Yanis Varoufakis resigns despite referendum no vote | Hacker News Reader

Yanis Varoufakis resigns despite referendum no vote

theguardian.com

36 pointsivank63 comments

It's sad that certain creditors didn't want to negotiate with Yanis anymore. To me, it seems he's a true hero of his nation, putting the needs of his people before the needs of the creditors. I wish politicians in my country (The Netherlands) would be more like him. Our politicians on the other hand seem to do anything the EU tells them, possibly in hope for a cozy, well-payed EU job in the future.

Yanis will wear the creditors' loathing with pride: http://yanisvaroufakis.eu/2015/07/06/minister-no-more/

Indeed, a true hero who wrecked his country and resigned.

You can see it like that.

You can also see it like this: he gave voice to the people, and accepted to step aside when pressured by the powers-that-be, instead of stubbornly clinching to his post.

He is no politician. We need more of those.

you can't borrow, get 100 EU billions in haircuts few years ago, have monthly salaries in the administration and bureaucracy between 1.5-1.7 monthly, get 60 EU billions 5 years ago and not expect to default with 90 EU billions only in salaries in public sector. And those were only salaries expenses. Incompetent, malignant, and corrupt bureaucracy is Greek's heritage. No one will pay for that. When they borrow money in the eurozone they borrow money from middle class people who put that money into the bank. Then they call elections, and now are in recession, even though months before the elections they were on the upward line. They were already in the state that could service their own budget without borrowing and on top of that pay 3.4% interest to the creditors. The issue was that they didn't wanted to pay that 3.4%. All of this we see today is that 3.4%. And of course an insane idea that communism will rule the EU. Once more. He is an asshole, a person who calls the ordinary people who borrowed money to the Greeks for years terrorists and nazists. Good riddance.

I can't fault the Greek government for lending what the creditors (banks from Germany and France) were willing to provide. I think the creditors made a huge mistake in their greed and thinking it was a sound investment since the credit would be backed by strong countries in the Eurozone anyway. And I also think ik was a huge mistake to include Greece in the Eurozone, since at the time the problems with the Greek economy were already well known.

Now the Greeks have voted no, we finally have reached the moment we can right these wrongs. Greece should leave the Eurozone so they can achieve a better trade position. The Greek debts should be wroten off as losses to the creditors so the Greek economy can recover. And perhaps other weak countries in the Eurozone should follow suit, eventually.

It's morally wrong to keep the Greek people in endless debts that they'll never be able to repay anyways.

And you can't win elections by promising not to pay back your debts and accuse everyone else of trying to destroy the democracy. New government does not mean you can erase your debt. And the fact that you won the elections by telling fairytales does not mean that someone else will pay for the fairytale. That is borderline insanity. Democracy is responsibility of the successive government for the deeds of the previous one. May that be debt or a warcrime.

Sovereign debt absolutely can be defaulted on, just like any other kind of debt. The risk of default is priced into it.

Greece is in a situation where there is no possible way that it can ever pay back its debts. Saying that does not make you "borderline insane". Quite the opposite.

> Greece is in a situation where there is no possible way that it can ever pay back its debts.

Other countries have managed to claw themselves out of bigger holes than this. It does take a much more hardline stance with respect to payment of taxes and reduction of the size of the state apparatus, what Greece has done is in many ways a simple strategy of postponement of action until the consequences were extremely bad for all of Greece, in particular the weaker parties.

I don't blame the Greeks for their 'no' vote, but it would have been a lot better if they had had their 'French revolution' a decade earlier. Right now there is no good or easy way out of the mess any more and the Greek economy is about to collapse.

This is not a situation where there are winners, only losers and the biggest losers are the people partying in the Greek squares today. It will take a while before that reality sets in though.

> Other countries have managed to claw themselves out of bigger holes than this.

Do you have examples of any that have done so without extensive debt relief? I can't think of any.

IMF's most optimistic numbers (which rests on wildly unrealistic assumptions) indicates it would take decades, and they've made it very clear that the debt isn't sustainable at all. When their past attempts at forecasting the Greek situation has consistently understated the problems, that ought to be pretty sobering.

