
Review of “Adults in the Room” by Yanis Varoufakis - osullivj
https://www.theguardian.com/books/2017/may/03/yanis-varoufakis-greece-greatest-political-memoir
======
osullivj
"The first revelation is that not only was Greece bankrupt in 2010 when the EU
bailed it out, and that the bailout was designed to save the French and German
banks, but that Angela Merkel and Nicolas Sarkozy knew this; and they knew it
would be a disaster."

The treasury departments of the French and German banks had loaded up on GGBs
- Greek Govt Bonds because they yielded more basis points than eg German Govt
bonds, but also had AAA rating. The AAA was culpable negligence by Moodys,
S&P, Fitch rating agencies. Ignoring the credit quality implication of the
discount built into the market price of the GGBs was culpable negligence on
the part of the treasurers at the French and German banks. Yes, the Greek Govt
was culpable too. But the Greek people are bearing years of economic pain
while the French and German banks and the ratings agencies have got off scot
free because Merkel & Schauble put the fix in and parked the dodgy GGBs in the
ECB.

~~~
Scea91
Didn't Greece falsify data for years? That would explain the AAA ratings.

~~~
drzaiusapelord
Greece has been cooking the books for a long time, even their entrance into
the EU was fradulant. Greece is the blame here via its decades of fraud that
finally caught up with it. As a Greek-American with an interest in Greece
being successful I think all the finger pointing at Wall Street or Germany is
asinine. Greece is horribly corrupt and tax dodging is like its national
sport. Its like someone turned Chicago into a country. All of its out of
control spending, unsustainable union perks, and unrealistic pensions finally
caught up with it, just like its happening in Chicago right now. The
difference is Chicago and Illinois can raise taxes and make appropriate cuts
over the long term, but Greece won't unless strong-armed by Germany and
others.

Ultimately, a shared currency with nations with such disparate levels of
income and corruption just doesn't work out in real life like it does on
paper. Arguably, Greece could have restructured its debt and engaged in
inflation with its own currency and handled this much better, but that's not
an option when you're wed to the Euro. Personally, I like the idea of the EU,
but a shared currency is extremely questionable.

Credit ratings are just that, ratings, not investment advice and like all
ratings should be understood to be of limited value. A nation state can hide
quite a bit from organizations like Moody's and every election changes
leadership, so there's no static "Greece." Instead its a handful of parties
fighting for power with different agendas and goals and with differing levels
of corruption and incompetence with a baseline being pretty bad to begin with.
Heck even senior Moody's staff were warning investors about Greece and its
dealings with Goldman[1]. You'd have to be a little thick to think that AAA
rating meant no-risk. All investment involves risk.

I suspect the larger economies always saw Greece as their 'little brother' and
countries like Germany had a sort of "Well, if we give them money, they'll
build industry and catch up to us eventually," instead Greece blew it on
pensions for people retiring at 50, questionable social programs, and other
unsustainable and unwise spending.

I sense a high level of paternalism in general from other Europeans especially
when I'm perceived as a native Greek when in Europe. Sadly, I think everyone
would be better off if we were rougher with Greece and instead of seeing it as
our tourist-friendly 'little brother,' but instead as our dishonest and
thieving neighbor. I hope this current crisis has changed perception and
paternalist attitudes in Europe and made everyone think about the limitations
a shared currency creates.

[1]
[http://www.nytimes.com/2010/02/14/business/global/14debt.htm...](http://www.nytimes.com/2010/02/14/business/global/14debt.html?pagewanted=all&_r=0)

In 2008, Goldman helped the bank put the swap into a legal entity called
Titlos. But the bank retained the bonds that Titlos issued, according to
Dealogic, a financial research firm, for use as collateral to borrow even more
from the European Central Bank.

Edward Manchester, a senior vice president at the Moody’s credit rating
agency, said the deal would ultimately be a money-loser for Greece because of
its long-term payment obligations.

Referring to the Titlos swap with the government of Greece, he said: “This
swap is always going to be unprofitable for the Greek government.”

~~~
nickbauman
This is a "moral hazard" line of thinking that distracts from the underlying
fundamentals of the economics here. Even without the corruption, Greece would
eventually be in this situation in the EU because of the structural trade
imbalance. Nations like Germany, Sweden, Norway, etc, export far more than
they import and do no share the profits. The EU has become a giant capital
vacuum cleaner from the poorest nations to the wealthiest. Without fundamental
changes to this, the EU is doomed. Greece is just a symptom.

~~~
EastLondonCoder
Correct, its also worth noting that the US do have mechanisms in place to
transfer funds from surplus areas to deficit areas.

~~~
davrosthedalek
As does the EU.

