A Dispatch from Germany: The Rhetoric of Competition in Everyday Life and Varoufakis’s Endless Relitigation of the Bailout:

By Nathan Tankus, a writer from New York City. Follow him on twitter at @NathanTankus

Wednesday I attended a debate between Yanis Varoufakis and Hans Werner Sinn. I will not summarize the debate (I’m told the video will be up next week), but instead give my reading of the debate and wider impressions of attitudes in Germany.

Relitigating Varoufakis’s Relitigation of Past Bailouts

What was most striking about Varoufakis’s posture was how he seemed to learn nothing from his experience as finance minister. Despite the repeated failures surrounding arguing over process and attempting to change the bailout the previous Greek government had already agreed to, he was still adamant about going over these points again. Further, he discussed his negotiations not as someone representing a country in a weak bargaining position, but as a doctor attempting to deliver medicine. It has been said many times but it bears repeating: he has acted and still acts like an economist diagnosing and fixing Europe rather than a representative of Greece negotiating on Greece’s behalf.

Varoufakis’s economic analysis remained as good as ever, but the issue has (for the most part) not been his economic analysis. The issue is how he conceived of his position as finance minister. He doesn’t seem inclined to pursue elected office again (he explicitly called his speaking tour “doing politics”) but it’s unclear if that is voluntary or a consequence of how poorly popular unity did.

The Mania and Rhetoric of Competition in Germany

From outside of Germany it has been difficult to judge what the attitude of the “ordinary” German is. Do the articles coming out of Germany accurately represent people’s views or is there a disconnect between media obsessions and the ideas people hold? I’m in no position to make that judgment overall but one issue stood out starkly to me: the language of competition. Based on my experience here the notion of competition seems to have seeped very deeply into mainstream discourse. ordinary people conceive of the Eurozone’s problems as one of an uncompetitive south stuck with a competitive north.

You could see this in a question asked of Varoufakis towards the end of the night. Essentially the question was whether recently discovered oil deposits in the Mediterranean could be explored and turn Greece into “Norway.” Rather than shoot down this insane question (my German friends tell me he was doing everything he could to not be “divisive” and seem “reasonable”), he doubled down on it and suggested that not only should Greece develop oil in the Mediterranean but Greece should start cooperating with Turkey on this project. The inconsistency with his earlier stance of using his “modest proposal” to develop green technology around Europe went unmentioned. He acknowledged this was “unpopular” in Greece but didn’t comment further than that (such as mentioning the horrendous Ankara bombings). The logic of competition is so deep seated that I felt like the only person who saw a problem at all.

In talking about these issues with Germans and hearing ordinary people ask questions in public you get the image of ordinary Germans scouring maps, researching Greek islands and furtively “analyzing” Greek (as well as other “southern” countries) industries looking for any resource that could be extracted and sacrificed on the altar of Europe. In reality of course most people don’t spend their time on this sort of thing but I wouldn’t be surprised if most families had one relative who had figured out a unique “solution” to the Greek problem that didn’t require “German” money. Any policy other than extracting more blood from stones seems to be seen as “papering” over the “crucial” problem.

The idea that member states in a monetary union need to be in trade balance (let alone the idea that the current account says anything about “competitiveness”) is a bizarre one to the uninitiated. However, Germans had similar debates to today about post-reunification in the early 1990s (Sinn referenced the east-west split in this debate) and don’t seem to find anything strange about it. From an American perspective a monetary union seems permanently hobbled by statistics on member states trade balances. Americans of course have no idea what the trade balances of individual states are. More importantly it’s not an issue most Americans have even thought about. In this way we see how statistics produce consciousness. In speaking with ordinary Germans I’ve come to contemplate whether the United States could survive accurate data on the current account positions of individual states. I’m not sure and I certainly don’t want to risk a definitive answer to that question.

IT Issues and Grexit One More Time

In response to Sinn arguing that Grexit was the best option for Greece (it’s unclear whether Schäuble’s ghost haunts him or he is the ghost that haunts Schäuble), Varoufakis laid out two objections.

The first objection consisted of recounting some findings of his “group” working in “the office next” to him. Apparently they “discovered” how difficult it would be to redenominate contracts.

The second objection was that it would take “twelve months” to transition to the drachma from the moment he decided to do it. He said this was mostly because of technical issues related to physical banknotes. He went on to claim that if the Euro was “purely digital” then the currency could be changed with a “touch of a button.”

