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Varoufakis and Stiglitz [video] (youtube.com)
121 points by MaysonL on Apr 12, 2015 | hide | past | web | favorite | 117 comments



Other Varoufakis videos that are worth watching if you want to know more about him and his views:

* "The Global Minotaur: America, Europe and the Future of the Global Economy " -- about his book, a nice narrative of the last 100 years of the political economy -- https://www.youtube.com/watch?v=MEUWxNifJJ8

* Richard D. Wolf's Global Capitalism update featuring Varoufakis -- Richard D. Wolf is always fun to watch, he looks like a Marxist version of Homeland's Saul Berenson -- https://www.youtube.com/watch?v=Fc-iYzniEXM

* "Confessions of an Errant Marxist" -- sort of Varoufakis's origin story -- https://www.youtube.com/watch?v=A3uNIgDmqwI

* Bizarre BBC Newsnight interview with Varoufakis -- where you can see the BBC's idealogical function leaking through -- https://www.youtube.com/watch?v=vVpWOk7vu18

It's evident from watching these that he is almost without exception the smartest person in every room he's in. And unlike most other economists, he is actually, you know, alive.

Also, the obligatory Pettis articles that should be read by everyone who wishes to form an opinion about Greece's current position:

* http://blog.mpettis.com/2015/02/syriza-and-the-french-indemn...

* http://blog.mpettis.com/2015/02/when-do-we-decide-that-europ...

And to encourage some cynanism about the neoliberal wisdoms, here's a contrarian economist called Ha-Joon Chang:

* "23 Things they don't tell you about about Capitalism" -- https://www.youtube.com/watch?v=whVf5tuVbus

And then of course at the end of the rainbow there is David Harvey:

* "The 17 Contradictions of Capitalism", LSE -- https://youtu.be/AULJlwoI3TI

We also recently had a spirited HN thread about Greece that had some good stuff in it: https://news.ycombinator.com/item?id=9314000


I know it's not the HN guideline to thanks, but crap. Thank you for your exceptionally well sourced comment.

I wish I had something like pocket for the youtube videos so that I could watch them during transit.


> I know it's not the HN guideline to thanks

Of course it is! It's just fine.


"It's evident from watching these that he is almost without exception the smartest person in every room he's in."

Careful...your "idealogical function [is] leaking through"...


Why would you watch them? Did you manage to figure out what he 's talking about or if he even has a concrete proposal? His modest proposal is nothing but generalities and unfinished arguments. I voted for his party but this guy lives in the world of half-assed academic hypotheses. He will probably end up resigning and go back to teaching in whatever country claiming that the world wasnt ready for him.


Here are the thoughts of Steve Keen (an economist) about Varoufakis[1] on BBC and this how the BBC, the economist and largely every other mainstream media outlet describes Varoufakis[2]. I saw since day-1 Varoufakis described as "self-acclaimed marxist left wing/radical finance minister". A description which in the western has more than a touch of negativity. On the other side you see e.g. Jeroen Dijsselbloem[3] being presented as "President of the Eurogroup" and/or "President of the ESM", while he could be easily be described in the same vein as a "Right-right wing, non-economist with a false degree[4]". Unfortunately that's the level of journalism we are up against.

Greece apart, if one takes the time to listen Varoufakis talking, then he understands that he is an exceptionally knowledgeable man. He has a deep knowledge of his domain and he speaks his mind - which is rare for a politician and got him in to troubles with the media more than once - all to often and in a very loud and clear manner.

I'm not sure if can pull out anything positive for Greece, because other than bailing Greece out, there is no way (for the Greeks at least) out of this spiral: Following the EUs terms is equally if not (much?) more catastrophic than leaving the common currency (even without leaving the EuroZone for military/geopolitical reasons).

[1] http://www.debtdeflation.com/blogs/2015/02/05/talking-about-...

[2] http://www.nakedcapitalism.com/2015/02/bill-black-bbc-dismis...

[3] http://en.wikipedia.org/wiki/Jeroen_Dijsselbloem

[4] http://www.independent.ie/irish-news/dutch-finance-minister-...


Have you read Pettis on the subject? Similar views on prospects - there has to be a bailout, but his view is that there is a bailout - somehow or other someone will pay the debt, European taxpayers probably, but we can have a managed fair debt reallocation or we can have a disastrous collapse.

My fear is unelected officials trying to smack down democratically elected wishes will lead to a collapse not just in Greece but elsewhere.


    unelected officials trying to smack down democratically elected wishes
Greece can immediately get rid of EU and IMF officials if they want. All they need to do if forgot the free money that has been raining down on Greece.


"forgot the free money that has been raining down on Greece"

Which greece never sees, and the money go immediately to bailing out the german and french banks that created the problem in the first place. (Courtesy of the tax payers, with a cut for the politicians, with the past gains of german and french industialists, and the present and future gains of the bailed out banks.)


Let's assume John goes to a Ferrari shop and can't afford the latest California T model because it's to expensive. John borrows the money from Tom and gets the car, promising Tom to pay back. John then doesn't deliver on his promise, and starts to whine ... please EU I'm so poor, please bail me out. The EU then pays John's debt.

Then "twobits" would say "Which John never sees, and the money go immediately to bailing Tom who created the problem in the first place."


So, what has EU done in the example of "NotableAlamode"? EU has made sure Tom gets his money back, despite the fact that he had recklessly lent money to John to get high interest rates -which John had been providing all along till the Ferarri case. And John's debt is not only the same, but much higher, because EU has forced him to sell off 25% of his property that was providing him money (be that human capital or state assets). So, Tom (EU banks) is bailed out and John (Greece) can never pay back his debt.


