8 ms·

IMF admits euro problems and apologises for the immolation of Greece

102 points by randomname2 10y ago

PaulHoule 10y ago
After brexit the EU has to prove that it is not a lights on and nobody home situation.
- SideburnsOfDoom 10y ago
  Given that "brexit" covers a whole range of incompatible outcomes, some of which are unpalatable to interested parties such as Scotland, Northern Ireland and the people who voted for Brexit; so does Britain.
  - keithpeter 10y ago
    Westminster parliament is responding to the will of the people as expressed through the referendum. We shall what form the response takes over the next few months (Autumn statement will be a significant marker - there will be some economic data based on actual events then not sentiment or opinion surveys) and I'm sure the various political groupings will have plenty to say. My point is that the debt transfer from private banks in predominantly Germany to the Greek state appears to have been a purely bureaucratic policy designed to prop up the Euro. Disclaimer: I actually voted remain on the balance of practicalities.
    - TheOtherHobbes 10y ago
      There is no "will of the people" because Brexit was never a well-formed practical concept. As a matter of common sense, you can't have a referendum on a word with no meaning. Or rather you can, but the result is guaranteed to be a disaster. When there is no definition everyone agrees on, the only possible outcome is anger and disillusion because some very significant proportion of the population will be disappointed. And even if everyone in the UK agreed on a practical definition - which they very much don't - the EU might not agree to it in negotiations. The entire business was utterly dishonest. There's a huge difference between 'Do you want to leave the EU?" - which is a meaningless catch-all promise that covers all possible and impossible hopes - and "Do you want to leave the EU under these specific terms and conditions?"
      - keithpeter 10y ago
        Yes I agree that we don't know what the people who ticked the 'leave' box actually voted for. The Westminster parliament(1) will now arrive at a series of policies to embody that choice and those policies will have to be negotiated through a long and complex process with the various EU institutions concerned. What emerges from that process will probably not fit anyone's conception of what they were voting for. As a (marginal, 5.5/10) remain voter, I would be inclined to point out that if you vote for radical change, radical change is what you get! I'm pretty sure that the Westminster government(1) will seek a mandate for their choice through a general election. (1) I'm referring to the Westminster parliament and government here as there are of course huge issues with the position of Scotland (which voted very heavily in favour of 'remain') and of Northern Ireland (which also voted less heavily in favour of remain, and which also has the added complexity arising from the Ulster Agreement, and the Ireland Act / Common Travel Area). The devolved assemblies in Scotland/NI will be fighting their corner and trying to see what they can get. Not sure about Gibraltar yet.
        SideburnsOfDoom 10y ago
        > I would be inclined to point out that if you vote for radical change, radical change is what you get! Yes, it's like voting for Trump, you have voted against "the system" and you will get ... something else. it will change, to something unknown. You might end up not liking it much.
      - chriswarbo 10y ago
        I disagree; leaving the EU is a perfectly well-defined action/goal, which isn't particularly difficult to achieve (we'll be out of the EU at most 2 years after invoking article 50). The referendum result was in favour of leaving the EU, so that's what should happen in order to maintain any semblance of democracy. There is certainly a huge space of possible strategies to take, but that's always the case with any political action. The UK government is elected to take such decisions on our behalf, with various oversight/transparency/legal conditions attached, so that's what should happen. I don't see how this is any different from a goal like "increase Britain's GDP"; there are many ways to do it, huge levels of disagreement, the elected government will choose a strategy they think is best for themselves. The threat of regular elections is designed to align the government's selfish choice more closely with that of the people; universal education is designed to align the choice of the people more closely with the will of the people.
- fsloth 10y ago
  Uh, no, EU is very much concerned with day to day operation of its member countries. It's just incompetent to react to any extrnal stimuli not coming out of its own bureaucracy.
  - tomelders 10y ago
    To be fair, people do keep sending anti-EU MEP's to the EU Parliament, who are incentivised to be as disruptive as possible. Their entire raison d'etre is the total annihilation of the European project and they represent 1 third of MEPs. And none of them seem to have an alternative. They just want the EU gone. Let's clarify that the situation is nor entirely the doing of pro-EU MEP incompetence. There are powerful forces at work.
    - ethbro 10y ago
      Isn't the EU being gone their alternative?
      - tomelders 10y ago
        Ok, I should have said alternative plan/strategy/roadmap.
- AnimalMuppet 10y ago
  This isn't about the EU. This is about the EZ - the Euro Zone, the countries that use the Euro, which is not all the countries in the EU. Only 19 of the 28 EU countries use the Euro. And this isn't even really about the EZ; it's about the IMF. (About the IMF trying to fix the problems caused by the Euro, but still about the IMF.)
LeifCarrotson 10y ago
