I'm having trouble reading between the lines here. Was he given a push by being excluded from the recent meetings? Is the suggestion that he was actually a hindrance to Greece progressing? Is he saying he supports the move or that he 'has to'?
In that sense, yes, he's better gone: he leaves while on top, having been vindicated by both economists (IMF report) and the public. I fear this might mean Greece will still have to swallow a bitter pill though.
However, if his words are commonly misrepresented, then he should be more careful when speaking publicly. Part of being a politician, and particularly a minister, means your every word will be scrutinised in every way.
While he definitely had the ability as an economist, he did not when it came to being a politician nor a diplomat. But his resignation seems to confirm that he himself realises this.
Their government can certainly print money endlessly, but it's like issuing more stock: it doesn't just make the value of that country go up, it makes the value of its stock (money) go down proportionately.
So the fact remains that Greece won't be able to buy all the things it wants without outside cash. And who is going to give it any now? If you just print money without limit, you'll soon find that there's nothing to buy with that money due to inflation.
Maybe they can copy Argentina, but when their finance minister's exit speech is basically "haha, later suckers!" I don't have high hopes.
If their currency were to lose value, their exports would become cheaper in relation to others.
This in turn would drive up exports.
Right now the euro is trading pretty much on par with USD.
Not likely that this is beneficial for the Greek economy, as it seems very dependent on farming and raw material extraction.
Where do you think the mistranslation happened? Here's the text (in Spanish) from the El Mundo interview. My Spanish isn't great, but it seems quite clear:
(El Mundo) Aunque no haya encuestas, en las calles de Atenas lo que se siente es que la gente cada día que pasa tiene más miedo.
(Varoufakis) Sí, así es. Lo que están haciendo con Grecia tiene un nombre: terrorismo
(El Mundo) ¿De verdad piensa que lo que están haciendo con Grecia es terrorismo?
(Varoufakis) Por supuesto que lo pienso: es terrorismo. ¿Por qué nos han forzado a cerrar los bancos? Para insuflar el miedo en la gente. Y cuando se trata de extender el terror, a ese fenómeno se le llama terrorismo. Pero confío en que el miedo no gane.
(El Mundo) Even though there are no polls, what you feel in Athen's streets is that people is more scared every day.
(Varoufakis) Yes, that's it. What they are doing to Greece has a name: terrorism.
(El Mundo) Do you really think that what they are doing to Greece is terrorism?
(Varoufakis) Of course I think so: it is terrorism. Why did they force us to close our banks? (They did so) To instill fear into people. And when the objective is to spread terror, that phenomenon is called terrorism. But I have faith in that fear won't win.
---
My personal stance is that he did indeed call their counterparties terrorists. However, he carefully distinguished them from "violent terriorists" such as ISIS et al. Which kind of terrorists are actually more harmful in the long run... that's a matter for personal opinion.
But the guy have a penchant for not mincing words...
Googling the actual Greek word he used brings up page after page of arguments that it meant exactly that: terrorism.
One positive note: most organizations are culturally self-selecting. So if it didn't work out, that means he's freed up to land a better gig even if he could have made an larger impact if allowed, it's clear the leadership either blames him, feels they have irreconcilable differences or doesn't want him to succeed. It appears he gave it a good go, but perhaps insiders think otherwise. Reiterating the maxim of never burn bridges and always take the high road when leaving employment (and never gossiping/speak ill of anyone in an exit interview.)
And it's a bit rich to talk about the "competent" Greek economist vs. his "incompetent" EU counterparts when they're the ones with the money and he isn't.
When it comes to the Greek debt fiasco, Shakespeare said it best 400 years ago: "Neither a borrower nor a lender be, For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry."
So you mean that all competent economists are in rich countries, and all incompetent in poor ones?
Does the same apply to other disciplines? Like all good mathematicians are in the US and India? All good painters are in the Netherlands? etc
How sad! I now realize that coming from a country with less than average literary achievements, no matter how I try I won't be ever able to write! I thank you for saving me the effort to try!
What a funny world!
Right? :-)
This is no longer a negotiation regarding greek debt, it is a determination of the process for greek exit from the Euro.
Which was the only possible solution for Greece (outside of 50% debt relief which would have been optimal, but politically impossible due to conservative culture). So in a way he delivered.
> It is a determination of the process for greek exit from the Euro.
It might well be the determination of the process for Euro dismemberment. It's now clear that a country not useful to the current "enlarged deutschmark" will be just thrown to the wolves, so the clock is ticking for Italy and Spain.
From my reading of the IMF report abstract, it seems that they believe the debt is unsustainable given that Greece didn't follow the plan laid out in the 2012 framework. Hardly a change of message, I'd say.
Relevant passage:
> By late summer 2014, with interest rates having declined further, it appeared that no further debt relief would have been needed under the November 2012 framework, if the program were to have been implemented as agreed. But significant changes in policies since then—not least, lower primary surpluses and a weak reform effort that will weigh on growth and privatization—are leading to substantial new financing needs.
http://www.imf.org/external/pubs/cat/longres.aspx?sk=43044.0
Here's a wonderful anecdote about their glacial and incompetent privatization:
http://www.forbes.com/sites/timworstall/2015/07/03/the-airbu...
