
Yanis Varoufakis opens up about his five month battle to save Greece - jacquesm
http://newstatesman.com/world-affairs/2015/07/exclusive-yanis-varoufakis-opens-about-his-five-month-battle-save-greece
======
dang
Discussed yesterday:
[https://news.ycombinator.com/item?id=9877189](https://news.ycombinator.com/item?id=9877189).

------
xae
Difficult not to love how he discusses everything with a very different
language from traditional politans (or I would say, professional polititians).
He sounds true and honest, and by no means a radical inciendary that wants to
destroy the EU and the Euro. His political career has been cut short by
massive pressure from all sides but he has gained sympathy for Syriza's cause
worldwide in a very short time and nonetheless make progress in negotiations
despite having everyone against his ideas in economic institutuions.

I'm sure we'll miss Varoufakis and I hope his style - be like a common mortal
- permeates politics everywhere.

~~~
roel_v
"True and honest"? Are we reading the same article? He sounds like a bitter
extremist who doesn't know how to control himself in order to reach a certain
goal, but instead like either a petulant child or an autistic person
(depending on the day of the week, it seems) can only repeat 'the Greeks voted
for no extra cuts yet stay in the Euro so we should get it' (no shit? and I'd
like a pony) and 'my economics paper says xyz, I want you to reply to each
point I made'. Uh no buddy, that's not how the world works.

~~~
Mikeb85
Can't decide if you're more insulting to those who are autistic, to those who
believe in democracy, or to those who are in academia...

Yanis Varoufakis' problem is that he was playing a different game. He was
trying to be an economist and do the right thing for Greece when the Eurogroup
was playing politics and trying to punish Greece. They never were interested
in economics or a prosperous Greece, only in maintaining the power structure
across Europe.

~~~
andy_ppp
Absolutely my reading of the situation too. I hear these two sides of the
argument "Greece is a petulant and lazy bad state, hit them" and the one I
subscribe to "let's forgive Greece, it was on the banks to lend stupid amounts
of money to them".

------
sandstrom
While I agree with some of Varoufakis ideas (e.g. that Greece may be better of
leaving the Euro, since internal devaluations are hard), he doesn't portray
the other side objectively.

Many of the suggested improvements are objectively sound, e.g. property taxes,
tax collection in general, normalized VAT, reducing government corruption and
red-tape, removing various monopolies, etc.

Greece is the most corrupt country in the EU[1] and also one of the worst for
doing business in general[2]. It also has one of the lowest levels of
productivity.

It's been ~5 years since the first bailout, yet Greece haven't made much
progress. Many of the suggested improvements require a simple pen stroke by
the parliament. No wonder Germans get tired bankrolling all of Greece.

[1]
[http://www.ekathimerini.com/155963/article/ekathimerini/news...](http://www.ekathimerini.com/155963/article/ekathimerini/news/greece-
seen-as-most-corrupt-country-in-eu-transparency-international-finds)

[2]
[http://www.doingbusiness.org/data/exploreeconomies/greece#st...](http://www.doingbusiness.org/data/exploreeconomies/greece#starting-
a-business)

~~~
junto
To be fair, the vast majority of the bailouts have gone to paying back debts.
Those debts were held with corporate German and foreign banks.

And here is the kicker; Those debts are now held by the ECB, which, is not
supposed to be a lender of last resort, but now has become one by default. The
corporate banks are now safe and have extricated themselves from the risky
position they found themselves in 5 years ago.

The ECB doesn't care either way. Schauble secretly welcomes a Grexit, because
without external support Greece can't move to a new Drachma. The logistics are
just impossible by themselves. Schauble wants the rest of the Eurozone to
witness what will happen when you exit the Euro without support (it won't be
pretty).

Hi there France btw. You still like you early retirement, large civil service
employment, string unions and social state? Well, you're number one on their
hit list.

~~~
calibraxis
Yes, Varoufakis mentioned: "Based on months of negotiation, my conviction is
that the German finance minister wants Greece to be pushed out of the single
currency to put the fear of God into the French and have them accept his model
of a disciplinarian eurozone." ([http://yanisvaroufakis.eu/2015/07/11/behind-
germanys-refusal...](http://yanisvaroufakis.eu/2015/07/11/behind-germanys-
refusal-to-grant-greece-debt-relief-op-ed-in-the-guardian/))

A bit like nuking Japan was the first shot in US's Cold War against USSR. (But
fortunately not as immediately violent.)