Actual title: IMF admits disastrous love affair with the euro and apologises for the immolation of Greece It's nice that you fixed "disastrous love affair with the euro" to read "euro problems", but there's also plenty of unnecessary hyperbole in "immolation".
- travmatt 10y ago
  Hands down, the best bit of hyperbole during the EU debacle was when Greece's Finance Minister called the austerity measures 'financial waterboarding'.
  - forgotpwtomain 10y ago
    > Hands down, the best bit of hyperbole during the EU debacle was when Greece's Finance Minister called the austerity measures 'financial waterboarding'. Can you explain how this is 'hyperbole'[0] ? It's used in a single phrase 'financial waterboarding' which makes it symbolic or metaphorical, unless you are saying this is an exaggeration of Greece's economic problems, in which case I would like to know in which way you think they are exaggerated? Would it need to be 1921 Berlin for it to be 'financial waterboarding' ? [0] exaggerated statements or claims not meant to be taken literally.
    - summarite 10y ago
      The conditions were there to ensure Greece would actually reform, rather than keep lying about data and overspending each year to an extremely unsustainable degree. Greece caused the mess 100℅ itself, then turned around and asked for money. Terms were agreed, billions given, and then Greece turned around and broke the agreement. After three times breaking agreed bailout terms for which the country each time got billions, they wanted another bailout without any conditions while the new government varoufakis was in was actively reinstating some of the already improved insanity ((re)hiring thousands of officials for example). See also my other comment in this thread.
- smallnamespace 10y ago
  Would you accept the literal double or triple decimation of their economy as a substitute for 'immolation'?
kyriakos 10y ago
How about they do something to help Greece then since they are partly responsible for the mistake?
- at-fates-hands 10y ago
  Honestly a lot of this should be on Greece. They racked up huge debts while losing their competitiveness in the global market. This led to slower growth. Add in attempts to hide how much they were really in debt and you have a recipe for disaster. This was compounded by the fact that since they relied on the Euro, they couldn't just print their way out this situation like the US does all the time. Instead, they got caught with their pants down and had no alternative but to own up and take severe measures to right the ship.
  - keithpeter 10y ago
    For every borrower, there is a lender. Was it not the case that banks in Northern Europe saw an opportunity (common currency, diverse interest rates, and countries with historically very low personal borrowing) and went for it?
  - the-dude 10y ago
    Germany and France were quite happy to take Greeks money for VWs, BMWs etc.
  - crdoconnor 10y ago
    "Honestly a lot of this should be on Greece. They racked up huge debts while losing their competitiveness in the global market. This led to slower growth. Add in attempts to hide how much they were really in debt and you have a recipe for disaster." The Eurozone was fully aware of, and indeed, tacitly endorsed the trick Greece played with Goldman Sachs in order to join the Eurozone. It was on the front page of the Times at the time when it happened. The Greek leaders behind this are gone (but not punished). The Eurozone leaders behind this are still in power. The weak and powerless in Greece are being punished for their crimes. Many people think this is justice.
  - abakker 10y ago
keithpeter 10y ago
Yanis Varoufakis wrote And the weak suffer what they must to explain the impact of austerity policies on Greece. He was (briefly) the finance minister in one of the Greek governments that had to manage this transfer of debt. Respectfully suggest reading the above alongside Timothy Geithner's Stress Test for an alternative approach. The basic issue now is how do they get the Greek economy (and by extension the Spanish and Portuguese economies) back into something like stability?
- pjmlp 10y ago
  They don't. The first thing EU has done as soon as Portugal and Spain went left on the last elections, was to show who's the boss with the new planned sanctions.
- randomname2 10y ago
  He also commented on this piece at https://yanisvaroufakis.eu/2016/07/29/the-imf-confesses-it-immolated-greece-on-behalf-of-the-eurogroup/ https://yanisvaroufakis.eu/2016/07/29/the-imf-confesses-it-i... TIME FOR RESIGNATIONS AT THE IMF, THE ECB & THE COMMISSION TIME FOR AN APOLOGY TO THE PEOPLE OF GREECE TIME FOR A POLICY U-TURN, BEGINNING WITH IMMEDIATE DEBT RELIEF, THE END OF AUSTERITY & THE CESSATION OF FIRE SALES TIME FOR THE RESTORATION OF GREEK DEMOCRACY This week began with a debate in Greek Parliament called by the Official Opposition (the troika’s main, but not only, domestic cheerleaders) for the purposes of, eventually, indicting me for daring to counter the troika while minister of finance in the first six months of 2015. The troika who had staged a bank run before I moved into the ministry, who had threatened me with bank closures three days after I assumed the ministry, and who proceeded to close down our banks, now moved to charge me with… bank closures and capital controls. Like a common bully, the troika proved immensely keen to blame its victims, and to violate and vilify anyone who dares resist its thuggery. My reaction to the troika’s charges, and threat of being pulled up in front of a judicial inquiry , was simple: “Bring it on!” “I shall face you”, I challenged them “in any forum you want: in an amphitheatre, a TV station, even a court room!” In the end, they chickened out and the parliamentary motion was defeated as some of them (a small party usually fully in troika’s clasps) strategically voted against. And then, to complete this week’s drubbing of the troika, the report by the IMF’s Independent Evaluation Office (IEO) saw the light of day. It