Mark Ames of Pando Interviews Your Humble Blogger on Greece

I hope you’ll enjoy this interview with Mark Ames: Naked Capitalism: “We are in the business of making trouble.”

It’s unlocked only for the next 48 hours, so please check it out soon!

Also, there’s one small correction that didn’t get into the version that Mark put up. Hopefully it will be revised soon, but in case you see the article before Mark makes the update, I make a statement about “negative interest rates” that should read “negative real interest rates”.

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  1. TheCatSaid

    Great interview, Yves. Informative as always. Excellent questions, too. Thanks to Panda for making it briefly available to NC readers.

    Yves, I love your answer to the question about the potential role of Silicon-Valley-type technology solutions to Greece’s problems. You explain that Greece’s problems are “political, institutional and cultural”, tying together the preceding questions and discussion.

    Your high-level discernment grounded in facts and practical experience is one of the most valuable aspects of NC.

  2. Mike

    Great interview! And just like TheCatSaid said, it is extremely valuable to see your Greek crisis narrative make its way out into the world.

  3. Dean Plassaras

    Nice interview. However, the true problem of Greece is that it has across the table a fanatical Ayatollah Schauble and a bunch of his psychopathic Talibans residing in Berlin.

    Greece’s problem is not economic but purely political and clearly outside its own borders.

  4. Foy

    Great interview and summary of the posts of Yvve’s posts on Greece last 6 months.

    And loved the last question and answer. What a business to be in… Made my day!

  5. IsabelPS

    Very good. (I don’t know if you forgot to switch off comments, but now I said it!)

  6. Toivos

    I have to praise Nakedcapitalism for providing such wonderful coverage of the Greek crisis. However, I do not criticize Syriza for its failure. In fact I believe they made a major political achievement. In this Pando interview Yves criticizes Syriza for not playing by the rules and overreaching with this statement.

    Syriza’s efforts were tantamount to a group of grad students armed only with rifles making a frontal attack on a Panzer unit.

    Perhaps that is true. But what Syriza did accomplish is to show the whole world that the current European financial system (now understood to be neoliberal) is German dominated and guided by the same ethics of a Panzer division. In the short term Greece may have lost, but in the longer term they have educated millions of Europeans what belonging to the Euro really means.

    I have noticed that Poland, Slovakia, Hungary and others are not rushing in to join the Euro. Syriza’s brave resistance to EU financial tyranny and German dominance have opened many eyes. In the short term Greece may have lost but they have done something that no one else on this planet has done. Also, it seems obvious, that the Greeks losses in these recent negotiations are no worse than the benefits they would have achieved if they “played” the game according to the rules from the EU play book.

    I think Yves strong suit is financial analysis — political analysis not so much.

    1. Yves Smith Post author

      The Greek people did not give their consent to have their already depressed economy driven to the brink, or to suffer an even greater loss of sovereignity, to make a political point.

      They were promised relief from austerity. Instead, they have already suffered vastly more than they would have had they merely accepted the deal on offer when Syriza was voted into office, and everyone I knew with good intel in Europe was of the view in February and March that Syriza would be able to get concessions from the Troika if they could persuade them that they were serious about improving tax collections. I’m not exaggerating, I was getting almost daily e-mails objecting to my “I don’t see any bargaining overlap here” from people who outlined where a deal could be done.

      I hate to sound argumentative, but this site was virtually the only one to call correctly, and very early at that, that the negotiations would fail. So it seems peculiar for you to take issue with our ability to do political analysis.

      Your objection is that you disagree with our view that Syriza failed the Greek people, to whom they promised relief from austerity. Instead, they’ve made the economy much worse, and that also means a lower baseline for the IMF assessment, which means more intense austerity too.

      Syriza. or at least Tsipras, is far more cynical than he’s managed to convince people that he is. I suggest you read this post. His widely touted referendum was a sham. Tsipras even changed the rules a week before the referendum was announced so as to eliminate the procedures to give voters an informed choice, namely, the creation of a “Yes” and “No” committee to give the best case for each side. The period before the referendum was also made shorter than the old law provided. The referendum question was so (deliberately) confusing as to fail to meet international standards for a proper voter question.

