Varoufakis and Stiglitz [video]
youtube.com
youtube.com
* "The Global Minotaur: America, Europe and the Future of the Global Economy " -- about his book, a nice narrative of the last 100 years of the political economy -- https://www.youtube.com/watch?v=MEUWxNifJJ8
* Richard D. Wolf's Global Capitalism update featuring Varoufakis -- Richard D. Wolf is always fun to watch, he looks like a Marxist version of Homeland's Saul Berenson -- https://www.youtube.com/watch?v=Fc-iYzniEXM
* "Confessions of an Errant Marxist" -- sort of Varoufakis's origin story -- https://www.youtube.com/watch?v=A3uNIgDmqwI
* Bizarre BBC Newsnight interview with Varoufakis -- where you can see the BBC's idealogical function leaking through -- https://www.youtube.com/watch?v=vVpWOk7vu18
It's evident from watching these that he is almost without exception the smartest person in every room he's in. And unlike most other economists, he is actually, you know, alive.
Also, the obligatory Pettis articles that should be read by everyone who wishes to form an opinion about Greece's current position:
* http://blog.mpettis.com/2015/02/syriza-and-the-french-indemn...
* http://blog.mpettis.com/2015/02/when-do-we-decide-that-europ...
And to encourage some cynanism about the neoliberal wisdoms, here's a contrarian economist called Ha-Joon Chang:
* "23 Things they don't tell you about about Capitalism" -- https://www.youtube.com/watch?v=whVf5tuVbus
And then of course at the end of the rainbow there is David Harvey:
* "The 17 Contradictions of Capitalism", LSE -- https://youtu.be/AULJlwoI3TI
We also recently had a spirited HN thread about Greece that had some good stuff in it: https://news.ycombinator.com/item?id=9314000
I wish I had something like pocket for the youtube videos so that I could watch them during transit.
Of course it is! It's just fine.
Careful...your "idealogical function [is] leaking through"...
Greece apart, if one takes the time to listen Varoufakis talking, then he understands that he is an exceptionally knowledgeable man. He has a deep knowledge of his domain and he speaks his mind - which is rare for a politician and got him in to troubles with the media more than once - all to often and in a very loud and clear manner.
I'm not sure if can pull out anything positive for Greece, because other than bailing Greece out, there is no way (for the Greeks at least) out of this spiral: Following the EUs terms is equally if not (much?) more catastrophic than leaving the common currency (even without leaving the EuroZone for military/geopolitical reasons).
[1] http://www.debtdeflation.com/blogs/2015/02/05/talking-about-...
[2] http://www.nakedcapitalism.com/2015/02/bill-black-bbc-dismis...
[3] http://en.wikipedia.org/wiki/Jeroen_Dijsselbloem
[4] http://www.independent.ie/irish-news/dutch-finance-minister-...
My fear is unelected officials trying to smack down democratically elected wishes will lead to a collapse not just in Greece but elsewhere.
Didn't it come to your mind that it's first of all the voters of other EU countries that don't want to pay for Greece's debt with their taxes? It's not the unelected officials' money we're talking about here.
Mostly because Italy (and France) itself is in danger. Do we think the money really is there if it is needed? And that it won't push Italy (and France) over the brink?
Yes Italy and Spain were in dangerous waters if you looked at the interest rate differentials with Germany, but they paid their quota of the bailout like everybody else - so they saved Greece as much as everybody else. Actually, they contributed much more than the new North-Eastern EU states, which have a much lower GDP (both total and per capita).
Doesn't it piss you off, btw, that Eastern European countries with a poorer population than Greece participated in the Greek bailout but the Greeks still think they are entitled to more?
Regarding entitlement from some Greeks, I agree. But you should keep in mind the total net from/to the EU: all those poorer countries, even with the bailout, are getting much more from the EU than they are giving (as it should be).
Not at all!
But, yes, there /is/ a correlation between corruption and latitude.
I don't see him saying that. I see him saying that countries of the former Soviet block have poorer population than Greece [0] but are subsidizing it.
