Syriza, R.I.P.

Mark Ames e-mailed me earlier this month: “Seems you should write an obit on Syriza’s failure, seeing as you were the only one on the left calling out their failure from early on (and taking so much heat for it).”

For those of you new to the site, we posted intensively on the 2015 Greek bailout negotiations. We were early and alone in predicting that the negotiations would fail, as they did. This was an exceptionally unpopular assessment. It offended those who admired the new government headed by the charismatic Alex Tsipras of Syriza who made the articulate and media-genic economist Yanis Varoufakis as his Finance Minister and de facto lead negotiator, along with pragmatists who were confident that cooler heads would prevail and some sort of deal would be cinched.

The denouement is that Syriza, having abandoned its reformist stance, is now out of power. Greek Prime Minister Alex Tsipras had called snap elections for July 7 after the ruling party suffered large losses in European Parliament, local and municipal elections. As expected, the center-right New Democracy party won, by a margin that the press depicted as a landslide, with former banker Kyriakos Mitsotakis becoming Prime Minister.

I didn’t relish being correct at the time, and I take no pleasure in witnessing the failure of a party and an effort to loosen the austerity choke-chain that Greece had been wearing for so long and at such a high cost to its citizens. Even though Syriza lives on in a diminished state, it long ago gave up its pretense of being a force for social justice. From Athens, DiEM25 member David Adler pointed out in the Guardian:

In the four years that followed [Syria’s win in January 2015], Tsipras tried desperately to endear himself to the establishment he once pledged to fight. He protected the old oligarchs and ushered in a generation of new ones. He implemented austerity measures so brutal that even Germany’s finance minister Wolfgang Schäuble accused him of “putting the burden on the weak”. And he placated international investors with big promises of small taxes and golden visas….

In short, Tspiras did not simply capitulate to the troika, or swap his radical ideals for hard-nosed realism. He actively refashioned his government as a rightwing force on the world stage.

We’ll return to Syriza’s sorry performance after the bailouts, but it is frustrating to see many, and from what I can tell, most of the writers who’ve revisited the topic of Syriza’s failure, misrepresent what happened in 2015.

Syriza had already effectively given up the game in February 2015, less than a month after Tsipras took office. The only commentator I have seen who has regularly acknowledged that is then-Syriza-MP Costas Lapavitsas.1. As we wrote on February 19:

Things are not going well for Greece. It appears Syriza has largely capitulated to the demands of the Troika. Greece has submitted a request for a loan extension that the Eurogroup will consider Friday….

This means that Greece is effectively asking for an extension of the bailout, which is what it had refused to do. And that means keeping the “conditionality” as in privatizations and labor-crushing structural reforms, intact. Greece is still fighting to keep some flexibility there but it is not clear they will obtain much. …

Update 8:00 AM. Well, that was fast and ugly. The Germans are playing completely non-negotiable, not that that is a surprise. Greece must surrender completely.

And on February 21:

Greece and the Eurozone have entered into what amounts to a letter of intent in the form of a memo released yesterday. It’s important to understand, even as a basis for further negotiations, what this document is and is not. Because this is not a definitive agreement, as in it explicitly states that Greece’s detailed structural reform proposals must be reviewed and approved by “the institutions,” the new name for the Troika, as well as approval by the Eurogroup finance ministers before any funds are released, there is still uncertainty as to how its deliberate ambiguity will be resolved.

General Observations

There is no way of putting a pretty face on this document. It represents a huge climbdown for Syriza. Despite loud promises otherwise, they’ve agreed to take bailout funds, and the top and the close of the memo confirm that the baillout framework is still operative (emphasis ours):

The Eurogroup notes, in the framework of the existing arrangement, the request from the Greek authorities for an extension of the Master Financial Assistance Facility Agreement (MFFA), which is underpinned by a set of commitments. The purpose of the extension is the successful completion of the review on the basis of the conditions in the current arrangement, making best use of the given flexibility which will be considered jointly with the Greek authorities and the institutions…

We remain committed to provide adequate support to Greece until it has regained full market access as long as it honours its commitments within the agreed framework.

Even writers who take a positive view of what Syriza accomplished are under no illusion as to how far short Syriza has fallen relative to its lofty promises. From Paul Mason’s blog:

I asked [Netherlands finance minister Jeoren] Dijsselbloem in the press conference: “What do you say to the Greek people, whose democracy you’ve just trashed.” He replied that he did not think that was a very objective question. We’ll have to agree to differ.

There is also language in the memo that looks to authorize the return of the Troika monitors: “In this context, the Greek authorities undertake to make best use of the continued provision of technical assistance.” The Financial Times reads it the same way:

It also leaves the IMF and EU institutions — the European Central Bank and European Commission — in control of evaluating Greece’s economic reform measures and the disbursement of bailout funds, despite Mr Tsipras’ vow to rid Greece of the hated “troika” of bailout monitors.

Mind you, despite the foregoing, it is doubtful that Greece could have done much better, particularly in light of the way the ECB had worked to intensify the already-in-progress bank run and boxed the Greek government in by giving it only a thin increase in the ELA limits [the “Emergency Lending Authority” which was designed to be used only for short-term liquidity assistance but the ECB had been using on an ongoing basis to keep the Greek banking system from collapsing]. A contact told me the Greek government would have had to impose capital controls over the weekend in the absence of a deal; the Financial Times reported close to the same thing by stating that Greece was on track to hit the limits of the ELA on Tuesday (the day after a long holiday weekend). And let us not forget that the Greek government is also slotted to run out of cash by February 24.

Back to the current post. Depending on which account you believe, Tsipras either did not negotiate the memorandum at all or asked for only one word to be changed.

To make a long and sad story short, Greece kept trying to find a way to get some relief from the deal it had signed. Tsipras would make conciliatory remarks when he met European leaders but then would walk them back when he returned to Athens. Whether by accident or design, Greece acted as if it could play a game of chicken with the Troika, that if it refused to go through with the bailout, the Troika would blink and give better terms.