> unelected officials trying to smack down democratically elected wishes

Didn't it come to your mind that it's first of all the voters of other EU countries that don't want to pay for Greece's debt with their taxes? It's not the unelected officials' money we're talking about here.


You mean, they want the greeks to pay for their (mostly french and german) bankers poor investments?


Greece took 240 billion euros from the other EU governments as a bailout. That is other citizen's money, not "bad bankers'" money.


They took them on the express condition that the vast majority was used to pay the bankers. So the former greek government was the willing participant in moving bankers losses onto public books.

But that makes it no less the bankers losses that were covered with public money.


Is Greece willing to say that it does not back decisions and agreements made by the previous government? How can anyone trust they won't do the same when this government bows out? Greece will lose all credibility in the international market if it keeps playing victim.

No, the debts will not go away. Everyone loves to crap on big banks but in this case Greece owes money to EU nations.

Unrelated side note: Bringing up the second world war makes Greece sound even more petty. What's wrong with you people?


> Greece owes money to EU nations

Only because the private debts were nationalized in the last bailout round, which was basically a joint bailout of Greece's public finances and German/French banks, all of which were on the brink of insolvency. The bonds were previously mostly held by French and German banks, and the agreement did two things: 1) Greece was given a big chunk of money on the condition that most of it be sent back north to pay off a portion of their bonds; and 2) much of the remaining bad debt was shifted to public books, in the process being restructured with more generous terms. Greece has a large part of the fault in this whole saga, but they are not the only reason these originally privately held debts have now ended up on public books.

I do think from a realpolitik perspective Greece is playing hardball at the wrong time: they had a much stronger negotiating position in 2010 than they do now, when much of the "contagion" problem has been contained. But the government at the time stupidly agreed to a set of terms that solved the German/French problem while containing but not solving the Greek problem. Few serious economists at the time believed the package was a workable one for Greece, unless you thought some extremely optimistic projects of Greek GDP growth were realistic; it was seen as at best kicking the can down the road. But by 2015 when Greeks realized that and voted in a government willing to play hardball, they are no longer in a good negotiating position.


I don't think Greece is playing hardball. I think the game is "chicken": everybody involved knows that Greece cannot and will not pay back that money and will leave the Euro. But both sides want to avoid being the first mover: both want the other side to make the first move and admit that Greece is bankrupt.

Syriza wants to be forced out of the Euro so they can continue to play the xenophobic game and blame Europe, or rather Germany. The rest of the EU wants Greece to decide to leave, so they don't have to go to their voters and say "we tried everything, they didn't want help ..." and avoid admitting that the critics of the bailout were right all along.

In this game, time is on Greece's side, because as long as nobody blinks, all that sweet EU money is still raining down on Athens.


There are many layers here, as I see it sitting in a northern european non-eurozone country:

Moving bankers bad investments onto public books is a monumentally poor decision for everyone, and the effects of the decision should be undone.

However, if France and Germany have no appetite for holding their bankers responsible for their poor investments, and if they can honestly convince their citizens to pay for the bankers poor investments, then that is a (poor) decision they can make (and have so far made). The better decision is to require repayment of bonusses, let the losses materially affect banks shareprices, and let bank-shareholders lawsuits handle the rest.

On the other side, pushing the financial burden of a bankers bailout onto the greeks is counterproductive to everyone (who is not a banker) in the eurozone, and is morally disgusting.


Are you not in effect saying: never pay back debt at all? For whenever you don't pay back debt, then it's the lender's fault, nobody forced them to lend, it's their own risk.

While this is a consistent position that has historically been held by some, it's incompatible with any modern economy. In particular it is incompatible with the modern concepts of old-age pension, health insurance, unemployment insurance etc.


No - as a citizen I'm saying. Don't let bankers buy risky papers to a degree that they cannot cover their own losses.

The german and french bankers should not have bought greek government bonds at the prices they did considering the greek levels of public debt.


Why do you keep talking about German and French banks only? As Atropos pointed out, Greek banks had the highest exposure. German banks had quite a low exposure. In the light of this (and the power structure of the EU/ECB) the German taxpayer is bailing out French and Greek banks.

Anyway, what is deemed risky is highly subjective and easy to see only in hindsight.


Because democratically, the foreign debt-relation makes the whole difference. If all of the greek debt had been domestic, then a restructuring would have been a purely domestic matter - solvable by a democratic election.

What is ugly is when foreign states impose non-sensical demands of another country as part of a move to bail out their own banks.


I'm not sure I see your point. Greece has a perfectly democratic way of getting rid of its debt: default. Russia in 1998 was the last big European country to do so. Iceland's banks also defaulted on some wholesale depositors a few years ago. Greece has (partly or fully) defaulted on foreign debt already on several occasions in the past. Greece has in effect already defaulted on some of its current debt, although it is not always called a default. Moreover Greece is getting extremely favourable interest rates and repayment schedules on its remaining debt.

The real question is: why is Greece not going the democratic way of defaulting on its external debt? And the answer is, as you know well, that Greece wants to continue receiving all that sweet EU money. Why stop a good thing?

    ... impose non-sensical demands ...
Have you considered that not everybody thinks that fighting corruption, tax-avoidance etc is non-sensical?


Agreed. However, once again, we should not compare directly solutions of Iceland (banks) and Greece (government), because the problems are quite different.

Iceland (the country, the government) was not in much debt and did not default. Icelandic banks did default and went bankrupt. The banks (Kaupthing, Glitnir and Landsbank) were split so that Icelandic debts and assets were moved into new surviving publicly owned domestic versions of the banks, and the foreign remnants of the banks were placed into receivership and liquidation.

