Monday, April 20, 2015

Greece --- No Friends Left?

Here is the video of FinMin Varoufakis' presentation at the Brookings-Institute:

A conversation with Yanis Varoufakis

And here is Wolfgang Münchau's reaction to it as published in SpiegelOnline. Just one excerpt: 

"The performance of Greek Finance Minister Yanis Varoufakis at the Brookings-Institute was particularly gross. Instead of explaining his future plans for Greece, he gave once more a lecture about the deficiencies of the Eurozone. What bothers me about Varoufakis is less his middle finger; rather it is his index finger. Varoufakis is correct in many of his views. After all, I have written about them often enough myself. But who does still care about that? One gets the feeling that Varoufakis has little interest in specific financial policies and prefers to walk on theoretical ground.

There was a noticeable contrast between Varoufakis and the Ukrainian Finance Minister Natalie Jaresco who, at the Peterson-Institute across the street, presented in full details all reforms which her country had already undertaken und which reforms would still need to get done. Greece received over 200 BEUR from the EU in rescue loans. The Ukraine just about 2 BEUR. From Greece we got a sermon. From the Ukraine constructive proposals. The Greek government is presently in the process  of alienating those few friends which it still has in Europe and I consider myself to be one of them".


  1. The comments by Munchau are at best disingenuous, at worst merely propaganda against Greece. Why?
    (1) Varoufakis is finance minister because of his high level of expertise (way above most of the eurozone countries) on the eurozone. He is not FM because of expertise in domestic economy, economic growth strategies, FDI promotion, investment, trade or anything else. If the eurozone don't like his repeated analyses of the eurozone disastrous policies and structure, the solution is to correct them. Not to complain about the analysis.

    (2) Greece has been in the EU since 1981 and is a member of the eurozone, having been courted by Germany. Ukraine is not in the EU; is not in the eurozone, and is in a critical condition for many reasons, of which only one is Russian relations. Corruption is far far worse than in Greece, for example. The comparison of Ukraine with Greece is childish and absurd.

    In both cases, if that is the best Munchau can offer, I suggest he keep his mouth (or keyboard) firmly closed. The comments are worthless.

    1. Missing the point on every account, unfortunately.
      The typical Greek respond - hopeless...

    2. "... if that is the best Munchau can offer, I suggest he keep his mouth (or keyboard) firmly closed. The comments are worthless ..."

      Again your arrogance knows no borders. It's in the same class as that of your Master, Varoufakis himself. He always has loyal pet to count on!

    3. In response to the 2 Anonymous comments:
      No, you and the incompetent ministers of the eurozone are the arrogant ones who are missing the point. And accusing me of being *a loyal pet" of Varoufakis is just ridiculous: I have no link to the Greek political system and none to Varoufakis. I have sufficient training in economics to recognise expertise as opposed to the garbage that we hear from Schaeuble and his ilk.

      I presume that if the eurozone accepts the logical argument for reform, and actually does something intelligent, that Varoufakis will be replaced de facto or de jure by someone with relevant expertise in economic development. My fear is that Germany is quite happy for the eurozone to disintegrate, taking the maximum benefit for Germany until having to recreate the DM. The rest of Europe will just be allowed to collapse,. economically and politically.

      Of course, there is a national political rationale for the position that the German government imposes on Greece: there is not much of an economic rationale though. This crisis is primarily about political power within Europe and very little to do with economics -- despite the massive economic ramifications for all. Tsipras is challenging that political power with rational argument: it seems that the Germans are no more able to accept this than they were in the 1930s.

  2. Klaus, with that title you have proven that you have much talent to work as chief editor!

    Regarding Münchau and many other publications, I just wonder why apart from me nobody in the world seems to realize that only a hidden agenda of Grexit can reasonably explain the behavior of Tsipras and Varoufakis.

    These two definitely are not small minded agitators. Varoufakis has given more publications and talks in English than Tsipras and judging from that imho looks pretty smart and intelligent.

    With Grexit as their hidden target, it was adequate to negotiate in that style with the Eurogroup.

    Their plan must have been: If the Eurogroup is 'flexible' (silly etc.) enough and gives us that money without any hard obligations then we take it and go that way, otherwise we do what we prefer and tell the world that it is the fault of the Eurogroup.


