Sadly Germany Wins at the Expense of Greece


I must say I agree with Yanis Varoufakis on this one. What he says in the New Statesman is worth a read: Exclusive: Yanis Varoufakis opens up about his five month battle to save Greece

 “It’s not that it didn’t go down well – there was point blank refusal to engage in economic arguments. Point blank. You put forward an argument that you’ve really worked on, to make sure it’s logically coherent, and you’re just faced with blank stares. It is as if you haven’t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem – you’d have got the same reply.”

Speaking of Grexit:

And yet Tsipras diverged from him at the last. He understands why. Varoufakis could not guarantee that a Grexit would work. After Syriza took power in January, a small team had, “in theory, on paper,” been thinking through how it might. But he said that, “I’m not sure we would manage it, because managing the collapse of a monetary union takes a great deal of expertise, and I’m not sure we have it here in Greece without the help of outsiders.” More years of austerity lie ahead, but he knows Tsipras has an obligation to “not let this country become a failed state”.

What cost him his job? A plan:

He said he spent the past month warning the Greek cabinet that the ECB would close Greece’s banks to force a deal. When they did, he was prepared to do three things: issue euro-denominated IOUs; apply a “haircut” to the bonds Greek issued to the ECB in 2012, reducing Greece’s debt; and seize control of the Bank of Greece from the ECB.

None of the moves would constitute a Grexit but they would have threatened it. Varoufakis was confident that Greece could not be expelled by the Eurogroup; there is no legal provision for such a move. But only by making Grexit possible could Greece win a better deal. And Varoufakis thought the referendum offered Syriza the mandate they needed to strike with such bold moves – or at least to announce them.

He hinted at this plan on the eve of the referendum, and reports later suggested this was what cost him his job.

12 thoughts on “Sadly Germany Wins at the Expense of Greece

  1. YV is unreliable narrator, backtracking the total failure of his/Syriza strategy in nicest possible terms (for himself). Schauble’s intentions to push Greece out to draw a stronger EU line (as early as 2012) should be well known to YV and Syriza and part of their strategy, not this ‘they didn’t listen to us, we’re hurt, shocked, shocked’. Social-democratic Pollyannas meet Realpolitik. Wow.

    Schauble is indeed personification of German might: in a wheelchair, pushed around by a country which has army and resources to back up its hegemony: USA. Which also has politicians smart enough to propagandize USA as good guys in this debacle.

    USA wants united Europe, it’s easier to manage (TTIP) and are (with majority of EU) happy to let the Germans do the dirty work. It seems pretty indifferent to Greece becoming a failed state, it has plenty of experiences with those. Plus, another albatross around EU neck won’t hurt.

    Of course, USA is another cancer colony of western capital, full of tumors, quickly growing.

    There are no victors here, just fools.


  2. Irrespective of good or bad guys, in my view, there is a cultural clash between the north of Europe and the south. The weakness in the euro is the rules to make it work with different economic strengths of the different nations that use it. Inevitably, irrespective of the ideology of different governments, right or left, under these rules all the economies will converge into a single economic unit, hence the call for greater European integration. Fiscal rules (in this case balancing the books) are by definition conservative or right wing. Therefore one has to organise the economy to achieve that and today that is known as ‘reforms’. It doesn’t look like Syriza understands this, or the Greeks as a whole. The same situation is going to confront Podemos in Spain later this year. When Varoufakis said “You might as well have sung the Swedish national anthem” it means that his conversation was not about the rules. Those now in the eurozone only have a discourse structured by the rules, so when they have a meeting the meeting is about the rules. Culturally the Greeks, and I suspect the Italians and Spanish, have a notion of ‘dignity’ that is alien to those in northern Europe. They talk of humiliation as something that others take away from them, hence there is talk of neo colonialism of some kind. They don’t seem to have a discourse that allows for self humiliation, or the destruction of their dignity by their own hand.


    • So obviously what you’re saying is the Eurozone is truly a great failure, both diplomatically, culturally, and economically? I can’t agree with your estimation on that either Varoukis is an economist and economics is already fairly universal as you see many other economists taking up positions on the side of Greece from other places in the world.

      You make it all sound so reasonable, so cold, so rational. As if – Oh, if Greece would just bow down and lick our ass, play by our rules, do what we say without question everything would be just fine… do I get that correct? Oh, let me add, I think you’re full of crap. Do you get my meaning? After following this for months myself as an outsider all I can say is: Do you think if your masters in the North believed it was only a matter of the ignorant Greeks not understanding the rules of the game that they’d have taken the time to explain them? Instead the truth is there are no rules, all there are is one thing: Do what we tell you are be done! That’s the rules of the German Finance Minister: there will be no negotiating, there will be only one thing: our imperial rule of imposition of economic austerity on our terms not yours.