As Yves, I, Clive and Louis Proyect wrote over the summer, this idea is completely insane (for a refresher on the financial IT issues of a Grexit see here [http://www.nakedcapitalism.com/2015/06/the-operational-issues-of-a-grexit-part-two-organizational-capacity-capital-controls-and-bootstrapping-a-new-monetary-system.html], here [http://www.nakedcapitalism.com/2015/07/more-on-the-it-implications-of-a-grexit.html] and here [http://www.nakedcapitalism.com/2015/07/bank-it-grexit-and-systemic-risk.html] among many others). What’s more interesting is what could possibly motivate this claim. Did his “Plan B” team not have an IT expert? Or does he know better and for some political reason he wants to represent Grexit as more viable than it is despite his public opposition to Grexit? I will leave the question of whether this statement is derived from ignorance or lies up to the reader.

Does Europe Need Democracy or a King?

Varoufakis has in the past and currently says that his goal was and is to “democratize” Europe. However, in relating specific frustrations from his experience as finance minister his objection seemed less about a lack of democracy than a lack of formal hierarchies. For example he told a story of doing “a deal” with a high ranking IMF official over sales taxes, having a drink with him and flying to Athens to convince his colleagues to agree. When his negotiators went to Brussels to finalize the agreement that he made with that IMF official, it was not on the table. When he next saw that official, the official sheepishly changed the subject to labor law.

It’s obvious why this experience would frustrate Varoufakis but it was not an issue of democracy. A world in which he could make an agreement over drinks with one individual in the IMF, even high ranking, is a world missing democracy. It may be frustrating for him and “counterproductive,” but that individual official’s inability to “represent” Europe is in some sense a triumph of democracy. He also cited Kissinger’s famous quote “Who do I call if I want to call Europe”? By no stretch of the imagination was Kissinger complaining about Europe’s “lack of democracy.”

From hearing Varoufakis talk you get the sense that he wanted one single individual that he could “do a deal with” through essentially force of personality. He even said he felt he could have done a deal with Schäuble and implied the biggest barrier to that was that Merkel didn’t share Schäuble’s views. Would Europe be more democratic if Varoufakis had that single person he could convince? I’m skeptical. That is not to say that Europe doesn’t need radical reform to its governance structure. Just that a more formal set of European-wide political institutions would not necessarily be more amenable to Greece’s plight. The attempt to conflate a lack of formal institutions with a lack of democracy is dangerous. It is even more dangerous to conflate the lack of either with hostility to Greece.

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  1. Darthbobber

    It always seemed to me that Varoufkis shared the strange naivety of a Krugman. He thought, and still thinks, that the European “project” is, or could still be, “about” all the shiny stated goals that were once seriously believed in by many and are still marketed as the raison detre, albeit with ever-declining plausibility. Its as if he really believed that these people were somehow inexplicably unaware of the impossibility of the Greek debt ever being repaid, or of the considerable utterly pointless (from any human perspective) suffering that the attempt to do so in their preferred fashion would entail. It as if I were to take the smiley-face blather that our HR woman is responsible for generating at face value, noted that the company had many policies which seemed, err, inconsistent with that, and chose to waste my time having a meeting with her about how the policies might be better harmonized with that. But I know in advance that this would be an utter waste of time.

    He would of course be correct, from my perspective, in arguing that if they wanted a “Europe” that was stabilized as a reliable source of surplus value going forward, an end to contractionary policies going forward would be in the elites long-term interests as well. But no party that made its own people wear the hair shirt would ever agree to such a thing, and popular challenges to those parties at home would actually increase their intransigence in the short term. (The Portuguese and Spanish ruling parties, for example, would have been under immediate notice to quit the second they let Greece obtain less onerous terms than they had helped shove down their own populations throats.)

    For all their blunders in negotiations, I think the Greek leadership were reflecting the ambivalence of their own electorate, who hated the terms of all the memoranda, but also saw no realistic alternative if push came to shove. Which in the end, it did. And they agreed to what they agreed to for pretty much the same reason the Bolsheviks “agreed” to the Brest-Litovsk treaty. (Which also had another common element, in that a Ludendorff who was a bit more rational would have agreed sooner to less onerous terms, just to get that army back to the west in time to do himself some good there before the Americans started showing up in large numbers.)

    1. skippy

      Varoufkis… Libertarian Marxist or Marxist Libertarian [gets confusing these days] that studied game – market theory on a FPS et al MOG that used hats as a observational tool.

      Had he only enjoyed the antics of Half Life 2 Team Fortress/Death Match/CTF years ago now…. just the pron, all the pron, everywhere… 64 players on two teams stopping to check out the porn spray on the bridge, connecting two fortresses on one map, big pow wow, until one lone wolf would let off an orb weapon killing everyone. No worries you re-spawn instantly or in 15ish seconds. My personal pron favorite was the 6 very old geriatrics going at it on a king size bed, that-a-take your mind off the hyper awareness needed to be competitive….

