Yanis Varoufakis: Greece Was Never Bailed Out and Remains in Debtor’s Prison – Bild Zeitung Interview

Yves here. The European press and most of the rest of the world averts its eyes from the continued punitive, economically counterproductive austerity being inflicted on Greece.

Be sure to read this interview in connection with Ambrose Evans-Pritchard’s story on the report by the IMF’s internal auditor. It lambasted the Fund for its conduct with European programs, most importantly, the one in Greece. The overview:

The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.

This is the lacerating verdict of the IMF’s top watchdog on the fund’s tangled political role in the eurozone debt crisis, the most damaging episode in the history of the Bretton Woods institutions.

It describes a “culture of complacency”, prone to “superficial and mechanistic” analysis, and traces a shocking breakdown in the governance of the IMF, leaving it unclear who is ultimately in charge of this extremely powerful organisation.

The report by the IMF’s Independent Evaluation Office (IEO) goes above the head of the managing director, Christine Lagarde. It answers solely to the board of executive directors, and those from Asia and Latin America are clearly incensed at the way European Union insiders used the fund to rescue their own rich currency union and banking system.

By Yanis Varoufakis. Originally published at his website

BILD meets Yanis Varoufakis – the man who was THE symbol of the Greek left-wing government’s resistance against the targets set by the bailout troika for the broke state of Greece. We met the professor of economics – who co-founded left-wing movement DiEM25 – in his summer house in the mountains of the sunny island of Aegina.

BILD: Mr. Varoufakis, Greece went broke ten years ago. Where does Greece stand now, after three rescue programmes, 270 billion euros in loans and two debt cuts?

Varoufakis: “At the same point, in the same black hole, and it keeps sinking deeper into it every day. One reason among others is that the creditors’ cutback demands obstruct investments and consumption.”

BILD: But allegedly, Greece can now stand on its own two feet and can be released from the hands of the troika after August 20th …

Varoufakis: “What has really changed? Greece’s state debts have not become lower, but higher. We just have more time now to pay back even more debts. Despite two debt cuts over several billion euros, the debts have grown: the state is still broke, private citizens have become poorer, companies still go bankrupt, and our gross national product has decreased by 25 percent. The cutback demands limit consumption and investments. Companies owe money to each other and to the state. The state owes enormous sums in refunds to companies. Everybody owes money to everybody – but nobody has money to pay back their debts. Since 2010 young people have been leaving the country, in recent years at the rate of 15000 every month. If this continues, we’ll soon only have old people here who either stayed or came back from abroad when they retired. Plus there are the people who work for them, or in tourism. I call this desertification. The Roman Tacitus used the expression ‘They made a desert and called it peace’. In Greece they call it ‘fixed’.”

BILD: But tourism is booming with more than 37 million visitors …

Varoufakis: “We have a dramatic over-taxation in Greece. Combined with social security contributions, small businesses, even the self-employed, pay 75 percent to the state – beginning with the first euro! This is killing young entrepreneurs, in particular. In Bulgaria, next to us, the business tax is ten percent. The companies are running away from us. And yes, tourism is booming, there has been an incredible push over the past years. However, the infrastructure in Greece does not suffice for this. New investments are required. But there is not enough money for that. Plus, the boom and increase in tourism do not suffice to lift the sunken ship from the bottom of the sea.”

BILD: Your former boss and former buddy, head of government Alexis Tsipras, the troika, the German government, the EU – they all point out the budget surplus of XZ percent. Are they all lying?

Varoufakis: “The surplus is very real, not at all a lie. However, it reflects the flesh and blood that the state extracts from a dying private sector. It is the evidence of the crime against logic, not of recovery or success. They portray the statistics of misery as evidence of success. They change the rules so they can say that the Greece bailout was a success. If it doesn’t fit, get a bigger hammer. That is not only against any logic, it is also a crime against the people in the EU states – from Portugal to Germany.”

BILD: Who has lied?

Varoufakis: “All of them! Greek governments, the IMF, the ECB, everyone. And you Germans have been heavily lied to by Ms. Merkel – twice. The first time was when she stepped into the Bundestag for the first rescue package and said that this would be an act of solidarity with the Greeks, when the money was intended only for German and French banks who had, against logic, loaned a lot of money to the Greek state and oligarchy.”