~~~
taliesinb
The analogy with actual war is I think far less unreasonable that it at first
sounds. I-don't-know-who said "The First World War was fought with guns, the
Second World War was fought with tanks, the Third World War will be fought
with banks."

I don't mean to say that this is any kind of tinderbox situation. But it is
crystal clear to me that it's at the very least a first-world country being
forced by a hegemon into neo-colonial vassal-hood/debt bondage, something that
is quite shocking to see, especially when there are no standing armies in
sight.

And the violence is _real_ , in that Greece is suffering a humanitarian crisis
that will only deepen. Actual people will die prematurely, and others' lives
will be wrecked, for Schaeuble's example to pay off, as much as newspapers
like to abstract this fact behind phrases like "deep pension cuts".

------
adamc
I wonder what effect the current EU "offer" to Greece will have on Britain's
vote down the line, or on other states that may now have second thoughts about
joining the euro. From my (American) perspective, it looks like being part of
the Euro means giving Germany an awful lot of influence over your fiscal
policy.

~~~
roel_v
Of course, that's why the Greeks so desperately wanted to get out of the Euro,
and why new countries have to be added to the Euro by beating them until they
join.

Oh wait, no.

Despite all the 'omg the Germans are holding poor pplz hostage!', the Euro has
massively lifted the economic prospects of tens if not hundreds of millions of
people in a measly 10 or 15 years. Ask the Polish how bad the Euro has been
for them, for example. The fact of the matter is - if you want to play, you
have to abide by the rules. And I for one am glad that at least the Germans
have the spine to say 'this is what we agreed on, no you're not special and
we're not going to give you special treatment that we wouldn't give to many
other countries that are in much worse shape' (like in Africa or Asia). Ffs,
even some of those countries are less corrupt than Greece.

So, just because the Germans have gotten so much flak over the last few weeks,
here's another sound: thank you, you guys do what others talk about but fail
to uphold. (much like how the US is the only one with enough spine to actually
go to war when it's necessary, but that's another topic...)

~~~
bokononon
> Ask the Polish how bad the Euro has been for them, for example. Poland isn't
> in the Euro, its currency is the zloty.

~~~
roel_v
Uh oh, you're right and I was even in Poland not that long ago, I meant in the
EU, but still an egg on my face.

------
jwr
Reading all these heated discussions on HN, I find them to be extremely
polarized ("good Germany/bad Germany") and missing the essential component:
Greece is not a country that can sustainably live without working hard. Why do
so few people mention that almost 75 percent of Greek pensioners retire before
the age of 61?

While I do think debt relief is a necessary tool, I also believe that we
should hear much more about what the country will do to improve productivity
and work harder.

~~~
jazzyk
Greece functioned OK before the euro. They devalued the drachma every now and
then to keep themselves competitive. While never the model of operational
efficiency, they chugged along before they were saddled with debt in the mid
2000s - debt spent mostly on buying military equipment and other unnecessary
stuff FROM GERMANY and other EU countries with Greek decision-makers decisions
being "incentivized" to do so. Ordinary people did not see much of this money.
And the money spent on bailouts since 2010 was just bailing out private banks
and saddling euro taxpayers with the bill.

By the way, Germany is not exactly a stranger to corruption (compared to other
northern states in Europe):

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

~~~
MagnumOpus
Greece functioned "OK" if a low standard of living, rampant inflation and
pervasive lack of access to credit for businesses or individuals is "OK".

Of course is better than blowing up a giant credit bubble and then popping it
when it goes wrong, but it's not very nice.

> debt spent mostly on buying military equipment and other unnecessary stuff
> FROM GERMANY

I hope you realise how ludicrous this sounds. Granting them victim status
because they just couldn't resist those submarines and tanks despite not being
able to pay... If you are looking for large unnecessary contributors for Greek
debt, why don't you start at the $15bn Olympic Games (no doubt they were
forced on Greeks by the German manufacturing firms, too).

> Germany is not exactly a stranger to corruption

Sometimes orders of magnitude matters. It does matter whether the rate of tax
payment non-compliance is 5% or 50%, even if it does not fit the narrative of
moral equivalence.