      Not to mention the awareness that many University’s were conducting quite a bit of real time observations and testing in this platform at the time, under and post grad work.

      Skippy…. studying reality can be difficult…. may one could view Nathan for You skit the souvenir shop season 2 episode 2

      1. Alejandro

        Labels or categories have always been confusing, especially when used as meaningless identity referents…used to be referred to as “pigeonholing”…once in the cognitive cage, thinking is restrained, as ‘is’ awareness…

    2. Massinissa

      I dont think Krugman is naive. Its easy to believe something if your livelihood depends on your believing it like Krugman’s does. Without being a neoliberal, he has no source of income. And he probably couldnt live with himself if he didnt first believe what he was being financially rewarded for saying.

      I dont know enough about Varoufakis to know whether or not hes naive though, honestly.

      1. Darthbobber

        I think its a mistake (though one I’m prone to myself) to go straight to purely financial incentives for this sort of thing. More importantly, I think, when you go into that field you are approved of and rewarded by every authority figure you encounter and most of your peers validates you for playing well within this particular theoretical structure.

        And things like Ricardian comparative advantage theory have the further attraction of looking very elegant and internally inconsistent as long as certain presuppositions aren’t questioned. I know very tediously earnest people who manage to very honestly believe this sort of thing.

        And adherence to nonsense is hardly confined to those who are rewarded for it. My Trotskyite friends, barring an incredibly unlikely series of events, are never likely to be “rewarded” for their (often courageous and self-sacrificing) adherence to a system of thinking that has never produced anything resembling the predicted results from its inception well before my birth. I have a brother in law who, together with his spouse, has devoted the bulk of his life to promoting what he thinks of as “the Revolution” (always that capital R) within the strange context of Bob Avakian’s wee party.

        And not only do these peoples’ livelihoods not depend on promoting such things, in almost all such cases their livelihoods are well short of what they might otherwise have been. (And my criticism is not that they are devoting all this effort to struggle, but that they are doing so within a framework which a less “theoretical” 12 year old could see will never produce the desired result.)

        But back to the more hifalutin’ purveyors of nonsense. I usually turn for my preferred explanations to Bourdieu, Mills and Miliband for explanations of this sort of intellectual behaviour that don’t require direct corruption or the direct need to self-rationalize the corruption as the go-to explanations (though they often are ONE of the explanations). Or stop at the vacuous level of Althusserian Ideological State Apparatuses. But I grow long-winded. So I’ll stop.

  2. Darthbobber

    “It may be frustrating for him and “counterproductive,” but that individual official’s inability to “represent” Europe is in some sense a triumph of democracy.”

    The key phrase here is “in some sense”. But in the sense in which that is democracy, anything other than absolute rule by a single individual is, “in some sense”, democracy. In a continental arrangement embracing several hundreds of millions of people, the fact that authority in these matters is spread among-maybe- a couple hundred of those people, with a handful of those (like the German chancellor) effectively holding liberum veto power, may be democracy “in a sense”, but not in a sense that would intuitively seem relevant to most people.

  3. Jim

    To the extent that there is any such thing as “Europe” it is a multicultural empire, not a democracy.

  4. Rob adams

    State trade balances are exactly what’s needed to sober up the electorate. Non voters at least might finally see incentive to act like citizens & it would most certainly destroy the Republican party.

  5. Lee Baker

    This post represents a bias against a sincere effort to overcome the ravages of austerity. You may not like Varoufakis’ method, but in the main he is correct to resist the Troika’s efforts to sell off a country like a bankrupt company’s assets are sold off. A country is not a business corporation. Stiglitz is trying to start a conversation about restructuring sovereign debt at the UN since there is presently no formal way of getting out of sovereign debt without destroying a country. See: http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=14997. Even the neoliberal IMF admits that Greece’s debt must be restructured, i.e. diminished significantly.

    1. Yves Smith Post author

      You ignore the fact that the result of Varoufakis’ misguided negotiating strategy, which both the Left Forum and the conservative members of Syriza (the faction under Dragasakis) opposed, produced a victory more complete for the neoliberals than they ever could have engineered on their own. Had the Greeks been less inept, the Troika would not have been likely to use their trump card of pushing Greece what amounted to a bank holiday, which in turn forced the Greeks into submission.