BILD: Well, the banks – mostly Greek banks – were saved so the Greek state wouldn’t collapse, would still have access to money, and could pay for wages and salaries … But what was the second lie?

Varoufakis: “It was not the Greek banks that were saved. It was Deutsche Bank and the rest of France’s and Germany’s banks. As for the Greek banks and state, they should not have been saved – we should have been allowed to go bankrupt, suffer the consequences but then be allowed to pick ourselves up and move on – something that these bailouts prohibited, forcing Ms. Merkel to her second lie: the promise to the Germans that the bailout loans would be paid back and with interest – something that was impossible given Greece’s bankruptcy. She has been trapped in this lie ever since. Once you start lying about such things, you can no longer escape. And so she continues to lie …”

BILD: Before 2002, Greece lied its way into the euro with faked statistics. Now, after all these years of rescuing the country, it should finally meet the euro criteria, right?

Varoufakis: “Ha! Of course not. First, do you really think that the EU and Berlin were fooled by Greek statistics? They always knew. They were conniving in the statistical manipulation of Italy because the politicians really needed Italy in. Greece entered on the basis of the same intentional manipulation of the ‘rules’. Rules that could not be met then and which are impossible to apply now. Turning a blind eye to this was a concession that Helmut Kohl made to France’s head of state, Mitterand, for his agreeing to the German reunification. Wolfgang Schäuble was present back then – he and the German Bundesbank knew this couldn’t work. He has basically stuck to his position.”

BILD: You and Wolfgang Schäuble were the two big brawlers in the decisive months of 2015 when your country was close to leaving the euro. Schäuble supported an exit with billions in help – so that Greece could either make itself fit for the euro and return at some point, or do its own thing. In hindsight, was he right?

Varoufakis: “At least he wasn’t completely wrong. But what he really meant was: go away, get out of the euro. He wanted us forever out, since this doesn’t work, after all, and because he saw that, with Italy, a far bigger catastrophe is approaching the euro zone. What sense does it make to kick someone out with a huge amount of money, for a short period of time? Then there would be no reason to return to the badly construed euro, which would be expensive for Greece.”

BILD: If you had the choice, which government would you rather enter: that of your former buddy Alexis Tsipras or Schäuble’s?

Varoufakis: “Neither of those. But if you’re asking who I trust more, then my answer is clear: Wolfgang Schäuble.”

BILD: Why?

Varoufakis: “In all this time, he was the only one who told at least part of the truth. I could trust the things he said to me privately – even though that was not always the same as what he said in public to the Germans. He always kept his word to me.”

BILD: And Ms. Merkel?

Varoufakis: “Never! She seems terribly uninspired and devoid of vision to me. She will go down in history as the politician who had almost all of the power and possibilities to unite Europe and to lead it into the future and to implement reforms – but then she failed to make use of a historical opportunity. And I don’t trust her in general.”

BILD: How did Merkel manage to make Alexis Tsipras side with her in 2015 and agree to the third rescue package – against his conviction and the vote of the majority of Greeks?

Varoufakis: “To be honest, I don’t know. But she has also destroyed many others with her very peculiar charm: various leading SPD men, the men in her own party, France’s former president Hollande – and she will also do it with Macron. Tsipras was one of her easiest exercises. She promised him a lot and gave him nothing. For instance, she promised him debt relief – and then obstructed them. She had an aim: we were supposed to get more money and then shut up. Even Schäuble said then that this wouldn’t work.”

BILD: But why don’t you trust her?

Varoufakis: “Very early on, she asked Tsipras – according to his narrative – to kick me out. He refused to. Later, when there were serious struggles between me and Wolfgang Schäuble, Merkel apparently told Tsipras something like: ‘it’s great that you didn’t fire him, we can let Schäuble and Varoufakis fight, and then the two of us will calmly find a solution’. So she didn’t only go behind my back, but also that of her own minister of finance, who fought for the third rescue package in the Bundestag, against his own conviction.”

BILD: Did Schäuble ever tell you what he thought of the third rescue package that was under discussion in 2015?

Varoufakis: “Yes.”

BILD: And?