But the Greek government had no basis for believing that. It had no popular mandate to leave the Eurozone and create a new currency, nor was this even remotely possible operationally (see our first footnote). It was not self-sufficient in food, petrol, or pharmaceuticals, That meant it could not afford to be cut off from international transactions for very long (which would be a side effect of trying to launch a new currency while not even remotely having the needed pieces in place). And as we learned later, the Syriza government had no Plan B. Finally, as we pointed out in March, it also had no friends:

A substantial portion of the site’s commentariat has wanted to believe that the Greek government’s defiance of the will of the Troika has been effective, either in and of itself, or as a means of preparing the Greek public and buying time before a Grexit.

As we’ve argued, Greece was almost certain not to prevail on its own. But outside help has been sorely lacking. While the US expressed concern early on, and argued the Greek case, that the nation needed debt writedowns and pro-growth policies, the Administration quickly abandoned its lobbying effort. The European left similarly has not taken up the Greek cause in a meaningful or consistent manner.

As for the notion that Syriza has been planning to depart the Eurozone, we argued that Finance Minister has long viewed that outcome as an unmitigated disaster for Greece and Europe. And perhaps most important, the government’s actions don’t bear that out. The first order of business should have been to impose capital controls. As reader Ishmael stressed, you declare bankruptcy before you run out of cash. This measure would have reduced the Troika’s leverage over Greece somewhat, and would be an absolutely essential step in preparing for a Grexit. Moreover, imposing those restrictions in response to withdrawals could have been positioned as a necessary protective measure if it had been done early on. Acting now would look like a desperate measure, either a last-ditch effort to protect the banks or an admission that Grexit risk was high.

A new story in the Financial Times illustrates what we said early on, that it is the ECB that holds the whip hand. It is the ECB that is keeping the Greek banking system on life support through the backstop of the ELA and also increased pressure on the Greek government by refusing to allowing Greek banks to increase their holdings of Greek government debt (raising the ceiling would have allowed the Greek banks to buy newly-sold government bonds and bills, thus providing the government with a desperately-needed funding mechanism)….

And this chart from Bloomberg illustrates the lessening of the bank run in February looks to be a distinction without much of a difference:

Greek bank run

As Mark Gilbert put it:

So the Greek banking system had just a bit more than 140 billion euros at the end of February. That’s down almost 15 percent since the end of November, suggesting bags of capital are fleeing the country as fast as their little legs can carry them. And while extrapolation is an imperfect science, taking the trend from November and running it to the end of this month suggests there could be as little as 133 billion euros left at the current pace of withdrawals, which would be the lowest in more than a decade.

Back to today’s post. In May, things started looking worse for the Syriza government and for Greece. Merkel had taken a personal shine to Tsipras, which may have caused too many parties, particularly in Greece, to take hope. But Finance Minister Wolfgang Schauble had always had more sway with the legislature and press than Merkel on Greece. Even Merkel started taking a tougher line.

One of the most frustrating aspects of conventional coverage of the bailout negotiations has been the depiction of Syriza’s July referendum as a heroic democratic demonstration that the Trokia steamrolled. It in fact was purely cynical. The July referendum was on bailout terms that had expired on June 30. This would be like holding a second Brexit referendum a week after a no-deal crashout. This was a cruel deception by Tsipras. As we wrote:

We described in detail how the referendum scheduled in Greece for next Sunday, July 5, is a cynical exercise in democracy theater. The Greek people are being asked to vote on a (draft) proposal by Greece’s lenders to unlock €7.2 billion in funds, the last portion of the so-called “second bailout” agreed by the Greek government in 2012. Tsipras knew at the time he announced the referendum that the proposal expired on June 30; that was the known-well-in-advance final date for the bailout terms to be agreed if each and every one of the 18 Eurozone countries agreed. We said it was a no-brainer that they would not agree; in Germany as with some of the other countries, it would require parliamentary approval to accommodate Greece’s too-late request, and there was no reason for any of them to cut Greece slack when the government has plenty of opportunity to schedule the vote in time, so it actually would inform the government’s actions.

Instead, Tsipras has already taken the decision to miss the €1.6 billion IMF payment due June 30 and the €3.5 billion ECB payment that falls on July 20, while falsely telling Greek citizens that they have a say in this momentous choice.

Greece’s creditors took the halting of negotiations and the announcement of the referendum on June 26 as tantamount to a rejection of the June 30 bailout. Even though the ECB did not withdraw support to the banks, Greece imposed what amounted to a bank holiday to prevent an acceleration of the slow-motion bank run in progress. Critically, importers could no longer convey payments of goods save by trucking or flying cash across the border. Fish rotted on docks due to petrol shortages. Small business failures rose. Food shortages started in to appear at the wholesale level in the second week after the bank holiday. Greece capitulated on June 13.

The result was that Greece wound up worse off than it if had accepted the Troika’s earlier terms. The already-weakend economy suffered considerable damage in July. And before you blame the meanie Troika (and yes, they were savage), let us now continue with David Adler’s bill of particulars on Syriza in the Guardian:

There is a common view that the Tsipras transformation was predestined…

But nothing was predestined about the eviction of struggling families and the foreclosure of their homes. Nothing was predestined about the auction of vast tracts of land and sea to fossil fuel corporations such as ExxonMobil. Nothing was predestined about the severe overcrowding, sexual violence, and shortages of “doctors, medicine, food and drinking water” in Greece’s migrant camps. And nothing was predestined about the sale of arms to Mohammed bin Salman, the smiles of support for Benjamin Netanyahu and the purchase of fighter jets from Donald Trump.

Now one can say, what could Syriza have done differently?

Arguably, they were hostages of their own PR. Having swept into office promising to get real relief from the Troika, it would have been extremely hard to digest the cold reality of the February bailout memorandum, that lenders were insisting that the old framework and the hated IMF monitors were still very much in place and that Greece lacked the leverage to stare down its creditors. But the reality was the Greek public had the better measure of the odds of success than Syriza did. They knew it was a long shot but they were desperate for any way out.

