Friday, January 22, 2016

High Noon In Davos: Tsipras vs. Schäuble

Seldom have I witnessed such a discrepancy between what media reported and what actually happened. I watched the entire panel discussion yesterday in Davos on live stream. Never would I have thought what kind of a High-Noon-Event the media would make out of it.

Die Welt reported that Tsipras had made himself a laughing stock. So much so that, immediately after the discussion, yields on Greek bonds jumped high. On the other hand, the Greek blog KeepTalkingGreece reported that Schäuble had called Tsipras "stupid". What had actually happened?

At one point, Tsipras said that "we not only have to become more competitive, we also have to become more productive. We must not only look at labor costs". According to Die Welt, die audience was in shock and could only shake heads. Did Tsipras not even understand the difference between labor costs and unit labor costs? Did he not even understand that becoming more productive is a precondition for becoming more competitive?

I can literally picture how members in the audience, shocked by Tsipras' statement, immediately texted their brokers to sell Greek government bonds because if the Prime Minister is confused about unit labor costs, the country will have to go down the drain.

And Schäuble? Did he really call Tsipras "stupid"? Well, my impression was that Schäuble had decided to show his charming side on the panel. Early on in the discussion, he made comments like "as the Greek Prime Minister said" or "I agree with the Greek Prime Minister". This, of course, was not in relation to Greek finances but to the refugee problem, instead. As regards Greek finances, one would have had to be very naive to expect that Tsipras & Schäuble would suddenly fully agree. But as things go: Bill Clinton still gets praised for coining the phrase "It's the economy, stupid!" but when Schäuble says "It's the implementation, stupid!", some people see it as an offense instead of a reference to Bill Clinton's slogan.

Overall, I thought Tsipras handled himself well and Schäuble was far from his aggressive potential. In fact, I would give Tsipras credit for the best line in the entire discussion: Schäuble explained that any change to the existing agreement would require him to go back to the Bundestag and seek approval. This, he said, would be like "walking into a room full of dynamite carrying a burning candle". Tsipras's response was: "I do not recommend carrying a burning candle into a room full of dynamite. Instead, we should first remove the dynamite and light the candle thereafter!"

Not bad; not bad at all!


  1. I think that Renzi has put it more elegantly. The problem is that the fact that a lot of corrupt people from pasok are now in Syriza is devaluing anything Tsipras says or does. He is not a young person and i am one year older than him...

    see this, it is a rather better critique by italy which says, we are reforming but the growth is not coming because this is not 1986 with plenty of fat to burn in the public sector and huge efficiencies to be reaped. If we do not deliver better living standards for the less intelligent, well connected and lucky in society, they will elect Hitler 2.0 and simply confiscate the fortunes of the CEOs, we have reached that point really. This is what UKIP is, as is Lepen etc.. Focus on the working class and deliver the welfare state of 1975 or we are going lose everything and end up in world war 3. it will take time but it will be inexorable. Davos showed how massively out of touch the elite is.

  2. The real question is, is germany prepared to concede a common finance ministry based in Paris and headed by himself responsible for the economic success of all of the eurozone, not just germany, this is what will keep the eurozone sustainable and nothing less than that. The minute the us and them arguments stop massive growth will ensue. He says he is a federalist, well he needs to show it, i would gladly swap a greek finance minister for a german one, BUT ONLY IF HE IS RESPONSIBLE FOR THE WHOLE OF THE EUROZONE. currently he is pursuing politics that are tearing the eurozone apart.