Varoufakis: “He told me that he was against it, that it wouldn’t work like this. That’s why he supported the idea of us leaving the euro. He thinks the same about Italy. But he believed – and here he was wrong, I think – that he could keep France in the euro, even though it is also in a bad position.”

BILD: You caused a stir, when you rehired hundreds of cleaning ladies for the ministry of finance, despite the bankruptcy. At the same time, there was a lack of financial investigators for checking the dirty money lists that came from abroad – such as the Legarde list …

Varoufakis: “I’m really fed up with having to justify myself for the 300 poor cleaning ladies who received the minimum wage and whose dismissal was cruel and unnecessary. Especially if you see what the troika and Alexis Tsipras’ government did FOR tax evaders immediately after I resigned.”

BILD: What was that?

Varoufakis: “Tsipras fired me exactly at the point of time when we wanted to bring charges against huge numbers of tax evaders. A special group, that I had assembled, had identified 485,000 tax evaders with the help of a particular computer programme and bank data. These people had evaded at least 100,000 euros in taxes each between 2000 and 2014. We had everything ready, we had even linked the banks’ live data with account numbers and tax numbers. Following the German model, we wanted to offer something like an act of grace: whoever pays back their taxes voluntarily and on their own initiative will only pay a minimum fine of 15 percent. We would have caught anyone who then didn’t pay. Among the people we found were many Greek oligarchs and their families.”

BILD: Are you saying that Tsipras fired you because you were going after the rich?

Varoufakis: “No. I was pushed out because I would not sign the 3rd bailout loan. However, the moment I resigned in early July 2015 the troika, with the acquiescence of the Tsipras government, killed the programme that would have caught the tax evaders. As far as it was reported to me, the senior representatives of the troika – not the ministers of finance – wanted to protect the oligarchs. The oligarchs were the troika’s allies in Greece, running the banks and controlling public opinion. They had to be protected.”

BILD: Final question, Mr. Varoufakis: Can you understand the regular German taxpayers’ view that Greece should be grateful for their help and the huge amount of money? You don’t really sound as if you do …

Varoufakis: “I understand that this is how they feel because the facts have been kept from them. I am sure that if your readers knew the truth, they would be very angry with their own government for giving so much money to the German bankers and the Greek oligarchs while pretending they were helping the normal Greek – who only saw pain and misery in the past decade, thus finding it impossible to be grateful. Germans and Greeks must be united in our anger against our governments!”


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  1. Ignacio

    Wow! The Bild vs Varoufakis! Kickboxing-interviewing!

    Today I read an op-ed in the “liberal” El Pais (https://elpais.com/economia/2018/08/22/actualidad/1534957905_885737.html) and it is depressing to see how we are determined to go on with the same mistakes indefinitely. It is recognized that the “rescue” was badly done. It is also recognized Greece cannot realistically grow enough to repay the current debt (It would require 3.5% annual growth from 2018 to 2050). Now it is said that Greece will depend on continuous special investment plans designed in the EU. There is not alternative. The op-ed writer believes he is a progressive.

    1. makedoanmend

      Hello Ignacio – that last sentence struck a cord with me as I see so many so-called progressive op-ed writers across the West actually shilling for the status quo. (This is just an aside riff on that sentence alone:

      “The op-ed writer believes he is a progressive.”)

      Is he progressive or does he just want the reader to think he is progressive? (I don’t know and I suspect many of these purported progressives are never going to say since their incomes derive from portraying themselves as an opinion makers rather than a reporters.)

      And further to that point, is an op-ed writer, by portraying themselves as a purported progressive, actually delivering a two-fer for the neoliberal establishment? 1. they discredit a progressive message by actually touting neo-liberal sibboleths 2. make it seem (following on point 1) that there is no alternative (TINA) since a progressive is touting neo-liberal ideology in the guise of a so-called progressive message?

      1. KnotRP

        The political labels are always and everywhere just sheep’s clothing for what is essentially apolitical sociopaths. For example, are neo-liberals in any way liberal? If one watches what they say, one might be fooled, but not if one watches what they do. They are not neo, nor are they liberal.