      1. TheCatSaid

        I’d love to know why Syriza never went after the media moguls or ramped up tax collections on the rich like they said they would.

        YV said in an interview that the troika kept the Greek side on the hop by constantly shifting focus, and maybe the Greek civil service has bread buttered in some way by the oligarchs, but even so, couldn’t they have done more?

        The government’s cautious language–not to offend the 0.001%, it seemed to me–made me wonder if there might be some hidden leverage being exercised behind the scenes, a personal threat of some kind.

      2. salvo

        well, I don’t want to judge whether syriza as a whole (treating syriza as a homogenous subject seems wrong to me btw) performed terribly or not, but to claim that it has been syriza who has imposed still more misery upon the greek people and not the creditors seems to me to confuse cause and effect

    2. IsabelPS

      For heaven’s sake, half a decade into this crisis do you think we were waiting for Syriza to lay bare the power play in Europe and the relationship of forces in the eurozone and beyond???

  7. rusti

    It’s a shame that this interview will disappear behind the paywall, because it’s such a fantastic introduction to this whole calendar year of research and discussion at NC.

    You have to fix the economies before you have market opportunities that entrepreneurs can serve.

    This line was really perfectly formulated for “Pando’s Silicon Valley/tech audience”. I hope it sinks in for some of the readers there as a larger lesson.

  8. nmb

    Thanks! Very interesting interview.

    Yves is right in many things but she’s quite strict on SYRIZA. It is hard for anyone outside Greece to understand current conditions. SYRIZA had very limited options and fights against an extremely powerful system inside and outside Greece, but this may change quite soon in Europe.

    However, there is a crucial SYRIZA conference today which will determine to a great extent whether SYRIZA will manage to remain solid and united. If not, then Yves will be probably right about Tsipras’ real intentions. The mutation of the Left will be disastrous.

  9. Pattso

    Yves, I enjoyed an excellent reading. Especially your comments about the practical IT issues of a Grexit are outstanding.

    I mostly agree with you regarding Syriza. You are right, this blog was one of the few wich got it already right back in February. There were others but as far as I remember not in the english speaking world.

    I could add some comments about Syriza turning an economical argument into an argument about legitimacy and how that changed the approach in many European capitals.
    Or I could repeat a comment I made months ago about Syrizas trying to exploit Berlin’s influence after they failed to isolate Berlin. (“Athen will stop complaining about Berlin dominating the others as soon as Berlin starts to dominate the others for Athen.”)

    But it would be retrospective.

    I would like to add some thoughts about the German position.

    1. I agree with you regarding you comment that Berlin is fronting for the status quo. At least right now. The argument from Merkel/Schäuble is: To fund the deficit countries there has to be someone able to fund it in the first place.
    For Berlin it’s about competitiveness in the global market, not about the 90bn (or whatever the German exposure might be).

    2. What we witness is a very old conflict inside the EU. It’s more or less the same conflict Europe is into since the early 1990s. A (very) short summary of this conflict:

    Everybody: We need a fiscal union, otherwise it won’t work.
    Everybody: Right.
    Paris: Let’s do it?
    Berlin: We need a political union first.
    Paris: That’s not possible. Let’s do the fiscal union first.
    Berlin: Not possible. Let’s do the political union first.
    Paris: We won’t do that. Fiscal union.
    Berlin: We won’t do that and we can’t do that.
    London: We don’t want it anyway.
    the Haque: Berlin is right.
    Rome: Paris is right.

    That conflict is going around in Europe since decades.

    For sure, Germany does not want financial transfers (nobody wants to pay) but it would give into it. Especially Schäuble is open minded. Germany just wants and needs something in return and until now more ore less nobody in Europe wants to pay that price.

    There is still the hope that faced with the econimical necessity Berlin will finally give into it unconditionally.

    That is a dangerous hope and I would like to comment the “need”-part to explain it.