It is possible that even with the Troika setting hard lines that better negotiators would have made a difference. Varoufakis is a brilliant economist, but economists get ahead by out-debating their colleagues, which is not a good approach to winning over counterparties. But “assume a Talleyrand” isn’t a realistic alternative.

However, there are at least two areas where Syriza did the public a disservice. One is in not going after the oligarchs. Greece has a fabulously broken tax system. Cheating is endemic; probably the only people who come close to paying what they owe are civil servants.

The IMF and the nation-state lenders were at their wits’ end about the inability of Greece to collect a reasonable level of taxes.

One of Syriza’s potential selling points was as outsiders to Greece’s fabulously cronyistic political system, they could crack down on vested interests. This was a big bargaining chip they had and failed to use. “Look, you need us to reform the tax system. But we cannot do this overnight and we certainly can’t do this without hiring more people and without getting some measure of cooperation from the public. We need time and we need to deliver some short-term wins to ordinary people, even if they are small.”

One measure that would have boosted Syriza’s credibility enormously would have been to crack down on exposed oligarchs. The most obvious target would be ones that held TV and radio licenses. They could have threatened to pull their licenses in the absence of adequate reporting and tax payments. But Syriza was unwilling to do so because it felt it needed media backing to stay in power.

Second was that the creditors were up in arms about Greece’s generous-looking pension system. From Greek Reporter in 2014, citing the then-current labor minister:

“In the public sector, 7.91% of pensioners retire between the ages of 26 and 50, 23.64% between 51 and 55, and 43.53% between 56 and 61. In IKA, 4.44% of pensioners retire between the ages of 26 and 50, 12.83% retire between 51 and 55, and 58.61% retire between 56 and 61. Meanwhile, in the so-called healthy funds, 91.6% of people retire before the national retirement age limit,” Vroutsis said.

This stuck in the craw of Germans who were having their retirement age increased from 65 to 67.

However, the picture looks a bit different when you understand that Greece used pensions as a one-stop social welfare system. As the Economist pointed out in 2010:

Finally, as in many Mediterranean countries, all social spending was skewed towards pensions, essentially for vote-winning purposes. Things like unemployment benefits are pretty miserly in Greece, the real money has always gone to pensions, which have been used as a “substitute” for other welfare policies.

Amazingly, the IMF may have gotten the point on its own but too close to the June negotiation breakdown to make a difference. We discussed at length a creditor concession that went unnoticed and the Syriza side never took up:

The creditors are proposing a social safety net and a minimum guaranteed income program, plus the hiring of 50,000 people for social works. Now a lot of pixels have been spilled on the Greece/creditor negotiations, far too many for me to stay on top of them all. Nevertheless I don’t recall seeing anyone take note of this section.

Now what if Syriza early on had made a point of showing that its social spending overall wasn’t out of line even by poorer European country standards, but it was badly structured and they needed time to move towards a modern system with less generous pensions and proper disability and unemployment insurance? This would have taken the wind out of “Those Greeks have inexcusably generous pensions and they are fighting to keep them!” And recall that pension “reforms” were one of the areas on which the talks foundered.

One of the reasons that our take on the negotiations aroused so much pushback was that few wanted to learn that Syriza and the Greek people had no good options. Saying that the plucky Greeks were sure to lose was regularly mischaracterized as siding with the Trokia, when a doctor who diagnoses a patient with Stage 4 cancer isn’t rooting for the cancer. The Greeks held up despite the horrific terms imposed upon them; one can only hope they get the relief promised by Syriza but have yet to see.


1 Lapavitsis argued for Greece to leave the Euro and launch a new currency. Not only would that have been at odds with the overwhelming majority of the Greek public (ie, Syriza had no mandate to take such a radical step), Varoufakis had explained on his website before he became Finance Minister why he thought it would be bad for Greece. Varoufakis focused on macroeconomic consequences.

In another one of our unpopular veins of writing on Greece, we explained long form why launching a new currency was operationally not feasible in anything less than three years based on IT requirements (not just in Greece but for any member of the payments system that might handle transactions in the new currency) which given how large IT projects go, meant realistically 5+ years. Even just designing, printing, and distributing new cash would take at least a year (you need to modify ATMs to carry the new currency or be dual currency, which means ordering parts, fitting the machines and then hauling the new money around and stocking the modified ATMs). That in turn meant Greece would need the cooperation of the Eurozone and the ECB, when the point and effect of a Grexit would be to tell them to pound sand.

Oh, and on top of that, launching a new currency would make Greece’s debt burden worse. The new currency would almost certainly fall relative to the Euro. Most of Greece’s debt was not only Euro-denominated but also “English law” debt, so the Greek government could not redenominate it in the new currency.

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  1. PlutoniumKun

    Thanks for this Yves.

    I’m sure the reasons for Syriza’s failures are many and complex, but so many times the failure of the left comes down to a simple issue – a failure to develop, in depth, a coherent alternative. Its not enough to shout out ‘stop austerity’, or ‘neoliberalism is evil’ without knowing how you will engineer the alternative, and that means getting deep into the guts of how money markets work, how finance and business really operate, what generates ‘real’ wealth and so on. This is why NC is so important, and also the work of MMT* and other heterodox economists. Lapavitsis is a classic example of this – a very smart and articulate guy who was excellent at calling out the failures of the EU and Syriza, but then went and proposed an alternative which would never have worked in reality.

    I saw the exact same thing happen in Ireland after the crash when the left and Greens looked like rabbits in the headlights when the economy went down. People accepted austerity, because the left only offered slogans, not workable solutions. People I think realised instinctively that there wasn’t a real alternative, so voted for the same old faces on the ‘devil you know’ basis. Until the left can offer genuine, coherent and intellectually robust solutions, it won’t win elections, and won’t deserve to either. And in a European context, this means policies for all of Europe, not just individual countries.

    *with my personal caveat that I’m sceptical about just how applicable a lot of MMT ideas are for small open economies like Greece, even without taking account of the existence of the euro.

