Thursday, May 19, 2016

Setting The Record Straight!

Bank of Greece Governor Yiannis Stournaras slammed the negotiations conducted by former finance minister Yanis Varoufakis and former chairman of the Council of Economic Advisers Nikos Theoharakis on Thursday, saying they resulted in an additional 86 billion-euro burden for the Greek people. 

Stournaras was speaking at an event organized by the Hellenic Observatory at the London School of Economics. He was responding to comments made by Theoharakis earlier in which he described the previous New Democracy government, in which he participated as finance minister, as “colonial”. 
“He (Theoharakis) failed though to admit that the ‘brave’ negotiations that he and Yanis Varoufakis led, which led to the change of the name of the troika to institutions and removed the troika from the ministries to the Hilton, had also a cost. If we assume that what he described were benefits, the cost of course was 86 billion euros,” the central banker said. 

“That was the third memorandum and the capital controls that have been imposed after 45 billion euros of deposit outflows. And these capital controls have been imposed in order to safeguard financial stability following the ‘brave’ negotiations of Mr. Theocarakis and Mr. Varoufakis. I am sorry to say that, but I had the obligation to put the record straight,” he added. 

Original in ANA-MPA.

And the response is here:

A response came from Mr. Varoufakis and Mr. Theoharakis on Friday, with the two arguing that Mr. Stournaras made an unprecedented faux pas by publicly expressing concerns about liquidity in December 2014, fueling a bank run. They added that the aim was to pressure the new government into accepting troika demands.

According to the two, Mr. Stournaras acted not as a central banker, but rather as the former Minister of the Antonis Samaras government. They also commented that they are only “responsible” for the 86-billion-euro burden if one were to believe that Greece manage to pay off the unsustainable 320 billion euro debt without additional loans.


  1. Here is the full speech. Syriza voters (and Greeks) got in Vafourakis/Tsipras/Kammenos exactly what they deserved.

  2. Stournaras is one of the incompetents who assisted with Greek entry to the eurozone without one word of warning, or research, or the development of strategy for the greek economy to benefit from cheap access to capital. In plain language, he is a primary cause of the problem -- and his opinions count for nothing. They are self-interested propaganda.

  3. Mr. Stournaras is a nice and polite man, he only mention the "out of pocket" money for Greece that can be quantified. Not a word about the loss of credibility the nation suffered, and will suffer from for years to come. That loss will be apparent when the debt burden has been lightened and the investors still don't return.
    Varoufakis gambled (wildly cheered on by the population) from a safe position, as he assumed that possible losses would be paid by the EZ. Now, that it looks like the losses will be shared between the EZ and Greece, his fans are rather miffed, in fact very few can remember ever being fans of his.
    So, no winners? Well, the people who cleaned out their accounts did not do too badly, neither did YV. Nice to gamble with other peoples money, that is genuine solidarity.

  4. Of course anyone with an understanding of how sovereign debt works knows that the Stournaras claim is false. Greece has a series of separate debt issues maturing at different times in the future. So the 86 Billion euros are not an additional cost to Greece, rather a line of credit from which to recycle maturing debt with new debt at a lower interest rate. If Stournaras wants to explain to us why returning to markets for such debt refinancing at rates 10 times higher the present rate Greece gets, I am willing to listen. Otherwise we all know Stournaras is making an uncalled for partisan statement. The most likely reason for such statement is his frustration that Greek banks are still ELA-dependent which is costing Greek banks 150 basis points or so of lost profit. Such anger I would understand. But to say it "cost Greece 86 Billion euros" is 100% laughable.