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Friday, January 30, 2015

FM Varoufakis: "We Don't Want the 7 Billion!"

"We don't want the 7 billion" - This is what the new Greek Finance Minister Yanis Varoufakis told the NYT in an interview after assuming the position. It is totally consistent with what Varoufakis has published in his blog in recent years. The theme was always: "Greece should not take on one more Euro of debt only to repay debt. If that means default, it means default".

It's going to be very difficult for Varoufakis to backtrack from this position. February 28 (the expiry of the present Troika agreement) is approaching with great speed. Even with the 7 BEUR, Greece might face a bit of a cash squeeze in the next months, so much more so without it.

One cannot help but interpret this as Varoufakis' throwing down the gauntlet. Two cars are racing at each other in a Game of Chicken and one of the two drivers has just thrown the steering wheel out of the window. Or to use the language of soccer: "Either the home team will win or the visitors, but there won't be a draw!"

22 comments:

  1. Do you also play chess, Herr Kastner?

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  2. Yes, it is hard to see it differently, whatever card he still has up his sleeves. And he is very consistent. I remember a televised debate he had with Werner Sinn, where the german economist accused Varoufakis for blackmailing the Eurozone: If Greece defaults you are going down the drain too.

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  3. Syriza is trying to play chicken with Merkel. The problem is the Greeks are riding a bicycle and Frau Merkel is driving a train.

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    1. I don't see it's a matter of uneven transports. As I said, one of the two has just thrown away his steering wheel. That makes it an uneven game.

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    2. Then the uneven game is not a matter of different or equal transports, but of two different, not equal drivers. The one who throws the wheel away is not a driver but a luniac and should be arrested, to offer the car to a more clever one, after having reinstalled the steering wheel.

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    3. I find some of these comments here very arrogant. Varoufakis is a world authority on game theory; what he is obliged to do as finance minister is twofold -- to use his expertise in the science of negotiation along with solving Greece's financial problems within the eurozone. He is far more competent to do that than any of us, and a little respect is in order.

      Let me put it simply. Someone above makes an analogy with the game of chicken. That is a very crude analogy and rather childish. Another speaks of uneven transports -- similarly, a crude analogy uninformed by empirical and theoretical thinking. Klaus talks about throwing away the steering wheel: that is another simple analogy. I do not know that he has thrown away a steering wheel: a clever negotiator can ALWAYS find a way to come back from a previously rejected position.

      Putting it aphoristically: the proof of the pudding is in the eating. The negotiations have barely started, and people are trying to belittle the Syriza government. History will judge their actions, based on outcomes. Judging the strategy prior to an outcome is just foolish.

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    4. Certainly Varoufakis is very competent, but your claim that he's a world authority on game theory is just plain out ridiculous. He has co-authored a textbook, but apart from that he only has a handful of publications in peer-reviewed journals. His most cited paper in game theory has a mere 58 citations. To be a world authority, you would expect +10000 citations.

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    5. @Anonymous. Sorry, but your comment reeks of ignorance and is rather US-centric. Although there is some credibility of citation levels, the statistic is highly biased in favour of US journals. And to be frank, many US academics are just not that good. So, those of us who do not play the US journals game are just not interested in the fake statistics.

      And by the way, this is also a reflection of the very strong neoliberal bias of American economics and American journals. Varoufakis is a strong critic of the neoliberal and neoclassical crap that US economists have inflicted on the world: it is no surprise that (a) he is not much published there; and (b) that he couldn't give a fuck. We do not expect admiration from our enemies.

      My own personal experience of US journals is also highly negative, mostly on the grounds of their incompetence. They use as referees very junior people, who have no expertise at all. Their procedures are corrupt, and I even know of one major journal in NY where editors resigned over the corruption of publishing their friends' work and automatic rejection of leading authorities' work.

      So, don't think Mr/Ms know-it-all that you understand anything about international respect. Those of us who resist the corruption and nepotism of hegemonic agencies, the political elites that own and control most things, know what is serious and what is conformist crap. Varoufakis is a serious economist, with a good international reputations. Europe's politicians are afraid of him in his role of Minister, and one can see this even in the few meetings that have been broadcast. For many decades, if not centuries, politicians have succeeded in controlling and silencing dissidence in the West -- no different from elsewhere in the world, other than the mechanisms used to silence.

      Now, it is time for you and your ilk to be silent. Listen and learn.

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  4. Before the election I thought that a left government in Greece could somehow reform administration because they had not hired their voters as had done all other parties before.

    The situation looked somehow similar to Germany when socialist PM Schröder started Harz4 program, an important prerequisite for current economic success of Germany. (No other party could have silenced the labor unions...)

    However, this morning I red that the Greek minister of reforms has announced that those who had been dismissed by the previous government will again be part of the administration.

    This proves that the new government is not at all determined to bring costs down in order to avoid waterboarding the poor half of citizens by high taxes.