        We need a new word for identifying the wolves who readily adopt the most favored sheep disguise of the moment, and switch looks whenever needed. They are a socioclass with only one motive…

      2. Ignacio

        I think the author believes he is a progressive. He, for instance, accuses Nouriel Roubini for being a false progressive because he said Greece would be better outside we euro. He claims that austerity was wrong but still provides justification for it in the Greek economic illnesses (similarly as the Bild editor interviewer). Said that, the author convenes that paying the remaining debt in full is the only available roadmap. He must believe this is progressive.

        1. makedoanmend

          Yeah, someone can claim to be progressive and who is anybody else to claim they aren’t?

          I suppose my main point (given a definition of progressive) is that one has to view someone who claims to be a progressive not only by the assertion of their position but also by their actions. If the assertion and the actions don’t coincide, we should, at the very least, question their self assertion and their motives.

          On the other hand, maybe neo-liberals think they are progressive! In which case, can we even come to a somewhat objective definition of what constitutes a progressive. Can merely moving one’s favoured ideology forward, whilst harming many others and the environment, be considered as progressive?

    2. Ginavon

      Key words…DEPRESSING, FAILURE TO GRASP ELEMENTAL CONCEPTS OF CURRENCY, IMPENDING CRISIS, COMPLACENCY, SUPERFICIAL Analysis, TRACES OF BREAKDOWN WHO EXACTLY IS IN CHARGE IF THIS EXTREMELY POWERFUL ORGANIZATION…….Just having my first morning coffee so being a little groggy I at first thought they were talking about what is going on in the USA….Second cup didn’t really cure the misperception it just changed a little by realizing the USA is being duped in the same ways and another crash is inevitable. Can you see the writing on the wall? Are Trumps trade deal shenanigans intentional to push the Fed Reserve Private bankers up against a wall?

    3. Jon Cloke

      When Draghi and the ECB turned off the money-flows in 2008 and announced that the EU social model was dead, that was a clear signal that the only purpose the ECB has is to support and stabilize the EU financial services sector, however impossible that will become..

      You guys keep talking about ‘mistakes’ as if the people who made them were not well-aware of how deadly the consequences will be, but you underestimate the short-termist thinking of these narcissists; they literally believe that the guy who dies with the most money, stuff and houses wins.

      Not only do they believe this as a literal ‘word-of-God’ they will do absolutely anything to make sure that system continues, even as the EU falls apart in slow-mo and the fascists of France, Germany, Hungary etc pour in through the broken gates and sack the remnants.

      If you think things were at a critical cliff-edge following 2008, you wait and see – apres Draghi, la deluge…

      1. Ginavon

        Germany’s post-war economic miracle?
        Only 16 % of polled Germans currently think Greece should be the recipient of some form of debt cancellation from the eurozone. The irony of Berlin’s obstinancy on debt relief may well be lost on some.
        Following the end of WWII, the London Debt Agreement of 1953 saw the abolition of all of Germany’s external debt. The total forgiveness amounted to around 280% of GDP from 1947-53, according to historian Albrecht Ritschl. The cancellation, along with an extension of its repayment schedule, allowed Germany to return to the financial markets, and become part of the IMF and World Bank.
        The London agreement also helped set in motion the country’s incredible export performance as Germany was required to service its debt through money earned from foreign trade.
        In the words of historian Ursula Rombeck-Jaschinski, Germany’s “economic miracle would have been impossible without the debt agreement.”
        Whither Greece’s debt mountain?
        Greece’s new government is pushing for a debt conference on the lines of that which saved Germany from its post-war abyss. At more than €300bn, the Syriza-led coalition wants a nearly half of its debt pile to be permanently wiped off. So far, the country’s Troika of creditors are not playing ball.
        Whatever happens in this latest game of brinkmanship between creditors and debtors, history shows that mass debt write-offs are neither as rare nor as taboo as we might think.

        1. Ginavon

          The study of world history is extremely important…those who forget history will be doomed to repeat it.

  2. Patrick Donnelly

    The Greeks lied about their economy and had massive corruption. The recent hundred deaths were due to overbuilding outside the law.

    They have fighter aircraft and submarines. Why? To train sailors and pilots? To attack Turkey, of course!

    Their economic elite use flags of convenience to pay less to crew and take risks with risky cargo. Their working classes refuse to create businesses for themselves or to properly unionise. This is close to the definition of a failed state. Class exploits the weak. The weak do not have access to medicines.

