Varoufakis stepped down

Yanis Varoufakis stepped down as minister of finance of the Tsipras government and said the following about this on his blog:

"The referendum of 5^th July will stay in history as a unique moment when a small European nation rose up against debt-bondage.
Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25th June ultimatum comes with a large price tag attached. It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms.
Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.
I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.
And I shall wear the creditors’ loathing with pride.
We of the Left know how to act collectively with no care for the privileges of office. I shall support fully Prime Minister Tsipras, the new Minister of Finance, and our government.
The superhuman effort to honour the brave people of Greece, and the famous OXI (NO) that they granted to democrats the world over, is just beginning."

At the same time, today, Monday, Yanis Varoufakis wrote an article on his blog about the NO vote of the Greeks:

Our NO is a majestic, big YES to a democratic, rational Europe!

Posted on July 6, 2015 by yanisv

On the 25^th of January, dignity was restored to the people of Greece.
In the five months that intervened since then, we became the first government that dared raise its voice, speaking on behalf of the people, saying NO to the damaging irrationality of our extend-and-pretend ‘Bailout Program’.
We

• spread the word that the Greek ‘bailouts’ were exercises whose purpose was intentionally to transfer private losses onto the shoulders of the weakest Greeks, before being transferred to other European taxpayers
• articulated, for the first time in the Eurogroup, an economic argument to which there was no credible response
• put forward moderate, technically feasible proposals that would remove the need for further ‘bailouts’
• confined the troika to its Brussels’ lair
• internationalised Greece’s humanitarian crisis and its roots in intentionally recessionary policies
• spread hope beyond Greece’s borders that democracy can breathe within a monetary union hitherto dominated by fear.

Ending interminable, self-defeating, austerity and restructuring Greece’s public debt were our two targets. But these two were also our creditors’ targets. From the moment our election seemed likely, last December, the powers-that-be started a bank run and planned, eventually, to shut Greece’s banks down. Their purpose?

• To humiliate our government by forcing us to succumb to stringent austerity, and
• To drag us into an agreement that offers no firm commitment to a sensible, well-defined debt restructure.

The ultimatum of 25^th June was the means by which these aims would be achieved. The people of Greece today returned this ultimatum to its senders; despite the fear mongering that the domestic oligarchic media transmitted night and day into their homes.
Today’s referendum delivered a resounding call for a mutually beneficial agreement between Greece and our European partners. We shall respond to the Greek voters’ call with a positive approach to:

• The IMF, which only recently released a helpful report confirming that Greek public debt was unsustainable
• The ECB, the Governing Council of which, over the past week, refused to countenance some of the more aggressive voices within
• The European Commission, whose leadership kept throwing bridges over the chasm separating Greece from some of our partners.

Our NO is a majestic, big YES to a democratic Europe.
It is a NO to the dystopic vision of a Eurozone that functions like an iron cage for its peoples.
It is a loud YES to the vision of a Eurozone offering the prospect of social justice with shared prosperity for all Europeans.

Looking beyond Greece - Europe's disasters

Greece is not the only problem in Europe, there are more countries that may end up having trouble with financing their debts. France, for example - Explosion de la dette : après la Grèce, la France ? And, if you look at unemployment and other economic figures, are not Spain and Portugal in trouble? And what about Finland?

That country, Finland, is where Paul Krugman begins his article: Europe's many economic disasters:

"Let us talk, for starters, about Finland, which could not be more different from that corrupt, irresponsible country to the south. Finland is a model European citizen; it has honest government, sound finances and a solid credit rating, which lets it borrow money at incredibly low interest rates.
It is also in the eighth year of a slump that has cut real gross domestic product per capita by 10 per cent and shows no sign of ending. In fact, if it were not for the nightmare in southern Europe, the troubles facing the Finnish economy might well be seen as an epic disaster."

And what do you think of this excerpt of an article I just read :

"No future

Whatever happens in the short term with Greece, the single currency has no long-term future.

Here’s why, in two words: youth unemployment.

Almost half of young Greeks are jobless, according to official statistics from Eurostat. That may not be much of a surprise, but the figure for Spain is almost as bad at 49.3 per cent. In Italy, youth unemployment is running at 41.5pc, a third of youngsters in Portugal are out of work as are nearly a quarter in France. The full significance of this does not seem to have been grasped. The single currency has never been a viable economic or even political idea, it is part of a dream of a new Europe born out of the ashes of the Second World War and the fall of the Berlin Wall.