~~~
jazzyk
>Greece functioned "OK" if a low standard of living, rampant inflation and
pervasive lack of access to credit for businesses or individuals is "OK".

They still have all of these things. Plus 25% unemployment (50% for young
people), and debt equal to 180% GDP (soon to be 200%).

It takes two to tango. I was not trying to grant them victim status, I was
just pointing out that German (and other EU businesses/banks) are not exactly
blameless (ever heard of predatory lending?)

------
_ph_
While I am not a big fan of austerity, one can ultimately only spend what you
got. There were several months in which the Greece government had broken with
the austerity agreements but in exchange did not manage to achieve anything
which could be called an improvement of the country income situation. As a
consequence the gap between income and spending even widened without giving
positive impulses to the Greek economy.

~~~
venomsnake
> While I am not a big fan of austerity, one can ultimately only spend what
> you got.

Wrong. You can always print money if you are the sovereign.

~~~
jpfr
Printing money is like robbing those who still have cash as the currency is
devalued. And it doesn't change a thing if you owe money in foreign
currencies.

Otherwise, Japan et al. would have long ramped up the printing presses.

~~~
venomsnake
Most of the japan debt is in yen and they have been running the printing press
in overdrive for the last 25 years or so.

------
StavrosK
What he says is very damning. If true, it shows that the EU leadership is not
interested in the welfare of the members at all, and is very worrying.

------
lhnz
Does this mean that Democratic countries that are part of the Euro are
rendered unable to listen to the wishes of their citizens and must instead act
as despots on behalf of Germany?

If so, I don't see this ending well.

~~~
CurtHagenlocher
Every borrower of money has to come to terms with the lender, or there will be
no money.

~~~
parasubvert
Never had this been true in history. Bankruptcy and debt forgiveness have
happened regularly through history. And if those don't happen, usually
revolution or war is a consequence.

~~~
MagnumOpus
It is true, though. Bankruptcy (or its polite cousin "debt forgiveness")
happens when the money tap gets turned off.

If you want the tap to keep running, you have to be able to compromise with
the guys at the source and at least pretend to care about repaying it.

~~~
parasubvert
I agree with this in individual cases.

But we are talking about an economic union among states where the biggest
state is quick to socialize banking losses among the poorer states, and makes
it a morality play about "Those dirty Southerners".

That's a pattern that doesn't end well unless someone is smart enough to hit
the partial reset button.

------
theseatoms
For those who are just catching up, I found the following article enlightening
on the Greece situation:

[http://www.pragcap.com/greece](http://www.pragcap.com/greece)

..especially the following line: \- The EMU is a single currency system just
like the USA is. The reason the USA works and the EMU doesn’t is because the
USA has a system of rebalancing whereby poor states get more federal funding
than wealthy states.

~~~
stewbrew
In the EU poorer states get more funding too. One line explanations for a
fictive problem are most likely wrong.

~~~
RobertoG
The grandparent is basically right.

The Euro is flawed by design. Flow capitals works against the Euroarea. For
instance:

The interest rate convenient for Germany is not the interest rate convenient
for Spain. What do you think are the rates chosen by the Central European
Bank? (clue: the ECB is in Frankfurt)

This shouldn't be more problem that the Fed rate affecting New York and
Florida for instance, but there is not a common fiscal policy like in the
States.

What happens is that capital in the banks of the north search bigger returns
in hot economies (south countries) and create bubbles (Florida again?).

When the crisis arrive, we lend public money to (Greece for instance) so they
can return the money to the (private) banks and, in a sleight of hand the
fault is all of the lazy south Europeans.

~~~
Tomte
_(clue: the ECB is in Frankfurt)_

Sure, physical location is paramount...

Let's count the members of the main decision-making group of the ECB, the
Governing Council.

