
Greece’s Proposals to End the Crisis - harperlee
http://yanisvaroufakis.eu/2015/06/18/greeces-proposals-to-end-the-crisis-my-intervention-at-todays-eurogroup/
======
lkrubner
Someone recently suggested the current mood in Europe was a bit like the mood
in the spring of 1914 -- a sort of uncaring and sloppy optimism, a sense that
real disaster can not possibly happen, a stumbling blindness that makes real
disaster more likely, exactly because so few, among those in leaderships
positions, are thinking that disaster is possible.

15 years ago German was stuck in a slump with high unemployment and little
growth. It got out of that slump thanks to the euro, which created a boom in
southern Europe, and thus generated export markets for Germany. The nation
which benefited the most from the euro is Germany, and yet Germany seems
willing to sabotage its own success. If Greece leaves the euro, it becomes
more likely that Spain or Italy or Portugal or Ireland might leave the euro.
Once these countries leave the euro, they will have weak currencies that will
make it easy for them to underprice Germany. One can get a small sense of how
this plays out by looking at the growth that Poland has enjoyed, thanks to the
weakness of the zloty. Of course, Poland has not seen high growth, since all
of its trade partners are stuck in, or near, recession, yet Poland has gained
market share in dozens of small industries, such as coffins and beer. And the
advantages that Poland has would also become advantages of Greece and Italy
and Spain, etc, if they leave the euro. A rational German minister would avoid
this at any cost, but the Germans themselves seem entirely blind to the
disaster they are getting themselves into. If the euro dies, all of Europe
will be hurt, but Germany most of all.

Edited to add: interesting about the rapid upvotes and downvotes on this
comment. Right now the comment has a total of 20, but every time I check it
has gone up 4, then down 3, then up 2, then down 1, then up 3, down 2, etc.
I've never before written a comment that drew forth such intense up and down
voting.

~~~
sien
Where is the evidence for this claim?

"It got out of that slump thanks to the euro, which created a boom in southern
Europe, and thus generated export markets for Germany. "

Germany's biggest trade partners are France, US, UK and China.

[https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvir...](https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvironment/ForeignTrade/TradingPartners/Tables/OrderRankGermanyTradingPartners.pdf?__blob=publicationFile)

Germany's improvements have more to do with Germany's changes to industrial
--(relations) reform than to do with Southern Europe:

[https://en.wikipedia.org/wiki/Hartz_concept](https://en.wikipedia.org/wiki/Hartz_concept)

\-- edit added (relatations) to the sentence.

~~~
atmosx
Germany enjoys the lowest unemployment rate in history, while Greece has a
humanitarian crisis and Spain has also extremely high unemployment. That's not
a coincidence.

> Germany's improvements have more to do with Germany's changes to industrial
> reform than to do with Southern Europe [...]

Then let Greece default (as a Greek I believe that's best for my country in
the long term) and see how that plays out. BTW the lack of understanding of
101 macro-economics by Scheuble is disheartening[1]. Every time he speaks, he
is comparing economy-wise countries to businesses and/or households, which
coming from a FinMin is plain ridiculous[2].

[1] [http://www.brookings.edu/blogs/ben-
bernanke/posts/2015/04/03...](http://www.brookings.edu/blogs/ben-
bernanke/posts/2015/04/03-germany-trade-surplus-problem)

[2] COMPETITIVENESS - A DANGEROUS OBSESSION P. Krugman, 1994, Foreign Affairs
Magazine
[http://www.pkarchive.org/global/pop.html](http://www.pkarchive.org/global/pop.html)

~~~
mkesper
Let Greece default ... and see how that plays out.

I'm horrified of the carelessness with which that option seems to be
considered by the Greek government.

~~~
michael2l
A default is a horrible outcome, but "that which can't be paid back won't".

It's been pretty clear for a while now that the debt load for the Greek
economy is too great and some sort of bankruptcy(default) is required. The ECB
and others have conspired to hide this with the collusion of previous Greek
leaders, by heaping on more onerous debt and calling it a bailout.

It will have to end at some point. What's occurred up until now is fraud with
the intent that someone further down the road will have to deal with ensuing
mess. But it's likely the game of kick the can will continue.

------
dataker
>Around 1 million families survive today on the meagre pension of a
grandfather or a grandmother as the rest of the family members are unemployed
in a country where only 9% of the unemployed receive any unemployment benefit.

This is simply terrifying

~~~
rimantas
Aren't pensions in Greece still highest in EU even after the cuts?

~~~
gizmo
Absolutely not.