    Merkel is a weak Chancellor by design. Like every German Chancellor in the past. Berlin actions are constrained by 16 Länder and the Bundesverfassungsgericht in Karlsruhe. The German constitution is the tricky part.

    Germany is allowed to transfer sovereignty to Brussels. There is even a whole article 23 in the German Constitution about it. However, the German Government can’t transfer the fiscal sovereignty from the Bundestag to Brussels without establishing a political union in the first place.
    (no taxation without representation)
    Such an action won’t stand Karlsruhe. That’s a quagmire because that is what many are hoping for.

    Is it possible for Germany to change it’s constitution?

    Apart from the practical problem of getting a majority to do so it is only allowed to some extend. There is the “Ewigkeitsklausel” (eternity clause):

    „Eine Änderung dieses Grundgesetzes, durch welche die Gliederung des Bundes in Länder, die grundsätzliche Mitwirkung der Länder bei der Gesetzgebung oder die in den Artikeln 1 und 20 niedergelegten Grundsätze berührt werden, ist unzulässig.“

    I translates to: Listen lawmakers, you messed up on such a big scale a few decades ago that we won’t allow you to mess up again. Even not if you all agree on it. Even not if you are democratically elected to do so. Article 1-20 are sacred. There is no way around it. Forget it. Go home.

    This “it’s all about the rules” the Germans are often accused of being into it to much, that is not just a state of mind, a political concept or some kind of illness. It’s a practical problem the German Government faces.

    3. I know that France/Germany are dominating Europe is a wonderful narrative. These countries are the most influential one but the EU/EZ doest not work this way. No European country is able to dominate Europe the way the US dominated the western world for decades. Berlin might be able to dominate Malta but there it ends. Whoever believe that Berlin would be able to dominate Austria, Slovakia or even the Dutch does not know much about the EU.

    These Brusseles summit we witnessed a few weeks ago. That’s the way it works.

      1. Pattso

        @Salvo: Seriously? The German defense budget is around ~1.3%/GDP. Wich is a constant cause of quarrel between Berlin and London/Paris/Washington. Berlin’s reluctance to rearm it’s forces is one of the underlying reasons for the rift between Paris and Berlin in the recent years.
        There is an almost certain way to loose a vote for any German party: just demand real money for the Bundeswehr. The Bundeswehr is barely able to reach Frankfurt/Oder without asking Washington for some gasoline. You can patch some dykes at the baltic sea with the German military and that’s it.

        But let us think a possible military buildup. Let’s say Berlin decide to reintroduce two Divisions the old fashioned way. Not the air-transportable Irak/Afghanistan stuff but troops able to operate in the central european plain. I’m not a Bundeswehr expert but that should be something around 38.000 troops, ~700 MBTs, a lot of IFVs, artillery et. al. Furthermore Berlin would come back to that proposal with the Force de Frappe the French made a few years ago. Paris would probably like this kind of European integration (the stuff is expensive).

        Let us even assume that Berlin would ask Warsaw, Riga and Vilnius if they would be please so kind to host some Brigades. What do you think would be the answer from Warsaw, Riga and Vilnius?
        A: Help! The huns are back! The are dominating us.
        B: You are welcome

        @Yves: I will come back to you argument. Your argument just needs a little bit more time.

    1. Yves Smith Post author

      Please read the new Wall Street Journal account on the negotiations over averting a Grexit:

      A self-proclaimed “friend” of Greece and a veteran of eurozone politics, European Commission President Jean-Claude Juncker wasn’t among the small circle of leaders that agreed to the most contentious issues during the long summit night of July 12.

      “Juncker was there all the time, but not in the small circle,” said one senior diplomat who took part in the extended eurozone leaders’ meeting.

      The so-called breakout sessions were held only between the leaders of Germany, France and Greece and presided over by European Council President Donald Tusk. Nearly 10 hours of the total 17 were spent in this format, noted EU affairs commentator Peter Ludlow in his summit analysis.