    1. anonymous

      —“I saw the exact same thing happen in Ireland after the crash when the left and Greens looked like rabbits in the headlights when the economy went down. People accepted austerity, because the left only offered slogans, not workable solutions”

      This is true, but what about fraud? Bill Black said AIB was the most insolvent bank he’d ever seen. I don’t know why it can’t be expected for Fine Gael, Fianna Fail, as well as the left to investigate crimes? Workable solutions might become evident if the problem is confronted.

      1. Yves Smith Post author

        I am doing this from memory due to the hour, so I hope PlutoniumKun or others can correct or elaborate.

        A key bit was German Hypo Bank had just bought Irish bank Depfa at the top of the market. Lotta pressure to bail out Depfa to keep Hypo from collapsing. I think that played into the excuse for bailing out all the Irish banks, none of whom had a state guarantee.

        Another key factor was that a key person in the Bank of Ireland (was it the Governor?) sold Ireland out to advance his EU career prospects.

        1. PlutoniumKun

          I must admit the issue with Hypo is a bit beyond me. But certainly a core element of Irelands enforced baleout was from pressure from the German government to indirectly bale out its Landesbanks, of which Hypo was a particularly bad example. I don’t believe any of them had bought into the major Irish banks, I’m not sure what you mean about Depfa?

          My understanding (just from memory, I haven’t read up on this in years), is that the main German exposure to Irish banks was via direct bond purchases – the focus was on rescuing the bonds, hence the shareholders came off worst. No German banks had directly bought into the Irish banking system.

          In reply to ‘anonymous’ above, I suspect Bill Black was referring to Anglo Irish Bank, not AIB Bank. The former was the one that brought the country down – it was a highly leveraged merchant bank originally, that bought big time into property. In comparison, the retail bank AIB was only bankrupt in a generally conventional manner.

          There wasn’t anywhere near the level of criminality in Irish banks as elsewhere. It was plain ordinary stupidity and greed, nearly everything done was quite legal. The only court cases involved financial swaps during the crisis, intended to disguise the lack of liquidity.

          The story of ‘who advised who’ during the crisis is still unknown. I’ve read several well sourced, but highly contradictory accounts. The Central Bank of Ireland was completely at sea, they simply had no idea what to do – they’d been weakened by having had many of their regulatory functions hived off earlier, so there was a huge regulatory gap.

          I don’t think anyone will ever know for sure if Ireland could have stood up to the EU at the time and simply threatened the German government with bringing down the entire EU financial system unless it provided more help. I tend to veer towards the incompetence and cowardliness theory rather than the notion of their being any great conspiracy involved, but its not a topic I’ve read into in detail, so I could happily stand corrected on this.

          1. Yves Smith Post author

            Huh? You may not consider Depfa to be an Irish bank but it most assuredly was. From Wikipedia:

            At the end of the 1990s, the bank went through a legal restructuring, which led the bank to move its headquarters to the IFSC in Dublin, Ireland[2] in 2002 with the Irish government specifically legislating for it. Depfa Bank was purchased by German mortgage giant Hypo Real Estate in October 2007.[4] The bank ran into liquidity problems in 2008 as a result of the economic and financial turmoil in the United States. At the same time banking supervision in Ireland was very weak, soon to be proved by the 2008–2010 Irish banking crisis.

            DEPFA underwrote a group of municipal bonds in the U.S. that subsequently had their ratings downgraded. Under the terms of the underwriting, DEPFA was required to buy back the securities after downgrade in the ratings. Because of the difficulties in obtaining short-term funding in the markets at that time, Depfa’s liquidity became a major concern.[5][6] Through a series of bailouts, the German government ended up with 100% ownership of Depfa’s parent company, Hypo Real Estate.[7][8]


            1. PlutoniumKun

              I do apologise, I’d forgotten all about that particular link, I thought Hypo had simply set up an IFSC subsidiary.

              1. Irrational

                As far as I recall AIB and Ulster Bank were the ones to tip the system into trouble and Depfa Ireland had to be bailed out by Germany due to the Hypo ownership and the size relative to the economy of the Depfa problem – but it is a long time ago.

                1. PlutoniumKun

                  I can’t recall the timing, but of course Ulster Bank was part of RBS so was tied into the collapse in the UK. Anglo Irish Bank was the big one in Ireland that pulled everything down. The small Building Societies like EBS were also major offenders. In comparison AIB and BoI were ‘relatively’ sensible.

          2. TheCatSaid

            Another factor was that the decision-makers in Ireland refused to burn any of the bondholders, even the unguaranteed ones. All the private debt was shifted onto the Irish public. (I believe this was to favor the foreign holders of Irish bank debts–e.g., those in Germany, etc.–who had taken advantage of the lack of effective laws/regulation in Ireland to enable them to invest in ways that were illegal in other EU countries, and suffer no consequences. Big dogs win, public suffers.)

            1. PlutoniumKun

              Yes, I think this was the crucial mistake, and one made under huge pressure from Germany. Shareholders got screwed, but even the most reckless bondholders walked away unscathed.

  2. vlade

    This – willingness to call out idiocy on your own side – is why NC is so important.

    It’s all well calling out your opponents, but true credibility (by others than fanboys) is gained because you dish it out as-it-is as hard to your own as to anyone else.

    As PK says above, a lot of people are way too willing to attack what is, but when you ask them “and what should be”, the answers are just out of this world.

    Attacking your own ideas first, to see how well they hold, is what we all should try. It’s hard, but more kudos to people who do it, and Yves does it on regular basis.

    If this sounds like a fundraise post, well, it is (unsolicited). Because most of us are willing to pay for things that confirm our bias, but not so much for things that go against our wishes and dreams. And w/o our (monetary) support NC will not survive, and in the end, we will all lose.

    1. Keith Newman

      I agree with vlade. It is one of the reasons I appreciate Naked Capitalism as much as I do. Nonetheless the reality is ”most people would rather die than think” including clever progressive people. Anyone trying to change a significant government policy faces that hurdle. It can be a tough slog and real changes must be tackled with a long time frame in mind.