    Things will turn round. in a generation or two. They are about to lose many of those tourists ….. The crash is coming for these tourists and Greece will be worse off. Savings are always needed for the proverbial rainy day.

    A place to avoid now…. how sad. Italy and Turkey next?

    1. Summer

      “He told me that he was against it, that it wouldn’t work like this. That’s why he supported the idea of us leaving the euro. He thinks the same about Italy. But he believed – and here he was wrong, I think – that he could keep France in the euro, even though it is also in a bad position.”


      1. Ginavon

        I knew the day they started the EU that it would end in disaster..that was a long long time ago…the day the Brits voted to leave I told my friends…they will never let you our……now they keep stalling the exit and suggest another possibly rigged election…my European friends are screaming at the top of their lungs…here is what they are saying…” what ever you do..do not let them take your guns..we gave ours up and now look at us!”

    2. The Rev Kev

      Agreed that the Greeks seem to have an outsize military although in fairness, Turkey is continuously pushing at Greek borders with patrol craft and aircraft. Just last year Turkish aircraft and helicopter violated Greek airspace 141 times – in one day!
      I do wonder about whether a reason for all this equipment is certain nations going to the Greeks and saying something along the lines of: “You know, you are really going to have a tough round of negotiations coming up. Of course if you purchased some military equipment from us, we might not go so hard on you”. I do not find this an unlikely scenario.

    3. Ddt

      I may be biased as a greek American but i seriously doubt that Greece’s armed forces are there to “attack” Turkey. Greece has consistently spent considerably for defence due to Turkey’s aggressiveness in the region.

      As far as the illegal building and the deaths from those horrific fires, I agree. However, if the state is taxing these illegal villas etc, and they are, they should have a semblance of capability in handling situations like those that happened in July.

    4. Ginavon

      I saw a pie at the local supermarket for $16.99. It was not special and it was not super large……The way inflation is calculated in each country is a mystery but we all know in the USA it has been changed twice since the 1970’s to appear more favorable than it is at the expense of the populace… here is a list of (as of 2017) countries with rates of inflation 8% or higher.
      2017 est.
      Kenya 8.00 2017 est.
      Belarus 8.00 2017 est.
      Ethiopia 8.10 2017 est.
      Gambia 8.30 2017 est.
      Guinea 8.50 2017 est.
      Tajikistan 8.90 2017 est.
      Eritrea 9.00 2017 est.
      Iran 9.60 2017
      Ghana 11.80 2017 est.
      Azerbaijan 12.00 2017 est.
      Liberia 12.80 2017 est.
      Ukraine 12.80 2017 est.
      Malawi 13.00 2017 est.
      Uzbekistan 13.00 2017 est.
      Haiti 14.70 2017 est.
      Turkey 15.39 June 2018
      Nigeria 16.30 2017 est.
      Sierra Leone 16.90 2017 est.
      Mozambique 17.50 2017 est.
      Burundi 18.00 2017 est.
      Yemen 20.00 2017 est.
      Suriname 22.30 2017 est.
      Egypt 23.50 2017 est.
      Syria 25.50 2017 est.
      Sudan 26.90 2017 est.
      Angola 30.90 2017 est.
      Libya 32.80 2017 est.
      Argentina 40.00 2018 est.
      Congo, Democratic Republic of the 41.70 2017 est.
      South Sudan 117.70 December 2017
      Venezuela 1,000,000.00 2018 est.[3]

      1. Ginavon

        Oh and while you are at it be sure to take note of the “kill white farmers” problem currently happening in Sudan. I suspect the US MILITARY might be heading that way soon. Don’t look to MSM to tell you what is really going on around the world or in the USA…they will not do so.

    1. The Rev Kev

      You had the same thought too. I took one passage by Varoukis and reworded it-
      “(He) will go down in history as the politician who had almost all of the power and possibilities to unite (America) and to lead it into the future and to implement reforms – but then (he) failed to make use of a historical opportunity.”
      What Varoukis should have told Bild was that virtually all of the money sent to Greece bounced back to Germany and France the same day. In other words, the citizens of the EU spent hundreds of billions of Euros propping up Deutsche Bank and sticking the Greeks with the tab.