      “It was certainly an odd meeting. Sixteen government leaders and the presidents of the commission, the European Central Bank, the International Monetary Fund and the Eurogroup spent the best part of 10 hours with little or nothing to do,” Mr. Ludlow said.

  10. Disturbed Voter

    Congrats on a good interview. Tsipras turned out to be a bigger snake than I could even imagine. It seems that there are few statesmen in the world.

  11. PlutoniumKun

    Yves, fantastic interview, you summed up succinctly so many issues that have been boiling over for month. Its good to see Ames has been paying attention, he asked pretty much the questions I’d have put to you if I had the chance.

    My only problem is that I feel pretty humbled at the summary of your CV, thats an impressive amount of gigs you’ve done in such a short time.

  12. Barry Fay

    That the tone of the interview displayed an underlying (and IMHO undeserved) animosity is well represented by your “Einstein” point: that Syriza refused to change course even though it wasn´t working, which is the behaviour of an insane person (insanely stupid is of course understood). First, change course to what? Certainly not capitulation? And second, their stubbornness could just as well be seen as their having believed that, WITH TIME, their argument would win out (as the Euro-Left joined in, as the force of their BEING CORRECT in their analyses sunk in, etc.). This is not insanity. It is in fact perfectly reasonable, even if it proved to be mistaken. Why did you choose the “insanity” interpretation? Animosity, oder? Then there is your stilted choice of comparisons in your analysis of a potential drachma solution: e.g. “it took 8 years for the Euro to be initiated” to show how ridiculous the introduction of a new drachma would be. The Euro, however, involved ELEVEN OR TWELVE different and distinct nations, not one, making this analogy completely unsuitable, but, yes, self-serving (even if you are right!). Next up was the “logistical capabilities” of the US military requiring a whole year for the new money in Iraq. The performance of the US military was in general abysmal and in financial matters they were completely in over their heads. And lastly, one should never attribute someone´s behaviour to evil intentions (traitorous) when ignorance or incompetence or misplaced hopefulness or bad luck are more than adequate explanations.

    1. flora

      I’m glad you cite misplaced hopefulness and luck(bad) in your last sentence. Relying on good luck for a successful negotiation is not logical or reasonable strategy or tactic, though very understandable. When it appeared that luck couldn’t be counted on why was there no Syriza negotiating Plan B ready to go?

      Maybe with enough time things would shift, but Syriza had less than a year. How much time are you talking about?

      A Greek conversion from Euro to Drachma is a difference is scale from the full EU conversion but not in kind. And a Greek currency conversion effects would not be limited to the Greek banks alone.

      1. Barry Fay

        My point was about the use of inappropriate analogies to attack Syriza. I was NOT trying to aver that a Grexit was viable (that question seems to be above EVERYONE´S pay grade). Which gets to your other observation about the lack of a Plan B: the fact is that there was no possible Plan B EXCEPT a Grexit (the “temporary currency” idea would lead to the same place). The fact is that Syriza had NO GOOD OPTIONS. Period. They tried to play the horrible hand dealt to them and lost. No surprise there – bluffs rarely work, especially when the opponent has exponentially more money!
        And while I´m at it, I also resented Yves calling Yanis V “macho” – talk about playing into the hands of the neo-liberals! He is, yes, a man, who happens to be great looking and has a strong deep voice – does THAT make him macho? That was what I call a cheap shot! I´m still wondering why all the animosity.

        1. Yves Smith Post author

          We said from the beginning that Greece had only terrible options. Yet Syriza managed to bring about just the worst outcome imaginable.

          As for Varoufkais been regularly described that way in the media, both in flattering terms (“like Bruce Willis”) and unflattering (“like a bouncer”) And most men consider being called “macho” particularly when you are well into your 50s, to be a term of praise. And I’m critical because he’s a flagrant liar and has been misrepresenting what happened to try to salvage his reputation (for instance, saying Syriza intended to lose the referendum. Tsipras might have, but other members of Syriza were quite clear that the “no” vote would get a big win. And other members of Syriza campaigned for a “no” and to get the vote out too!)