> Right now there is no good or easy way out of the mess any more

Maybe not "good or easy", but substantially less damaging than what's been put on the table: Drastic debt cuts coupled with short term financing, coupled with reforms that aren't tied at reducing Greek government spending, or at least replaces any spending cuts with investment elsewhere (as the spending cuts have been a driver for the drastic contraction of GDP).

This is all true now, but it wasn't when this whole circus started.

As for the present my personal preference would be to simply forgive all debt and to ask Greece (politely) to exit the Euro and not to apply for re-admission until they have the house in order.

That's not going to be a very popular option but it would give the Greeks a fighting chance to solve this the Greek way.

Already a large chunk of the debt was written off (in 2012) so there is some precedent for that but back then the motivation was a different one (to keep Greece in the Euro at all costs and to offload the private sector problems onto the public one).

If you are willing to forgive all the debt there probably isn't much reason to kick them out of the Euro. I'm not watching the situation all that carefully, but I expect that kicking them out would further damage their economy, whereas if you don't kick them out, individual actors can just note that lending money to Greece isn't a good idea (so it shouldn't be the case that they are able to quickly build up a new untenable debt).

It would give the power to self-determine these issues back to the Greeks, and it would forestall any re-run.

I don't think it is clear that an exit would forestall a re-run any better than their already ruined credibility .

(another way to look at it: the interesting question on the table is how much of their existing debt the Greeks are going to repay, future debts aren't going to be a serious problem in the short term regardless of what happens)

I also (while not thinking my opinion is worth much) think that the economic damage from an exit would likely not be worth the ability to self determine further ruinous fiscal policies.

If you forgive all debt, there's no reason for them to exit the Euro: They've been operating at a surplus for a while now. Their required ongoing bailouts are at this point down to servicing the mountain of debt.

There's certainly many more reforms they ought to carry out, but none of them are necessary for a budget surplus if the debt is removed.

> Do you have examples of any that have done so without extensive debt relief? I'm can't think of any.

Ireland perhaps the most recent one.

Irelands debt situation was never anywhere remotely as bad as Greece's. Irelands debt to GDP peaked at 123% after the bailout. Greece's reached 177% in 2014, as is likely to go higher.

So it is in fact not an example of a country that has clawed itself out of a bigger hole than Greece.

Ireland's debt to GDP peaked 4x fold from it's longtime "norm" of 30%, while Greek was long at over 100% to begin with.

> Other countries have managed to claw themselves out of bigger holes than this

One of the main reasons why other countries have been able to quietly improve their economy is the fact that the markets are real busy betting against Greece. They have been forced to issue Government debt at huge interest rates (at some point 15% if I remember correctly).

We are living in a world with global markets for private capital, but without global defenses for the national governments. The few global institutions that are supposed to act on a global level (IMF, UN, World Bank, ...) are controlled by a market-fundamentalist ideology, making them enemies instead of friends.

All this would be nice and good if we were living in a perfect market, where all players are treated equally. Instead, we are living in a world where:

- rating agencies hold huge power because of the favoritism that they get from political elites: credit papers have to be rated by one of the international agencies for some funds/governments to be able to invest in them

- banks are too big to fail

- financial markets are rigged in favor of some players (dollar)

- banks are allowed to make huge profits with a zero risk game, unloading risky credit on taxpayers whenever deemed necessary.

The market is only there for the suckers.

Even the IMF have admitted that the debt is unstainable. The Eurozone refused debt restructuring, which was the main thing Varoufakis was holding out for.

Without debt restructuring the same thing will happen 5/10 years down the line. An economist will try to fix, politicians like to push it down the line, so they don't have to deal with it.

Some debt needs to forgiven, while economy needs to competitive. Euro deal was the opposite of this.

That's what has caused the rift.

The IMF has been out to lunch when it was needed most with more reasonable and 'Greek adapted' solutions. Essentially they have forced Greece down a very narrow path that would have worked in Germany but not (in a lifetime) in Greece.