60% of Greek pensioners get less than €800 gross a month, and 45% live on less
than the monthly poverty limit of €665.

Also, unemployment is sky high so a lot of the pension money is used to feed
impoverished family members.

------
panarky
The point of this, beyond Varoufakis' actual arguments, is that he's using new
media to ensure his message gets out.

As an individual, on his own blog, he's publishing material that the
institutions sought to obscure and spin.

~~~
PhantomGremlin
_he 's publishing material that the institutions sought to obscure and spin_

Interesting. Instead of "the institutions", here in the USA we used to say
"the Man"[1]. As in "the Man is keeping me down". Sadly, that phrase is from
the '60s and appears to have fallen out of the vernacular.

The problem is that in his blog we're only seeing Varoufakis own spin on the
situation. What is he himself obscuring? It's hard for us who are looking in
from a distance to keep up.

[1]
[https://en.wikipedia.org/wiki/The_Man](https://en.wikipedia.org/wiki/The_Man)

~~~
lbruder
There are always three sides in every argument: The ones arguing, and the
truth.

~~~
gonvaled
Usually The Truth (in human matters) doesn't exist. Most human matters are
nonsensical - or so complex that there is no way of knowing "The Truth".

------
draugadrotten
So far I can't find anyone commenting on Putin and Russia here. There are
those who say the Putin is using the Greece situation to destabilize the Euro
and Europe.

[http://www.bbc.com/news/world-europe-31837660](http://www.bbc.com/news/world-
europe-31837660)

[http://www.washingtonpost.com/opinions/putins-global-
ambitio...](http://www.washingtonpost.com/opinions/putins-global-ambitions-
could-destabilize-
europe/2014/03/18/69abb2a2-aec5-11e3-9627-c65021d6d572_story.html)

[http://www.dailymail.co.uk/news/article-3133035/Greece-
line-...](http://www.dailymail.co.uk/news/article-3133035/Greece-line-Putin-s-
new-cold-war-Grexit-looms-leading-historian-argues-imperialist-Russian-leader-
sees-chance-swoop.html)

------
contingencies
Wow, I had no idea how bad it was in Greece. This article is an incredible
summary. They've removed 40% of pensions, raised taxes, agreed to sell off
most public assets within 10 years, agreed to put a 'fiscal council' (read:
bankers) in charge of the country's budget.

As a result: _Aggregate real GDP fell by 27% while nominal GDP continued to
fall quarter-in-quarter-out for 18 quarters non-stop to this day; Unemployment
skyrocketed to 27%; Undeclared labour reached 34%; Banks are labouring under
non-performing loans that exceed 40% in value, Public debt has exceeded 180%
of GDP; Young well-qualified people are abandoning Greece in droves; Poverty,
hunger and energy deprivation have registered increases usually associated
with a state at war; Investment in productive capacity has evaporated; young
workers in several chain stores get fired as they approach their 24th birthday
so that the employer hires younger workers in their place to avoid paying them
the normal minimum wage which is lower for employees under the age of 24;
employees are hired part time for 300 euros (340USD) a month, made to work
full time and threatened with dismissal if they complain; Around 1 million
families survive on the meagre pension of a grandfather or a grandmother as
the rest of the family members are unemployed in a country where only 9% of
the unemployed receive any unemployment benefit._ ... and I didn't summarize
the whole article, this is only about 10% of it!

Overall it looks like the entire population is suffering, no sane young person
will stay in the country, and the population are essentially being forcibly
reverted to a permanent state of debt-slavery. Not sure about anyone else, but
to me it sounds like it is time to cleanse the temple -
[https://en.wikipedia.org/wiki/Jesus_and_the_money_changers](https://en.wikipedia.org/wiki/Jesus_and_the_money_changers)
\- and default. If the state changes its name and all of its banks go under
(perhaps bar one for a kickstart), it might be enough to hammer in to the
minds of the rest of the Eurozone that yes, an economically failed state is
not the same as its successor. The corporate world allows this to happen: it
should be allowed to happen for nations. After all, it's hardly fair for a
child to be born in to the world eternally cursed under the labour of a debt
which, frankly, the lender(s) made in error. There is risk in money lending,
as there is in borrowing, and at this juncture it's immoral to extract
anything more from a victim who has already declared bankruptcy and offered up
their firstborn.