      1. Nathan Tankus

        ” You may not like Varoufakis’ method, but in the main he is correct to resist the Troika’s efforts…”

        This is an insidious straw man. The conversation is not over whether resisting the Troika is correct, the question is over what strategy is the most effective resistance to the Troika. I think by now all can see the failures in Varoufakis’s strategy. This is no Monday morning quarterbacking. This blog admirably “called it” in real time.

        Varoufakis had a legal and a moral responsibility to do as much as he could for Greece in the position as finance minister. That he conceived of himself as an economist fixing the eurozone rather than a government official with a weak bargaining position whose job was to get as much as he could for those he represented deeply hobbled his efforts and materially hurt real people.

      2. Lee Baker

        What was the disagreement between Varoufakis and Tsipras? From what I read in NC, the two men had a substantial disagreement about a Plan B. In addition, it seems unfair to criticize the exchange between Varoufakis and Hans Werner Sinn without letting your readers view or read the exchange for themselves. I believe my main points still hold, especially if you consider the posts on The Real News.

        1. Nathan Tankus

          “What was the disagreement between Varoufakis and Tsipras? From what I read in NC, the two men had a substantial disagreement about a Plan B”

          this is a non-sequitur that has no relevance to my response to you. At the very least, if you see a connection you need to establish one before dragging Yves or I into another argument about “plan B”.

          “In addition, it seems unfair to criticize the exchange between Varoufakis and Hans Werner Sinn without letting your readers view or read the exchange for themselves”

          this is extremely disingenuous. The German media produced reports on this event within an hour of it happening and journalists regularly report on things before a video goes “live”, let alone when there isn’t a video at all. Show me one place where you’ve held any other media outlet anywhere close to this standard. I’m told there will be a video and you can judge then.

          1. Lee Baker

            Thanks so much for not answering my questions, which I believe are relevant. You are flogging a dead horse. Tsipras was naive, but maybe not Varoufakis. And, in focusing on the details of how idealistic Varoufakis was, you make a perp out of a victim. Much of your response is just rhetorical play and ad hominem bluster.
            The real point is that NC may be seen as an apologist for neo-liberal policies that are dangerous to Greece especially, and to the EU in general. NC should be supporting Greece like Stiglitz and Galbraith do. Most readers rightfully believe that NC is on the side of justice for Greece.

            1. Yves Smith Post author

              “A true patriot is a lover of his country who rebukes and does not excuse its sins.” Frederick Douglass.

              That includes those of its ex-Finance Minister. And he was an astonishingly naive in his understanding of power dynamics. The fact that we could call the trajectory of the negotiations merely from reading the media says this was understandable. Varoufakis’ failures cost Greece dearly, yet you make excuses for him.

              It also seems that your are incapable of understanding complexity and want to force everything into simple black/white frames. This site has consistently criticized neoliberalism and austerity, and has similarly always criticized Germany’s wanting contradictory things, namely running trade surpluses and being unwilling to finance its trade partners. But Tsipras and Varoufakis botched the negotiations as badly as could be done. And we said their failure would set the left back in Europe, which is precisely what has occurred. Look at what happened to Podemos in Spain.

              Syriza failed its most important duty, which was putting the welfare of the Greek people first. I had conversations with insiders (on the left, mind you, not the right) who were telling me about deal terms that they were confident that Greece could have gotten early on in the negotiations, as we they were trying to tell me I was far too pessimistic as to outcomes based on what the creditor side was prepared to accept. Greece got vastly worse terms than it could have by overplaying its hand. You refuse to hear that.

        2. Yves Smith Post author

          If you read our posts, as you claim to have, the differences between Varoufakis and Tsipras were seldom major issues until late in the negotiations, when Dragasakis succeeded in getting more of Tsipras’ attention. Bringing that up here is unrelated to the argument Nathan is making and an effort to make us defend a position we never took. In other words, as Nathan points out later, you are arguing in bad faith.

  6. human

    Lessig learned this lesson the hard way in Eldred v. Ashcroft.

    Upon reflecting on the outcome, he came to understand that you can argue academics and technicalities ’till the cows come home. In the end it will be the emotional arguments that win the case, as every ambulance chaser knows.

    1. Alejandro

      Some believe that Aristotle crafted the “Rhetoric” as a cautionary treatise, to decipher and counter the increasingly pernicious influence of the sophists and calling them out as manipulators and not the “truth-seekers” they postured themselves as “being”…I find myself inching closer to this POV.

      1. hunkerdown

        I hadn’t heard that line of argument before. Fascinating, but it’s hard to trust the intentions of those who haven’t been completely written out of the victors’ history.