Russia, the country, actually defaulted. Russia is today not known as a safe place for investments (though the history of a default is just a small part there; in Russia's assets, it has huge energy reserves, and in its liabilities, it has kleptocracy, corruption and an arbitrary justice system).


Sure, but it's a tried and tested way of getting rid of one's debt. Many (most?) countries have used it in the past, see [1], including the USA.

[1] https://en.wikipedia.org/wiki/Sovereign_default#List_of_sove...


"Moving bankers bad investments onto public books is a monumentally poor decision for everyone"

It's a great decision for the banks, and the politicians that got their cut. It's (only) a bad decision for you and me, the tax payers, who are being raped.


You are using the anti-bailout and anti-banker rhetoric from the bailouts in the financial crisis, but this situation here is totally different: Greece borrows 100€ from a bank, cannot repay it, so there is a huge debt haircut and Greece only has to repay 50€. Now an argument can be made that the haircut should have been even bigger, but there was no shifting of "bankers losses onto public books".

You can make the argument that the other EU countries taxpayers had to cover Greek debt to banks (including Greek banks) with their own taxpayer money - but that is something that only the other EU countries could complain about!


Hmm, you do realise that when you say "Greece borrows 100 EUR from a bank ... " you actually mean, "bankers bid competitively for greek government bonds - and were so eager to buy them that the spreads to german bonds were ridiculously low 2000 to 2008".

And there was very clearly a shifting of "bankers losses onto public books" when Greece was pushed to repurchase bonds from banks at values far above their market value with money lent to Greece for that express purpose.

And yes I think that we exactly agree that other countries could cover the losses that the banks incurred on their bad investments in greek bonds. But I, very clearly, think that the other countries should not cover those losses on bad investments, but rather demand payback of bonuses paid 2000-2008 to anyone responsible for the greek government bond investments.


Sometimes using fewer words enhances clarity. Country A has debts of 100 Euro. The debt gets restructured by 50% so that Country A now only has debts of 50 Euros. How has this transaction magically pushed losses onto public books of Country A?


It pushed them onto the public books of countries B, C, D, E, F, G, etc, who took over (part of) the debt. Since they also provide financing at lower than market rate, they are also providing a continuous subsidy to country A (in a manner that they hope their own voters/tax payers won't notice -- and in a manner that the entitled voters of country A certainly haven't noticed).

(I wrote "part of" because there was a haircut involved for the private lenders. They /did/ take a loss.)

Edit: tpyo.


Banks have (eagerly) bought bonds for 100 EUR from Country A (that considering the risk inherent in the high public levels of debt of country, clearly were not worth more than 30-40 EUR).

Now there is a crisis, and the unsustainability of the public debt of country A is undeniable to everyone, so no-one will buy the bonds, well maybe for 5 EUR. However, through lobbying etc. a deal is struck so that Country B lends Country A 60 EUR to buy the bonds for the artificially high price of 53 EUR, thereby allowing the banks to escape the full writedown from 100 EUR to 5 EUR, but pushing 48 EUR of unrealized bankers loss onto the public books of Country A (debtor) and Country B (creditor).


I'm sorry, but this is a ridiculous way to think! You give me 100 Euros that I promise to repay later. When "later" comes, I refuse to pay. My brother finds this humiliating and to protect the family name buys the debt from you for 10 Euros. Should I now be able to say to him "Hey, a smart hedge fund would have only paid 1 Euro for this debt - you pushed 9 Euros of book losses on me, that I had nothing to do with! I'm getting taken advantage only to save the family name!"

Nevermind the theoretical principles involved, the actual numbers are quite different from what you probably believe: All in all, around 200 Billion Euros of private creditor debt was restructured:

1) 107 Billion Euros were simply written off

2) 62,4 Billion Euros of old private bonds were exchanged into new private bonds

3) Only 29,7 Billion Euros were paid out to private creditors and shifted onto the books of other Eurozone governments.


I am sorry that you think it is ridiculous. However, it is the only reasonable way to think about bonds. They are not safer than a risk of default, and the spread between bonds expresses exactly this (relatively). If bankers buy at a high price (low spread) when clearly they should not have bought at that price they are simply poor investors. No one forced them to buy - they could, and should, have bought something else.

I don't see we disagree about the numbers? Of the 200 Billion, only about half of the losses were realized. The rest was pushed onto public books (as new bonds or as bailout-loans).


Do you think that if Greece had defaulted on those loans they would have been better off today? Are you aware that that situation would have meant MUCH bigger cuts to public spending than those requested from the so called Troika?


> Do you think that if Greece had defaulted on those loans they would have been better off today?

Yes.

> Are you aware that that situation would have meant MUCH bigger cuts to public spending than those requested from the so called Troika?

No, I am not, that's because this scenario is nothing but fear-mongering without any base in reality. It is always put up when an alternative to the current course is discussed but is nothing but hot air. If you are "aware" that your scenario would have happened provide a proof.


It's not fear-mongering, it's just looking at historical precedents (eg Argentina). Do you think you can just default, and then everybody will do business with you as usual? Do you think that Greek bonds were only in stupid French and German banks, or that they were the main investment of Greek banks - which would have all defaulted, leaving Greek people and businesses without any money, and forcing the government to leave the Euro (as to be able to start printing money).

There is no mathematical proof for what I'm saying, but even the economists who suggested that Greece should have defaulted and left the euro were saying (I would say they were aware) that things would have become much worse before they became better.

That is as certain an economic forecast as one can be - the point some economists were/are making is that in the long run Greece will come out better from a fresh start with a default and outside the euro, with a devalued Dracma that would make Greeks poorer but more competitive internationally. But there is no guarantee that Greece would actually recover from an event like that and come back to the first world - especially if it alienates the whole EU in the process.