Also as nations they are poorer, though their GDP has climbed to the same level. They soon will be richer than Greece. In 1990, they were still much poorer, as they were still under Soviet occupation and influence, while Greece had been a member of EEC/EC for ten years. Greece is lagging behind due to its sclerotic economy and clientelism of previous power parties, and Syriza seems to revert to the same.
> But there is a very real North/South divide in the way the economies are structured and in societal norms (trust in others, corruption, tax evasion, clientelism)
This is very poor simplifcation, and pretty offensive too.
"Where trust is high, crime and corruption are low". http://www.pewglobal.org/2008/04/15/where-trust-is-high-crim...
Regarding trust, below is one source for how people see it. Look at the European map. There's a bit of north/south divide (with Italy being somewhat north). http://www.jdsurvey.net/jds/jdsurveyActualidad.jsp?Idioma=I&...
This is not the same as amount of corruption (note how high China and Saudi Arabia are in the "most people can be trusted" index, while they don't rate as well in corruption indexes). Here's the Transparency's Corruption index map: https://www.transparency.org/cpi2014/results
Crime maps are many but what I can find quickly are not incompatible with this generalisation either: http://www.numbeo.com/crime/gmaps_rankings_country.jsp
Exactly, stereotypes... and no, they're not true. I live in Italy and know Russia well enough, and Russia is much more corrupted than Italy. How much northern than Russia can you go?
Cultural problem? Yes. Latitude-related problem? No. Linking this to latitude is like linking problems to the color of your skin: you can't change the color of your skin, nor your latitude. Culture, on the other hand, can and does change.
BTW Italy has indeed a big problem with corruption, but one funny thing is that most Italians like to publicly bash Italy, so the relative perception of corruption is even higher than it actually should be, especially vs countries where most people think "right or wrong, my Country" ;)
But I also have the perception that within Italy, there is quite a strong north-south divide? Turin and Milan are quite different from Naples and Palermo, also in the mind of Italians, regarding level of corruption?
In Italy, too, there are big variations, but they aren't really so correlated to latitude (even if many people superficially think that way). Most of Sardinia is south of Naples, but the disrespect for rules/corruption is much lower (eg in Cagliari, which is a lot to the south of Naples). It's just not as simple as that.
http://yanisvaroufakis.eu/2015/03/15/presenting-an-agenda-fo...
The money was already gone when we allowed bankers to handle it and invest it in high-risk projects like greek and spanish real-estate etc.
And if we don't place the blame where it is due (with the bankers) then they will find another bubble to waste our money with another time.
[edit: reply moved to proper place]
But that makes it no less the bankers losses that were covered with public money.
No, the debts will not go away. Everyone loves to crap on big banks but in this case Greece owes money to EU nations.
Unrelated side note: Bringing up the second world war makes Greece sound even more petty. What's wrong with you people?
Only because the private debts were nationalized in the last bailout round, which was basically a joint bailout of Greece's public finances and German/French banks, all of which were on the brink of insolvency. The bonds were previously mostly held by French and German banks, and the agreement did two things: 1) Greece was given a big chunk of money on the condition that most of it be sent back north to pay off a portion of their bonds; and 2) much of the remaining bad debt was shifted to public books, in the process being restructured with more generous terms. Greece has a large part of the fault in this whole saga, but they are not the only reason these originally privately held debts have now ended up on public books.
I do think from a realpolitik perspective Greece is playing hardball at the wrong time: they had a much stronger negotiating position in 2010 than they do now, when much of the "contagion" problem has been contained. But the government at the time stupidly agreed to a set of terms that solved the German/French problem while containing but not solving the Greek problem. Few serious economists at the time believed the package was a workable one for Greece, unless you thought some extremely optimistic projects of Greek GDP growth were realistic; it was seen as at best kicking the can down the road. But by 2015 when Greeks realized that and voted in a government willing to play hardball, they are no longer in a good negotiating position.
Syriza wants to be forced out of the Euro so they can continue to play the xenophobic game and blame Europe, or rather Germany. The rest of the EU wants Greece to decide to leave, so they don't have to go to their voters and say "we tried everything, they didn't want help ..." and avoid admitting that the critics of the bailout were right all along.
In this game, time is on Greece's side, because as long as nobody blinks, all that sweet EU money is still raining down on Athens.