      1. vlade

        Which is why I wrote: “And w/o our (monetary) support NC will not survive, and in the end, we will all lose.”

  3. skippy

    Must be a glitch in the matrix, first the post went poof when submitting comment and then can’t retrieve comment by backing it out ….

    Oops … sin bin lol …

  4. fdr-fan

    It would be more accurate to say that Syriza never lived. I observed in 2015 that Syriza followed the pattern of TeaParty and Occupy. Both appeared to be independent for about 24 hours before the usual Deepstate agent-provocateur setup became blindingly obvious. Syriza had the same one-day lifespan of pretense.

    1. Yves Smith Post author

      With all due respect, you have this wrong. Occupy wasn’t done in by “agent-provacateurs”. There was a 17-city, Federally coordinated, paramilitary crackdown one night. I watched it, appalled. In NYC, journalists were kept well away from the action, which included sweeping live dogs into garbage trucks where they were crushed.

      Similarly, Syriza flailed about. Tsipras was not any sort of “deep state” victim. He was inexperienced and weak.

      And with the ECB, the nation-states of the EU as lenders and the IMF as no-bones-about-it heavies, you are seriously telling me you need spooks and cloaks and daggers to explain what happened to Syriza? Conspiracy theories are not on here, particularly ones as lame as this.

      1. jcf

        There was a 17-city, Federally coordinated, paramilitary crackdown one night. I watched it, appalled. In NYC, journalists were kept well away from the action, which included sweeping live dogs into garbage trucks where they were crushed.

        And Obama was president at the time, lest we forget. It’s always surprised me how little flak he got from the left for this.

      2. Keith Newman

        I do agree with fdr-fan regarding Occupy. It was infiltrated by local police forces coordinated by the FBI, and directly by the FBI itself. One of the main purposes of the FBI is to keep an eye on protest movements and disrupt them. This has been documented many, many times over the decades including with respect to Occupy. This is simply what police forces around the world do, not only in the U.S.
        With respect to Occupy I think the infiltration was effective. The group had no coherent demands and no coherent spokespeople that I ever noticed. Its weakness allowed it to be eliminated very easily in 17 locations in one night.
        There is lots of documentation of this but for the sake of brevity I recommend

          1. Yves Smith Post author

            The history in that comment is incorrect. The major OWS encampments were broken up less than 2 months to the day inward. There were never 150 to 200 encampments.

            There were a few attempts to “reoccupy” Wall Street but with rulings against being able to use Zucotti Park and the city able to clear public parks, this was futile.

            Occupy the SEC and Alternative Banking were parallel groups but the people in them were not part of the encampments. They had visited them but they were different but sympathetic people. Strike Debt was started by Brooklyn hipsters and had little in the way of overlap of people with the original OWS. These groups were sympathetic to and aligned with rather than direct spinoffs of OWS.

            1. marym

              OK, thanks, I won’t reference that comment again, and understand if you delete it. I may be mis-remembering that large number as a reference to Occupy groups or protests at the time, not actual encampments (e.g. this is a dkos list similar to maps and reports of activities in numerous locations that I’m imperfectly recalling).

        1. Yves Smith Post author

          I am sorry, this is bunk.

          Occupy existed for less than two months before the crackdown, September 17 to October 15. Two months for a grass roots, radically decentralized, deliberately leaderless group to do anything, let alone come up with a platform, is a ridiculous expectation.

          I went to the Occupy site in NYC several times, have colleagues who were extensively involved, have friends who are part of Occupy the SEC and participated in Alternative Banking. The people in them weren’t part of the encampment.

          Occupy had hyper-democratic processes like decision by consensus and “stack” which led to very long discussions and not much action. The FBI had nothing to do with that. And Occupy’s radical decentralization made it difficult for anyone to any much/any influence. Anyone could show up at Zucotti Park, eat, hang out, sleep overnight, and participate in meetings. Calling that “infiltration” might appeal to the FBI bosses but that does not translate into influence.

          The NYC cops were also trying to disrupt Occupy before the crackdown, like huge police presence, hot lights on the site all night to make it hard to sleep.

          1. Summer

            “Two months for a grass roots, radically decentralized, deliberately leaderless group to do anything, let alone come up with a platform, is a ridiculous expectation….

            “Occupy had hyper-democratic processes like decision by consensus and “stack” which led to very long discussions and not much action…”

            Looking at it that way, in retrospect, two months is enough time to gather up the energy and dissipate it.

        2. anonymous

          —-“weakness” ???
          Why wasn’t the FBI investigating the banks, countrywide etc.?

          Just Days before 17 OWS sites were simultaneously shut, polls
          showed the movent had a 67% public approval rating. I doubt a politician or institution nationwide could boast half that.

          Whatever weakness was in OWS, it was the same as in Guernica.

      3. Tyronius

        Occupy wasn’t done in by “agent-provacateurs”. There was a 17-city, Federally coordinated, paramilitary crackdown one night. I watched it, appalled. In NYC, journalists were kept well away from the action, which included sweeping live dogs into garbage trucks where they were crushed.

        Where can I go to learn more about this? Such news didn’t make it into the hinterlands where I live and I’m very interested to hear more about how the Feds treated a movement that was about freedom of assembly and expression if it was about anything.

  5. Colonel Smithers

    Thank you, Yves and the NC community, especially Vlade for the above comment.

    On a not unrelated note, there has been an influx of migrants from Spain, amongst others, to central Buckinghamshire over the year. Further to that, a Catholic secondary / high school due to open in September does not have enough places for all of the applicants, many of whom are from the Catholic south, centre and east of Europe. That made me wonder how the EZ member states are performing.

    1. PlutoniumKun

      Thanks CS, that’s an interesting observation, first I’ve heard of that. Are they the rich or poor variety of migrants? Despite pretty much full employment in Ireland, there hasn’t been a huge increase in European migrants to Ireland, its mostly been non- EU citizens, mostly Brazilians and Asians, using study visas. A lot of ‘Spanish’ immigrants in Ireland are actually Venezuelan (some find it easier to just say they are Spanish when looking for casual work). Anecdotally, I’ve heard many Asians are hesitating to send their kids to UK schools/universities because of fears over Brexit uncertainty.