Note the marvelous bit about the hundreds of clients the non-selling of 4 Airbus planes provided jobs for.
As far as I can see it is much harder to reach a deal now that there is a precedence to have the negotiated deal rectified at a referendum.
If everyone else can't handle the truth then they're being fools. Is that true?
> If everyone else can't handle the truth then they're being fools.
Take a step back, the idiocy of the past is history. There is the idiocy of the now to deal with.
Someone who (or something which) superficially dazzles with apparent qualities but on closer inspection disappoints utterly.
http://ordnet.dk/ods/ordbog?query=distancebl%C3%A6nder
(I agree completely with your description: some good arguments at best and then only if...)
He understands that the last restructuring agreement terms is not acceptable. I would assume that he was probably being very vocal in meetings, thus certain parties would think that his presence might make future negotiations more difficult.
Leverage better terms? I don't think you have any idea how much Tsipras has alienated France and Germany's public opinions. Now that supporting Greece has become synonym of political suicide, I believe that Greece has effectively very little leverage.
After Tsipras' call to vote No, I would be surprised to see any negotiation happen in the near future.
If Greece defaults, most likely they will exit the Eurozone and this will be disastrous for Europe (Italy and Spain will be exposed in particular).
Financially, it will send a ripple effect and the Euro will devalue as those debts can't be collected, i.e. written off. Politically, it will be the beginning of the end of the Eurozone.
Again, basic knowledge of the current public opinions of either countries on the subject strongly indicates the contrary.
I do not have the background required to have an informed opinion about the economical consequences of such situation.
Just stating the obvious from a pure political standpoint IMHO.
In Greece's situation, the public opinion (by form of referendum) is used to cement their bargaining position, i.e. the people are ready to accept the repercussions of debt default if they don't get a better deal.
Which is why the negotiation is continuing / will continue, otherwise it will be a terrible lose-lose situation for all.
The problem is that the creditors insist on "squeezing blood from a stone", unwilling to reach an agreement that actually works, and the people of Greece insist that they won't accept that. Now, it's often said and true that in a democracy, the people of one country cannot be allowed to force their will onto the people of 18 other countries. But the facts are on the table; the Greeks have demonstrated that they won't budge. If the creditors won't budge either, it probably means total default and Grexit, something that ostensibly nobody wanted, but that is inevitable given how nobody was willing to make the necessary concessions to avoid it.
In the medium to long term, the Greeks will probably be better off outside a dysfunctional currency union, and the Euro will either get fixed or dissolved after the next few crises.
Greece was sacrificed to save the wider euro, and the German and French public should be grateful.
When a bank makes a loan there's always a risk of losing money and that's priced into the load (or should be).
'moral hazard' should limit the amount of money banks are willing to lose and so willing to lend to people / companies / countries etc.
The banks and european politicians seem to have forgotten about the hazard and instead bailed out those who lent money to Greece and left the public to pick up the cost.
Yes. The Troika wanted to negotiate, but Varoufakis didn't have the power to negotiate anything because the Greek prime minister reserved the right to veto anything which came out of the negotiations.
First rule of negotitations: If you're serious about negotiating, you send someone who has the power to negotiate.
It's a race to the bottom.
And let's not forget how much of the help for Greece wasn't actual help, it was a bailout by proxy for German and French banks. How would the political climate in Europe be if these banks had needed an explicit bailout?
Regarding the bailout thing. A bailout is, per definition, paying off the creditors (banks in this case). The reason people do it at all is to keep the confidence of the money market. Greece wouldn't need a bailout if they were planning to stop taking on any debt at all. But they aren't.
To answer your question, if the banks would take the hit, then it would hurt private households. People think of banks as some super dodgy prop hedge funds, that use their own money to reap super profits. They don't. Banks invest the money of their clients and bag any difference between the interest rate they've offered and the interest rate they've earned. So again, the hit would go to pension funds and possibly depositors. Now, what kind of political climate would be in Europe, if say a German pensioner suddenly got less, because the Greeks couldn't pay back?
Yep.
We are talking iterated games and rational expectations here. Something you'd expect an expert in game theory to understand -- which he of course does, leading to the conclusion that he has been very dishonest the whole way through.
(I agree with the rest as well.)
[1] http://www.economicprinciples.org/
[2] https://www.youtube.com/watch?v=JQuHSQXxsjM
[3] http://www.imf.org/external/pubs/ft/wp/2011/wp11158.pdf
On Thursday, Schulz told German daily Handelsblatt that the elected Syriza government should be replaced by “technocrat” government until stability is restored.
“We should appoint governments of technocrats,” Martin Schulz told Handelsblatt. [2]
[1] http://www.theguardian.com/world/2001/may/07/terrorism
[2] http://www.telegraph.co.uk/finance/economics/11718296/EU-war...