A default would not just lower the Greek wages down to where they ought to be. It would also de facto quickly lead to massive deregulation, reductions in the number of people working for the state, subsidies for political cronies, etc. It might also break various political stalemates.

All those factors will help Greece rebuild but it is a very unpleasant way of reforming a country that has had an urgent need for reforms for decades. Unpleasant as in: people will die.

A smarter country with better voters would grab the chance it has been given to do those reforms in a slower and more orderly fashion and say "Thank You!" to the IMF and the EU. And then spend the next 30 years apologizing :)


So after default, where would the money have come from to pay teachers and police salaries, pensions, public services, etc? And how would the country import oil, medicine, technology, etc?

Even if current Greek debt was wiped out overnight, the government would still need loans just to pay day-to-day bills. It's hard to tell how much since lying about government spending is a Greek institution (for example, they've "revised" the 2009 deficit number 3/4 times since then) but conservatively a few billion a month would be required even if they had no debt.

The unfairly vilified troika not only gave Greece the money to pay off all their loans at very reasonable rates but also promised to continue to lend money to give Greece some time to sort out their primary deficit (deficit without interest payments). No Syriza is telling the rest of the EU that they will reverse the moves to fix the primary deficit but that the EU must continue to pay for it.


And Greece actually sorted out that primary deficit for a moment, in second half of 2013. Then, in 2014, the election campaigning started again.


Greece DID default on privately held loans.

http://en.wikipedia.org/wiki/Private_sector_involvement


AFAIK that wasn't technically a default.

Edit: yes it was a partial default, so what I meant is defined as "disorderly default".


No. Greece got money from german and french banks. (Like giving all your money to an old, sick, homeless, uneducated, drug addicted, person. Would you do it?) That, turned out great for the german and french industrialists. Greeks had "free money", and more BMWs were sold. But, suprisingly, didn't turn out good for the banks. So, the politicians, appreciating their cuts, transfered the debts to their taxpayers, all over europe, to "save greece". End result: Industrialists, happy. Banks, happy. Politicians, happy. The tax payers, pays (much, much, much) more.


Oh God what a perfect conspiracy! But it's not at all as simple as that. The most important thing to remember is that "too big to fail" is morally very bad, but it doesn't mean it's not true. If Greece had been allowed do default when the crisis hit hardest, very likely speculators would have attacked also Spain, Italy, Portugal, Ireland, and possibly the whole EU would have gone to pieces, with MUCH worse consequences for all EU citizens - and the whole World, actually.


Actually, the highest investment in Greek government bonds was by Greek banks, see "The Greek Debt Restructuring: An Autopsy" by Zettelmeyer/Trebesch/Gulati.


This narrative of "bankers" (biehl, just look up how many times you repeat the word) is apparently popular somewhere, because it enables you to find a group of scapegoats who can be blamed for problems, a group about which someone can say "take their money, no one will suffer".

But it is not so simple. What is borrowed to Greece is not "bankers'" own money. It is funds belonging to institutional investors. The job of those "bankers" is to look after that money and invest it. Significant institutions include things like pension funds or other savers.

Write off the debt, who loses? It's not just some "banker"; the brunt will be carried by pension savers.


The money was lent to improve the Greek economy. It was largely spent on an unnecessarily large army, a large, inefficient and extremely well remunerated civil service, olympic games, cushy early retirement deals and shenanigans like that.


A fairly large amount (though still outweighed by other issues) was just outright stolen as well. Not many Greeks were too surprised to discover corruption, but the amounts have surprised many people. I think it was widely believed that officials were pocketing "modest" amounts of money (€100k here, €150k there), but some turned out to have been pocketing Swiss-bank-account sized amounts of money, tens of millions. A number of the arms deals appear to have been corrupted as well, e.g. both Russia's Almaz-Antey, and Germany's Rheinmetall, appear to have paid large amounts in bribes, presumably to divert even larger amounts of contracts. And the Olympics construction contracts were almost certainly not clean.

One thing that gained Syriza some centrist votes is that they come across as at least having clean hands: good or bad policies, people believe they aren't caught up in clientelist networks and stealing millions personally. Whereas the previous ND/Pasok unity government was widely suspected of still trying to cover up skeletons in its closet (e.g. the scandal over trying to suppress the Lagarde list didn't improve its image).


Yes, the "clean hands" thing is true, and it's about the only positive that Syriza has to offer.


You mean, the Greeks want Northern/Eastern Europe to pay for Greek vote buying?


Nope. I mean Our Eurozone growth model, [...] relied heavily on private, bank-driven, vendor-financing for the net exports of the surplus nations. [...]. The end result was a transfer of potential losses from the banks’ books onto Europe’s taxpayers in a manner that placed most of the burden of adjustment on the crisis countries that could least bear it.

http://yanisvaroufakis.eu/2015/03/15/presenting-an-agenda-fo...

The money was already gone when we allowed bankers to handle it and invest it in high-risk projects like greek and spanish real-estate etc.

And if we don't place the blame where it is due (with the bankers) then they will find another bubble to waste our money with another time.

[edit: reply moved to proper place]


Why "Nothern/Eastern" Europe? Italy for example contributed 40 billion of the 240 billions that were used for the bailout so far.


Very good question.

Mostly because Italy (and France) itself is in danger. Do we think the money really is there if it is needed? And that it won't push Italy (and France) over the brink?


I just don't like bundling the "north" vs "south" of the EU.

Yes Italy and Spain were in dangerous waters if you looked at the interest rate differentials with Germany, but they paid their quota of the bailout like everybody else - so they saved Greece as much as everybody else. Actually, they contributed much more than the new North-Eastern EU states, which have a much lower GDP (both total and per capita).