~~~
jpatokal
Do not confuse correlation with causation. High on cheap loans, the Greek
economy had a helluva party until 2008, and they were going to have a _really_
bad hangover no matter what. There are some pretty epic stories of the
corruption of the era: [http://www.theguardian.com/business/2010/may/07/greek-
debt-c...](http://www.theguardian.com/business/2010/may/07/greek-debt-crisis-
jobs)

Has austerity made things worse in the short term? Almost certainly, and
they've cut plenty of meat along with the fat. But there's no way Greece can
pick itself up off the floor without some pretty painful reforms.

~~~
contingencies
While I don't disagree, your comment is conservative and therefore
uninteresting in that it is conceived and reasoned within the bounds of the
de-facto international system, with all its well known problems. Problems we
have to try to solve anyway. Greece is in a place that could meaningfully try
something new, right away.

~~~
draugadrotten
> Greece is in a place that could meaningfully try something new, right away.

Yet, what the Greece wants is more money to keep doing exactly what they were
doing before - that didn't work.

What was that Einstein quote again? The definition of...

~~~
atmosx
"Yet, what the Greece wants is more money to keep doing exactly what they were
doing before - that didn't work."

said a guy on the internet. Then he quoted Einstein.

------
cwyers
There's a lot of people who seem to feel like the Greeks made their own bed
and now they should lie in it. Well, fine, except for a few decades now most
of Europe has been in the same bed, the European Common Market. And with the
introduction of the Euro everyone gets to share a blanket too. This is not
just a problem for Greece, and insisting that Greece should bear all the costs
of solving it puts petty moralizing ahead of actually trying to solve the
problem for everybody.

------
greendesk
A lot of money is spent on sustaining Greek economy. Not only by lending money
to it, but by EU funds stretching back decades.

This money can be spent in other means: maybe a highway in Estonia or
increasing pensions in Slovenia. Unemployment is not high only in Greece -
Finland can also use funds to lower its own unemployment. Why would the money
be spent on sustaining an early retirement in Greece, instead of adding Balkan
countries, for example Albania, Macedonia and Monte Negro, to the European
Union?

After support from the EU for such a long time, I believe Greece should be at
a point where it can help support development in other countries.

~~~
gonvaled
The Marshall plan supported the rebuild of Europe after the WWII ("supported"
in a much stronger way: it was based on donations, not credit), for a long
time. Without that, Europe would have probably needed a longer time to recover
- which would have been bad for the world (and particular for the American)
economy.

Let's not be naive here: the Americans did this because it was in their
interest to do it. Long-term, it payed-out. And we need to learn from them in
this regard: it is in the interest of Europe to "invest" in a stabilization of
the Euro-area. We need to make clear that for a long-term solution, sacrifices
and restructuring is necessary - but those can only go so far.

Greece has done whatever it was able to. They have no more reform margin.
Greece is technically bankrupt, and the Euro-area has to bail it out. In three
decades time, we will be happy. This is the first serious crisis of the Euro:
how we handle it, will define if the Euro has a long-term survival chance -
even if it does not mean immediately collapse. Letting go of Greece will
destroy the Euro; which is what lots of short-sighted euro-parties (or self-
interested outside parties) want, interestingly.

------
smegel
I get the feeling that the EU would rather forgive Greek debt than see Greece
either leave the EU or suffer a prolonged economic stagnation. Smart people in
Greece have probably figured this out, and are possibly just holding out for
Germany to come out and say "you know, let's just write of a small fraction of
our GDP to put this crisis behind us". Reminds me of the banks that were "too
big to fail" after the GFC.

~~~
cgio
And that would, as in the case of the banks, create all kinds of moral hazard
issues. Being a Greek, I could potentially feel relieved by an outcome such as
the one you describe. Nevertheless, any such solution would be just a
painkiller that fails to address the source of the pain. The Eurozone is
fundamentally broken so, even if it is painful, I think exiting the Eurozone
is the most appropriate action at this stage. How we can work together in
Europe to make sure this does not mean we default to our obligations towards
other European people is the question. And of course this should be based on
an assessment of the debts we took to support indigenous corruption and
consumption (which we should be paying) versus the debt of the last five years
which has accumulated just to support imported incompetence (as proven by the
outcomes) and mostly served as a concealed European banks bail out.

~~~
ubernostrum
The moral hazard argument feels a bit flat considering that

A) Imposing harsh sanctions on Germany to "repay its debts" after WWI was a
major factor leading to WWII, and

B) The modern industrialized economies of northern and western Europe owe
their start to the Marshall Plan. The loan portions of the plan were
eventually repaid, but represented less than 10% of the over $12 _billion_ in
aid given.

In historical terms, working with Greece to restructure and actually fix the
economic problems would be a financial drop in the bucket compared to the
money lavished on rebuilding other European economies within living memory.

~~~
tormeh
War reparations aren't debt - they are the plunder of the winning party in a
war.

