The horizon is not so far as we can see, but as far as we can imagine

Tsipras: “Now that I Have Unconditionally Surrendered, I Promise to Lead the Fight.”

Yeah, ok:

As far as my own code of values is concerned, the presence of the Left in the government is not in order to seek high office. It is the stronghold of the interests of our people! A stronghold for the protection of those who have been wronged! A stronghold for the large class fights against vested interests within the country!

As far as I am concerned, I have no intention of abandoning this stronghold. We will not become cowards, nor will we ignore our responsibilities, nor will we become apologists for lost fights. Because the only lost fights are those which never took place!

The fights lying ahead will be given with the same fighting spirit, the same faith in our strength, the same dignity and they will be fights which will be won.”

The same lack of planning and willingness to fold when faced by strong opposition? The same ability to create a worse situation than would have existed if you’d just accepted the first deal on the table?

Not just contemptible but delusional, and Greeks who are anti-austerity and still support him are fools. (Of course, given the pollsters got the results of referendum wrong by 20 percent, who’s to say that 60 percent of Greeks do still support Tsipras?  More likely he’s got the support of a little more than the 40 percent who voted Yes.)

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  1. V. Arnold

    Frankly; I’ve given up trying to understand the Greek thinking(?) about the rape of their country.
    Their response, via Tsipras defies logic/reason. Varoufakis seems the only sane mind remaining operational…
    In the meantime, here’s a site worth exploring;

    A wealth of present and historic wealth…

  2. S Brennan

    Tsipras, is a quisling in a nation that fought so hard they halted the Nazi war machine, albeit temporary, as the British presumed a loss and didn’t resupply the Greeks…even with ammo.

    That Tsipras wouldn’t even prepare to resurrect the Drachma told the Nazilings everything they needed to know. I agree with above “Varoufakis seems the only sane mind”

  3. Y’all are falling into the same mental rut you keep falling into, because you desperately want to believe that this is currently about some kind of negotiation strategy, and it never was. There was no way to plan for a Grexit — everyone knew that in advance — but the fight Tsipras got into was unavoidable by the way that Syriza took power. So I for one am not angry at him, and neither should y’all be. Because what you’re actually arguing is that Syriza should not have taken power.

  4. Ian Welsh

    Ah. Planning for grexit, or even using Varoufakis’s plans for ECB withdrawal of liquidity was impossible.

    No, wrong.

    And no, governments often plan for shit they are not elected to do. See FDR, WWII. Good thing he planned for it, eh? Need an excuse, say “we do not want to Grexit, but German finance minister Schauble is on record as wanting us out of the Euro, and we fear he will force us out.”

    You are even more vastly unrealistic about how government works than you claim other people are.

    If Tsirpas thought that Grexit was off the table, he should have been willing to go with Varoufakis’s plan. If he was willing to do neither, he should have just accepted the first deal offered, because yeah, it was better than what he got.

    Competence. Goddamn competence. If what you do predictably makes your people WORSE off in both the short and long term (and it was predictable, I predicted it multiple times, so did others), then don’t fucking do it.

  5. There is worse yet to come.

  6. Ah. Planning for grexit, or even using Varoufakis’s plans for ECB withdrawal of liquidity was impossible.

    No, wrong.

    I guess we’ll have to agree to disagree. The Greek state is simply not capable of the kind of coordination that would have made a Grexit anything other than a cautionary tale — and much more importantly, the Greek public doesn’t agree it is. Syriza is not an organization that contains the expertise required on its own, as we were discussing on the other thread — left wing organizations rarely have the technical competence (that word!) to do this.

    I really like Varoufakis, but there’s no way that the rest of the EMU wouldn’t have taken that plan as a signal for Grexit.

    I’m sorry, Greece was just not going to be the hub of your axis-of-pariahs plan. I still can’t believe you think that makes sense.

    Competence. Goddamn competence. If what you do predictably makes your people WORSE off in both the short and long term (and it was predictable, I predicted it multiple times, so did others), then don’t fucking do it.

    Politics. Goddamn politics. What you are describing is a catch-22 here. When Merkel decided to stick a fork in Samaras, Syriza could either have backed down and let him continue in office (risk of momentum loss) … or take power. But it could only take power under the condition that it make an appearance of fighting austerity. Unfortunately, it’s own Left Platform thought like you and imagined that a Grexit was “plannable” — where is their plan and where are their printing presses? — so in order to prevent a split in the party that would have forced new elections, Tsipras had to take it to the very bitter end. The only mistake was underestimating the size of the OXI.

    But I would suspect that the polls are still right that Tsipras would basically win an election if they were to hold it now. Who else is left standing? Greeks haven’t yet decided to vote KKE (I know a KKE supporter or three, btw, they’re lovely young people but haven’t thought things through) and they are not yet ready to vote Golden Dawn. The other parties are reportedly bad jokes.