~~~
atmosx
> As does the EU.

Are you trolling? What kind of mechanism does the EU have? How does Germany
have such a high surplus if such a mechanism is in place?!

~~~
Tomte
Trade surplus is neither evil nor a problem in itself.

~~~
crdoconnor
Trade surplus without a safety valve (the ability to devalue a currency) is
very much a problem since it leads to unsustainable debt buildups.

Germany should be running a trade deficit with the rest of Europe right now
but it refuses to.

------
syoc
It is interesting to note that Varoufakis worked with Valve on the in-game
economical systems for Team Fortress 2 and Counter-Strike: Global Offensive
before he got pouched by Greece. His blog posts are really interesting.
[http://blogs.valvesoftware.com/author/yanis/](http://blogs.valvesoftware.com/author/yanis/)
Those in the know about the economies in the mentioned games should agree that
Valve probably got a good return on his paycheck.

~~~
btreesOfSpring
Also of interest is Varoufakis on EconTalk[0] interview in 2013, almost two
years before the Greek electoral victory of Syriza and Varoufakis taking the
political position of finance minister. You might hear from this interview how
Varoufakis looked at Greece's crisis negotiation-position with the EU: that
for Greece, similar to the employee-management structure of Valve, there was a
lack of hierarchy between peers and only a room full of equals. In that sense
and through the Valve-hierarchy of equals lens, much of the tone-deaf rhetoric
of Varoufakis towards his peers though the bailout talks can be interpreted
with a wider spectrum of sound. Varoufakis, it seems, sincerely thought he
would bring "enlightened" new ideas of successful software development
management to a negotiation table of frustrated, advantaged, EU financial
stalwarts.

[0]
[http://www.econtalk.org/archives/2013/02/varoufakis_on_v.htm...](http://www.econtalk.org/archives/2013/02/varoufakis_on_v.html)

~~~
sgift
> Varoufakis, it seems, sincerely thought he would bring "enlightened" new
> ideas of successful software development management to a negotiation table
> of frustrated, advantaged, EU financial stalwarts.

What he thought (and later stated) was that people would be interested in
solutions instead of blaming, finger pointing and political games. He reminds
me of a goal-oriented team member versus the team members who want so save
their hides at all costs to the detriment of the company.

~~~
btreesOfSpring
> people would be interested in solutions instead of blaming, finger pointing
> and political games.

Would anyone be interested in bureaucratic machinations over solutions?
Varoufakis' ex post facto statement sounds bitter and judgemental and to be
expected in the face of his failure.

If you listen to his EconTalk episode, you get a sense of an admirable and
optimistic person who, when faced with the defensive positioning of EU
stalwarts, represented his ideas in a naive and condescending way that denied
himself and the Greek people he represented the chance to establish trust and
the proper report to begin alternative negotiations in earnest. His economic
ideas might be perfectly salient but his self-introduction at the bailout
talks did not represent those ideas very well.

------
IslaDeEncanta
Varoufakis is a hero to the international working class. His most recent book
before this one is also excellent.

~~~
pif
Why? What did he do, apart from letting the Greeks believe they could choose
not to refund the debt?

~~~
andy_ppp
Morally it's on those who give out loans to make sure that they can be repaid.
It's wrong that Greece took these huge loans as well, but also it's wrong to
suggest that they have to pay them back. Everyone has the option to default
when they are unable to pay and this was clearly the situation for Greece (and
probably Spain and Italy, maybe even UK soon enough).

~~~
dragandj
And they ARE making sure the debt is going to be repaid.

~~~
andy_ppp
Nope, they will almost certainly default on a large proportion of it.

~~~
dragandj
That remains to be seen. Until now, it was quite the opposite.

------
atmosx
The Google Talk about his previous book[1] was very good. You're encouraged to
give it a go and make up your own mind on Varoufakis.

[1]
[https://www.youtube.com/watch?v=P2Zpkz7lK-s](https://www.youtube.com/watch?v=P2Zpkz7lK-s)

------
cheesedoodled
I'm not into conspiracy theories... but Why can't i find anywhere to buy this
book in my area in the US, or online?

~~~
DanBC
Isn't this it?

[https://www.amazon.com/Adults-Room-Battle-Europes-
Establishm...](https://www.amazon.com/Adults-Room-Battle-Europes-
Establishment-ebook/dp/B01ICK4IWK/)

------
throwit2mewillU
Grexit blackmail didn't work, so run away and got rich writing books.

------
Tomte
Varoufakis has always been obsessed with his ego and rock-star status, never
with Greece's problems.