      1. Colonel Smithers

        Thank you, PK.

        The migrants tend to be of the poorer variety, working at Stoke Mandeville hospital, on the trains and at supermarkets. The Spanish ones have Spanish, not Latin American, accents.

        There are also from India and Zimbabwe.

  6. Jessica

    The one thing that I don’t understand is why Syriza received any votes at all in the most recent election. Yes, they lost solidly, but the swing was not all that great considering that they came in with such high hopes and wound up doing the exact opposite of what they were voted in for.
    The swing against them was less than say the French Socialist Party or the German Social Democratic Party. Or the Canadian Conservative Party falling from 151 seats in 1988 to 2 seats in 1993. That makes me wonder if there is a piece missing. Did they manage to protect some part of their constituency, even at the expense of the rest?

      1. Altandmain

        People feel they have no alternative.

        Learned helplessness may very well be the reason.

        In the long run though, I suspect they will end up like many of the EU social democratic parties – losing ground.

  7. skippy

    It really is a tale of woe ….

    We have the Onassis et al era antics with shipping and how that played out geopolitically, next we have the financial musings which enabled Greece to enter the E.U. all capped off by the blow back from the GFC and the structural dramas created by so much foreign investment C/RE built or in the pipeline to facilitate dynamics grounded on the expectation of a grand new era of international flows of funds and people …. E.g. work and make packet in core Country then retire to sunny shores or vistas in lower FX accommodation and spread the wealth around like in the good old days of colonialism as a latter day demigod.

    On top of all that Greece had endemic taxation dramas and some very questionable market dominance dynamics with rights to sell products exclusively through bottleneck chains, with a side of not having its own currency.

    Then to make matters worse the populism ploy was deployed without any political leverage [cap gun at the OK Corral] aka whose investors win the day and write the tale for future moralistic relevance consumption.

    It should be noted that no oligarchical elites were harmed in this tale of woe …. that would be a sin …. and a cost would be metered out accordingly for such heresy ….

    1. skippy

      I treasure the sensation of black hole transport … chortle …

      Anywhos …. how many remember the attempted demise of Onassis only to receive the information that the ship was tripled insured … cold war … what a trip … eh Hudson …

    2. Yves Smith Post author

      This is a good point. One argument against not cracking down on the Greek shipping magnates who were paying no taxes was “Oh, they’d leave! How awful.”

      Really? If they are paying no taxes, what good are they? They aren’t employing all that many people to run their homes. And I doubt they locate most of their ops staff in Greece either.

      How about confiscating their estates for the unpaid taxes? I’m sure they could be sold to other Eurowealthy on the cheap for the commitment that they’d pay some compensating level of property or other taxes to the Greek state for 10 years (or again have the property and any improvements and contents confiscated).

      1. skippy

        I thought Keynes and Kalecki sorta put that perspective into light, but we got the other side of the coin – as it were … funny that …

        At least I can reconcile myself with the NC 7ish …

      2. skippy

        I can only surmise that option is off the table lest it become sorta like the oil tanker episode of late, nothing would rile elites internationally like having stuff pinched, unless of course one of less than a handful of nations with the threat to back it up deem it so.

  8. Geo

    I didn’t relish being correct at the time, and I take no pleasure in witnessing the failure of a party…

    This is a pretty regular sentiment I’d imagine for you. Personally, I thank you for being level-headed and avoiding the easy narrative for true critical thinking and sharing your original perspectives here.

    “News is what people want to keep hidden and everything else is publicity.” – Bill Moyers

  9. The Rev Kev

    I don’t think that this particular Greek tragedy has finished playing out yet. In retrospect, one could say that the eight years of the constant betrayals by Obama of his base made possible the Presidency of Donald Trump. So with Syriza promising so much and delivering so little after so much time, what will be the long term effect of this on Greek politics? If the center-right New Democracy party just elected just delivers more of the same, in which direction may Greece go then?
    Every 28th October the Greeks celebrate “Ohi Day” which commemorates when the Greeks, in reply to Mussolini’s demands back in 1940 that they let Axis forces into Greece, said simply Ohi – “No!” It is a point of pride with them. They did not say “No! Nah, just kidding – go ahead!”. I am sure that the Greeks have noted the contrast too. This will not end well.

    1. skippy

      You forget basic psychology as applied to a society that has dominate esoteric underpinnings good sir, bad times only reinforce the dogma.

      Did you miss the Bush Jr years …

      It can be arranged …

  10. Seamus Padraig

    ‘I asked [Netherlands finance minister Jeoren] Dijsselbloem in the press conference: “What do you say to the Greek people, whose democracy you’ve just trashed.” He replied that he did not think that was a very objective question. We’ll have to agree to differ.’

    This why I can’t take Guardianista leftists like Paul Mason seriously anymore: they see clearly the misery and degradation that the EU is inflicting on its very own member states, yet they go on endlessly berating the Brexiteers who want to leave it. Now I get that the Brexiteers don’t seem to have a realistic plan for leaving the EU, but tell me: where is the Remainer plan for reforming it?

    As we’ve argued, Greece was almost certain not to prevail on its own. But outside help has been sorely lacking. While the US expressed concern early on, and argued the Greek case, that the nation needed debt writedowns and pro-growth policies, the Administration quickly abandoned its lobbying effort.

    Of course they did. Washington was not going to needlessly antagonize the Germans over Greece when they needed Germany’s help in getting the EU to impose sanctions on Russia.

    The European left similarly has not taken up the Greek cause in a meaningful or consistent manner.

    No joke. In fact, with anti-Brussels sentiment now spreading through Europe like wildfire, I actually get the impression that the Guardianista lefties would rather we forget about the whole Greek debacle entirely. For example: outside of Italy, where is the left-wing support for the new Lega/Five-Star government trying to renegotiate Italy’s finances with Brussels? The thing is, unlike tiny, broke, bloated-trade-deficit Greece, Italy actually does have an outside chance of forcing Brussels to relent. As this might set a powerful precedent for the whole continent, you’d think all the DiEM25 types would be eager to rally to Italy’s side … and you’d be wrong. Why is that?