        “Sore losers” violate neoliberal Rules #1 and #2. The world needs more of them, I think.

  7. financial matters

    “It has been said many times but it bears repeating: he has acted and still acts like an economist diagnosing and fixing Europe rather than a representative of Greece negotiating on Greece’s behalf.”

    I think this can be seen as a two-pronged approach.

    One would be the approach taken by Costas Lapavitsas in Greece and BE in Portugal to bring back a sovereign currency. This would certainly have benefits but as we are seeing, many countries with this privilege still don’t use it for general advantage.

    The other tack, which Varoufakis is taking, is to directly address the purpose of central banking authority and expose it’s advantage to banks.

    I think the popular support that we are seeing with political leaders such as Corbyn and Sanders are due to the latter and can also be a start to get sovereign currency producers on a better track.

  8. MarkJ.Lovas

    Early on you speak of “bargaining”, and Greece’s weak position. For me this echoes the persistent criticism made of Varoufakis and company at this blog. I just don’t get it. I don’t know what this thing you call bargaining is, but I take it that, by definition, it is not a process that has anything to do with democracy or reason.–Because: I haven’t heard anyone really say that the problem was the Greek claim that what was agreed to wouldn’t work, and didn’t work. The idea that someone should respond to that fact gets squashed whenever someone introduces the idea that there’s a rule book of how to bargain. I suppose my problem is that I never read the fairy tale where the Emperor Had No Clothes and everyone steered clear of saying so, and that was a good result, the sort of outcome that smart bargaining would lead to….
    I can only imagine that bargaining is something like stroking the lion when you’ve got your head between his jaws–because it seems to be assumed that power differentials are essentially an indisputable unquestionable fact recognized by every “smart”person. I don’t see how you can introduce this idea of smart bargaining without giving up on reality–if you want, call it “moral” reality to be distinguished from a reality graspable within the narrow confines of a purely instrumental sort of reason, but I think it’s just reality

    I apologize if my remarks seem flamboyant or too personal. But I think there’s a sort of intellectual trick being done here–not with ill will–but because there are unspoken assumptions here…… And the criticism of Varoufakis fails because those assumptions are not stated or defended…. (and it is independent of any personality quirks of V. or anyone else)…..

    1. Yves Smith Post author

      Sorry but there are norms at to how to bargain. And despite your vitriol, Varofakis agrees with the framing of what he was as a negotiation and still fancies himself to be a skilled dealmaker despite the evidence to the contrary.

      Greece dealt in bad faith. They made commitments during the negotiation and later went back and reopened settled deal points. They did that repeatedly. I documented that as it happened in considerable detail. You can’t negotiate with people/other parties unless there is at least some level of trust, and the Greek operated in such a way as to undermine that.

      I don’t see why you refuse to accept the fact that Syriza did a terrible job for the Greek people. The Troika was never going to be nice, but Syriza managed to make what was already a bad situation worse.

      1. Nathan Tankus

        Yes, Bargaining involves power relations. have you really never had to negotiate in your life? did it feel like a fair, “democratic” process? The idea that a government official from a country about the population of New York City was in the position to make Europe “fair” or “democratic” (let alone the idea that that was his job) is so absurd it is difficult to respond to. Inveighing against the unfairness of life or modern society is for talking with friends over beers, not for negotiating international government agreements.

        Power differentials are not “indisputable unquestionable fact” but neither can they be debated away. That expectation is toxic.

      2. JMarco

        I’ve heard this argument from you before. I read all your pieces and none of your info comes from inside actual negotiations but are based on bloggers interpretation of comments made after meetings. There was no bargaining and you know that. Troika asked for plans but rejected all Greek offers. As smart as you are I doubt you could have done any better. In fact I remember early on you criticizing Varoufakis for not using threat of leaving the euro. One big fact you are forgetting Yanis was not elected greek prime minister so he did not make final decisions in dealing with Troika. What Yanis did accomplish is that somebody was actually calling out Troika for continuing to use failing economic policies. But most news media repeated the mantra that he should shut up and do as you’re told.

        1. Nathan Tankus

          ” I read all your pieces and none of your info comes from inside actual negotiations but are based on bloggers interpretation of comments made after meetings. ”

          unsubstantiated lie

          ” As smart as you are I doubt you could have done any better”

          Irrelevent non-sequitar that’s impossible to know

          “In fact I remember early on you criticizing Varoufakis for not using threat of leaving the euro”

          unsubstantiated lie.

          “One big fact you are forgetting Yanis was not elected greek prime minister so he did not make final decisions in dealing with Troika”

          disingenuous nonsense. are you trying to claim his orientation towards the negotiations had no effect on the outcome?