Moving bankers bad investments onto public books is a monumentally poor decision for everyone, and the effects of the decision should be undone.
However, if France and Germany have no appetite for holding their bankers responsible for their poor investments, and if they can honestly convince their citizens to pay for the bankers poor investments, then that is a (poor) decision they can make (and have so far made). The better decision is to require repayment of bonusses, let the losses materially affect banks shareprices, and let bank-shareholders lawsuits handle the rest.
On the other side, pushing the financial burden of a bankers bailout onto the greeks is counterproductive to everyone (who is not a banker) in the eurozone, and is morally disgusting.
While this is a consistent position that has historically been held by some, it's incompatible with any modern economy. In particular it is incompatible with the modern concepts of old-age pension, health insurance, unemployment insurance etc.
The german and french bankers should not have bought greek government bonds at the prices they did considering the greek levels of public debt.
Anyway, what is deemed risky is highly subjective and easy to see only in hindsight.
What is ugly is when foreign states impose non-sensical demands of another country as part of a move to bail out their own banks.
The real question is: why is Greece not going the democratic way of defaulting on its external debt? And the answer is, as you know well, that Greece wants to continue receiving all that sweet EU money. Why stop a good thing?
... impose non-sensical demands ...
Iceland (the country, the government) was not in much debt and did not default. Icelandic banks did default and went bankrupt. The banks (Kaupthing, Glitnir and Landsbank) were split so that Icelandic debts and assets were moved into new surviving publicly owned domestic versions of the banks, and the foreign remnants of the banks were placed into receivership and liquidation.
Russia, the country, actually defaulted. Russia is today not known as a safe place for investments (though the history of a default is just a small part there; in Russia's assets, it has huge energy reserves, and in its liabilities, it has kleptocracy, corruption and an arbitrary justice system).
[1] https://en.wikipedia.org/wiki/Sovereign_default#List_of_sove...
It's a great decision for the banks, and the politicians that got their cut. It's (only) a bad decision for you and me, the tax payers, who are being raped.
You can make the argument that the other EU countries taxpayers had to cover Greek debt to banks (including Greek banks) with their own taxpayer money - but that is something that only the other EU countries could complain about!
And there was very clearly a shifting of "bankers losses onto public books" when Greece was pushed to repurchase bonds from banks at values far above their market value with money lent to Greece for that express purpose.
And yes I think that we exactly agree that other countries could cover the losses that the banks incurred on their bad investments in greek bonds. But I, very clearly, think that the other countries should not cover those losses on bad investments, but rather demand payback of bonuses paid 2000-2008 to anyone responsible for the greek government bond investments.
(I wrote "part of" because there was a haircut involved for the private lenders. They /did/ take a loss.)
Edit: tpyo.
Now there is a crisis, and the unsustainability of the public debt of country A is undeniable to everyone, so no-one will buy the bonds, well maybe for 5 EUR. However, through lobbying etc. a deal is struck so that Country B lends Country A 60 EUR to buy the bonds for the artificially high price of 53 EUR, thereby allowing the banks to escape the full writedown from 100 EUR to 5 EUR, but pushing 48 EUR of unrealized bankers loss onto the public books of Country A (debtor) and Country B (creditor).
Nevermind the theoretical principles involved, the actual numbers are quite different from what you probably believe: All in all, around 200 Billion Euros of private creditor debt was restructured:
1) 107 Billion Euros were simply written off
2) 62,4 Billion Euros of old private bonds were exchanged into new private bonds
3) Only 29,7 Billion Euros were paid out to private creditors and shifted onto the books of other Eurozone governments.
I don't see we disagree about the numbers? Of the 200 Billion, only about half of the losses were realized. The rest was pushed onto public books (as new bonds or as bailout-loans).
Yes.
> Are you aware that that situation would have meant MUCH bigger cuts to public spending than those requested from the so called Troika?
No, I am not, that's because this scenario is nothing but fear-mongering without any base in reality. It is always put up when an alternative to the current course is discussed but is nothing but hot air. If you are "aware" that your scenario would have happened provide a proof.
There is no mathematical proof for what I'm saying, but even the economists who suggested that Greece should have defaulted and left the euro were saying (I would say they were aware) that things would have become much worse before they became better.