      1. JEHR

        TRK, Varoufakis said just that:

        “Varoufakis: “It was not the Greek banks that were saved. It was Deutsche Bank and the rest of France’s and Germany’s banks.”

        1. Ginavon

          Yup banks banks banks is anyone seeing a pattern here? Every time there is a financial crash or disaster the wealth of the people is transferred to the banks….

      2. Scott1

        “No drama Obama.” or the dramas don’t come to the surface because they are suffered by the proles, not the wealthy who are at the top corner offices of tall buildings & who are aware that what they do means grinding desperation for many as has been the game for a long time and is considered normal. In the case of Greece it is the Greeks.

        Great when the bankers of the ECB or IMF control the nation states who create the currency they apportion unto themselves for themselves.
        The world has moved on and Greece is a done deal. Not only are they paying their creditors eternal interest on a principal never to be rewritten the fingers point at high Tourism as evidence that the plan has worked out when it is at least 13 of Greek International airports profiting the German Airport management company Fraport. Looks like a choke hold on the profits from tourism to me. Those airplanes at the gates and all the associated fees and fuel profits go into a German company & is money simply leaving Greece.

        That’s war by other means.

        Warren Mosler advised the Italians to issue the lira and continue to use the Euro. The advice would be the same to the Greeks.

        It has been awhile that it has been clear that the Euro is the fatal flaw of the EU. since it gives power to the Northern nation states over the Southern Nation states and provides to a group of bankers greater power than the nationstates who have given up control of their currency, the core of the problem, the bankers have an interest in not fixing, and only the Nationstates can fix one by one, or all together.

        Thanks, I’m into long sentences this week.

        1. Ginavon

          War by other means exactly….Thomas Jefferson Quotation: “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…. I believe that banking institutions are more dangerous to our liberties than standing armies…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” Sound familiar? By the way is it true that some US universities have stopped teaching US HISTORY? Hmmmmm….I wonder why

  3. JEHR

    I do not understand how the European Union can survive on monetary policy alone. The banks are running the union and their chief interest is in making profits while the concerns of the people in the EU are ignored or secondary to that goal. When the democratic decisions of Europeans are ignored, then democracy is on its way out.

      1. Synoia

        The US recirculates surpluses among states, as does Canada between provinces.

        The Germans refuse to do this with the Euro.

        Consider the MMT equation of surpluses and defects.

        Government + Private = Trade .

        In Germany’s case, Trade is positive, for Greece and Italy it is negative.

        MMT is very clear, if Private is negative the country’s economy collapses. The only way to fund Trade with a trade deficit requires the Government sector to run a defecit.

        Running Trade deficit in the Euro zone requires the National Government to borrow more Euros.

        Welcome to Free Trade and Free Capital flows. Governments control is replaced by the rule of currency issuer, or lender of last resort.

        1. jochen

          Actually the rich German states have been trying for years to discontinue the recirculation of surpluses between the states. They don’t want to pay for the ‘profligate’ states in the country.

          So it’s not just in Europe, they’d like to do the same internally inside Germany.

    1. Yves Smith Post author

      *Sigh* We’ve posted on this at length. It would take a full year alone to design and print a new currency and get int into circulation (you have to refit all ATMs to handle new currency among other things).

      The bigger issue is that you need to code bank IT systems to handle the new currency. This is not just those of Greek banks but of every other player in the fragmented payment system. This is a minimum of three years if everything goes well and 5-6 years if it doesn’t. See what happened at TBS in the UK for an example of what happens when you put an IT system live that isn’t ready.

      It took eight years of planning and three years of implementation for the euro to be introduced without a hitch, and there is a ton more code now.

      The Greek economy nearly collapsed when the ECB effectively caused a bank holiday. It was only three weeks and food shortages were starting. This would be like putting the banks on a holiday until the IT system were done. There would be no Greece left.

        1. Yves Smith Post author

          Because once it was clear you were planning, everyone would move their money out of Greece to prevent it from being redenominated in drachma. You get bank runs and then quickly after that, bank failures.

          1. Jean

            OK, dumb me, but why not just use the old printing plates for currency without redesign, declare a bank holiday, freeze everything and make an arbitrary switch over?