          “What Yanis did accomplish is that somebody was actually calling out Troika for continuing to use failing economic policies.”

          He was doing this (as he himself will tell you) for years before getting power.

          1. Barry Fay

            This style of argumentation where you sever individual sentences and simple dismiss them out of hand is intellectually lazy and bankrupt and completely unacceptable. I´ve seen you use it before – like some smartass kid with new toy. It adds nothing to the thread but negative feelings.
            Also, I went round with Yves back when all this was current: there is such an obvious bias against Varoufakis which is never fully explained (although there were a few allusions to him being “macho” – could THAT really be it). Let me just say that he called out the pigs in the Troika for what they are when nobody else WITH A PULPIT was doing so and now the lines are drawn more clearly for the people of Portugal, England, Canada, etc! For that he should be thanked – and the fact that the resulting deal for Greece was more offensive is really irrelevant – what you are really saying is that he should have sold out his convictions for a little more meaningless lucre. The Greeks were going to get fuc…ed no matter who was in the bargaining chair. I would also add that the refugees from Syria and elsewhere owe Yanis a debt of gratitude – after the ugly treatment of the Greeks that Yanis so adroitly revealed Mrs. Merkel was practically forced to play “mother Merkel” with the open arms so as to avoid EVERYBODY realizing what a bunch of cold-blooded, self-serving and arrogant people the Germans are (I live in Berlin and know what I´m talking about – the “real” Germans are in Pegida, just wait and see).

              1. JMarco

                As my original post said how does Varoufakis make a deal with Troika if he is not prime minister? Yves hasn’t addressed that. I just think Yves expected something from Yanis that he did not have the power to deliver.

              2. Nathan Tankus

                “No Proof, same as just throwing mud.”

                Is this a joke? you make up multiple unsubstantiated lies and then you think saying “no proof” is a response? It’s much easier for you to prove I said something you claimed I said than it is than it is for me to prove I never ever wrote something somewhere that lines up with your claim. if your statements are not lies you can substantiate them at any time.

            1. Nathan Tankus

              “This style of argumentation where you sever individual sentences and simple dismiss them out of hand is intellectually lazy and bankrupt and completely unacceptable.”

              What do you expect me to do? say “everything you’ve said here is a lie”. not respond? marshal counterevidence against statements that aren’t substantiated and completely baseless?

              Liars can make up random lies much faster than anyone can debunk them and the idea that their lies all deserve careful unpacking is absurd.

              notice that you didn’t actually disagree with anything I called “unsubstantiated lies” being unsubstantiated lies.

              I hope you’ll forgive me if I think being direct, honest and to the point has merit.

        1. Yves Smith Post author

          I regard straw manning our arguments as a form of abuse. For instance, this: “Because: I haven’t heard anyone really say that the problem was the Greek claim that what was agreed to wouldn’t work.” This is a misrepresentation of what we said. We stated clearly at the time that the creditors made it clear that they had no interest in Varoufakis’ economic analysis. They believe in neoliberalism, and many of the governments, such as Finland, Spain, Latvia, Slovenia, and Portugal, had all put their countries through painful austerity programs. They weren’t about to let Greece, which was in their eyes the most profligate, get away with not taking its medicine. And Eurozone rules require that the bailout decisions be unanimous. As a very good post from Michael Pettis explained (as did an earlier one we featured by Josh Rosner), this may have looked like nations v. nations, but it was as much a class issue within these nations, even if much of the population has been conditioned to identify against its interests).

          I don’t know how many times we’ve explained the boundary conditions, and people come to the site and do the equivalent of putting their fingers in their ears and saying “Nyah nyah nyah.” Even if they do so articulately, substantively it amounts to the same thing.

  9. MarkJ.Lovas

    Just to balance my previous comment: I was very glad to read your honest remark that you really don’t know what German people (in general) might be thinking, and it’s hard to know. I myself am a USA citizen living in Central Europe (the Czech Republic) and I try regularly to read the Czech press (admittedly with imperfect Czech). I often find myself in the position where when I manage to speak casually to a real person, I get an entirely different impression than I had gotten from newspapers.

  10. RabidGandhi

    I gave up on Varoufakis as an economist the day he came out in favour of eternal surpluses (with bobblehead Joseph Stieglitz right behind him).

    As a politician however, I place less blame on him personally and more on the Greek people. In electing Syriza and then not coming out en masse to protest the Tsipras pseudo-oxi, the Greeks have shown that they do not have the gumption to work towards leaving the Euro Zone. They rather beg to be sung lullabyes about being able to reason with Neo-Libs and Schaubles: lullabyes which pols like Varoufakis were more than happy to sing to them.