That is as certain an economic forecast as one can be - the point some economists were/are making is that in the long run Greece will come out better from a fresh start with a default and outside the euro, with a devalued Dracma that would make Greeks poorer but more competitive internationally. But there is no guarantee that Greece would actually recover from an event like that and come back to the first world - especially if it alienates the whole EU in the process.
All those factors will help Greece rebuild but it is a very unpleasant way of reforming a country that has had an urgent need for reforms for decades. Unpleasant as in: people will die.
A smarter country with better voters would grab the chance it has been given to do those reforms in a slower and more orderly fashion and say "Thank You!" to the IMF and the EU. And then spend the next 30 years apologizing :)
Even if current Greek debt was wiped out overnight, the government would still need loans just to pay day-to-day bills. It's hard to tell how much since lying about government spending is a Greek institution (for example, they've "revised" the 2009 deficit number 3/4 times since then) but conservatively a few billion a month would be required even if they had no debt.
The unfairly vilified troika not only gave Greece the money to pay off all their loans at very reasonable rates but also promised to continue to lend money to give Greece some time to sort out their primary deficit (deficit without interest payments). No Syriza is telling the rest of the EU that they will reverse the moves to fix the primary deficit but that the EU must continue to pay for it.
Edit: yes it was a partial default, so what I meant is defined as "disorderly default".
One thing that gained Syriza some centrist votes is that they come across as at least having clean hands: good or bad policies, people believe they aren't caught up in clientelist networks and stealing millions personally. Whereas the previous ND/Pasok unity government was widely suspected of still trying to cover up skeletons in its closet (e.g. the scandal over trying to suppress the Lagarde list didn't improve its image).
But it is not so simple. What is borrowed to Greece is not "bankers'" own money. It is funds belonging to institutional investors. The job of those "bankers" is to look after that money and invest it. Significant institutions include things like pension funds or other savers.
Write off the debt, who loses? It's not just some "banker"; the brunt will be carried by pension savers.
unelected officials trying to smack down democratically elected wishes
Which greece never sees, and the money go immediately to bailing out the german and french banks that created the problem in the first place. (Courtesy of the tax payers, with a cut for the politicians, with the past gains of german and french industialists, and the present and future gains of the bailed out banks.)
Then "twobits" would say "Which John never sees, and the money go immediately to bailing Tom who created the problem in the first place."
It's true that Labour in Europe made a big swing towards right. It's now more often firmly at the centre, instead of left of centre, on a host of economic issues. And so you could then say he's rightish, especially in his European position as opposed to his Party position in the Netherlands... but then you can throw a lot of terms out of the window and it becomes impossible to label anything anymore.
For example, in Europe we tend to consider most Democrats to be Rightish-Wing, and consider most Republicans just 'way out there', the notion that democrats are leftist is kind of ridiculous here. Left would be the Green Party for example. But we call them left because in the spectrum of dem/reps in the US, they're relatively left. We could say they're both 'right' and then come up with other differentiating words to describe em, but it never really catches on...
Same with Labour on a national level, Dijsselbloem is part of labour and labour is generally left in the political spectrum of a country, for what it's worth.
Unless you are on the fringe left of parties, you adhere more or less fervently to the idea that a minimal government that buy services from private companies is the way to do things. It is "utility maximizing" taken to the level of religion.
This has lead to ever more measurements and goals in government, often referred to as New Public Management.
Problem is that most of the leftist parties at that time were run by people that had little to no actual worker background, and the situation has since become ever more solidified.
End result is a quiet disdain for people that choose industry or service work over a university degree.
He is clever, has a vast knowledge, and you're right, he "speaks his mind". Rare, but valuable.
Whenever any of the actors involved speak to the press, you can be sure they have an agenda: to influence public opinion (their own or of other parties), or to seem more extreme than they actually are at the negotiating table so as to make a solution politically possible, etc.
When reporting on this the press then layers on a nice thick coating of opinion, often basing themselves on other press articles which suffer from the same problem.
No wonder comments on the internet are often of the 'You're an idiot! No you are!' variety. People are trying to reason based on second degree derivatives of the actual situation.