So now we have the end result of that strategy (which both the IMF and the previous Greek governments as well as their lenders are party to).

Varoufakis is a very smart man that made a whole bunch of moves that make no sense to me, I think that the last 6 months have pushed Greece into a corner taking away whatever manouvring room they had and now there are only (very) tough choices left.

Going after the tax dodgers with a really big stick should have been the first order of battle for instance, now it is very late to start to solve this in a structural way, it's chaotic at best and catastrophic at worst.

How the EU will handle this will be a defining moment in their history and will potentially make or break the union in the longer term.

Greece has a massive annual deficit before counting interest on existing debt. Beyond defaulting on their existing debt they need to make large structural changes to their fiscal policy for recovery to be sustainable. Otherwise their borrowing costs would be beyond junk.

Put it this way, if you make $100k per year and spend $160k, and you have no assets, what bank is going to give you a loan?

The problem is that many banks gave Greece loans for many years and at very low interest rates in exactly this scenario.

And then Greece attempted to make the structural changes you described only having reduced expenditure to $100k per year they ended up reducing income to $60k per year and so actually increased the amount they owed as a proportion of their income.

Further structural changes along the lines of those demanded (leave business and rich people alone - tax the poor) would just make the situation worse.

And so we have a choice, - restructure (this happens all the time in business even for businesses with outgoings higher than incomings - the long term potential for growth is what matters). - force Greece out of EU

Kicking the can down the road only postpones the inevitable choice between these two options.

It's more that just about Greece's debts, it's about Greece's persistent refusal to live within it's means. Other EU countries have higher debt to GDP ratios than Greece, but they reformed their economies, increased government revenues and reduced spending to make those debts sustainable. Greece has not. They were supposed to sell of 50 Bn Euros of state assets, 5 years later they've sold less that 3 Bn worth. They've persistently dragged their feet over even basic sensible reforms. It didn't have to be this way, under Giorgos Papakonstantinou Greece was well on it's way to financial reform.

Note that the Greek banks are dying not because the ECB has stopped lending to them, it's because it has stopped automatically ramping up the amount of it's lending. Even just freezing emergency lending on a daly basis is bringing the country to it's knees. What Greece wants is for the other EU nations to forgive past debts while also continuing to keep on lending to them with no end in sight. This is why the creditor countries are getting so frustrated negotiating with Greece.

Other nations went through tough times, got their finances in order and are now paying off their debts sustainably. Greece has chosen not do that. It's inability to pay off it's debts is a choice they have made.

> New government does not mean you can erase your debt

This is a sovereign government: they can do whatever they want. Defaulting on the debts will have consequences, of course, some good, some bad. Difficult to say if, in balance, this will be good or bad for Greece.

> Democracy is responsibility of the successive government for the deeds of the previous one. May that be debt or a warcrime

OK, bring the accused to the courtroom. And, now that you are at it, bring the rest of the players. The banks, the Troika, and all the rest that have profited from this whole saga.

The blame does not lie solely on the Greek.

The outcome of the judgement can very well be positive for Greece: maybe some banks have to repay some interest, maybe the IMF has to restructure some of the debt because they badly advised past Greek governments, maybe Germany has to repay that old loan they took from Greece and never repaid, maybe the Euro-area has to compensate some members for the prejudice of helping Germany become the world export leader at their expense by using a weak currency, maybe the UK has to pay some fines for allowing the financial markets (by opposing regulation) to bet against economies bringing them to the brink of bankruptcy ...

We can factor all those things and see who owes what to whom (impossible), or we can recognize that everybody shares a part of the blame and help one member of the European Union - which probably made huge mistakes, but can't now stand on its own.

> Democracy is responsibility of the successive government for the deeds of the previous one.

NO. Democracy is the right of the people to violently topple down their corrupt government when they think it no longer represents them, to put up a new government that better represents them, and not to have the hold the new government responsible for the debt and crimes of the old one.

Yes, you'd need to do it violently to be able to legitimately affirm that "the old guys don't represent us, and we're not going to pay their debts! (don believe us when we say they don't represent us at all? look over there and see their bodies impaled on stakes! raise them from their graves and sue them if you want those paid back!)".