is a brutal assessment, leaving no room for doubt about the vulgar economics and the gunboat diplomacy employed by the troika. It puts the IMF, the ECB and the Commission in a tight spot: Either restore a modicum of legitimacy by owning up and firing the officials most responsible or do nothing, thus turbocharging the discontent that European citizens feel toward the EU, accelerating the EU’s deconstruction. While I was in the ministry, negotiating with such folks, the troika-friendly (or should I say troika-dependent) press was arguing that I am not fit to conduct these negotiations because I had dared insinuate that, from 2010 to 2014, the IMF, the ECB and the Commission had been fiscally waterboarding Greece, causing an unnecessary Great Depression as a result of their thuggish imposition of macroeconomically incompetent policies. The establishment press were claiming that a finance minister of a small, bankrupt nation which is being waterboarded by the high and mighty troika functionaries cannot afford to say, in public or in private, that his small, bankrupt nation was being waterboarded. My response was that we had tried silence and obedience from 2010 to 2014. The result? A loss of 28% of national income and grapes of wrath that were “…filling and growing heavy, growing heavy for the vintage”. Thus, it was time to put to the troika moderate, rational counter-proposals while refusing to continue to acquiesce to their pretend-and-extend tactics. It was a stance that I was never forgiven for. A year after the troika succeeded in having me ejected from Greece’s government, by prevailing upon Alexis Tsipras to capitulate to them against the wishes of 62% of Greece’s voters, the IMF’s ‘internal affairs’ is now confirming that my stance was utterly justified, rather than mistaken or undiplomatic. Ambrose Evans-Pritchard, in his 29th July Telegraph article, had this to say about the IMF’s IEO report: A sub-report on the Greek saga said the country was forced to go through a staggering squeeze, equal to 11pc of GDP over the first three years. This set off a self-feeding downward spiral. The worse it became, the more Greece was forced cut – what ex-finance minister Yanis Varoufakis called “fiscal water-boarding”. (See below for more pertinent quotations from Evans-Pritchard) The question now is: What next? What good is it to receive a mea culpa if the policies imposed on the Greek government are the same ones that the mea culpa was issued for? What good is it to have a mea culpa if those officials who imposed such disastrous, inhuman policies remain on board and are, in fact, promoted for their gross incompetence? In sum, an urgent apology is due to the Greek people, not just by the IMF but also by the ECB and the Commission whose officials were egging the IMF on with the fiscal waterboarding of Greece. But an apology and a collective mea culpa from the troika is woefully inadequate. It needs to be followed up by the immediate dismissal of at least three functionaries. First on the list is Mr Poul Thomsen – the original IMF Greek Mission Chief whose great failure (according to the IMF’s own reports never before had a mission chief presided over a greater macroeconomic disaster) led to his promotion to the IMF’s European Chief status. A close second spot in this list is Mr Thomas Wieser, the chair of the EuroWorkingGroup who has been part of every policy and every coup that resulted in Greece’s immolation and Europe’s ignominy, hopefully to be joined into retirement by Mr Declan Costello, whose fingerprints are all over the instruments of fiscal waterboarding. And, lastly, a gentleman that my Irish friends know only too well, Mr Klaus Masuch of the ECB. Finally, and most importantly, the apology and the dismissals will count for nothing if they are not followed by a complete U-turn over macroeconomic, fiscal and reform policies for Greece and beyond. Is any of this going to happen? Or will the IMF’s IEO report light up the sky fleetingly, to be forgotten soon? The omens are pointing to the latter. In which case, the EU’s chances of regaining the confidence of its citizens, chances that are already too slim, will run through our leaders’ fingers like thin, white sand. FURTHER QUOTES FROM EVANS-PRITCHARD “The report by the IMF’s Independent Evaluation Office (IEO) goes above the head of the managing director, Christine Lagarde. It answers solely to the board of executive directors, and those from Asia and Latin America are clearly incensed at the way EU insiders used the Fund to rescue their own rich currency union and banking system.” “While the Fund’s actions were understandable in the white heat of the crisis, the harsh truth is that the bail-out sacrificed Greece in a “holding action” to save the euro and north European banks. Greece endured the traditional IMF shock of austerity, without the offsetting IMF cure of debt relief and devaluation to restore viability.” “The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.” "“Many documents were prepared outside the regular established channels; written documentation on some sensitive matters could not be located"IEO report It describes a “culture of complacency”, prone to “superficial and mechanistic” analysis, and traces a shocking break-down in the governance of the IMF, leaving it unclear who is ultimately in charge of this extremely powerful organisation.”
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yequalsx 10y ago
What I don't understand about reactions to Greece's profligate borrowing is that I rarely see criticisms of the lender. Borrowing is a 2 party interaction and both parties bear responsibility. The so called bailouts of Greece have been nothing more than bailouts of German and French banks. All the while putting the suffering on Greeks and not anyone else. The best option for Greece would have been to leave the EU in 2008.
- golemotron 10y ago