    On a personal note, when Tsipras did his kolotoumba, Argentine TV showed a nearly vacant Syntagma Square. Mrs RG became so indignant that she threw a banana peel at the TV screen. “If an Argentine government would have done that, the people would have filled the street and shut the whole country down!”

    Given the Greek peoples’ ambivalence, it should be no wonder Varoufakis now goes around Europe selling sparkle ponies.

    1. Darthbobber

      Well, one can’t criticize from the left and the right simultaneously. Insisting on running no primary surplus would have caused any negotiations to be a non-starter. And I think the Greek ambivalence, if thats what it is, comes from a painful awareness that their-to use an old phrase-“best alternative to a negotiated settlement” is potentially as or more disastrous than even the eventual settlement was.

      Mass protests against something quickly hit the limits of efficacy when even the protesters have no credible way to give force to the “no.” What was the old phrase attributed to Cromwell (when still in opposition? “What I would not, that I know, but what I would, I do not.” (This is the real problem for Popular Unity. Loud opposition to something only gets you so far if your electorate doesn’t find any of your alternatives plausible.)

      Most of the supposed alternatives, be it default with Grexit, default with semi-Grexit, default while staying in, bog down on the fact that in the absence of the constant stream of loans, the problem of going forward some other way in a country where retreat into autarky is not an option, becomes a PHYSICAL and MATERIAL problem. that can’t be fixed by any amount of “artful tinkering with money.” (If you can’t produce sufficient food or manufacture adequate medical supplies for your population, and you also can’t produce enough of something else anyone wants to obtain them that way, and nobody will deal with you on credit because you just stiffed everybody you have a problem that can’t be solved by any amount of militant posturing.)

        1. Darthbobber

          Well, of course one literally can. But on civil ibertties the strange bedfellows normally reside in different heads, don’t they?

    2. JMarco

      Can you refer me to where Varoufakis is agreeing to eternal surpluses? If you live in USA there is eternal surpluses/deficits going on for lots of states. Only state of Texas thinks it can survive without federal government.

  11. Madmamie

    “Based on my experience here the notion of competition seems to have seeped very deeply into mainstream discourse. ordinary people conceive of the Eurozone’s problems as one of an uncompetitive south stuck with a competitive north.”

    So? That dirty word again: “Competition”? Yes, what we called for several decades in France “la pensée unique” (a term that disappeared once the neocons had taken over and the youngest generation had forgotten it) has taken over in most of Europe because it was the basis for the founding of the Eurozone.
    However, we all know that every occidental society is based upon the concept of competition. It is the foundation of every social institution, especially public education in most western countries. We know that it’s wrong. We know what the terrible consequences are and how it works to create huge disposable populations in every nation but, until recently, masculine hunting group instincts have apparently been too strong to counter this impulsion in our species.

    1. Nathan Tankus

      The notion of competition that I’ve encountered in Europe is much stronger and much more pernicious than in the United States (yes I know how shocking that is). no one talks about how “competitive” individual states are and indeed we have no idea how “competitive” they are in the European (current account) sense.

      1. Massinissa

        Yeah, no one labels, I don’t know, Mississippi, as ‘uncompetitive’. They call weak states like that other things, but no one uses that word, or even a synonym for that word.

  12. Matt Usselmann

    There is lots of other options out there for Greece other than straight Grexit with its own currency. It could keep the Euro and not participate inthe euro system (like Montenegro) or it could introduce a parallel currency.

    Obviously Varoufakis does not believe in these options for Greece and now prefers to talk about the Eurpoean democratic deficit, in speeches in Europe. Where that will lead, I guess, is nowhere.

    There will not be a pan-European party to overthrow the neo-liberal European consensus, with a strong and punishing Central Bank. Even though Varoufakis is right, I think he once again is taking a strategically wrong decision.

  13. Gerard Pierce

    If anything ever focusIs attempting inform of general education. He may even realize this is not an automatic victory. It may not be a victory of any kind.
    At the very worst it may be an extended exercise and giving the finger to the eurocrats

  14. Gerard Pierce

    If anything Varoufakis may be attempting a form of general education. He may even realize this is not an automatic victory. It may not be a victory of any kind.

    At the very worst it may be an extended exercise in hiving the finger to the Eurocrats.