    This is all just an echo across another continent of the whole ACA argument. But the answer is the same: politics, not policy. This was not a negotiation, this was the rearranging of the political scenery. And it worked out more positively than I had thought…so far. If it fails, it won’t be because Tsipras capitulated, which actually happened in February, as I recall.

  7. EmilianoZ

    They did put up a good spirited fight before the ECB nuked them. What could they do? Even Japan had to capitulate.

    The Greek people wanted to see a real good fight. That has restored some dignity and more importantly now, that has bought them some knowledge. Knowledge that every possible door has been tried. Knowledge of the enemy. Now that they understand the situation, one can only hope they will prepare for an orderly exit.

  8. Knowledge that every possible door has been tried.

    Yeah, I can’t underestimate what I think is the significance of the spectacle for the past few months, for good or ill. Podemos may lose votes from it…but the votes that it would lose are from the people who thought that a Syriza-like strategy might end austerity. Now that everyone knows entirely well that a pro-Euro stance won’t work to end austerity, at least in currently-constituted European politics, again for good or ill, some things will likely shift.

  9. mike

    People who actually have insight into Greece’s administrative infrastructure agree with Mandos.

    But we can just keeping assuming we have a can opener, I guess.

  10. Synoia

    It is difficult to know if extend-and-pretend (the current policy on Greecs) would be worse than Grexit in the short term.

    It is possible to speculate the $50 Billion sate asset fund is looked upon a largess for the political class in Greece. In other words, a bribe to the Greek “leaders” and a potential money trough for them.

    SYRZIA has exposed the new kind and gentle German Europe. That is a success.

    The seed with which people are willing to denigrate Germans demonstrated the human ability to create “others” and “instant enemies” is nowhere dead, and that many people are itchin’ for a war.

    Let us hope it is their gene pool which becomes expunged. Don’t hold your breath. The mass deaths of the Ruling Classes’ young in WW I was a mistake not to be repeated.

  11. Ian Welsh

    I follow a number of very politically involved Greeks. They have “insight into Greece’s administrative culture” and were shocked.

    As with many things in human knowledge, you can find experts on both sides of an equation, so it comes down to judgment.

    I will simply note that the day Syriza was elected I said they would not be able to bargain for a better deal and should have a plan B for when negotiations failed.

    They did not have a plan B. And the proponderance of evidence is that Tsirpas and many others in the party genuinely believed they could get a better deal thru negotiation.

    They are incompetent fools who misunderstood the situation they were in, at best. They failed their country, and a lot of Greeks are going to suffer, and yes, die, because of their incompetence.

    The continued willingness to make excuses for politicians who are either incompetent or evil (or both), is one of the main reasons the West is so fucked up for so many people.

  12. john c. halasz


    You’re just indulging in self-righteous liberal moralism and pretending like that’s “brave” or even particularly radical. You know full well that the payments system is embedded in the banking system, and that the Troika was intent on squeezing the latter to destroy the former, regardless of the economic damage, to crush the Greek rebellion. In 2010, Grexit was the best option, but it would have led to a chaotic unraveling of the EZ. (Everyone blames the Greeks and no one thanks them). But now after all the damage that’s been done, arranging an orderly Grexit would not just do untold further damage, but would take a long time to arrange. Syriza had neither the time, not the expertise and support for such a Plan B. (What Schaeuble was “offering” was not an option, sure to be even more punitive). So they tried and failed under extreme duress. Not an edifying spectacle. But what they surrendered too is actually completely unworkable, so Grexit will be the eventual outcome. Syriza might live to fight another day or not, since there is really no other viable domestic Greek alternative. But the terms of the eventual Grexit are now what is at stake. (Actually, the best solution would be for Germany to leave the EZ, but know on has the power to force that).

  13. They did not have a plan B. And the proponderance of evidence is that Tsirpas and many others in the party genuinely believed they could get a better deal thru negotiation.

    I’m willing to believe that they did genuinely believe that. It would fit the pattern that a lot of leftazoids follow. But what they believed is not as important as: whether they could have behaved functionally very differently or achieved a different outcome. The best they could have achieved is something similar to the present deal, but with less external political damage to Germany and to the prestige of EMU. (Inside Germany, Merkel would still have gone down as a heroine either way, an SPD state minister president just half-seriously suggested that the SPD not bother to run a chancellor candidate in the next election…)

    They are incompetent fools who misunderstood the situation they were in, at best. They failed their country, and a lot of Greeks are going to suffer, and yes, die, because of their incompetence.

    And you think that your hypothetical plan B would not have resulted in suffering and death? Even if Argentina put a shipload of vegetables on an ocean barge, the result would still have been massive austerity for Greece — if the axis-of-pariahs plan didn’t lead to a coup. Some of the neoliberal Greek twitter accounts were darkly muttering that if Varoufakis had prevailed and escalated further, he might not have been around to write op-eds about it. Even after the deal Unnamed Senior Officials were talking to the media about tanks in Athens.