These events still resonate with the older generations who pushed the single currency project, but are receding into history.

A new generation is reaching adulthood with no memory of the Cold War and no sense of the emotional impetus behind the euro and the hopes for a united Europe.

Yet they are the ones being made to pay the heaviest price for a noble but utterly futile dream.

The Greek experience shows how the single currency is held together by sheer political willpower. It is strained now, even with Angela Merkel, who was brought up in the old East Germany, at the helm.

There seems no hope of it holding up when today’s twentysomethings are in the seats of power."

I think youth unemployment in Europe is one of the important reasons to change course and come up with better economic policies and better democratic policymaking practices in the European Union. It's high time to review current practices and give new hope to European citizens, both 'old' and young citizens. Not only in southern Europe but also in northern Europe.

Are Greece's creditors killing the dream of a united and democratic Europe?

Yesterday (Thursday) I've read a number of authors arguing that the lack of a deal between the current Greek government (elected only 5 months ago) and Greece's creditors will have serious consequences including the (further) erosion of the European Union and its dream of democracy. To me it seems as if the majority of Europe's current leaders are determined to defend the current political order in which there is little or no room for divergency -- which reminds me of a book that I edited and gave the title "Diversity in Development: Reconsidering the Washington Consensus".

One of the interesting chapters in this book about the need for divergency of views on economic policies, written by Ricardo Ffrench-Davis, advocated that the neoliberal Washington Consensus reforms be reformed: Reforming the Reforms of the Washington Consensus.

A similar thing should be done right now: reforming the reforms the Troika is imposing on diverging governments as if the Troika's dictated reforms are the indisputable medicine to be swallowed -- for the health of the patient.

In the interview below in Le Nouvel Observateur, Stathis Kouvelakis, member of the central committee of Syriza, sees the way the Greek crisis evolves as the end of a certain idea or illusion of Europe and the imposition of its antidemocratic character.

Pourquoi le Premier ministre grec, Alexis Tsipras, a-t-il décidé un référendum ?
- Alors qu’il avait signé de sa propre main les dernières propositions présentées aux institutions européennes, celles-ci ont voulu le soumettre à un exercice d’humiliation en lui demandant d’aller encore plus loin, au-delà de ce qui était politiquement gérable par lui : il était devenu clair que son propre parti, sa majorité parlementaire et une partie croissante de la société n’étaient pas prêts à faire davantage de concessions.
Comment en est-on arrivé là ?
– Il n’y a pas eu de négociations. Le terme est inadéquat pour décrire ce qui s’est passé. Les institutions européennes ont gardé la même ligne depuis le début : imposer à Tsipras un plan d’austérité, le forcer à rester dans un cadre identique à celui de ses prédécesseurs et montrer ainsi que les élections en Europe, a fortiori quand c’est un parti de gauche radicale anti-austérité qui gagne, ne changent rien aux politiques qui sont suivies.
Ce qu’on appelle des négociations n’a été qu’un piège mortel qui s’est refermé sur Tsipras. Son erreur, c’est de ne pas l’avoir compris à temps. Il pensait qu’en poussant les discussions le plus loin possible les Européens finiraient par se résoudre au compromis plutôt que de prendre le risque d’une rupture. Mais ils n’ont rien cédé, alors même que lui a perdu beaucoup : il a fait d’énormes concessions, l’opinion publique s’est habituée à l’idée qu’un accord était possible, les caisses publiques sont vides.
N’a-t-il pas aussi fait l’erreur de croire qu’il pouvait obtenir moins d’austérité tout en restant dans l’euro ?
– Je fais partie de la tendance, au sein de Syriza, qui pense depuis le début que vouloir concilier le rejet de l’austérité et le maintien dans la zone euro est contradictoire. Or on a vu, dès que la Banque centrale européenne a décidé en février de couper le principal moyen de financement des banques grecques, que ce n’était pas possible. L’arme monétaire a servi de moyen de pression sur la Grèce afin de la forcer à renoncer à sa politique anti-austérité.
Le dernier épisode de ce chantage, c’est lorsque l’Eurogroupe, en refusant de prolonger le programme actuel, a contraint Tsipras à fermer les banques cette semaine. Le but est politique : en prenant les Grecs en otage et en créant une situation de panique, notamment dans les classes moyennes et aisées, il s’agit soit de forcer le gouvernement à ne pas aller jusqu’au référendum, soit de dicter les conditions de son déroulement et de favoriser le camp du oui. L’Europe a déclaré la guerre à la Grèce.
La société grecque semble très divisée…
– Oui, deux tendances s’affrontent. Le camp du non s’appuie sur une partie de la population très affectée par l’austérité, qui perçoit les exigences de la troïka comme une volonté d’humilier la Grèce. Mais le camp du oui, renforcé par la peur que suscite la fermeture des banques, est aussi en train de se structurer. Nul doute que ce référendum est un acte politique courageux. Les décisions importantes sont toujours risquées. On avait fini par oublier au fil du temps que la politique s’est rapetissée en Europe.