~~~
gonvaled
You could argue that Greece found itself in war against the financial markets.
They share some of the blame (like everybody does in any war), but the markets
won, so they could provide reparations for the defeated Greece. As in the
Marshall Plan example, it is in the interest of (some) financial market
players to ensure that Greece can come back to the table, and specially to
ensure that the Euro-area has a long-term prospect.

The analogy may seem stupid, but I say it describes pretty well the world we
are leaving in.

------
tiatia
The Global Europe Anticipation Bulletin Newsletter reports the cumulative dept
of the Euro zone with 92.1%, that of the US with 119.4%.

While I am not a fan of the EU, let's see who goes "belly up" first.

~~~
gonvaled
Well, the US have the dollar (reserve currency) and the bombs going for them,
so they can indulge in a lot more recklessness in this regard. We in Europe
need to be much more careful.

------
cyorir
"It would be, I submit to you, a major error to allow such a minuscule
difference to cause massive damage to the Eurozone’s integrity. "

It seems like this type of language is being used a lot by all sides. It kind
of irritates me that Yanis throws this out like he has no responsibility for
making up this "miniscule" difference. If the difference really is
"miniscule," why isn't it covered in Greece's proposals?

Whether it is Yanis or Juncker, it seems they just use rhetoric to place the
burden of making an actual compromise on the other side.

~~~
Pyxl101
> It kind of irritates me that Yanis throws this out like he has no
> responsibility for making up this "miniscule" difference. If the difference
> really is "miniscule," why isn't it covered in Greece's proposals?

And why are those proposals, like eliminating Greece's very early retirement,
only being made now? Greece's average retirement age is purportedly 61, with
some people retiring as early as 50. Meanwhile Germany and Spain raised their
retirement age to 67 and have discussed 69. It's completely understandable to
me that their taxpayers who will work until 67 do not wish to fund these
pensions.

It tells me something that Yanis suggests fixing the pension system now in
this 11th hour proposal. If Greece was seriously committed to fiscal
responsibility, the government would have done this of their own accord long
ago, right? By including this as part of the "deal", presumably it will allow
the Greek government to say it was "forced" on them, rather than taking
responsibility and making a sovereign decision, independent from any new
agreements with third parties, to do the right thing and institute policy that
will allow their government and pension system to be solvent.

------
marcoperaza
The Greeks are complaining that the EU and IMF's terms are unfair, but what's
really unfair is that Greece lived beyond its means for years with other
people's money and now doesn't want to face reality and tighten its belt under
very generous terms. Without the EU and IMF's help, Greece wouldn't even have
the luxury of manufacturing these crises every time they blow their previous
agreements.

~~~
gonvaled
They are guilty. They have paid a hefty price. Bail them out, so that they can
start again. They will __continue __to pay a hefty price nevertheless -
bailing out a country does not magically make them prosper. Your moral sense
of justice will not be severely offended, don 't worry.

We will bail them out, or they will default. What is the best option for the
Greeks? What is the best option for the Euro-zone? I argue that, for both
parties, the best option is to bail them out and keep the Euro-zone alive.

~~~
marcoperaza
They are being bailed out, but they don't like the strings attached. They will
never be a prosperous country if they don't reform their bloated public sector
and onerous regulations on businesses, particularly those regarding labor. And
yet those are the very reforms they refuse to implement.

Without serious reforms, I don't think it's in the EU's interests to prolong
this sorry drama.

~~~
gonvaled
What the Greek are arguing is that those strings attached are not going to
make any difference macro-economically speaking, and that they are going to be
extremely painful to an already suffering population. Those measures amount to
nothing if you compare it with the cost of servicing the debt.

Basically, they are bankrupt. To "end the sorry drama", either you let them
fall on their own (out of the euro, maybe out of the EU), or you bail them
out.

I think it is in the interest of Europe (and surely of Greece), to bail them
out. Even if it on the surface creates so-called moral hazards: nobody really
wants to be in the situation of Greece to be bailed out.

There are more aspects to the issue:

\- monetary: the whole world is running on the printing press. The Americans
are doing it, big time. Isn't California bankrupt too? Why should Europe not
do it? Just restructure the debt, print the money, create a huge investment
program and start funding projects in Greece - and other parts in Europe. We
will get some inflation long-term, but who cares? Why should Europe be
applying a harsh monetary policy while the US is rigging the markets, just
because they can?

\- humanitarian: do we really want to have a fallen first-world country in the
middle of Europe, with third-world poverty levels? What does that say about
our "community"? Can't we help one of our partners, once it has become clear
that they can not get out the hole by themselves?

\- reciprocity: parts of Europe have been bailed out in the past (Marshall
Plan). Why can't we do it now, when the economy is doing much better,
comparatively? You can argue that that was a different situation, and a looong
time ago. But crisis happen (luckily) once every so many decades. Now we have
a big crisis: let's show that the European project is there in case of trouble
too.

\- geopolitical: do we really want the Russian or the Chinese help one of our
European partners? Do we really want to tell the world: we do not care about
Greece, even if we can help them, while the Russians or the Chinese, with much
looser ties to Greece and with a comparatively weaker economy, are willing
(thinking on geopolitical interests, of course) to help them? How long will
the European project survive if we are not there to help each other whenever a
crisis arises?

Greece has to make reforms. Greece __has made __reforms. More reforms are not
going to amount to much of anything. Let 's bail them out.