But there is a very real North/South divide in the way the economies are structured and in societal norms (trust in others, corruption, tax evasion, clientelism). The PIIGS acronym wasn't conjured out of free air (Ireland seems over the worst, so we are down to PIGS now).

Doesn't it piss you off, btw, that Eastern European countries with a poorer population than Greece participated in the Greek bailout but the Greeks still think they are entitled to more?


Are you trying to tell me that countries from the former Soviet block are corruption free? In my own experience they are much more corrupted than Italy; there is no correlation between corruption and latitude.

Regarding entitlement from some Greeks, I agree. But you should keep in mind the total net from/to the EU: all those poorer countries, even with the bailout, are getting much more from the EU than they are giving (as it should be).


> Are you trying to tell me that countries from the former Soviet block are corruption free?

I don't see him saying that. I see him saying that countries of the former Soviet block have poorer population than Greece [0] but are subsidizing it.

Also as nations they are poorer, though their GDP has climbed to the same level. They soon will be richer than Greece. In 1990, they were still much poorer, as they were still under Soviet occupation and influence, while Greece had been a member of EEC/EC for ten years. Greece is lagging behind due to its sclerotic economy and clientelism of previous power parties, and Syriza seems to revert to the same.

[0] http://stats.oecd.org/Index.aspx?DataSetCode=BLI


I quote:

> But there is a very real North/South divide in the way the economies are structured and in societal norms (trust in others, corruption, tax evasion, clientelism)

This is very poor simplifcation, and pretty offensive too.


It might be offensive, but is it untrue? Note that we're not saying things about people as individuals. We're talking about national cultures, stereotypes and statistical averages.

"Where trust is high, crime and corruption are low". http://www.pewglobal.org/2008/04/15/where-trust-is-high-crim...

Regarding trust, below is one source for how people see it. Look at the European map. There's a bit of north/south divide (with Italy being somewhat north). http://www.jdsurvey.net/jds/jdsurveyActualidad.jsp?Idioma=I&...

This is not the same as amount of corruption (note how high China and Saudi Arabia are in the "most people can be trusted" index, while they don't rate as well in corruption indexes). Here's the Transparency's Corruption index map: https://www.transparency.org/cpi2014/results

Crime maps are many but what I can find quickly are not incompatible with this generalisation either: http://www.numbeo.com/crime/gmaps_rankings_country.jsp


> We're talking about national cultures, stereotypes and statistical averages.

Exactly, stereotypes... and no, they're not true. I live in Italy and know Russia well enough, and Russia is much more corrupted than Italy. How much northern than Russia can you go?

Cultural problem? Yes. Latitude-related problem? No. Linking this to latitude is like linking problems to the color of your skin: you can't change the color of your skin, nor your latitude. Culture, on the other hand, can and does change.

BTW Italy has indeed a big problem with corruption, but one funny thing is that most Italians like to publicly bash Italy, so the relative perception of corruption is even higher than it actually should be, especially vs countries where most people think "right or wrong, my Country" ;)


Well, Russia is neither North or South in this context, it is East. There's also a slant so that it's perhaps Nort-West compared to South-East.

But I also have the perception that within Italy, there is quite a strong north-south divide? Turin and Milan are quite different from Naples and Palermo, also in the mind of Italians, regarding level of corruption?


Don't you think this North/South rule is starting to get a little too many exceptions?

In Italy, too, there are big variations, but they aren't really so correlated to latitude (even if many people superficially think that way). Most of Sardinia is south of Naples, but the disrespect for rules/corruption is much lower (eg in Cagliari, which is a lot to the south of Naples). It's just not as simple as that.


> Are you trying to tell me that countries from the former Soviet block are corruption free?

Not at all!

But, yes, there /is/ a correlation between corruption and latitude.


It's Greece which wants more money. Not Germany and France.


Actually, what Greece wants is debt relief. Not more debt.


When your debt is forgiven -- or rather, paid by others -- you can borrow more. And that's what they want -- how else can they keep the current circus going?


Greece has a budget surplus before debt payments now. This is a new situation, of course.


They briefly had a primary surplus. Are you willing to bet that they still do?


Greece is almost broke. They don't have the money to pay all their welfare... Tax income is shrinking...


How is Dijsselbloem even remotely close to being right-wing?


Yeah, kind of nonsense. He's part of the Labour party here, definitely not right wing.

It's true that Labour in Europe made a big swing towards right. It's now more often firmly at the centre, instead of left of centre, on a host of economic issues. And so you could then say he's rightish, especially in his European position as opposed to his Party position in the Netherlands... but then you can throw a lot of terms out of the window and it becomes impossible to label anything anymore.

For example, in Europe we tend to consider most Democrats to be Rightish-Wing, and consider most Republicans just 'way out there', the notion that democrats are leftist is kind of ridiculous here. Left would be the Green Party for example. But we call them left because in the spectrum of dem/reps in the US, they're relatively left. We could say they're both 'right' and then come up with other differentiating words to describe em, but it never really catches on...

Same with Labour on a national level, Dijsselbloem is part of labour and labour is generally left in the political spectrum of a country, for what it's worth.


On monetary issues I think it's fair to say that many European center-left finance ministers (excluding perhaps French ones) are rather towards the right, at least since the 1990s. On fiscal policy center-left European governments are left-ish, supporting high taxation which pays for a social welfare state. But when compared to Americans on monetary policy, they tend to have positions closer to the Republican Party than to the Democratic Party, closer to orthodox neoliberal views (Milton Friedman, etc.) than to Keynesian or MMT style views regarding proper management of government debt, business cycles, and recessions. Which I think is one of the disconnects: even when Varoufakis advocates pretty mainstream Keynesianism that would be center-left in the U.S., he's perceived as being quite far left. (It doesn't help that he occasionally describes himself as "Marxist", but his actual proposals bear a lot more resemblance to Keynesian economics than Marxian economics.)