    1. PhilJoMar

      How do comments like this advance ‘fearless commentary on finance, economics, politics and power’?
      Isn’t it just a little bit possible that this continual re-hashing of Varoufakis’ mistakes (and the mugging of well-meaning readers in the comments section) is itself a distraction from what this site was supposed to be about?

      1. JTMcPhee

        One sometimes wonders what this site was supposed to be about. My projection and hope was to find the tools and tactics to both extract, refine and effectuate a common unifying principle wrapped around notions of comity, decency, appropriateness, survivability, and the kind of meta- stability that the organism parts of living creatures doing their daily routines of homeostasis somehow do without thought and with little and mostly self-correcting error.

        Or, if not to find those tools and tactics, at least get some indication that Grownups were equipped with them and that somehow a majority of us humans could be brought around to doing what to me at least seems “better:” less pain, less hunger, less tendency to organize into cancerous overgrowths.

        Apparently not in the cards…

        1. Yves Smith Post author

          The left is afflicted with wanting to win moral arguments rather than win. I’m sorry you don’t like hearing that. Greece was never going to win in the negotiations with the creditors the way many on the left think it could have or should have. Yet people like you shoot messengers like me when I tell you Greece has the political equivalent of Stage 4 cancer. You also seem unwilling to acknowledge that Syriza has promised contradictory thinks, namely, an end to austerity and staying in the Eurozone. And we explained in considerable detail why a Grexit was not in the cards for operational reasons, a view both the Greek government accepted!

          If you want to have conversations about solidarity, fine. I want the 99% to win. You have to deal with power relations and leverage points to do that. That does not appear to match with how you want to view the world.

          I suggest you read this:


          1. JTMcPhee

            Yves, I’m curious, was your comment directed to JTMcPhee? Not to waste your time better spent on other purposes, on explication to the commentariat.

            This site of course does all you say and more. And the Greece thing demonstrates how right you are, and how corrupt and incompetent the whole structure is. I’m not interested in “conversations about solidarity” — just want to note that the 1% has its strong, constant, durable organizing principle, MORE! of everything for themselves, and it informs every aspect and stratagem and foray of the 1%’s plans and behavior. I don’t see the same constancy and focus on the part of the 99% when it comes to decency-and-goodness-based strategizing and action, nor a formulation or flag that could draw the troops to combat.

            And if that’s inevitable, and all we ordinary people can do is struggle to see through the murk to see what’s being done to us, wholesale and retail and on so many fronts, and those among us who are in a position to resist have to fight where we can with what tools and arms we have, while knowing that the deck is stacked, there’s a strong Fifth Column and Quisling and Vichy element among us, and in the face of a bleeding out of the planet’s resources, then that is the best we can do.

            I read that link, recall reading it and much commentary to the same effect over the years, and of course agree with it. I’ve had too much of “coalition building” over flip charts and angels-on-pinheads polemics myself, that is not how a war is waged, and the mismatch between offense and defense is so puerilely misapprehended — from my own experience as an EPA regulator, to have the EPA’s chief of enforcement tell the public that ‘he would vigorously DEFEND the EPA’s enforcement actions against polluters.’ Similar remarks by FTC, SEC, DOJ, etc. Unclear on the concept, or maybe unintentionally honest? You betcha.

  15. Christoph Valenta

    in defence of Varoufakis!
    i am following this site as much as i can, it is usually very infomative on many topics and i agree with many of the points made. it is all the more strange for me to see how many of the “german/european media spins” – foremost that of the “selfpromoting vain Varoufakis breaking the poor Euro-Groups trust”, to summarize it, is swallowed and believed here by intelligent people.
    i can tell you that, living in the middle of Europe, and trying to get as much information on how and why things are run the way things are run, i have a very different view of what happened in this “negotiations”.
    Varoufakis was and is, in my opinion, absolutely right in addressing the massive problems we have in Europe as European problems rather than solely Greek problems. That the creditors wouldn’t listen to a reasonable point of view – well, the blame lies not with Syriza or Varoufakis but in a non-democratic European powerstructure which is built by neoclassical technocrats and where all the power lies with the creditor nations and banking and export industry lobbies.
    i am absolutely frightened that if people in Europe don’t wake up in time, it will be 1933 all over again… in 2017 there is the French election, which will be, if things don’t change dramatically, the end of the european union. if, and it looks very much like it, there will be another financial crisis, it will happen even sooner. Spain, Portugal, Italy.. all more or less insolvent.
    So, for me, Varoufakis, like him or not, is a sign of hope, somebody who has a good plan and can really make an impact for change. it makes me a little sad that he is bashed on a blog that i usually appreciate very much.
    anyway, keep up the good work, and greetings from Vienna!

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