  I'm not sure why Merkel is still in office. She's been behind most of that policy, along with the current immigration crisis, and the policies that Brexit was a rebellion against. Ostensibly, Germany is a democracy, but she's had the chancellorship for 10 years and she uses her position to be the EU's de facto leader. There don't appear to be term limits.
  - georgeecollins 10y ago
    I think because the flaws with the Euro that have been very disadvantageous for Greece are for the same reason very advantageous for Germany. Germany gets to have a big account surplus with a relatively devalued currency. She may be doing the wrong thing for EU, but the right thing for Germany. In the long run perhaps the right thing for EU is the right thing for Germany, but I don't think German voters see it that way right now.
  - detaro 10y ago
    She is still in office because she hasn't done that many unpopular things, especially in her first 2 terms. If anything, she is as seen as to inactive, but as long as the status quo wasn't too bad... And internally, many see her having a lot of influence on the EU as good. The general opinion is not a fan of "Mommy Merkel", but it hasn't been enough to propel the actual alternatives from the corners to a position where they can't be ignored, especially since right now the two largest parties (Merkels CDU and the SPD) support Merkels government together. Traditionally they'd prefer partnering with a smaller party, but their preferred coalitions didn't work out. The alternative combinations that would have had a majority are not seen as viable (yet). And sorry, this isn't great for change, but doesn't make Germany non-democratic. Other possible governments after the last elections would have been more interesting, but I'm not sure if they would have represented the votes better. Right now it seems like opinions drift away from Merkel in both directions, so it'll be interesting what happens next year. Election campaigns haven't really started yet, so it's hard to judge how the large parties are going to position themselves. SPD has to do something to break out from Merkel, or work another 4 years with her.
BenoitEssiambre 10y ago
A properly managed currency could allow for Greece's labor and investment market gridlock to suddenly resolve itself putting a large part of the unemployed back to work. The type of austerity that the euro group wants leads to disinvestment. It is like forcing a person to sell his or her tools and equipment to make this year's debt payments. No longer being able to work productively anymore without tools, how is that person supposed to make next year's payments? The ECB has prevented Greece and all economically disadvantaged regions of Europe from getting the investment they need to work and get out of their morass. At this point a considerable part of the debt is a direct result of perennial monetary strangulation and not caused by the indebted themselves. Some people may be afraid that allowing sufficient funds for investment into Greece may result in the money being diverted into short term spending instead of into long term sustainable investment. To reuse the metaphor, the lender is afraid the borrower will not buy tools with the money and work but instead buy a vacation in Santorini. It is somewhat a valid concern but then if there is this much distrust from other members of the eurozone that people in Greece are not even given the means to work, there is zero reason to continue the relationship and Greece should default and break off. The fact that unemployment is widespread in Europe, not just in Greece tells us that the main source of problems is the damaging monetary situation caused by the ECB, not greek laziness. Greece has already achieved a primary surplus, they went through a huge amount of pain to correct their finances. And they did it while the ECB was continuously throwing sand in their gears, keeping inflation too low and real interest rates above a rate that gets Europe to an acceptable level of employment. This disproportionately affects economically disadvantaged regions. Monetary policy in Europe is run so that only the areas that have natural economic advantages can prosper while investment is sucked out of weaker regions and turned into idle excess fiat. If Greece, through gargantuan efforts managed to be so productive as to offset their natural disadvantage and the European economy started heating up, the ECB would tighten yet again and vacuum investment out of the next weakest region causing a similar crisis there. Only when the ECB will have produced an acceptable level of unemployment in the eurozone will you really be able to start blaming individual countries for their economic woes. After the reforms in Greece, if the ECB did an half decent job, Greece might well have been able to pay the entirety of their debt without too much pain, and if they still didn't, then you would have had a case for corrective austerity there. But you cannot have government austerity at the same time as monetary over tightness (read private sector suffocation). That is just mathematical nonsense. To make another darker metaphor, if there is so much distrust and resentment toward the Greeks that people think they should be made into slaves to pay for their debt, even then, it would make no sense to refuse to provide the tools and infrastructure to enable them to work. What good are non-working slaves? Of course, the relationship should break off well before we get to this extreme. Sometimes it seems like Germany doesn't mind moving towards this nonsensical non-working slaves scenario. The only real solution will have to start with the ECB moving to a higher or better inflation target that doesn't choke their continent's economy and that allows weaker members to labor towards recovery.
Lidador 10y ago
Fake news. It is as simple as that.