The term you are looking for is neoliberalism. A set of thinking that has spread across Europe since Thatcher did her union busting.

Unless you are on the fringe left of parties, you adhere more or less fervently to the idea that a minimal government that buy services from private companies is the way to do things. It is "utility maximizing" taken to the level of religion.

This has lead to ever more measurements and goals in government, often referred to as New Public Management.


Yeah, I edited that in to make it clearer. This is one odd thing about Europe: in some ways it is left of the US, but in other ways quite right of the US. To take an example I'm familiar with in academia (I've worked in both American and Danish universities), Danish universities are more progressive in one sense: there is no tuition, education is free and universal. But in return, they are also much more shamelessly neoliberal about the goal of the university: the goal of universities is to increase the Danish GDP. Both their educational and research activities are measured by the extent to which they "create value for Denmark". That view exists in the US too, but only the right wing really buys into it full stop, whereas in Denmark even the Social Democrats hold it, and have recently initiated a set of university reforms on that basis.


I guess the thing to consider is that at some point the European left adopted the idea that educating society was the way to the leftist dream of a egalitarian society.

Problem is that most of the leftist parties at that time were run by people that had little to no actual worker background, and the situation has since become ever more solidified.

End result is a quiet disdain for people that choose industry or service work over a university degree.


I met with Yanis a bit over a year ago in Austin, to interview him for a book on Bitcoin that I haven't completed yet (too much work with my full-time job).

He is clever, has a vast knowledge, and you're right, he "speaks his mind". Rare, but valuable.


Wouldn't projecting Syriza as more leftist than they really are, be good marketing for them among Greeks?


At the moment, probably yes: the most effective attack on them in Greek media of the past month or so, which has reduced their popularity, is to portray them as "same boss, new suit (but no tie)". A big joke in particular has been over Varoufakis's use of the term "the institutions" as a substitute for the now-banned "troika". Part of Syriza's election platform was that Greek domestic policy would no longer be controlled by memoranda with "the troika" (IMF, EU, ECB). But now they talk about reaching agreements with "the institutions", who happen to be the exact same three institutions. So the wording change is widely seen as a bit of a farce.


Varoufakis is quite rightwing compared to his other 'comrades' who still live in the cold war.


I think there's a lot of misinformation around the Greek crisis.

Whenever any of the actors involved speak to the press, you can be sure they have an agenda: to influence public opinion (their own or of other parties), or to seem more extreme than they actually are at the negotiating table so as to make a solution politically possible, etc.

When reporting on this the press then layers on a nice thick coating of opinion, often basing themselves on other press articles which suffer from the same problem.

No wonder comments on the internet are often of the 'You're an idiot! No you are!' variety. People are trying to reason based on second degree derivatives of the actual situation.


I don't suppose you mean that discussion is futile because our sources are tainted?

In this case Varoufakis is saying pretty much the same he used to years before he had any political responsibility.


I think it's better to hear it straight from Varoufakis than to read the newspapers, and what he says seems less 'political' than from the usual career politicians.


Greece currently has big problems. But I think their new government is doing a great job to improve their situation. As you can see in the video Varoufakis is a brilliant guy.


Really? The economy has plunged further into decline after showing some signs of recovery in the second half of 2014. Tax avoidance (cheating) has soared given Syriza's populist promises to roll back measures designed to improve tax collection (and the Greeks are the worst tax cheats in the EU). They have both told their EU creditors f*ck you - you'll never get back the money you just lent us - while simultaneously demanding EU countries lend them more money. Unsurprisingly this pissed off their only friends/supporters in the world. Within the EU, support/goodwill for Greece has collapsed since Syriza took charge.

Other EU countries have taken on huge debts to support Greece only to be berated by Syriza; Spain for example has given Greece 27 billion euro (equal to an entire year of government social spending) while Spain itself suffers 25% unemployment and a collapsed economy. Syriza has/is rolling back many reforms (like paying civil servants 13 months pay every year) while other EU country are continuing to cut back (e.g. on retirement ages). Many EU countries (e.g. the Baltic states) have lower average salaries and work longer before retiring than the Greeks and yet have paid into the rescue fund for Greece. After all this Syriza still blames the EU for their troubles? Or threatens to unleash Jihadists on Berlin?

The trouble with Greece is that the government hasn't balanced its books in 35 years and the economy produces little of value (olive growing and cheap tourist sector jobs) while expecting to live a live-style like the average German, British or even French or Italian who produce high value-add goods which are exported to the world. They continue to demand that the government spend more while avoiding taxes.

Syriza feeds this national self-pity by looking for outsiders (particularly the Germans) to blame for this. At some stage reality has to be faced.


14, not 13 salaries a year. There are the normal monthly salaries, then there are an "Easter" and a "Christmas" salary.

I learned of this via something almost out of a ancient Greek comedy, the lines of the Goddess of irony:

A Greek manager sent to manage an branch created here in Bulgaria to take advantage our cheaper labor was outraged when she found out we only get 12 salaries a year. How is she expected to live on only 12 salaries, she asked incredulously, what about the extra spending around vacations??


I think that it is not very relevant whether civil servants get 12, 13 or 14 monthly salaries per year. The schedule of pay packages is just an artifact of history.

What matters is the annual salary (or total cost of employment). This can then be split into e.g. 12, 13 or 14 - I don't care - payment lots. But if the total salary package of civil servants is something that the government cannot afford, then that is the problem.