In this case Varoufakis is saying pretty much the same he used to years before he had any political responsibility.
As for high stakes... well, the stakes for someone coming into the finance ministry of Greece in this Europe are huge no matter how you look at it.
Do they not trade more with Turkey (and Germany) and about a handful of other countries?
Yes, the EU are of bigger importance, but OTOH those trade partners are still there. Only the exports to Russia are lost. If the trade amount relative to GDP really is 1%, that would amount to more than 2 billion Euros in lost trade. Greece is small and in a precarious financial situation, I can understand why they risk to affront other EU members for those 2 billion.
Compare with Finland and Sweden when the Soviet Union fell.
They were hit a lot harder but they cleaned up and enacted reforms. They certainly didn't complain that Greece was unreasonable for not lending (or giving) them money so that things could continue as before.
There's a delay on replying sometimes but it isn't karma-related.
Of course, regarding requirements for compensation from Germany, it would have made sense to ask those in 1980, i.e. before joining an economic community with Germany, a community whose purpose was to put back wars and their compensation requirements, and start up a free trade area and bind economies together to avoid further clashes and wars.
A mandatory loan from the Greek government to finance the German war effort would be at around 11 billion euros now. It is a multiple of that for many other EU countries.
I'm not saying that this "repay the war debt" is a good idea, but there certainly are a lot of hard to contest historical arguments for the validity of a small part of their claim.
Syriza was voted in to end austerity at minimum. They are nowhere near achieving this promise. Furthermore, their brinkmanship within the EU has made this even more unlikely.
All that has changed since winning the election is a steep degradation for the prospects of the Greek economy on almost every metric. The economic recovery early this year was snuffed out. Tax revenues have declined. Cost of sovereign borrowing is up. Bank deposits are flowing out.
I feel sorry for Varoufakis. He seems like a very sensible economist. Unfortunately the extreme elements of Syriza are driving Greece out of the eurozone and into much bigger trouble.
Other EU countries have taken on huge debts to support Greece only to be berated by Syriza; Spain for example has given Greece 27 billion euro (equal to an entire year of government social spending) while Spain itself suffers 25% unemployment and a collapsed economy. Syriza has/is rolling back many reforms (like paying civil servants 13 months pay every year) while other EU country are continuing to cut back (e.g. on retirement ages). Many EU countries (e.g. the Baltic states) have lower average salaries and work longer before retiring than the Greeks and yet have paid into the rescue fund for Greece. After all this Syriza still blames the EU for their troubles? Or threatens to unleash Jihadists on Berlin?
The trouble with Greece is that the government hasn't balanced its books in 35 years and the economy produces little of value (olive growing and cheap tourist sector jobs) while expecting to live a live-style like the average German, British or even French or Italian who produce high value-add goods which are exported to the world. They continue to demand that the government spend more while avoiding taxes.
Syriza feeds this national self-pity by looking for outsiders (particularly the Germans) to blame for this. At some stage reality has to be faced.
I learned of this via something almost out of a ancient Greek comedy, the lines of the Goddess of irony:
A Greek manager sent to manage an branch created here in Bulgaria to take advantage our cheaper labor was outraged when she found out we only get 12 salaries a year. How is she expected to live on only 12 salaries, she asked incredulously, what about the extra spending around vacations??
[1] It's an important part of Danish culture that everyone, of all social classes, should take a contiguous 3-week vacation in the summertime.
What matters is the annual salary (or total cost of employment). This can then be split into e.g. 12, 13 or 14 - I don't care - payment lots. But if the total salary package of civil servants is something that the government cannot afford, then that is the problem.
Is that anecdote about a Greek manager in Bulgaria real? If there indeed are such managers, they are definitely very silly not to understand how different the terms of employment may be in different countries. The practices in your home country may be not at all relevant somewhere else, and this is not just the pay packages, but also days off, terms of laying off people, what things like health care is included, and so on and so on.
We have a stereotype that Americans are particularly ignorant of the rest of the world in this respect, but I don't know if that stereotype is really justified.