    1. Yves Smith Post author

      You are comparing things that aren’t really comparable.

      The UK had an exceptionally good deal with the EU. Kept its own currency. Kept London as dominant financial center. Had reduced dues. Regularly played spoiler. Managed to shoot itself in the foot by trying to make itself an even better spoiler by pushing for the entry of Eastern European countries to dilute French/German influence, which the UK figured it could work to its advantage. It instead got a huge influx of Polish plumbers, depressing wages and putting great pressure on low-end housing stock, to the great distress of already hard-hit communities outside the Southeast.

      And it took zero interest in Greece at the time save the exposure of London financiers to Greek debt, so waving the Greek bloody flag as justification for Leave does not wash.

      Moreover, the UK was patient zero for neoliberalism. It bears a lot of responsibility for the degree to which the EU has embraced it. It would have pursued similar macroeconomic policies all on its own. So for the UK to act as if the EU is a neoliberal horrorshow and the reason the UK suffers from austerity is crap.

      Regarding Lega/Five Star, they don’t have a coherent program for just about anything because the two parties are so far apart on the political spectrum. And in particular, they don’t have any sound ideas re what to do with respect to the EU or how they might leave it. As PlutoniumKun said above, having a critique isn’t sufficient. You need a plan and they don’t have one and are too divided on too many issues to be likely to develop one. And the True Lefties are horrified by Lega’s xenophobia, so they won’t back it for that reason alone (my reasons are the other ones on the list).

      1. DJG

        Yves Smith: + 1

        Excellent observations.

        Further, how can the Left in Europe, let alone Italy, support the Lega and Five Stars? In Italy, the Democratic Party, carefully modeled after the U.S. Democratic Party, is feckless, the tail-end of a great leftist tradition that once included Gramsci and Berlinguer and is now Matteo Renzi, best described as Tony Blair Lite. The Lega is just plain repulsive, just slightly politer than foam-at-the-mouth Trumpists, and Salvini is consciously modeled after Trump, down to the nonsensical tweets. The Five Stars is incoherent, being divided into right, center, and left wings. Di Maio is the center of the Stars, which is why seems to stand for almost nothing. Roberto Fico, president of the chamber of deputies (the equivalent of Nancy Pelosi), is a left Star, and he is the most interesting among the 5Stars politicians. Most of the other 5Stars politicians are mere mediocrities.

        Salvini’s most brilliant idea is La Flat Tax, which as we all know is straight out of the swamp of U.S. reactionary think tanks. Besides Italy’s problems with being the powerhouse of the Mediterranean in an EU dominated by the North and its peculiar ideas of capitalism, we now see that Americanization is also bad for Italian ways and Italian politics.

        And now Salvini and the Lega have gotten mixed up in some weird scandal about Russian financing and bribery. The difference between the U.S. of A. and Italy seems to be that the Lega (not exactly an intellectual party, being a home of know-nothing-ism) somehow seems to have tried something quite stupid. Also, there are 49 million missing euro…

      2. Brooklin Bridge

        So for the UK to act as if the EU is a neoliberal horrorshow and the reason the UK suffers from austerity is crap.

        No disagreement with this, but were many of the people who voted leave aware of all this or were they simply fed up with austerity, concerned (often whipped up) about immigration, and feeling a sense of desperate futility with the somewhat anonymous EU government in Brussels which became, irrespective of the facts regarding British advantages, somewhat of an easy target for their woes?

      3. Seamus Padraig

        The UK had an exceptionally good deal with the EU. Kept its own currency. Kept London as dominant financial center. Had reduced dues. Regularly played spoiler. Managed to shoot itself in the foot by trying to make itself an even better spoiler by pushing for the entry of Eastern European countries to dilute French/German influence, which the UK figured it could work to its advantage. It instead got a huge influx of Polish plumbers, depressing wages and putting great pressure on low-end housing stock, to the great distress of already hard-hit communities outside the Southeast.

        Oh sure, all of that was great for London–or at least for that percentage of London residents who aren’t renters–but it wasn’t necessarily all that good for the rest of the UK. Hence, all those post-Brexit election maps showing London, Scotland and N. Ireland going for Remain, but everyone else voting for Brexit.

        1. Yves Smith Post author

          Do you have a reading comprehension problem?

          The section I highlighted specifically said it was the UK that pushed hard for the admission of Eastern European countries which led to a big influx of Eastern European immigrants and is widely perceived to have depressed wages and increased housing prices outside London (I say “perceived” because the UK has more non-EU than EU immigrants).

          Moreover, the next section pointed out that the UK as a diehard believer in neoliberalism and a big vector for that taking hold as hard as it has in the EU (not saying the EU would not have been infected, just not as quickly). So to pretend that the distress outside London was due to the EU is a serious distortion.

          Shorter: The Tories and UKIP have blamed the EU for Tory austerity and it’s worked.

  11. TG

    One is reminded of the fate of the Greek populist movement “Golden Dawn.” Yes I know, they were supposed to be Nazis – I mean, didn’t they use the Greek Key design as a symbol, which can sorta be made to look like a Swastika if you squint at it funny? (I hope all of you out there are alert that you don’t have any Nazi coffee tables or rugs!) And really, isn’t any group that actually stands in the way of the oligarchs looting a country by definition racist and fascist and Literally Hitler?

    OK maybe Golden Dawn was not all sweetness and light (though surely not nearly as bad as was portrayed in the press). But how that organization was taken down should give pause. A single member apparently committed a crime, and within 24 hours all the leadership had been arrested, all the accounts seized, all the offices raided and computers seized… it was clearly a pre-planned purge of the organization waiting only a trigger as an excuse. Imagine that in the United States one registered Democrat shot someone, and within 24 hours the entire Democratic Party had been similarly shut down in a. coordinated nationwide sweep – what would you call that? The bottom line is that despite appearances, the Greek government was very much run by hardliners, and Syriza etc. could only have been for show or they would have met the same fate.