102 points by randomname2 10y ago

PaulHoule 10y ago

After brexit the EU has to prove that it is not a lights on and nobody home situation.

SideburnsOfDoom 10y ago
Given that "brexit" covers a whole range of incompatible outcomes, some of which are unpalatable to interested parties such as Scotland, Northern Ireland and the people who voted for Brexit; so does Britain.
- keithpeter 10y ago
  Westminster parliament is responding to the will of the people as expressed through the referendum. We shall what form the response takes over the next few months (Autumn statement will be a significant marker - there will be some economic data based on actual events then not sentiment or opinion surveys) and I'm sure the various political groupings will have plenty to say. My point is that the debt transfer from private banks in predominantly Germany to the Greek state appears to have been a purely bureaucratic policy designed to prop up the Euro. Disclaimer: I actually voted remain on the balance of practicalities.
  - TheOtherHobbes 10y ago
    There is no "will of the people" because Brexit was never a well-formed practical concept. As a matter of common sense, you can't have a referendum on a word with no meaning. Or rather you can, but the result is guaranteed to be a disaster. When there is no definition everyone agrees on, the only possible outcome is anger and disillusion because some very significant proportion of the population will be disappointed. And even if everyone in the UK agreed on a practical definition - which they very much don't - the EU might not agree to it in negotiations. The entire business was utterly dishonest. There's a huge difference between 'Do you want to leave the EU?" - which is a meaningless catch-all promise that covers all possible and impossible hopes - and "Do you want to leave the EU under these specific terms and conditions?"
    - keithpeter 10y ago
      Yes I agree that we don't know what the people who ticked the 'leave' box actually voted for. The Westminster parliament(1) will now arrive at a series of policies to embody that choice and those policies will have to be negotiated through a long and complex process with the various EU institutions concerned. What emerges from that process will probably not fit anyone's conception of what they were voting for. As a (marginal, 5.5/10) remain voter, I would be inclined to point out that if you vote for radical change, radical change is what you get! I'm pretty sure that the Westminster government(1) will seek a mandate for their choice through a general election. (1) I'm referring to the Westminster parliament and government here as there are of course huge issues with the position of Scotland (which voted very heavily in favour of 'remain') and of Northern Ireland (which also voted less heavily in favour of remain, and which also has the added complexity arising from the Ulster Agreement, and the Ireland Act / Common Travel Area). The devolved assemblies in Scotland/NI will be fighting their corner and trying to see what they can get. Not sure about Gibraltar yet.
      - SideburnsOfDoom 10y ago
        > I would be inclined to point out that if you vote for radical change, radical change is what you get! Yes, it's like voting for Trump, you have voted against "the system" and you will get ... something else. it will change, to something unknown. You might end up not liking it much.
    - chriswarbo 10y ago
      I disagree; leaving the EU is a perfectly well-defined action/goal, which isn't particularly difficult to achieve (we'll be out of the EU at most 2 years after invoking article 50). The referendum result was in favour of leaving the EU, so that's what should happen in order to maintain any semblance of democracy. There is certainly a huge space of possible strategies to take, but that's always the case with any political action. The UK government is elected to take such decisions on our behalf, with various oversight/transparency/legal conditions attached, so that's what should happen. I don't see how this is any different from a goal like "increase Britain's GDP"; there are many ways to do it, huge levels of disagreement, the elected government will choose a strategy they think is best for themselves. The threat of regular elections is designed to align the government's selfish choice more closely with that of the people; universal education is designed to align the choice of the people more closely with the will of the people.
fsloth 10y ago
Uh, no, EU is very much concerned with day to day operation of its member countries. It's just incompetent to react to any extrnal stimuli not coming out of its own bureaucracy.
- tomelders 10y ago
  To be fair, people do keep sending anti-EU MEP's to the EU Parliament, who are incentivised to be as disruptive as possible. Their entire raison d'etre is the total annihilation of the European project and they represent 1 third of MEPs. And none of them seem to have an alternative. They just want the EU gone. Let's clarify that the situation is nor entirely the doing of pro-EU MEP incompetence. There are powerful forces at work.
  - ethbro 10y ago
    Isn't the EU being gone their alternative?
    - tomelders 10y ago
      Ok, I should have said alternative plan/strategy/roadmap.
AnimalMuppet 10y ago
This isn't about the EU. This is about the EZ - the Euro Zone, the countries that use the Euro, which is not all the countries in the EU. Only 19 of the 28 EU countries use the Euro. And this isn't even really about the EZ; it's about the IMF. (About the IMF trying to fix the problems caused by the Euro, but still about the IMF.)