"Real democracy" means admitting that government corruption is real, that once every XX decades you need a violent "cleanse" to get rid of it, and that "civil war" or "revolution" can be a natural way for a people to occasionally re-sort-out their priorities and take back control of their government.

That's what the Greek people should do if they had a pair!

...now, in all honesty, I'm not a big fan of violence and therefore I'm not a big fan of "real democracy" either :) But then you need to add a "reset" button to any monetary policy system, you don't want the natural "violent reset" option. You can choose between "real democracy and violent resets for crises" or "not-so-real democracy plus not-really-fair-but-functional-economic-reset-buttons".

(EDIT + : ...and yeah, there's also the third option of keeping the people too brainwashed and confused for them to realize what their real options are. And then you can redirect the people's energies from "reform and government cleansing" to more appealing high-level EU objectives like being pawns in a game leading to fiscal unification... which is what's probably really happening right now. And probably not such a bad thing either.)

And yeah, some countries, like Germany, will have to literally pay (like in "pay by forgetting about getting back that debt in reasonable time and, kissing goodbye the right to take up insanely-low-interest credit") to keep these "non violent economic reset buttons" on, because they are actually paying for the "privilege to live in an EU not thorn apart by wars and revolutions".

Homo sapiens societies are by their nature violent, unstable and corrupt. Peace is neither cheap nor fair. If you want to live in a "peaceful neighborhood" you should be willing to pay 10x higher prices on your damn house, utilities, car, school etc., and accept the ethically dubious choices you'll have to make to keep that peace!

So you think that where democracy and creditors clash, it should be democracy that loses?

Do the "click here for free ipad" ads give voice to the people too? Because that's what he did by giving false hopes. And then you congratulate him for not taking any responsibility for what will follow. Let me remind you that his 5 months as a minister were spent doing nothing , absolutely nothing ( yeah, he hired back 50 cleaning ladies for his ministry, that takes us into negative territory.)

Assumes the will of a single man would have been enough to rescue an entire economy based on what looks to outsiders like an ingrained culture of laziness

So what should he have done? What's your brilliant plan?

> To me, it seems he's a true hero of his nation, putting the needs of his people before the needs of the creditors.

If you are responsible for the finances of a whole state you have to find agreement with the other 18 elected leaders that try to represent their people as well, preferably before you are unable to pay for your countries loans and it collapses.

The Euro group was already moving in his direction but they have to justify their actions in front of their own people. I am all for some fresh wind but if you go into politics you have to be able to make compromises. You cannot just want something thinking that you are the only intelligent person in the room and step back if you do not get it, especially when the future of your country is at stake.

> you have to find agreement with the other 18 elected leaders that try to represent their people as well

That right there might be the root of all EU problems.

Eurozone problems, perhaps. I do not understand how you can attempt fiscal union without true political union.

Almost everything in the EU can be explained by considering the interplay between a core of EU politicians that wants the EU to be a "United States of Europe", and those who want a looser association, and that the former group in general will grasp at whatever integration they can manage to get past parliaments and electorates at the moment, and hope it will hang together long enough to take the next step and/or that a crisis can be leverages to get support for the next step.

>The Euro group was already moving in his direction

That's a huge load of bullshit. They never showed any intention of budging from their position.

He called the creditors 'terrorists' though. He didn't have to do that and I really can't blame the creditors for wanting someone else at the table.

Actually, a more accurate translation would be "fear-mongers"

Oh, I didn't know that. Still not very flattering and not the first incident. In my opinion the problem is that Varoufakis is more skilled at game theory than at diplomacy.

Have you perhaps considered that his background in game theory might make it reasonable to consider whether he's taken on a role on purpose?

It strikes me as odd that people are so quick to pile on criticism of his behaviour without asking why, given his background.

Perhaps it really is just personality flaws or too much enthusiasm. Or perhaps it's part of an intentional strategy (if so, whether or not it's been a good strategy we'll first find out when we see the end-result).