      Germany and others seem to want power over rather than power-with. You’re notion of rules is to me one of the great issues in neoliberalism to begin with: this subterfuge of rationalization, rather than human compassion. For you it sounds all clear cut and that you’re in favor of austerity measures that will keep people in debt for generations. To me that is both humiliating and destructive. If the North is so dispassionate that they can hide behind rules then to me they are no longer human. Period!


      • This unbreakable rules of the North and the prudent Schwäbische Hausfrau bullshit. Actually, Germany is the defaultiest European country. From interview with Piketty:

        Piketty: My book recounts the history of income and wealth, including that of nations. What struck me while I was writing is that Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.

        ZEIT: But surely we can’t draw the conclusion that we can do no better today?

        Piketty: When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.


      • Maybe Greece going down is incidental, a sacrificial pawn, it’s the Schäuble plan for neocameralist (for lack of better term) EU … or Greater Germany. Every remnant of original (mostly French) EU vision must be destroyed.

        Some quotes:

        Schäuble sees political institutions not as places of dynamics, but as places of stability. Parliament as a large law firm: follow the will of the partners

        New Eurozone will be genuine political union: Germany, Austria, the Netherlands, Luxembourg, Slovakia and, /if possible/, France.

        Therefore, the terrible end has begun. The postwar period is over. The tablecloth is cut. Irrevocably


      • Of course, Schäuble plan is myopic and insane, even suicidal. There was one good reason for EU, to prevent war in Europe. Now the war is one question away: how will Germany (new EU) get the resources and markets she needs ?


      • You’ll indulge me if I don’t engage in the name-calling, thank you. Firstly, I did not take up the side of the Germans, not did I denigrate Yaroufakis. I was trying to, from my perspective to outline what is the case and highlighting, if that is possible, some factual truths about the Greek situation with the euro. Perhaps I clumsily tried to take a disinterested stance, but maybe that is more difficult than I thought. Anway . . .

        You’re right, Varoufakis is an economist. There is nothing outstanding about that as one can get any number of economists to support a stance whether on the right or the left.

        At this point, the Eurozone is a club and clubs have rules and a constitution. If you want to be a member of a club, you must abide by the rules. The rules right now says you balance your books, and you pay back what you owe. Basically, they are the rules. There are a whole lot of little rules governing the major rules. One rule is that there is no exit door, one was not built in, so exiting will have a huge price to pay. The euro does not behave like any other currency. It should be a federal currency if it is to behave like any other currency, but it’s not. It might get there, and this is called greater European integration.

        Arguably Greece should never be in the club in the first place. Their economy did not comply with them being able to manage the rules. Along with Goldman Sachs, they cooked the books to get in. Why did they want to join the euro? I think it has something to do with their culture, with the way they perceive themselves. I hear a lot of Greeks (on TV interviews) talking about their dignity, and I wondered if that is a key to the thinking about being part of the euro. I know this is a stereotype, but they remind me of the Michael Constantine character in the film, “My Big Fat Greek Wedding.” Was it not puzzling that in their referendum they voted against austerity and ended up taking a double dose of it because they lost trust with the other club members. That referendum confused the hell out of the club members. Is part of the Greek culture to accommodate contradiction as a basic tenet of everyday life? It was very puzzling.

        The Greeks, with their big heart, their passion, their never ending of telling the world what their ancestors bequeathed the world 2,500 years ago, did walk into an icey fridge in Brussels where the discourse is purely rational, inhuman, and unforgiving, as it turned out. By stating this does not mean that I support austerity, it just happens to be the way it is. If all the other club members can abide by the rules and Greece cannot, then Greece should be a special case in the club where the other club members coalesce to support them to reach the standard.

        Whether we like the euro or hate it, it is hear to stay. The Germans were working over that last six months on a Grexit, but so, ironically, were the Greeks. A back door will now be built for countries exiting in the future. The euro has profound questions for democracy, or democracy as we know it. What will democracy be like in a federal Europe?


      • “At this point, the Eurozone is a club and clubs have rules and a constitution. If you want to be a member of a club, you must abide by the rules. ”

        You sound like a pitch man for a new product line. All kidding aside you’re not telling me something I don’t already know, and I’m sure that the Greeks knew this as well. To insult their intelligence as if they didn’t seems to be just another slur upon the Greek character. You’re trying to hide behind neutrality doesn’t cut it for me either. This higher than thou because “I don’t name call” rhetoric is moral lambasting that want cut it for me are many who view my posts. You’re defense of the indefensible seems to bespeak more about who you are than about the truth of this impersonal rules based system of economics that has all of the EU spell-bound to the economic dictatorship of Germany. If you want to relegate yourself to an outside loop of explainer that’s fine with me. Not that we don’t know what it is already. But seems that your surprised at the Greeks acceptance as much as many of us are… so let’s be clear: I’m no friend of the German financiers so am obviously one-sided in my appraisal. That’s me. I pull no punches. What I’m concerned over is neither the Greek government nor the EU specifically but the human cost and suffering for all involved. That’s it. Caput!


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