Two Germans. Twenty-three non-Germans.

~~~
RobertoG
Sure, physical location in Germany is just by chance..

"Let's count the members of the main decision-making group of the ECB, the
Governing Council. Two Germans. Twenty-three non-Germans."

No, let's count hard data better.

Here, from a nobel prize: [http://krugman.blogs.nytimes.com/2011/06/15/one-
size-fits-on...](http://krugman.blogs.nytimes.com/2011/06/15/one-size-fits-
one-redux-wonkish/)

And here (a little dense maybe): "Overall, the concern that the ECB rate
aligns more with the Taylor recommended rates of the core countries than with
the peripheral countries appears to be supported by the data[..]"
[http://econ.berkeley.edu/sites/default/files/Srivangipuram.p...](http://econ.berkeley.edu/sites/default/files/Srivangipuram.pdf)

------
chappi42
Egoistical showman. Not able to listen. Not able to compromise. Using
inapropriate language (waterboarding, terrorist - insulting people who endure
real waterboarding and/or are hurt by terrorist). Doesn't stop shooting at
Schäuble (Germany), but in truth he was opposed by 19 European countries.
External pressure is needed.

Stoneage lefties like to discuss, well, preach, all day long while spending
other (EU) citizen's money. Greece will be saved when he and the anarcho-
communist-syndicalist grufties start to modernize greece, e.g. do something
again the blatant corruption, burocratie and tax evasion instead of hindering
startups, business and innovative people. Imho.

~~~
Mikeb85
And this response shows that you know nothing about economics or finance.

> do something again the blatant corruption, burocratie and tax evasion

Corruption and tax evasion are an economic problem, not a moral one. People
decide whether or not to pay taxes based on many factors - convenience, value,
habit, punishment, etc... In a 'developing' economy, like Greece, if there's a
history of not paying taxes, you need to provide incentive to pay taxes.
Because if you all of a sudden raise taxes and enforce it hard, you don't get
tax evasion - you get capital flight, which is much, much worse for the
economy. And it's all too easy to move around in the Eurozone.

> Stoneage lefties like to discuss, well, preach, all day long while spending
> other (EU) citizen's money.

Greece did not spend other EU citizen's money. They sold bonds at the market
rate to banks and investors that BOUGHT them, and their debt spending was
entirely sustainable up to the financial crisis (not sure if you've heard
about it) which rocked the whole world. The troika bailed out those banks,
with the vast majority of the "EU citizens' money" going to those banks and
only a fraction of this money ever made its way to Greece.

> instead of hindering startups, business and innovative people

You know what hinders startups, business, and innovative people? A repressive
tax regime. Like the one the troika imposed on Greece...

~~~
MrBuddyCasino
> Corruption and tax evasion are an economic problem, not a moral one.

Not true. The Greek state has traditionally been seen as an enemy of the
citizen and something to take advantage of. This is due to the muchtar system
established hundreds of years ago by the Osman empire, establishing
clientilism. E.g. Estonia is much better on all these metrics, but income
levels are similar or below Greece.

> Greece did not spend other EU citizen's money

They took advantage of having access to "Germany's credit card", with interest
rates dropping from 25% to 5% post Drachme. Then they proceeded to consume
that money. Even in 2014, the public and private consumption relative to net
national income was at 114% [1], a completely unsustainable level. If Europe
wasn't financing elevated standards of living for Greece before the crisis,
they certainly did in the last few years.

[1] [http://www.cesifo-
group.de/ifoHome/publications/docbase/deta...](http://www.cesifo-
group.de/ifoHome/publications/docbase/details.html?docId=19161354)

> You know what hinders startups, business, and innovative people? A
> repressive tax regime.

New York and California have comparatively high tax rates, enormous housing
costs and expensive wages. They seem to be doing just fine. Also see Germany,
Austria, Switzerland and all of the Scandinavian countries.

~~~
Mikeb85
> New York and California have comparatively high tax rates, enormous housing
> costs and expensive wages.

That's why I'm bombarded with ads that brag about NY's startup program that
allows you to operate for 10 years with NO taxes?

[http://startup.ny.gov/](http://startup.ny.gov/)
[http://esd.ny.gov/BusinessPrograms/Taxes_Incentives.html](http://esd.ny.gov/BusinessPrograms/Taxes_Incentives.html)

Anyhow, like I said - businesses and people will pay taxes if they see value -
beyond NY's tax free startup program, those are the 2 most populous US states
(access to labour). That is a competitive advantage. There's also easier
access to financial capital - another advantage.

People don't necessarily go to where the taxes are the cheapest - they go to
where there's the best combination of access to labour, capital, customers,
taxes, etc... (or they stay put if they think their current location is 'good
enough')

Think of human behaviour as a maximization curve - a constant attempt to
attain maximum "utility" of our time.

> E.g. Estonia is much better on all these metrics, but income levels are
> similar or below Greece.