LeifCarrotson 10y ago

Actual title: IMF admits disastrous love affair with the euro and apologises for the immolation of Greece It's nice that you fixed "disastrous love affair with the euro" to read "euro problems", but there's also plenty of unnecessary hyperbole in "immolation".

travmatt 10y ago
Hands down, the best bit of hyperbole during the EU debacle was when Greece's Finance Minister called the austerity measures 'financial waterboarding'.
- forgotpwtomain 10y ago
  > Hands down, the best bit of hyperbole during the EU debacle was when Greece's Finance Minister called the austerity measures 'financial waterboarding'. Can you explain how this is 'hyperbole'[0] ? It's used in a single phrase 'financial waterboarding' which makes it symbolic or metaphorical, unless you are saying this is an exaggeration of Greece's economic problems, in which case I would like to know in which way you think they are exaggerated? Would it need to be 1921 Berlin for it to be 'financial waterboarding' ? [0] exaggerated statements or claims not meant to be taken literally.
  - summarite 10y ago
    The conditions were there to ensure Greece would actually reform, rather than keep lying about data and overspending each year to an extremely unsustainable degree. Greece caused the mess 100℅ itself, then turned around and asked for money. Terms were agreed, billions given, and then Greece turned around and broke the agreement. After three times breaking agreed bailout terms for which the country each time got billions, they wanted another bailout without any conditions while the new government varoufakis was in was actively reinstating some of the already improved insanity ((re)hiring thousands of officials for example). See also my other comment in this thread.
smallnamespace 10y ago
Would you accept the literal double or triple decimation of their economy as a substitute for 'immolation'?

kyriakos 10y ago

How about they do something to help Greece then since they are partly responsible for the mistake?

at-fates-hands 10y ago
Honestly a lot of this should be on Greece. They racked up huge debts while losing their competitiveness in the global market. This led to slower growth. Add in attempts to hide how much they were really in debt and you have a recipe for disaster. This was compounded by the fact that since they relied on the Euro, they couldn't just print their way out this situation like the US does all the time. Instead, they got caught with their pants down and had no alternative but to own up and take severe measures to right the ship.
- keithpeter 10y ago
  For every borrower, there is a lender. Was it not the case that banks in Northern Europe saw an opportunity (common currency, diverse interest rates, and countries with historically very low personal borrowing) and went for it?
- the-dude 10y ago
  Germany and France were quite happy to take Greeks money for VWs, BMWs etc.
- crdoconnor 10y ago
  "Honestly a lot of this should be on Greece. They racked up huge debts while losing their competitiveness in the global market. This led to slower growth. Add in attempts to hide how much they were really in debt and you have a recipe for disaster." The Eurozone was fully aware of, and indeed, tacitly endorsed the trick Greece played with Goldman Sachs in order to join the Eurozone. It was on the front page of the Times at the time when it happened. The Greek leaders behind this are gone (but not punished). The Eurozone leaders behind this are still in power. The weak and powerless in Greece are being punished for their crimes. Many people think this is justice.
- abakker 10y ago

keithpeter 10y ago

Yanis Varoufakis wrote And the weak suffer what they must to explain the impact of austerity policies on Greece. He was (briefly) the finance minister in one of the Greek governments that had to manage this transfer of debt. Respectfully suggest reading the above alongside Timothy Geithner's Stress Test for an alternative approach. The basic issue now is how do they get the Greek economy (and by extension the Spanish and Portuguese economies) back into something like stability?