~~~
marcoperaza
How can anyone claim that more reforms won't amount to much?

They've barely reformed at all. The public sector is still bloated and
spending too much, the tax burden is much too high, productivity across the
economy is dismal, and they refuse to cut welfare programs that they can't
afford going forward, let alone with the massive amount of debt they already
have.

The Marshall Plan was about building up the western alliance in the aftermath
of the most destructive war in history; the US was also trying to counter the
USSR's expanding influence. Greece is being bailed out because they spent
other people's money so irresponsibly that no one will extend credit to them
and they can't afford to service their existing debt. Two very different
situations.

~~~
gonvaled
Well, they are paying around 4% GDP in debt (2.5% real, since some creditors
are allowing for a non-service period), which is actually not _that_ much. But
they have a huge debt/GDP ratio (around 200%), which has dramatically
increased during the crisis, _specially_ during the austerity period imposed
by the creditors. So, austerity is not working, there is not much more that
can be squeezed, and the Greek worry is that squeezing more public spending
will actually further reduce GDP, making the ratios all the worse. A big chunk
of the Greek economy is based on public spending now, and lots of people are
living off the state, because unemployment has soared. This situation is far
from ideal, but what can be done? Sure, you can just force all those people
under bridges, but is that in the interest of Greece or Europe?

Faced with that prospect, Greece would leave the Euro, which would be a blow
to the Euro-project. We have a terminal patient, and we can help it. With a
bit of luck, in a couple of decades it will become a productive member of
society again.

The Marshall Plan had a lots of good reasons going for it, and probably some
critique too. In the end it proved to be a good solution, which increased
prosperity worldwide. It was a political decision. You could have very well
argued: "those Germans, they looked for it and they got what they deserve: let
them rot", but we didn't, and we are all the better off.

Regarding countering the USSR: as I have argued above, geo-politically the
situation is right now very similar. The Greeks are courting the Russians and
the Chinese (or the other way around). Do we want to split the European
project at the Balkans?

~~~
marcoperaza
I understand your perspective on this, I just think that bailout money should
be contingent on measures to make Greece's public sector sustainable. At the
very least, that means cutting the deficit so it grows slower than GDP. In the
long run, it means fixing Greece's deeper economic issues.

The EU is already being very generous by accepting tax hikes in a lot of areas
where Greece should really be implementing spending cuts. But Syriza wants to
convert even more of the spending cuts into tax hikes.

The structural reforms are more important. Deregulating professional trades,
selling off nationalized industries, easing bureaucratic barriers to business.
The problem is that the Greeks have elected an anti-capitalist far-left party,
which is fundamentally opposed to the goal of the reforms.

If the EU is going to budge at all, it should be on accepting a longer term
deficit reduction plan. They shouldn't budge on the structural reforms.

------
NicoJuicy
Greece shouldn't be in the EU in the first place... They were only admitted
into it because the altered numbers about their economy ( it got exposed
afterwards)...

Then again, even Belgium ( where i live) has a to high governement debt.. But
nothing beats Greece in favor of manipulated / incorrect numbers though.

------
borgiamono
Europe should split somewhere in the middle into two worlds, much like the
Americas (which seem to be like a weird blown up model of the old world) - the
Northern part - free and prosperous and forward thinking, and the Southern
part - corrupt, criminal and tragically and indulgently self-defeating.
Ideally the two should not mix much, as they both seem to find happiness in
their own predicament...

~~~
gonvaled
There are so much things wrong with this trolling comment, that I do not not
were to start. Do not feed the troll they say, but I will anyway loose a
couple of seconds with you, just by giving you some keywords.

Marshall plan, dollar, Irak, criminal population, TTIP, interest rates, NSA,
waterboarding, Guantanamo, ...