"La fin d'une illusion sur l'Europe"

Quels sont les scénarios possibles à l’issue du référendum ?
– Une victoire du oui serait une défaite majeure pour Tsipras et le contraindrait sans doute à organiser de nouvelles élections. Mais une victoire du non renforcerait sa détermination face aux institutions européennes en lui donnant un mandat différent de celui du 25 janvier : il s’agirait désormais de rompre avec l’austérité, quelles qu’en soient les conséquences – y compris si cela signifie sortir du cadre européen. Lorsqu’il a annoncé la tenue du référendum, c’était la première fois que le mot "euro" ne figurait pas dans son discours. Ce n’est pas un hasard.
Est-ce l’acte de décès de l’Europe ?
– Tout le déroulement de la crise grecque signe la fin d’une certaine idée, ou plutôt d’une illusion entretenue au sujet de l’Europe. Son caractère antidémocratique qui ne respecte que la loi du plus fort, son néolibéralisme qui méprise tout contrôle démocratique sont perceptibles par tous désormais. Tous ont pu se rendre compte que, même si Syriza n’a cherché qu’une rupture partielle avec les politiques d’austérité, une rupture modérée, pragmatique, et sans remettre en question les fondamentaux du cadre européen, l’affrontement a été ultraviolent. Simplement parce que ce gouvernement n’était pas prêt à capituler face au diktat néolibéral.
Même si l’Europe parvient à vaincre la résistance des Grecs, elle paiera, je crois, un prix très lourd pour son attitude. Car la Grèce n’est que la pointe avancée de la crise européenne : le projet communautaire est de moins en moins soutenu par les opinions publiques.
Propos recueillis par Sarah Halifa-Legrand

Dijsselbloem on 'no' and Varoufakis on 'yes'

Another day with dramatic news about the conflict between Greece and its creditors?

I just read the Dutch press reporting on a Dutch parliamentay meeting with Dijsselbloem The headings are: "Geen plaats in de eurozone voor Griekenland bij nee", "Grieken moeilijk in euro te houden bij 'nee'-stem", "Dijsselbloem: bij nee is het de vraag of Griekenland in de euro blijft". In plain English: Dijsselbloem suggests that Greece will/should leave the eurozone if the Greeks vote 'no'.

Varoufakis said to Bloomberg that he will step down if  the Greeks vote 'yes'.

July 2, 2015 — 11:40 AM CEST Updated on July 2, 2015 — 12:56 PM CEST

In an interview with Bloomberg TV's Guy Johnson, Greek Finance Minister Yanis Varoufakis said he would step aside if Sunday's referendum backs terms offered by international creditors

Varoufakis Says he Will Quit if Greeks Vote 'Yes' 

Yanis Varoufakis said Greece won’t “extend and pretend” that it can pay its debts, vowing to quit as finance minister if voters don’t support him in Sunday’s referendum.
With banks shuttered and Greece’s economy hobbled by capital controls, Varoufakis said in a Bloomberg Television interview in Athens that he would “rather cut my arm off” than sign a deal that fails to restructure Greece’s debt. The 54-year-old economics professor said he “will not” continue in his post if Greece endorses austerity in the plebiscite.

"Greece might be a Lehman moment"

I copy from an article of today (Thursday 2 July) in CNBC MoneyControl, "Greece might be a 'Lehman moment'" :

US-based investors have so far remained relatively calm in face of Greek financial and political turmoil. But one hedge fund manager wonders if the distress could be a signal of something akin to the 2008 financial crisis. "One of the many questions that remain is whether this is a 'Lehman' moment or not," Maria Vassalou, portfolio manager of the Perella Weinberg Partners Global Macro fund, wrote in a recent note.