Is that anecdote about a Greek manager in Bulgaria real? If there indeed are such managers, they are definitely very silly not to understand how different the terms of employment may be in different countries. The practices in your home country may be not at all relevant somewhere else, and this is not just the pay packages, but also days off, terms of laying off people, what things like health care is included, and so on and so on.

We have a stereotype that Americans are particularly ignorant of the rest of the world in this respect, but I don't know if that stereotype is really justified.

(FWIW, our annual gross pay in Finland is typically 12.5 monthly salaries; the .5 monthly salary is paid out at holiday seasons, typically in the summer. The creation of these bonuses are related to the economic situation in 1960's and 1970's: during their summer holiday, many people took a temp job in Sweden, and pay in Sweden was so much better that once there, many decided to stay. A "return bonus" was commissioned in Finland after negotiations between employers and employee unions, to motivate people come back to their normal jobs at end of annual leave. This has since those times transformed into a part of the regular compensation package for everyone. In shorter employments, you earn both holiday days and the holiday bonuses, which are then paid out typically at end of employment if you're not in a regular job.)


That's not too uncommon in Europe. In Denmark we also get something like 13.5 monthly salary payments. In order to ensure that all workers have extra cash flow around the time of the summer vacation [1], the Danish Holiday Act (Ferieloven) requires an extra salary payment about 6 weeks before the normal summer holiday period, equal to 12.5% of the annual "regular" salary (i.e. 1.5 normal monthly salaries). Well, modulo some complexity: in some arrangements a part of that money may go to a communal holiday fund run by your union instead, which uses it to operate vacation property that workers can use free or cheaply, and only half or so might be paid out to the worker in cash. But in any case, everyone gets 13 salary payments of some kind.

[1] It's an important part of Danish culture that everyone, of all social classes, should take a contiguous 3-week vacation in the summertime.


Average workers' monthly pay (year/12) as of 2013 for some of the UE28 countries, in euros:

  DK 3739
  LU 3009
  FI 2622
  IE 2621 
  DE 2574
  ES 1634
  GR 1028
  PT 984
  HR 848
  PL 693
  BG 316


It's comments like this that make me sick in the stomach. I won't argue with @derriz because his lack of basic understanding of the situation both in Greece and the EU is extremely low.

To get a perspective of how inadequate German and EU (generally speaking) technocrats are at basic macro-economics take a look at Ben Bernanke's blog, on Germany's trade surplus[1].

NOTE: Noting @derriz posts I'd say there's a strange patterns emerging. He probably jumps into conversations just to make a point: Greeks are bad and they get what they deserve while Germans are good and we should follow their example. I will just say that this view is naive and stupid :-)

[1] http://www.brookings.edu/blogs/ben-bernanke/posts/2015/04/03...


In a way yes I do think countries get what they deserve if they repeatedly vote for politicians which promise the impossible and enact self-destructive policies. For example not collecting taxes and borrowing 10% of GDP every year to over-pay under-worked state employees and fund grandiose vanity projects like the Olympics. It's all great until arithmetic catches up with you.

I'm from one of the other PIIGS, lost my job and had to emigrate. I lived through bank and property implosion and unemployment increasing more than 3-fold. I saw friends lose effectively ruined.

However, the other PIIGS have all faced the unfortunate reality of their position, recognized their OWN mistakes and tried to correct things by cutting back on public and private wages and government spending. After a few years of pain, they are all seeing improvement - particularly falling unemployment.

Only Greece seems to think the party can keep and what's even more irritating is that they are angry and bitter towards the very people - the voters other EU countries - who have made huge sacrifices to provide them with almost a quarter of a trillion euro to ease them over the required adjustments. Put yourselves in the shoes of a politician in a poorer (than Greece) EU country sending money to Greece instead of spending it on hospital, schools, etc. in their own country.

It's time for a reality check, my sick-in-the-stomach friend. It's time for Greeks to consider the plausible possibility that they bear some of the responsibility for its own unfortunate state. But I guess it's easier to blame German trade imbalances, international capitalism, the IMF, the EU, the US, bankers, anyone besides Greeks themselves for the problems of Greece.


Your comment is wrong at so many level, I seriously don't know what to do with it.

That said, I wish you all the best in life. Stay strong.


On a side note, if I'm not wrong I guess you meant either that:

1. His lack of [...] is really high. ( Does this make sense?)

2. His understanding of[...] is really low/poor.

Cheers :p


Funny, it's point-by-point exactly the line of the french eco channel BFM Business (which, I concede, is my main and only source in term of economics matters). I am curious, are you also a listener of this channel ? If not, what medias also hold this line ?


> If not, what medias also hold this line ?

Practically all the serious ones across many countries and many languages.


I am pretty certain that the economical point of view diverge a lot between countries. France, UK, Italy and Germany all have common cultural roots but very different opinions about how economy should serve society. Thus, I think that the media could only agree so much on the specifics.

If we really all agree on the problems of Greece, it could be the first time ever all members of UE agree on something spontaneously...


>> But I think their new government is doing a great job to improve their situation.

Syriza was voted in to end austerity at minimum. They are nowhere near achieving this promise. Furthermore, their brinkmanship within the EU has made this even more unlikely.

All that has changed since winning the election is a steep degradation for the prospects of the Greek economy on almost every metric. The economic recovery early this year was snuffed out. Tax revenues have declined. Cost of sovereign borrowing is up. Bank deposits are flowing out.

I feel sorry for Varoufakis. He seems like a very sensible economist. Unfortunately the extreme elements of Syriza are driving Greece out of the eurozone and into much bigger trouble.