pjmlp 10y ago
They don't. The first thing EU has done as soon as Portugal and Spain went left on the last elections, was to show who's the boss with the new planned sanctions.
randomname2 10y ago
He also commented on this piece at https://yanisvaroufakis.eu/2016/07/29/the-imf-confesses-it-immolated-greece-on-behalf-of-the-eurogroup/ https://yanisvaroufakis.eu/2016/07/29/the-imf-confesses-it-i... TIME FOR RESIGNATIONS AT THE IMF, THE ECB & THE COMMISSION TIME FOR AN APOLOGY TO THE PEOPLE OF GREECE TIME FOR A POLICY U-TURN, BEGINNING WITH IMMEDIATE DEBT RELIEF, THE END OF AUSTERITY & THE CESSATION OF FIRE SALES TIME FOR THE RESTORATION OF GREEK DEMOCRACY This week began with a debate in Greek Parliament called by the Official Opposition (the troika’s main, but not only, domestic cheerleaders) for the purposes of, eventually, indicting me for daring to counter the troika while minister of finance in the first six months of 2015. The troika who had staged a bank run before I moved into the ministry, who had threatened me with bank closures three days after I assumed the ministry, and who proceeded to close down our banks, now moved to charge me with… bank closures and capital controls. Like a common bully, the troika proved immensely keen to blame its victims, and to violate and vilify anyone who dares resist its thuggery. My reaction to the troika’s charges, and threat of being pulled up in front of a judicial inquiry , was simple: “Bring it on!” “I shall face you”, I challenged them “in any forum you want: in an amphitheatre, a TV station, even a court room!” In the end, they chickened out and the parliamentary motion was defeated as some of them (a small party usually fully in troika’s clasps) strategically voted against. And then, to complete this week’s drubbing of the troika, the report by the IMF’s Independent Evaluation Office (IEO) saw the light of day. It is a brutal assessment, leaving no room for doubt about the vulgar economics and the gunboat diplomacy employed by the troika. It puts the IMF, the ECB and the Commission in a tight spot: Either restore a modicum of legitimacy by owning up and firing the officials most responsible or do nothing, thus turbocharging the discontent that European citizens feel toward the EU, accelerating the EU’s deconstruction. While I was in the ministry, negotiating with such folks, the troika-friendly (or should I say troika-dependent) press was arguing that I am not fit to conduct these negotiations because I had dared insinuate that, from 2010 to 2014, the IMF, the ECB and the Commission had been fiscally waterboarding Greece, causing an unnecessary Great Depression as a result of their thuggish imposition of macroeconomically incompetent policies. The establishment press were claiming that a finance minister of a small, bankrupt nation which is being waterboarded by the high and mighty troika functionaries cannot afford to say, in public or in private, that his small, bankrupt nation was being waterboarded. My response was that we had tried silence and obedience from 2010 to 2014. The result? A loss of 28% of national income and grapes of wrath that were “…filling and growing heavy, growing heavy for the vintage”. Thus, it was time to put to the troika moderate, rational counter-proposals while refusing to continue to acquiesce to their pretend-and-extend tactics. It was a stance that I was never forgiven for. A year after the troika succeeded in having me ejected from Greece’s government, by prevailing upon Alexis Tsipras to capitulate to them against the wishes of 62% of Greece’s voters, the IMF’s ‘internal affairs’ is now confirming that my stance was utterly justified, rather than mistaken or undiplomatic. Ambrose Evans-Pritchard, in his 29th July Telegraph article, had this to say about the IMF’s IEO report: A sub-report on the Greek saga said the country was forced to go through a staggering squeeze, equal to 11pc of GDP over the first three years. This set off a self-feeding downward spiral. The worse it became, the more Greece was forced cut – what ex-finance minister Yanis Varoufakis called “fiscal water-boarding”. (See below for more pertinent quotations from Evans-Pritchard) The question now is: What next? What good is it to receive a mea culpa if the policies imposed on the Greek government are the same ones that the mea culpa was issued for? What good is it to have a mea culpa if those officials who imposed such disastrous, inhuman policies remain on board and are, in fact, promoted for their gross incompetence? In sum, an urgent apology is due to the Greek people, not just by the IMF but also by the ECB and the Commission whose officials were egging the IMF on with the fiscal waterboarding of Greece. But an apology and a collective mea culpa from the troika is woefully inadequate. It needs to be followed up by the immediate dismissal of at least three functionaries. First on the list is Mr Poul Thomsen – the original IMF Greek Mission Chief whose great failure (according to the IMF’s own reports never before had a mission chief presided over a greater macroeconomic disaster) led to his promotion to the IMF’s European Chief status. A close second spot in this list is Mr Thomas Wieser, the chair of the EuroWorkingGroup who has been part of every policy and every coup that resulted in Greece’s immolation and Europe’s ignominy, hopefully to be joined into retirement by Mr Declan Costello, whose fingerprints are all over the instruments of fiscal waterboarding. And, lastly, a gentleman that my Irish friends know only too well, Mr Klaus Masuch of the ECB. Finally, and most importantly, the apology and the dismissals will count for nothing if they are not followed by a complete U-turn over macroeconomic, fiscal and reform policies for Greece and beyond. Is any of this going to happen? Or will the IMF’s IEO report light up the sky fleetingly, to be forgotten soon? The omens are pointing to the latter. In which case, the EU’s chances of regaining the confidence of its citizens, chances that are already too slim, will run through our leaders’ fingers like thin, white sand. FURTHER QUOTES FROM EVANS-PRITCHARD “The report by the IMF’s Independent Evaluation Office (IEO) goes above the head of the managing director, Christine Lagarde. It answers solely to the board of executive directors, and those from Asia and Latin America are clearly incensed at the way EU insiders used the Fund to rescue their own rich currency union and banking system.” “While the Fund’s actions were understandable in the white heat of the crisis, the harsh truth is that the bail-out sacrificed Greece in a “holding action” to save the euro and north European banks. Greece endured the traditional IMF shock of austerity, without the offsetting IMF cure of debt relief and devaluation to restore viability.” “The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.” "“Many documents were prepared outside the regular established channels; written documentation on some sensitive matters could not be located"IEO report It describes a “culture of complacency”, prone to “superficial and mechanistic” analysis, and traces a shocking break-down in the governance of the IMF, leaving it unclear who is ultimately in charge of this extremely powerful organisation.”