Because people are not lab animals maybe?

I think i has in the past referred to himself as an anti-game theorist. As in, most of this work revolves around showing where game theory fails (often in spectacular ways).

He said that to a spanish paper: http://www.elmundo.es/economia/2015/07/04/5596f1b3ca47412d04...

"Lo que están haciendo con Grecia tiene un nombre: terrorismo."

I dont speak spanish, and i guess the interview was in english, but reading the ensuing dialog its clear he said terrorism.

http://www.theguardian.com/business/2015/jul/04/greece-crisi...

“What they’re doing with Greece has a name: terrorism,” Varoufakis told Spain’s El Mundo. “What Brussels and the troika want today is for the yes [vote] to win so they could humiliate the Greeks. Why did they force us to close the banks? To instil fear in people. And spreading fear is called terrorism.”

I will not trust 'el mundo' too much in this case, it is known for its 'creative' writting. In any case the spanish government seems to be very alarmed with this situation, maybe because comparatively they did very few, really late, and with obvious discomfort for protecting the people in distress.

Just a personal opinion. I will not expect a lot of support for Varufakis or Greece in official newspapers or public spanish TV just right now.

> Our politicians on the other hand seem to do anything the EU tells them

What the US tells them too, probably:

https://blog.cyberwar.nl/2015/07/dutch-intelligence-bill-pro...

Personally I think that he was expecting this. That he took the "bad cop" role on purpose, and that it's now time for the "good cop" to come in and appear more reasonable while pointing to the referendum with a "what can I do?" shrug while asking for more (e.g. after the IMF report, debt relief is now back on the table; EDIT: where it should have been all the time).

Yes-I agree.

It's sad? The man called them terrorists. Why should they even give him the time of day, after an insult like that?

As it has been pointed out, the (Greek) word he used doesn't have the same connotations as "terrorist" in English.

https://www.reddit.com/r/europe/comments/3c3cj6/yanis_varouf...

Sad that people still fall for these blatant PR smear tricks.

Varoufakis did great damage to the country, as expected. This is typical 'martyr academic' behavior. My comment from 3 months ago: https://news.ycombinator.com/item?id=9364609

Did he? How? He inherited a bankrupt country which can't do anything without debt-relief. He knew only two things worked in Greece’s favour: 1. 90% of the Greek debt is held by the eurogroup governments, they are in a position to make a deal 2. The stakes are higher for the other eurogroup countries than they are for Greece, he can say no to any deal that doesn’t give at least some breathing room. In that position, you should play hard, which is what he did. He is a rare case of a finance minister who did his job.

Most finance ministers in the eurogroup who decide on the fate of the second biggest monetary union are not economists, and don’t seem to listen to the advice of economists, most of whom are calling for an end to austerity. Since the current pro-austerity administration took office, the Netherlands has performed worse than its mostly ungoverned neighbour Belgium in almost every respect, including debt-to-GDP growth. Mind you that the Netherlands is one of the richest countries in the world with financial assets worth several times its debts, and those assets have much higher returns than what they pay in interest on their loans. Yet even in this most luxurious of positions, the Dutch finance minister who is also the eurogroup president, swears by austerity for his country and for others, and the Greeks must suffer through it.

>To me, it seems he's a true hero of his nation, putting the needs of his people before the needs of the creditors.

Guess why they hate him so much.

Yes it's sad.

IMO, Europe representatives are just bureacrats who think asking for a minister's head is a productive move.

Europe's biggest problem right now is direct democracy.

What happend when when people wish to change the rules? It seems Europe had totally forgotten about that.

We have a similar-ish situation in Switzerland: we voted for a revision of the immigration system, and Europe doesn't know how to handle that because it's in contradiction with 'the rules'. The situation is completely stalled because cannot-change-the-rules so there can't be any middle ground.

HCF please.

https://news.ycombinator.com/item?id=9836991

This is the same Yanis Varoufakis that left Valve Software so he could take on this role. Hopefully, gaben will allow him to return so he can work on something meaningful again.

I must go now...my planet needs me...