    1. This would imply that they have almost perfect control of the situation - something I very (VERY) much doubt

    2. AnonymousApril 21, 2015 at 1:37 PM:

      I agree that they do not have almost perfect control of the situation. (Imho they have none!)

      But why should this hidden agenda require control?

      Some day (pretty soon, most probably by end of April) they will not have enough money to pay their debts and therefore will default.

      This happens by force majeure, no control needed!

  3. I see Münchau as a kind of weather cock showing the main mood of anglosaxian economists. One can read of quite similar changes of opinions these days from other anglosaxian economists as well.
    I suppose that is a really important change of mood, as anglosaxian fund managers, caring for huge sums, are influenced by their folk and may change their view of the euro in the direction of Warren Buffet.
    In the past, Anglosaxians seemed to take a Grexit as a sign that the Euro fails, reay to withdraw their money in that case. This perspective was the foundation of the moral hazard strategy that IMHO especially Varoufakis tried to play last weeks.

    Now the main mood may change toward Buffets view that a Grexit would strengthen the euro zone, as it proofs that moral hazard will be punished and hence is an unattractive route, that will not find followers. So a Grexit may be a reason to invest more money to euro-zone, not withdrawing money.
    Such a switch of mind would devalue the last strong argument that Varoufakis plays (Grexit harms Europe) and hence further weaken the bargaining power of the syriza government toward euro-group.

    It looks like Greece just loose its last trump card.

    1. The Marxists running Greece at the moment are incompetent but there is lots of manly idiocy going around in the rest of EU too.

      Foreign creditors trying to squeeze an already battered Greek public don't "win" by having Greece flat out default them either. They'll lose hundred of billions and very plausible set in motion the slow speed destruction of the EU project. The EU certainly won't have much credibly going forward if Greece is forced out,,

    2. I am supporting the view of Buffett since over a year now. Markets and economies as a whole do not give a shit whether EUR is a currency union or currency system - as long as it works flawlessly. Transition from union to system would mostly be humiliationg for European politicians/bureaucrats...

      Hence, a Grexit would certainly have severe consquenses for everyone in the short term, be positive for EUR in the mid-to long term and unfortunately devastating over all terms (mainly long-term) for Greece.

      I am 100% for Greece to stay within EUR, but not in order to prevent chaos, but because Greece IS part of Europe and because I am convinced that EUR (due to the accompanied compulsions, among others) bears great benefits for Greece.

      BUT perhaps I am wrong:
      If Greece/the Greeks are of different opinion, that should be perfectly ok. No concerns AT ALL. They might even take a leading/connecting role in the adjunct areas (Turkey-Lebanon-Egypt-etc.). Suits their mentality far better and might lead to a surprisingly positive outcome!

      My greatest concern/fear:
      Unproductive struggles until fall, new elections/memorandum towards the end of 2015 and actually one year of very precious time lost

    3. @AnonymousApril 21, 2015 at 2:03 PM

      >"I am 100% for Greece to stay within EUR, but not in order to prevent chaos, but because Greece IS part of Europe..."

      This is not sufficient. If a country wants to be member of the Eurogroup it's economy must follow the Maastricht criteria!

      >"...and because I am convinced that EUR (due to the accompanied compulsions, among others) bears great benefits for Greece."

      That was my hope when the crisis started. But the past years have demonstrated that this is against the mentality of the population.


  4. Yes, Greece benefit from the EUR, but what do they contribute to the EZ or EU.
    Not one year lost, one more year lost on top of the last 5. And by then we have reached the point where nobody can or will govern the nation.

  5. "Foreign creditors trying to squeeze an already battered Greek public" ... That is Syrizas typical rhetoric of describing it. What is wrong about forging a sustainable pension system? The demographic development in Greece makes this utterly necesssary.

    1. There are many many utterly necessary reforms in Greece, but none have happened.


  6. @ Guest
    Finance ministers in Greece have the same job description as in developed countries.
    To asses the Greek governments revenues and expenditures, and adjust these in a prudent way.
    If Mr. Varoufakis is not willing, or able, to do that, he should find another job.