4 ms·

From what I understood of reading Varoufakis's "Adults in the Room" the French and German banks were every bit as risk during the euro debt crisis, as they had

From what I understood of reading Varoufakis's "Adults in the Room" the French and German banks were every bit as risk during the euro debt crisis, as they had bought government debt from PIGS countries. The issue was painted as profligate borrowing by PIGS, but was just as much an issue in keeping up the pretence that the PIGS (G in particular) weren't in fact bankrupt, and the German and French banks accordingly in deep trouble. Hence the subsequent demand for brutal austerity, as this was the only policy option when you can't default and devalue your own currency, nor persuade the taxpayers of other euro countries to bail you out.

epups 4y ago
But they did get a bail out. And Greece was indeed on the verge of bankruptcy.
- okeuro49 4y ago
  As I understand, Greece _was_ bankrupt. The citizens did not get bailed out, they got brutal austerity. The German and French banks, who were exposed to Greek debt, got bailed out, by pretending that Greece was not bankrupt. If Greece was a sovereign state, they would have defaulted, and the banks would have likely failed. The drachma would devalue and Greeks would have hopefully recovered by virtue of cheaper exports. It says a lot about the French-German hegemony in Europe that Greece was propped up for the sake of European banks, and its citizens treated to the worst austerity since WW2 (discussed in the book).
  - epups 4y ago
    I know Varoufakis' take on the Greek crisis. I think he's mostly correct on the fact that having a common currency without a correcting mechanism will inevitably lead to these issues. However, Greece benefitted enormously from being part of the eurozone too. And the fact is that it borrowed cheaply and invested that money badly. The bail out was there, the invrstors had to agree to a "haircut" and new credit lines were given to Greece (indeed under austerity, which I also found counterproductive). I think I mostly don't disagree with you, just offering a slightly different perspective too.

epups 4y ago

But they did get a bail out. And Greece was indeed on the verge of bankruptcy.

okeuro49 4y ago
As I understand, Greece _was_ bankrupt. The citizens did not get bailed out, they got brutal austerity. The German and French banks, who were exposed to Greek debt, got bailed out, by pretending that Greece was not bankrupt. If Greece was a sovereign state, they would have defaulted, and the banks would have likely failed. The drachma would devalue and Greeks would have hopefully recovered by virtue of cheaper exports. It says a lot about the French-German hegemony in Europe that Greece was propped up for the sake of European banks, and its citizens treated to the worst austerity since WW2 (discussed in the book).
- epups 4y ago
  I know Varoufakis' take on the Greek crisis. I think he's mostly correct on the fact that having a common currency without a correcting mechanism will inevitably lead to these issues. However, Greece benefitted enormously from being part of the eurozone too. And the fact is that it borrowed cheaply and invested that money badly. The bail out was there, the invrstors had to agree to a "haircut" and new credit lines were given to Greece (indeed under austerity, which I also found counterproductive). I think I mostly don't disagree with you, just offering a slightly different perspective too.