I have a bit of a science fiction scenario. Bear with me for a little bit. Let's suppose for a bit this approximate series of events was the actual goal of Mr. Varoufakis and company.

Why would they want this and who would want to risk the fate of an entire country and their own reputation on a "gamble"?

Because they started the negotiation game with a huge disadvantage and there was no way that they could bring something new to the table. So Tsipras and Varoufakis chose to "play the dumb communist" scenario that everyone was painting, stretch the canvas a bit and get new offers on the table and start with a different negotiating position.

This hypothesis, which I will check the following days, proposes that the Tsipras government and Varoufakis knew and understood very well the nature of the political and economical forces that pushed on them from outside of Greece. Knowing those forces and playing on the predictions laid out by the other side (Germany was already unhappy after Syriza won, expecting to have a difficult time negotiating with them) they followed to the line the "predicted" course. Difficult negotiations, huge differences in views, big political declarations and discourse, etc. The goal in the end was simple enough: get a cleaner slate.

Both the turbulent negotiations, with Varoufakis playing the evil marxist scapegoat, and the referendum, after a week of bank closures, were used as a ruse to lead the European leaders through to a "clean slate" phase. It was a very risky move, but I believe that the various contradictory signals that Tsipras sent just before the referendum confirm that it was a game. Like poker player that accidentally reveals his weakness just before he pulls a full house. The resignation of Varoufakis today is the next piece in their scenario: just take out the nasty opinionated communist and all the european parties will clearly feel more relaxed. I believe that this move was planned from the beginning and Varoufakis was used to "stir up" the pot a bit, while apparently being discarded as "peace offering" after a while.

So what was gained by this daring gamble? First of all, the markets were calmed. The negotiations were so desperate from the start, given the position of the two parties that everybody was sure of the Greek default. Now, with the financial markets accepting the default event in itself, any new deals on the table will have to take this fact into consideration. It's not "looming" anymore, it is here and it is indisputable. Second, the situation now allows for a much needed debt haircut. Refinancing is all fine and dandy, but everybody agreed that the debt could not be sustainably repaid. So now everybody is suddenly ok with the debt reducing. Third, the Tsipras government kept its word with its electors. They "fought" valiantly for the good of the people. Actually with the cards they got dealt by the previous government, they played quite a good game until now. And their general appeal has definitely risen from 36.3% (plus affiliated parties) to a 61% (as shown by the referendum). Fourth, the european hard-liners were blind-sided and the rules for the negotiation were changed. The deal before this referendum was "behave or we will strangle you". Now, it's quite a useless threat given the actual default. So Tsipras most certainly will be able to have better terms.

Sorry for the long post, had a bit of thoughts to get out. :D

By that logic, Varouf. was a german spy that was purposely put there to stir the waters and thus shield the markets from any kind of greek collapse/default/grexit whatever. And it worked: arguably the markets barely shrug about greece anymore. What did greece win?

They haven't been "playing the dumb communist" they've been smeared with it by their own media, by strategic "leaks" from EuroGroup meetings by "analysts" in International Finance and by the International Media which largely swallowed the smears time after time.

Not that they don't make mistakes. The problem is that they are not held to the same standards as members of the EuroGroup and Parliament. It ought to be fine for Varoufakis to talk about issuing IOUs, for the same reason that it is fine for the head of the European Parliament to say that Greece should be expelled from the Euro if it voted no.

There is an asymmetry of power. The EU holds the purse strings and so Greece cannot complain, whatever they do. Greece needs a bailout and so any mistake that its leaders make will be used as a bargaining chip against them. You see the same relationship in negotiations between Iran and the P5+1, between Hamas and the Quartet and between every black man on the street in America and any policeman that they meet.

Well, he already did his job. Greece is rolling down the slope...

Greece has been rolling down the slope for the past 5 years. Hating on a man for years of a country's peril does not offer constructive criticism.

Maybe you should know the data before you blame a man. How about some charts and numbers from December 2014: http://www.telegraph.co.uk/finance/economics/11283931/Nine-c...

Reply on news.ycombinator.com