(FWIW, our annual gross pay in Finland is typically 12.5 monthly salaries; the .5 monthly salary is paid out at holiday seasons, typically in the summer. The creation of these bonuses are related to the economic situation in 1960's and 1970's: during their summer holiday, many people took a temp job in Sweden, and pay in Sweden was so much better that once there, many decided to stay. A "return bonus" was commissioned in Finland after negotiations between employers and employee unions, to motivate people come back to their normal jobs at end of annual leave. This has since those times transformed into a part of the regular compensation package for everyone. In shorter employments, you earn both holiday days and the holiday bonuses, which are then paid out typically at end of employment if you're not in a regular job.)
DK 3739
LU 3009
FI 2622
IE 2621
DE 2574
ES 1634
GR 1028
PT 984
HR 848
PL 693
BG 316Practically all the serious ones across many countries and many languages.
If we really all agree on the problems of Greece, it could be the first time ever all members of UE agree on something spontaneously...
To get a perspective of how inadequate German and EU (generally speaking) technocrats are at basic macro-economics take a look at Ben Bernanke's blog, on Germany's trade surplus[1].
NOTE: Noting @derriz posts I'd say there's a strange patterns emerging. He probably jumps into conversations just to make a point: Greeks are bad and they get what they deserve while Germans are good and we should follow their example. I will just say that this view is naive and stupid :-)
[1] http://www.brookings.edu/blogs/ben-bernanke/posts/2015/04/03...
I'm from one of the other PIIGS, lost my job and had to emigrate. I lived through bank and property implosion and unemployment increasing more than 3-fold. I saw friends lose effectively ruined.
However, the other PIIGS have all faced the unfortunate reality of their position, recognized their OWN mistakes and tried to correct things by cutting back on public and private wages and government spending. After a few years of pain, they are all seeing improvement - particularly falling unemployment.
Only Greece seems to think the party can keep and what's even more irritating is that they are angry and bitter towards the very people - the voters other EU countries - who have made huge sacrifices to provide them with almost a quarter of a trillion euro to ease them over the required adjustments. Put yourselves in the shoes of a politician in a poorer (than Greece) EU country sending money to Greece instead of spending it on hospital, schools, etc. in their own country.
It's time for a reality check, my sick-in-the-stomach friend. It's time for Greeks to consider the plausible possibility that they bear some of the responsibility for its own unfortunate state. But I guess it's easier to blame German trade imbalances, international capitalism, the IMF, the EU, the US, bankers, anyone besides Greeks themselves for the problems of Greece.
That said, I wish you all the best in life. Stay strong.
1. His lack of [...] is really high. ( Does this make sense?)
2. His understanding of[...] is really low/poor.
Cheers :p
I enjoyed Varoufakis' comments on the "United States of Europe" and the idea that a European Federal Government might have prevented or at least lessened the adverse impacts of the financial crisis. From my limited understanding of the EU, it does seem that the ECB was not created with enough potency to act outside the interests of the largest (financially-speaking) members of the EU. Thus the German and French agendas and economies were furthered at the expense of the Greek, Spanish, and Italian economies.
My counter to this argument, looking at the US, is that our government and the Federal Reserve have become increasingly controlled by the interests of corporations and the owners of capital (banks). It is the government's job to provide a counterbalance against the profit-seeking interests of corporations by (1) creating and enacting regulations to protect constituents who might be harmed otherwise and (2) investing in infrastructure, R&D, and education - sectors that require large investments and that have no short-term, easily-observable returns, but that are absolutely vital to the long-term success of a country. The US government simply fell down on the job, repealing the Glass-Steagall act and allowing banks and consumers to take on unmanageable levels of risky debt.
What is to say that a "United States of Europe" would not have fallen victim to the exact same systematic breakdown in accountability and ethics that we have seen in the US? Sure, a "United States of Europe" might have more power in setting monetary and fiscal policy throughout the EU, but fundamentally it comes down to the ability to weigh long-term prosperity next to short-term growth, and to combat the temptations of excess greed and corruption. If the captains of finance and business, and the leaders of a country cannot perform these tasks that are fundamental to the functioning of a healthy economy and society, then no amount of tinkering with the structure of the government and other regulatory institutions can help.
Skip the intro: https://www.youtube.com/watch?feature=player_detailpage&v=OY...