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yequalsx 10y ago

What I don't understand about reactions to Greece's profligate borrowing is that I rarely see criticisms of the lender. Borrowing is a 2 party interaction and both parties bear responsibility. The so called bailouts of Greece have been nothing more than bailouts of German and French banks. All the while putting the suffering on Greeks and not anyone else. The best option for Greece would have been to leave the EU in 2008.

golemotron 10y ago
I'm not sure why Merkel is still in office. She's been behind most of that policy, along with the current immigration crisis, and the policies that Brexit was a rebellion against. Ostensibly, Germany is a democracy, but she's had the chancellorship for 10 years and she uses her position to be the EU's de facto leader. There don't appear to be term limits.
- georgeecollins 10y ago
  I think because the flaws with the Euro that have been very disadvantageous for Greece are for the same reason very advantageous for Germany. Germany gets to have a big account surplus with a relatively devalued currency. She may be doing the wrong thing for EU, but the right thing for Germany. In the long run perhaps the right thing for EU is the right thing for Germany, but I don't think German voters see it that way right now.
- detaro 10y ago
  She is still in office because she hasn't done that many unpopular things, especially in her first 2 terms. If anything, she is as seen as to inactive, but as long as the status quo wasn't too bad... And internally, many see her having a lot of influence on the EU as good. The general opinion is not a fan of "Mommy Merkel", but it hasn't been enough to propel the actual alternatives from the corners to a position where they can't be ignored, especially since right now the two largest parties (Merkels CDU and the SPD) support Merkels government together. Traditionally they'd prefer partnering with a smaller party, but their preferred coalitions didn't work out. The alternative combinations that would have had a majority are not seen as viable (yet). And sorry, this isn't great for change, but doesn't make Germany non-democratic. Other possible governments after the last elections would have been more interesting, but I'm not sure if they would have represented the votes better. Right now it seems like opinions drift away from Merkel in both directions, so it'll be interesting what happens next year. Election campaigns haven't really started yet, so it's hard to judge how the large parties are going to position themselves. SPD has to do something to break out from Merkel, or work another 4 years with her.

BenoitEssiambre 10y ago

A properly managed currency could allow for Greece's labor and investment market gridlock to suddenly resolve itself putting a large part of the unemployed back to work. The type of austerity that the euro group wants leads to disinvestment. It is like forcing a person to sell his or her tools and equipment to make this year's debt payments. No longer being able to work productively anymore without tools, how is that person supposed to make next year's payments? The ECB has prevented Greece and all economically disadvantaged regions of Europe from getting the investment they need to work and get out of their morass. At this point a considerable part of the debt is a direct result of perennial monetary strangulation and not caused by the indebted themselves. Some people may be afraid that allowing sufficient funds for investment into Greece may result in the money being diverted into short term spending instead of into long term sustainable investment. To reuse the metaphor, the lender is afraid the borrower will not buy tools with the money and work but instead buy a vacation in Santorini. It is somewhat a valid concern but then if there is this much distrust from other members of the eurozone that people in Greece are not even given the means to work, there is zero reason to continue the relationship and Greece should default and break off. The fact that unemployment is widespread in Europe, not just in Greece tells us that the main source of problems is the damaging monetary situation caused by the ECB, not greek laziness. Greece has already achieved a primary surplus, they went through a huge amount of pain to correct their finances. And they did it while the ECB was continuously throwing sand in their gears, keeping inflation too low and real interest rates above a rate that gets Europe to an acceptable level of employment. This disproportionately affects economically disadvantaged regions. Monetary policy in Europe is run so that only the areas that have natural economic advantages can prosper while investment is sucked out of weaker regions and turned into idle excess fiat. If Greece, through gargantuan efforts managed to be so productive as to offset their natural disadvantage and the European economy started heating up, the ECB would tighten yet again and vacuum investment out of the next weakest region causing a similar crisis there. Only when the ECB will have produced an acceptable level of unemployment in the eurozone will you really be able to start blaming individual countries for their economic woes. After the reforms in Greece, if the ECB did an half decent job, Greece might well have been able to pay the entirety of their debt without too much pain, and if they still didn't, then you would have had a case for corrective austerity there. But you cannot have government austerity at the same time as monetary over tightness (read private sector suffocation). That is just mathematical nonsense. To make another darker metaphor, if there is so much distrust and resentment toward the Greeks that people think they should be made into slaves to pay for their debt, even then, it would make no sense to refuse to provide the tools and infrastructure to enable them to work. What good are non-working slaves? Of course, the relationship should break off well before we get to this extreme. Sometimes it seems like Germany doesn't mind moving towards this nonsensical non-working slaves scenario. The only real solution will have to start with the ECB moving to a higher or better inflation target that doesn't choke their continent's economy and that allows weaker members to labor towards recovery.

Lidador 10y ago

Fake news. It is as simple as that.