            As to ATMS, switch them over, but require face to face transactions in banks until that’s done which would among other things,boost employment as former bank tellers and officials were recalled, correct tax fraud in that all funds would have to be “justified” to a single person or entity and negate all hidden funds’ value beyond a certain date. A few months of chaos seems worth it to avoid another generation of stagnation.

      1. NotReallyHere

        Emerging markets print new currencies regularly. Brazil had three currencies in a span of two years in the early 1990’s and Venezuela just issued a new currency (total flop but still). Argentina flipped off the usd in three days when it devalued (iirc).

        They could just print euros and stamp them with a d for drachma… or a L for lira. Other euro banks would refuse these notes .. wah-la …

        1. Yves Smith Post author

          Ahem, you have this wrong. These are countries that already had their own currencies. They just redemonimated them. Not even remotely the same. Each time only one currency was the legal currency.

          And for Brazil, the 1990s might as be the stone ages from a systems standpoint compared to now.

          1. NotReallyHere

            Ok, there are differences to today but I would argue that the Introduction of the Brazil’s Real in 1994 was a new currency. Also Argentina’s devaluation was not a reissuance of a new paper currency (they still issued the peso) but it was an abrupt delinkage from a hard currency board system that forced the redenomination of all contracts in the system. Mexico’s devaluation was a disaster too because although that didn’t involve a new currency issuance it did force the redenomination of all debt contracts.

            Anyway I would point out that in the case of Mexico, Argentina and Russia the ex ante arguments were all variations of the same theme. The “it’s gotta go “ side would point to the pain of holding the extant system together and say it’s unsustainable. The “it’s fixed forever” side would argue that the pain and disruption of leaving is always worse than the status quo so it won’t happen. This side can detail the complexity of the current system and argue credibly the impossibility of change. They are right more often than not but when they are not right it’s a disaster.

            On your comment there would be no Greece left. That’s where I get off the logic train. There will always be a Greece, and there will always be a “whatever country you may choose” it just won’t be the same as now.

            If Greece has to go from the Euro it’ll crash out, the central bank of Greece will issue shed loads of currency and the market will decide its value. The political arguments re the banks convertibility etc will follow (and they’ll be good viewing) and the IT will catch up.

      2. Summer

        “There would be no Greece left.”

        That seems to be the plan of the Eurozone…so what really is the difference?

  4. Klaus Kastner

    I respect Yanis Varoufakis’ intellectual brilliance, his eloquence, his competency, his charisma, etc. However, as a Greek, his specialty has been to offer solutions to other people’s problems, oftentimes very good solutions but still (problems of the Eurozone, problems of the EU, etc.). Regarding Greek problems which Greece could attack and solve on its own, Varoufakis has always been completely silent. Not even as Finance Minister has he ever proposed a serious economic development plan for his country. Varoufakis knows very well that it was not the Euro or the Eurozone or the EU which got Greece into trouble. In his manifesto for his new Greek party he explained that the stage for disaster was set during the 1980s and 1990s and that the Euro only added a turbo to that development, a giant turbo, to be sure. If Varoufakis claims that Greece could do nothing on its own by way of problem solutions, he should answer who else other than Greece could improve Greece’s ranking as the least attractive place for doing business in the entire EU (World Bank) and as the most corrupt country in the entire EU (Transparency International). Greece has ranked last on both counts ever since 2010. Already back in 1993, Varoufakis described the Greek economy as being in a terminal decline. What makes him think that Greece has improved so much since then? Greeks are generally a polite people who want to come across with good manners. As Finance Minister, Varoufakis has embarrassed with his conduct on the international scene many of his compatriots who feel offended by his arrogance and self-presentation.


  5. precariat

    “They portray the statistics of misery as evidence of success.”

    This should be evryone’s first thought and reply to austerity, so-called trickle-own tax cuts for the rich, privitization, and neoliberal free-trade.

    Not coincidentally, in what other policy endeavor is misery a measure of sucess? War.

    1. Ginavon

      In their seminal work, ‘This Time is Different: Eight Centuries of Financial Folly’ economists Carmen Reinhart and Ken Rogoff chart the long and varied history of sovereign debt defaults, noting that restructurings and write-offs have been key part of every major period of financial crisis.perhaps it is time for a debt jubilee?

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