          Syriza screwed up massively. There’s no way to put a pretty face on it. It was evident to both the left and right factions in Syriza that the original negotiating strategy had failed as of the end of February. There was nothing wrong with attempting what they tried to do. But not only failing to change course but doubling down on a failed strategy and getting aggressive on top of that too when they had no bargaining leverage is what led to the disaster that has been foisted on the Greek people.

          The ECB had demonstrated that it could bring any country to its knees through its ability to withdraw ELA support. They did it to Ireland and did it in an even more brutal way in Cyprus Yet with the Greek banks on ELA life support, and the ECB clearly ready and eager to lower the boom on Greece (we mentioned this as early as February) they keep provoking the creditors.

          You refuse to acknowledge that Syriza’s failure is a disaster for the Greek people. They’ve already taken economic losses they never would have suffered otherwise, they are going to be subjected to even worse austerity, and they are also being stripped of even more sovereignity.

          1. Barry Fay

            Yves – first, thanks for responding (THAT is what makes NC and Yves Smith so great!). However, I still think you are being unnecessarily hard on Yanis V. For instance, saying that he is a liar because he said Syriza wanted the Yes vote to win is over the top and only justified by saying that, even though Tsipras may have wanted that, others in Syriza didn´t. But Tsipras IS Syriza and is calling all the shots. Those that disagree with him HAVE HAD TO RESIGN. And in fact Yanis V resigned along with them.
            I also think that the harshness of the measures against Greece were unavoidable, no matter what Syriza did – it was the only way the Germans (both the people and the politicians) could possibly have agreed to a new “bailout” (I live in Berlin). The so-called earlier proposals that appeared to be less brutal were never written in stone and Syriza was claiming during the whole process that the Troika kept “moving the goalposts”, which I believe, especially considering that Schäuble was actually intent on forcing Greece out of the Zone. So the goalposts inexorably moved to the extreme end of the spectrum. It reminds me of some advice got for negotiating: Never make an offer you aren´t ashamed of!

            1. Yves Smith Post author

              Varoufakis also said a few days before the election that the Greek banks would open the Tuesday after the referendum no matter what the outcome of the vote was. That was clearly, obviously untrue and also inconsistent with his claim that Syriza intended to lose. You’d never give a false reassurance like that.

        2. Ormond Otvos

          I tend to analyze the EU/EZ/NATO vs The Other as foolish partisanship. Why the presumption of a failed state? Which definition? Is there a presumption that the EU is not significantly at risk of failing also?

          History shows no lack of joint interest organizations before both world wars, and the long list of bloody disputes before that, so I’m not cheered that the EU exists.

          At the current level of media-whipped nationalism, I tend to think in broader sociological terms, which I think Yves is glossing over. There are lots of available weapons, lots of fools to advocate using them, few real restrictions. Add climate change (the burning rain forest in Washington’s Olympic Peninsula), nuclear “tactical” weapons ( can see Putin’s “Scuze ME!”, EMP, mass poverty migrations (EuroTunnel riots?) and a few others, and I see burning fuses, many on turban bombs.

  13. Jess

    Just want to say that you’ve been very successful in the business of making trouble. And we’re all the better for it.

  14. Fool

    What a great interview! This was the most clarifying, practical explanation of the crisis — and, amazingly, at no cost to nuance. I hope to see these two world-class troublemakers continue to collaborate in the future.


  15. ewmayer

    Excellent summary of the key aspects of the Greek situation which Yves has been covering in exhaustive detail here for the past 6 months or more, for the wider audience Pando reaches.

    I note Ames mentions the pseudonymous aspect of ‘Yves Smith’, but he missed the economic-paradise-lost quip embedded in said pseudonym! To paraphrase the title of a popular book on punctuation, “Ames, Shoots and Misses”. :)

  16. Dwain Kuehner

    One of her closest collaborators, Lambert Strether, runs the Correntewire. Michael Hudson; political strategist Matt Stoller; and a bevy of guest writers and human inputs, including your humble interviewer.

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