Vassalou added that Europe will be changed regardless of what happens in Greece. "Independently of the outcome of the referendum, the dynamics of the euro zone are bound to change going forward, leading to more uncertainty in the region," she wrote. "The increased uncertainty is likely to prevent inflation from returning to its target rate in the near future and economic growth will face headwinds."   

Vassalou also noted that global markets "will see some degree of spillover effects" depending on the severity of the short-term developments in Greece. She notes that left-wing politicians elsewhere in Europe, especially Spain and Portugal, will get a boost if European creditors bend to Greek demands. "I think the gamble they are likely to take is a tough stance on Greece in order to halt the 'austerity revolt' from the other weak links of the euro zone," Vassalou wrote.

"One of the many questions that remain is whether this is a 'Lehman' moment or not," Maria Vassalou, portfolio manager of the Perella Weinberg Partners Global Macro fund, wrote in a recent note.

Read more at: http://www.moneycontrol.com/news/world-news/greece-might-belehman-moment-hedge-fund-pro_1758881.html?utm_source=ref_article

US-based investors have so far remained relatively calm in face of Greek financial and political turmoil. But one hedge fund manager wonders if the distress could be a signal of something akin to the 2008 financial crisis. "One of the many questions that remain is whether this is a 'Lehman' moment or not," Maria Vassalou, portfolio manager of the Perella Weinberg Partners Global Macro fund, wrote in a recent note. "It might be, but I think nobody can answer this question with great certainty at this point. It will have to be seen." Read More: PM Tsipras: Greece will go ahead with referendum Vassalou added that Europe will be changed regardless of what happens in Greece. "Independently of the outcome of the referendum, the dynamics of the euro zone are bound to change going forward, leading to more uncertainty in the region," she wrote. "The increased uncertainty is likely to prevent inflation from returning to its target rate in the near future and economic growth will face headwinds." The PWP Global Macro fund is down 1.37 percent net of fees this year through May, according to performance information obtained by CNBC.com. The fund, launched in late 2013, gained 17.22 percent last year. It manages approximately USD 461 million. Vassalou also noted that global markets "will see some degree of spillover effects" depending on the severity of the short-term developments in Greece. She notes that left-wing politicians elsewhere in Europe, especially Spain and Portugal, will get a boost if European creditors bend to Greek demands. "I think the gamble they are likely to take is a tough stance on Greece in order to halt the 'austerity revolt' from the other weak links of the euro zone," Vassalou wrote.

Read more at: http://www.moneycontrol.com/news/world-news/greece-might-belehman-moment-hedge-fund-pro_1758881.html?utm_source=ref_article

"One of the many questions that remain is whether this is a 'Lehman' moment or not," Maria Vassalou, portfolio manager of the Perella Weinberg Partners Global Macro fund, wrote in a recent note.

Read more at: http://www.moneycontrol.com/news/world-news/greece-might-belehman-moment-hedge-fund-pro_1758881.html?utm_source=ref_article

Why are Greece's creditors so stubborn?

Given the reasonable and moderate policies of the Tsipras government (elected only five months ago) it's hard to understand why Greece's creditors are so stubborn and stick to their view of how Greece should solve its problems. Partly it's arrogance, the arrogance of power, and partly it's the defense of interests. But there's more. There's the psychology of the creditors -- of the men and women representing the creditors.

Who are they?

They are officials working at the ministries of finance, at the central banks and at the international financial institution to which they move temporarily or for a lifetime: the IMF and the ECB.

I have worked for many years with these officials, as the chair of an informal working group on international finance, and as the director of the Forum on Debt and Development FONDAD.

They are pleasant, intelligent and often soft-spoken persons. Why do they defend policies that harm the lives of people and even kill them (for example, Greek patients who die because they don't get anymore the usual medical treatment)?

Why do they think their policy prescription for Greece is the right one, even when the facts show the medicine has not worked?

The answer is simple and can be summarised in four basic observations: 

• They are trained to think this way.
• They are selected in these jobs because they think this way.
• If they think differently, their bosses make them think this way.
• They stick to what their colleagues (those who they take seriously, that is, those who think like they think; so not Varoufakis) think.

You can go deeper in trying to understand the psychology or the psyche of the officials representing Greece's creditors. But that's for another post.