  12. JohnnyGL

    Yves, thanks for writing this. This was one of the episodes that has kept me giving each year and coming back for 10 years, now.

    No one had a better explanation for the 2007-8 financial crisis.

    No one else had a better diagnosis for the Greek Crisis. It was brutal to read in real time, though.

  13. djrichard

    It had no popular mandate to leave the Eurozone and create a new currency

    So what do we construe the mandate of Syriza to have been then? The bums before them got decisively thrown out for a reason. At which point Syriza got to have fun leading the parade … but to where exactly? To go down the same paths that the bums in front of them were going down? … to work a better deal? … really?

    From where I’m sitting (which admittedly is not in Greece), Greece needed leadership for a war campaign. And all the messiness that that entails. And if the horses and cows have already left the barn (i.e. capital flight) so be it. War campaigns have been run on less. But in any war campaign, you need to sell it to the people, after which you declare war. The first part of that is easy: to sell it to the people identify you’re already at war, that the Troika was already engaged in war on Greece. This would not have been a hard sell. Syriza in a way was sort of saying that, but then not following through on the next logical steps.

    My recollection (from what was divulged after the end-game) is that they were internally compromised from the get go to actually refrain from GREXIT – there were power brokers within the party who wanted that taken off the table. Which left them few options. So instead they played the game of chicken, not only with the Troika but with their own citizens as well. That in effect is how they interpreted their mandate. Good grief.

    Anyways, their citizens wouldn’t oblige. All the referendums and their citizens wouldn’t blink. Instead, Syriza blinked on the behalf of the citizens. When the reality was Syriza wanted to be boxed in.

    How did Tsipras imagine this game of chicken playing out otherwise is beyond me. He should have never let GREXIT be taken off the table. That said, like any game, it yielded a new equilibrium where Syriza remained in power and their constituency got shell shocked into submission. And then they were able to occupy that office until this year. If your game plan is to occupy power, well then “well played”.

    It’s not too often that leadership is called upon to do more than occupy power. History should deal harshly with Tsipras and Syriza. Instead of grabbing the brass ring they shrank from it.

    /sarc Anyways, from where I’m sitting (which again is not in Greece), the troika (or whoever) has conquered Greece. All hail the conquering heros. /sarc

    1. Yves Smith Post author


      Polls through and including the time of the referendum showed over 60%, I believe regularly over 65%, for keepingthe Euro.

      And I’m at a bit of a loss to hear you talk about “power brokers” in Syriza. This was a party of outsiders. There weren’t hidden hands manipulating them. There were some like Lapavitsas who loudly favored a Grexit, but critically placed Varioufakis opposed it, as did other ministers.

      1. djrichard

        Well I’m searching the internet trying to dredge up what I remember as being a “smoking gun” on GREXIT being taken off the table. In the process, I came across this article which speaks to factionalism leading up to the events. It’s a worthwhile read in general, with interesting details and observations.

        Whoever the player was, I distinctly remember that they were able to extract a concession to not put energies into plan B. There was some surface reason, e.g. so it wouldn’t undermine plan A or something like that. But whoever it was seemed to have personal constituencies that didn’t vote for Syriza, i.e. wealthy stakeholders in Greece. [Any dems we know like that? LoL] Anyways that concession held until it was too late.

        It could be that the issue was with Syriza’s coalition partner, “Independent Greeks”, e.g. Panos Kammenos. Some of the articles I’m reading now show how he wasn’t being an honest broker after the fact by explaining how they were stopped in their tracks to create a new currency because they didn’t have some other country’s currency to back it. Still, not sure it was him; nothing so far he worked to derail it before hand. So could have been another factional player in Syriza itself

        1. Yves Smith Post author

          I’m not about to pick it apart, but his account is so wrong in so many ways, starting with the February signing of the memorandum that we discussed in the post, that it’s clear he doesn’t have a good grip on facts or how to interpret them. For instance, he makes it sound as if Tsipras voluntarily replaced Varoufakis when that was under pressure from the Trokia because Varoufakis had alienated too many people on the other side of the table. See:

  14. RBHoughton

    Yanis Varoufakis made the point that when the whistleblower revealed details of those Greeks holding immense savings in Switzerland they had stoled from Greece, it would have been possible to seize the money to settle the outstanding debts to German and French banks that Larry Summers, ECB and IMF were so worried about and completely avoid the financial ruin of the Greek people that they contrarily actually promoted. Had that occurred the active part of the young Greek population would not have emigrated, taking their skills and energy with them, and the country should have quickly recovered.

    I hope everyone recognises that this sudden catastrophe could occur in any country at any time. WE are all in bottomless debt. Write the name of your banker on a piece of yellow paper, beat it repeatedly with your shoe and set fire to it. You’ll feel better.

  15. Summer

    RE: “The July referendum was on bailout terms that had expired on June 30. This would be like holding a second Brexit referendum a week after a no-deal crashout…”

    Strange as it may sound, I could see that happening in Britain. There could be that level of disbelief and denial if a crash-out happens….panicky face saving ploys…

    1. anon in so cal

      Bookmarked this article for later. From reading the first few paragraphs: were Syriza’s promises sincere, initially? Why didn’t the party go after the oligarchs?

      A conspiratorial take:

      “so capital used “socialist” syriza op to immiserate the Greek workers and outlaw strikes and steal the assets now “Communist” real estate developers bought up exaecheia hood in Athens and the rent is skyrocketing destroying small businessses owned by Greeks + extracom immigrants”

      (from “Red Kahina’s” Twitter feed

      Off topic, but this account makes some provocative claims about The Squad. Not sure how well-supported the claims are, but they are thought-provoking. I had forgotten that Hillary Clinton had given them her blessing.

  16. eg

    Is it true that Greece is not food independent?

    And if so do we know when this terrible condition came about?

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