PARALLEL system, and not a replacement for the existing Euro banking and payment systems. But this parallel system could allow Greece to run the deficit necessary (10% GDP as per Bill Mitchell and highlighted by Yves) to allow the economy to grow, while still running a surplus in Euros to not require external financing and comply with the austerian demands of the Troika.

    As time goes on, the government should introduce other ways to access the payment system, i.e. smartphone apps, ways to make transfers by SMS, APIs for other people to build products on top or physical POS terminals. Maybe even stored value smartcards one day. If they keep it all electronic they can even enforce much better tax collection! But all that can be done gradually. And I don’t expect TPTB to ever allow this system onto VISA, Mastercard or SWIFT, so I wouldn’t even waste any time thinking about how to integrate with those!

    1. Lambert Strether Post author

      So your answer to my question is “No”?

      Point being, there are some good ideas floating about, and many, many not-so-good ideas. And “everybody’s got one,” as the saying goes. But all of these ideas are a lot like Judy Garland’s “Let’s put on a show!” Alas, life is not a Hollywood musical. Absent a demonstration that (a) some faction in Syriza had an idea in mind, and (b) had the organizational capacity to implement it, most of these ideas are just noise, or, to put it more gently, ambient sound. And by the estimate of those who actually build and maintain these payment systems at scale, Syriza’s organizational capacity isn’t up to the job, especially given the timeframe; a judgment reinforced by Varoufaki’s descrption of Plan B.

      Another way of putting this is that the payment system, and banking generally, have a material basis. Many posts at NC have explained this material basis in a very detailed and concrete way. For example, if Greece wants to retain its tourist business, than figuring out the material basis for integrating into VISA, Mastercard, and Swift is by no means a “waste” of time.

      1. Amir S

        Well, I don’t know what Varoufakis believes (and it’s pretty hard to tell what he really believes), but I believe that it could be a functioning parallel system, as an add-on to the existing Euro systems. Yeah, it would suck for Greeks to have to handle two separate currencies in their daily lives, but there are worse things that could happen (like being kicked out of the Euro).

        > Another way of putting this is that the payment system, and banking generally, have a material basis.

        Yes, and the existing payment and banking systems should be left well alone!

        I guess part of what I’m saying is that an entirely new system, that does not integrate into any existing/legacy systems at all, is much easier to set up and needs much less organisational capacity than anything that requires modifying existing systems, which as you’ve pointed out in your extensive coverage, is somewhere between a many year project and impossible. The hardest part of the new currency is security and authentication of users, ensuring that only account holders have access to their accounts … e.g. mailing out PINs would lay the groundwork for widescale fraud and undermine the currency before it even begins.

        Current payment systems are complex in part because people have accounts at regular banks, and they want to send payments to people with accounts at other banks, and there’re a variety of ways (and timescales) for banks to net their payments and settle balances using central bank reserve accounts (and correspondent banks etc). In contrast, the new system would give everyone their very own reserve account at the new central bank, and hopefully zero cost transfers. It should be real time and online. There’re no private bank accounts layered on top, and no credit card systems and merchant accounts, at least to begin with. You wouldn’t even try to copy the existing payment systems, at least until you were sure you wanted to leave the Euro.

        Tourists, imports, exports and all the Greek people and businesses who have existing Euro bank accounts will have to continue to transact in Euros and use the existing international payment systems, albeit with capital controls as now. The new system would have to be separate and parallel.

        My remark about not integrating with Swift etc wasn’t that it would not be desirable, but that the ECB, Schauble, and the other Eurozone countries would ensure that any new local Greek parallel currency would not be allowed to join. They have an interest in the failure of any alternative that Greece tries, and I think they have enough clout with the payment networks to exclude a new Greek currency.

        Am I being too idealistic to think that it’s possible for a country to run with two currencies at once, one ‘hard’ currency used for all international payments and real banking, and one ‘local’ currency used for some portion of internal payments? Think Brixton pound, but scaled up and without full reserve backing.

  32. ralphel

    I haven’t (yet) listened to it myself, but what YV actually said — as opposed to Ekethimerini’s report/spin on what he said (quite likely to be two distinct things, imo) — can be heard via the OMFIF news item, “Greece’s pre-July parallel currency plan within monetary union”:

    The recording itself is at:

    Ekethimerini seem to be trying to spin this as “That crazy traitor YV had a secret Grexit plan all along!”. YV himself seems to be half-denying that spin and half playing up to it, saying (according to AEP) that he expects to be arrested as a traitor.

    Presumably the reality is that he initiated what in a less fevered atmosphere would be called a feasibility study, something it would be irresponsible of any prospective/actual Greek government NOT to do — just as it would have been irresponsible of the European Commission not to consider the possibility of a Grexit and not to make contingency plans for it.

    To my mind the more interesting things about the story are the claims that the relevant computer systems were under control of the Troika, that Schäuble wants Grexit as part of a plan to bring the French to heal (even if true, not entirely obvious why WS would choose to confide that to YV specifically), and the re-emphasis of YV’s post-resignation statements that his threshold for Grexit was lower than Tsipras’s.

    As usual, this is about politics rather more than about economics: internal Greek politics, Eurozone politics, and EU politics, and to a lesser extent global politics. This story is perhaps most pertinent to the first of these: does YV continue to see an active rôle for himself in the unfolding drama — and if so what rôle? — or is he just shooting his mouth off, as he seems to like doing?

    1. Yves Smith

      I have to tell you but I’ve gotten lots of private comments regarding his story about the tax systems being under the control of the Troika. The tax office being put in some sort of weird outside the government state to prevent cronyistic favors being done is not tantamount to it being a Trokia unit. It’s contradicted by the IMF not being able to data it needs to do its assessments. The IMF just cancelled 16.5 billion euros of funding over that very issue! Greece should be able to scream bloody murder over that if the IMF did have ready access to the info and they aren’t.

      Moreover, regardless of what you think of his napkin doodle of a plan, he was utterly out of line discussing it with the hedge funds.

  33. IsabelPS

    It just occurred to me a stupid idea:

    Could it be that the reason for the euro to be designed as a Hotel California is because it could be nothing else? I mean, is the dollar designed in such a way that Delaware could revert to the pound, the schilling or the delaware? Or once you have a common currency there is no (reasonable) way out?

  34. BadBentham

    After reading the text, one could believe, Varoufakis is some kind of Blofeld-reincarnation: A possible interpretation for the telephone meeting with the hedgies could be a plan to let go down the Euro in flames (quite possible after a Grexit) and thus, as effect, stabilizing the freshly-printed Drachma in its parity to the Euro. While it would work mid-term at best, it still could suffice to establish the Drachma as a new currency, especially with speculative support in both currencies, stopping effectively capital flight (ideally, Greece would even be flooded by the incoming cash flow) from Greece to the Euro zone, and thus preventing hyper inflation, as in Germany 1923, or Venezuela nowadays. –
    Audacity? Effrontery? Maybe even evil? – Or: Highly justified retribution ?

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