    Together with this provocation by Varoufakis I foresee not two cars crashing, but as I had published a month ago:

    Greece will default and Grexit will follow. Both steps imho are in the honest interest of Greece and the EU, most probably what aunt Merkel hoped for and will always deny.

    H.Trickler

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  5. Diego Maradona was undoubtedly the world's supreme dribbler of his time. Every once in a while, though, he dribbled so much that he stumbled over his own feet (or over the ball).

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    1. @Seukel: I suggest that you take off your ideological blinkers and deal with facts. If you can demonstrate to me any lack of professional management from Tspiras in the last 6 months, but especially since the election, I will listen. But I am not interested in your silly prejudices.

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  6. So, Varoufakis is going for a default on February 28th. Weirdly, Tsipras instead asked for more time. What's going on there, who is the prime minister, who's making the decisions? Looks to me as if Varoufakis is playing his own games, refusing to subordinate to Tsipras. Usually, such insurgency doesn't end well for the guy who's lower in the hacking order. A firing of Varoufakis so soon would be quite a scandal, of course, but may be the only way for Tsipras to regain control. Hehe, what fun, this Greek soap opera!

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    1. Apparently, you don't know how European governments work. Syriza has followed a typical pattern -- allotting the chief negotiatior position to a Minister with expertise, but with the PM always responsible in the end. If things get tough, of course the PM will make stabilising comments to try to make the negotiations easier.

      What is impressive is how professional these guys in the new government are, with not one of them having had experience of government. Rather a contrast with the idiots called Papandreou the Fool and Samaras the bootlicker.

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    2. Professional? Perhaps in the sens of being professional demonstrators, agitators, occupiers, demagogues. At least that is what people like Tsipras has been all his life. In the long run that is not a good background for running a country. Nor is seeing the EU as "the enemy".

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  7. I came across the linked blogpost which Yanis Varoufakis posted on February 18, 2012 (!). One can't blame the man for doing precisely what he said he would do. Few politicans are so consistent. And no one should really be surprised. Had I been on the EU side, I would have immediately assigned some assistants to study everything which Varoufakis has said and written since 2010.

    http://yanisvaroufakis.eu/2012/02/18/greek-default-does-not-equal-greek-exit/

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  8. @kleingut
    What makes you think they have not read a summery of Varoufakis publications? All professional politicians would.

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    1. What makes me think that way? Because since 4 years ago, I have tried to presuade the few friends in high positions which I still have as a retiree (including a member of the ECBs Governing Board) to read the Modest Proposal. Albeit without success.

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    2. If I may, I will tell you a story that is typical of how politicians behave with respect to research and policy advice. It is far from a singular case. In 1997 I was invited to attend an international closed meeting lasting 3 days, hosted by the UK Foreign Office and held in Wilton Park (their luxury conference centre). It was on immigration into Europe; the many guests were high-ranking diplomats, heads of immigration bureaux and leading academics and researchers from across all of Europe. The format was that the conference would be opened by the UK Immigration Minister, he would remain for the entire 3 days, and would listen to the discussions and arguments between experts, and conclude the conference with a speech about what he had learned. Sounds unusually enlightened, I would say.

      What happened? He failed to turn up for the opening, failed to attend the 3 days at all, and turned up to give a closing speech one hour before the conference closed. In this speech, which was a pile of ignorant nonsense, he contradicted all the conclusions and ideas that we had agreed amongst ourselves over the 3 days. (I simplify slightly, since the immigration bureaux directors agreed on nothing, and just sat there sulking while all the independent experts discussed solutions to problems). During the Minister's speech, colleagues from all over Europe started poking me, waving at me, telling me to reply -- to tell this moron that everything he was stating was contrary to our beliefs. I told them, "why bother? These people are interested in nothing but their own opinions."

      I think this story illustrates the contempt that polticians have for expertise, even in a formal setting involving other governments and world authorities. The bureaucrats are only marginally better, with a few who might be interested in getting some education. On the whole, I expect nothing from these people. The only thing that they understand is naked power -- and at the moment, Varoufakis has some of that. Now they have to listen to his ideas.

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  9. @kleingut
    Wow, that scares the hell out of me, they should be sacked. As a banker did you not try to get ALL the information you possibly could about your clients? Do boxers watch the fights of their opponents, you bet they do.

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    1. I would like to reply to you, which is why I ask you to detail your question so that I know where you are coming from.

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    2. The ECB is not a bank with clients: it is a political institution that knows who its masters are. This is why it is doomed to fail in its task as a central bank.

      Of course, Varoufakis is seen as an opponent. But they are unlikely to have worried about him before he had any power. It is possible that these bureaucrats are now exhorting research assistants to summarise Varoufakis's publication, extract his opinions stated on his blog, and get them up to speed on what the guy thinks.

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  10. Hold it, I also read the "no more loans" statement. I also read the fine print, we will "in conjunction with the ECB establish the necessary liquidity provisions". Either it is economist speak for loans, or he actually think the ECB will set up a note printing facility in his office.
    Lennard

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