By great job are you referring to the flirting with Putin's Russia, the pathetic attempts to collect war debt from Germany or something else entirely?


Obviously Greece is not making new friends at the moment, but given the situation they are currently in, yes I think this action will help them.


In what way exactly would it help to alienate the only parties that can provide sustainable assistance to Greece now and and in the foreseeable future?


Greece is one of the Euro zone countries that economically suffers the most from the EU sanctions against Russia. Their "flirting" with Russia, as you said, is merely trying to find a way to continue to sell greek agricultural produce to Russia. Given the economical state of Greece I think that's a pretty sensible approach.


Russia's share of Greek exports is less than 2%. Total value of the goods covered by the Russian sanctions is approx mio 200 EUR / year. I sincerely doubt that it is worth jeopardising EUs long term economic support to the Greek economy in an attempt to circumvent Russian sanctions even if individual Greeks or even sectors are hit hard by them.


@peterfirefly (sorry, I can't reply directly to you because of the negative karma of my original post)

Yes, the EU are of bigger importance, but OTOH those trade partners are still there. Only the exports to Russia are lost. If the trade amount relative to GDP really is 1%, that would amount to more than 2 billion Euros in lost trade. Greece is small and in a precarious financial situation, I can understand why they risk to affront other EU members for those 2 billion.


The Greek loss due to the Russian undeclared war against Ukraine is tiny, even if it meant that all the trade with Russia disappeared (which it doesn't).

Compare with Finland and Sweden when the Soviet Union fell.

They were hit a lot harder but they cleaned up and enacted reforms. They certainly didn't complain that Greece was unreasonable for not lending (or giving) them money so that things could continue as before.


Not only after Soviet Union fell. Also in the current trade war, Greece's problems from Russian sanctions are negligible when compared to Sweden and particularly Finland. Russian trade was almost 10 % of Finnish exports in 2012 and has since then collapsed. Finland will very soon be in a position where it is not possible to pledge any bailout money for Greece. Even if not counting the political fallout.


> sorry, I can't reply directly to you because of the negative karma

There's a delay on replying sometimes but it isn't karma-related.


How much of Greece's foreign trade is with Russia? Isn't about 1%?

Do they not trade more with Turkey (and Germany) and about a handful of other countries?


All of these things should have happened a long time ago. Better late, than never.


Greece should have flirted with Russia earlier? I don't get that.

Of course, regarding requirements for compensation from Germany, it would have made sense to ask those in 1980, i.e. before joining an economic community with Germany, a community whose purpose was to put back wars and their compensation requirements, and start up a free trade area and bind economies together to avoid further clashes and wars.


Greece couldn't have asked in 1980. There was a debt conference in the early 1950s -by the world war winning superpowers of the time- that postponed compensation questions until the reunification of Germany (then thought to be coming soon). In 1990, after the reunification, the same superpowers convened again, and decided _instead of all countries and without consulting_ to drop the debt.

A mandatory loan from the Greek government to finance the German war effort would be at around 11 billion euros now. It is a multiple of that for many other EU countries.

I'm not saying that this "repay the war debt" is a good idea, but there certainly are a lot of hard to contest historical arguments for the validity of a small part of their claim.


Just for the record: Greek governments did demand war compensation before 1980, but Germany argued that that question has to wait until unification. After 1989 it was "too late"


He's brilliant but playing very high stakes in a confrontational manner that could very easily backfire.


Could you elaborate on Varoufakis' confrontational manners? I think you may be misattributing to Varoufakis some moves by other actors in the Greek government.

As for high stakes... well, the stakes for someone coming into the finance ministry of Greece in this Europe are huge no matter how you look at it.


Could you elaborate on his brilliance?


"There is no doubt that if we had a Federal Republic - if we had a United States of Europe - we would not be here, discussing the Greek crisis, the Eurozone crisis, banking unions, or anything of the sort. I think most Europeans would agree with this, and most Europeans would want to live in a United States of Europe." - Varoufakis

I enjoyed Varoufakis' comments on the "United States of Europe" and the idea that a European Federal Government might have prevented or at least lessened the adverse impacts of the financial crisis. From my limited understanding of the EU, it does seem that the ECB was not created with enough potency to act outside the interests of the largest (financially-speaking) members of the EU. Thus the German and French agendas and economies were furthered at the expense of the Greek, Spanish, and Italian economies.

My counter to this argument, looking at the US, is that our government and the Federal Reserve have become increasingly controlled by the interests of corporations and the owners of capital (banks). It is the government's job to provide a counterbalance against the profit-seeking interests of corporations by (1) creating and enacting regulations to protect constituents who might be harmed otherwise and (2) investing in infrastructure, R&D, and education - sectors that require large investments and that have no short-term, easily-observable returns, but that are absolutely vital to the long-term success of a country. The US government simply fell down on the job, repealing the Glass-Steagall act and allowing banks and consumers to take on unmanageable levels of risky debt.

What is to say that a "United States of Europe" would not have fallen victim to the exact same systematic breakdown in accountability and ethics that we have seen in the US? Sure, a "United States of Europe" might have more power in setting monetary and fiscal policy throughout the EU, but fundamentally it comes down to the ability to weigh long-term prosperity next to short-term growth, and to combat the temptations of excess greed and corruption. If the captains of finance and business, and the leaders of a country cannot perform these tasks that are fundamental to the functioning of a healthy economy and society, then no amount of tinkering with the structure of the government and other regulatory institutions can help.


It starts with a 5m long and irrelevant introduction.


The rest of the content is really good though.

Skip the intro: https://www.youtube.com/watch?feature=player_detailpage&v=OY...


URL changed from http://economistsview.typepad.com/economistsview/2015/04/ine..., which points to this.




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