Estonia, business-wise, seems to have quite a few things going for it.

[http://www.lowtax.net/features/Estonias-
Advantages-571583.ht...](http://www.lowtax.net/features/Estonias-
Advantages-571583.html)

Just reiterates what I'm saying - paying taxes is based on a number of
factors, none of them morality (not on a large scale anyway).

Edit - if Greece wants to collect more tax money, they need to provide a good
reason for people to pay tax money. Given that the world is a big place and
anyone with enough money can move quite easily, it needs to be a more
compelling reason than the fear of punishment.

~~~
MrBuddyCasino
> if Greece wants to collect more tax money, they need to provide a good
> reason for people to pay tax money

I agree on this one. I would not want to give a corrupt government my money.
But then again, this is due to ethics - if not the taxpayer's, then the
government's. You will find the topic of corruption mentioned in the "Ethics"
section in this world bank report. [1, page 11]

[1]
[http://www1.worldbank.org/publicsector/civilservice/rsGerman...](http://www1.worldbank.org/publicsector/civilservice/rsGermany.pdf)

~~~
Mikeb85
It was a very brief mention.

Most people don't decide to pay or not pay taxes based on perception of
corruption, but rather what they perceive they're receiving.

In Canada, we generally are content to pay taxes because we get such benefits
as free health care, cheap medicine, free primary and secondary schooling,
subsidized post-secondary schooling, and our cities are generally quite clean
with good infrastructure, which is a good accomplishment considering our
population density is very low.

My wife is from a third world country where almost no one pays taxes. Then
again, what do they get? Infrastructure is non-existent (roads are all gravel
or dirt, power is on about 50% of the time, no potable running water, police
are non-existent, etc...). This is the conundrum of development economics -
how do you go from this stage of development, to a new stage where people pay
taxes so the government can provide services? With no services people will
avoid taxes, with no tax money the government cannot provide services. The
answer of course, is that it's difficult and takes time.

Corruption is an easier problem to solve, but difficult to implement. To get
civil servants to stop accepting bribes you need to pay them enough that
losing their pay is actually a punishment, or punish them enough that the
threat of jail time counters the benefit of accepting bribes (or ideally, a
bit of both).

Anyhow, neither problem can be solved in the amount of time that the troika
has expected Greece to solve them - and they ARE economic problems, not moral
ones.

------
padraic7a
Deutschland deutschland uber alles, but with banks instead of tanks.

"The European Union as we have known it ended over the weekend. That EU
project was all about the gradual convergence of equal nations into an “ever
closer union”. That’s finished now."

[http://www.irishtimes.com/opinion/tormenting-greece-is-
about...](http://www.irishtimes.com/opinion/tormenting-greece-is-about-
sending-a-message-that-we-are-now-in-a-new-eu-1.2283593)

------
vamur
Based on this interview, it looks like Tsipras is solely to blame for the
Sunday's disastrous deal. I think his career will be finished after the deal
passes.

------
dataker
its quite sad, but the West has been showing its liberal democracy is in a
gradual and obscure decline(like in this case).

------
cuillevel3
I had such high hopes for Varoufakis and now I can't agree with a single word
he says.

------
peterfirefly
"Greek Debt Crisis Deal Is Reached, but Long Road Remains (nytimes.com)"

[https://news.ycombinator.com/item?id=9879815](https://news.ycombinator.com/item?id=9879815)

------
diego_moita
Disclaimer: my parents are Portuguese and I visit Portugal regularly.

I understand his feelings, I don't understand his reasoning.

I understand his feelings because there is a lot of unfairness going on: big
economies (e.g.: France, Italy) are treated with more leniency and tolerance
than small economies (e.g.: Portugal, Spain), simply because they're far more
important to EU. It is humiliating and Greece should feel it even worse.

I don't understand his reasoning because for the indebted countries there are
only 2 objective choices: it is the EU way or the highway. The EU simply can't
accept that Greek voters just decide to quit the treatment but remain in the
Eurozone because the voters of Portugal, Spain, Italy and other countries
would do just the same. It would have been the end of Eurozone.

Varoufakis and Syriza should have started a Grexit strategy from the early
beginning. They didn't, so Germany saw they were bluffing and won the game.

Greece lost because Varoufakis didn't understand what was at stake.