    The continued willingness to make excuses for politicians who are either incompetent or evil (or both), is one of the main reasons the West is so fucked up for so many people.

    You know, ACA might be the wrong analogy here. It’s actually the whole third party strategy thing that’s the right one — with neoliberal Democrats playing the role of Schaeuble, who didn’t care if Greece took its marbles and went home.

    There are times when this sort of thing might work and times when it doesn’t. There are some ‘negotiations’ whose table you can’t walk away from, while the other side can. If Syriza were in power even in 2012 they might have been able to inflict credible damage on Europe — maybe. Otherwise, progressive, anti-austerity movements have to learn BATNA-free politics. That doesn’t mean helplessness.

  14. S Brennan

    This guy is a journalist living in Germany…

    Mathew D. Rose: The Crisis In Europe Has Only Just Begun

    Germany and its EU compradors are making it clear who is in charge. The Germans are currently not offering any compromise, but iterate the same blunt demand: Greece has to accept what is being dictated; in other words, capitulate or be annihilated. This time it will not be the Wehrmacht und Luftwaffe that are to force the Greek nation into submission, but a weapon just as lethal: national bankruptcy.

    This conflict has nothing to do with Greek debt or finances…Greece has had to learn the hard way, that the EU is no longer a European project for peace, democracy and prosperity, but a German tool for hegemony. The only other player of any importance besides Merkel was ECB president Mario Draghi, who assisted Germany’s financial blitzkrieg by questionably terminating the ECB’s support of Greek banks. Schäuble was Merkel’s executioner.

    The history of the “good Germans” has always been one of ineffectuality…Germans always regret what their nation is doing, but more often than not, in the end participate in the very actions they deplore. As A.J.P. Taylor wrote: “There were, and I daresay are, many millions of well-meaning kindly Germans; but what have they added up to politically?” In the case of Greece, this has occurred still again…A few years ago there was a massive campaign in commentaries and politics condemning so called Gutmenschen (literally translated: good people), who were defined by their critics as persons following their moral conscience – regardless of being leftist, moderate or conservative. In a nation that is responsible for the holocaust, this is a very worrying development. Thus the transition of Germany’s hegemonic role in Europe…has been thoroughly ideologically prepared.

    What the Germans have done to Greece has its basis in racism, but the Germans have a primordial fear and hate of eastern Europeans, resulting in a commensurate brutality. When the opportunity arrives to subjugate these peoples, the process will not be as gentle as in Greece. Ukraine could already be the first example of this. There can be no credible political discourse from a politically disgraced Syriza, leaving coercion as the only alternative (Varoufakis knew why he resigned as finance minister and has voted against the German dictate). The Greek people clearly rejected the dictate that has been foisted upon them. They will not be supporting the so called “reforms”, especially as they simply cannot afford to do so.

    The crisis in Greece and in Europe is not over, it is only just beginning.

  15. David

    Beppe Grillo is agrees with you:

    and now that the EU has been exposed for what it really is, one of the contenders
    for the UK Labour party leadership may back a Brexit:

  16. markfromireland

    The history of the “good Americans” has always been one of ineffectuality…Americans always regret what their nation is doing, but more often than not, in the end participate in the very actions they deplore. As A.J.P. Taylor wrote: “There were, and I daresay are, many millions of well-meaning kindly Americans; but what have they added up to politically?”

    Fixed it for you.


  17. V. Arnold

    @ markfromireland
    July 25, 2015
    As A.J.P. Taylor wrote: “There were, and I daresay are, many millions of well-meaning kindly Americans; but what have they added up to politically?”
    Excellent quote and agree 100%. I think it’s the leftist/liberal thingy; all philosophical, but no action/follow through.
    The U.S. is rapidly sliding into dangerous irrelevance…
    Children should never be allowed dangerous weapons…

  18. Hvd

    Although not incorrect about “good Americans” what exactly has this to do with the topic at hand?

  19. Hvd

    Of course the same could be said these days about the “good ____.” You fill in the blank.

    At least the writer above was trying to make a point about Germans vis a vis Greece which is the point I thought of this thread.

  20. markfromireland

    For the hard of comprehension and yes that includes those who shill out Federalist Society talking points about removing key protections used exclusively by lawyers acting for the defense I suggest you read Brennan’s post above.


  21. dfs

    mfi:This is the possibly the most deliciously brutal send-up of that sort of two-faced pious-handwringer mindset ever made.

    “Have you NO RESPECT FOR THE DEAD?!”

  22. dfs

    Oof. “…is possibly the…”

  23. Tom

    Well Greece problems are about to get worse. Turkey has declared war on both IS and PKK and is bombing both as both are terrorist organizations that commit the very same war crimes and human rights abuses. IS is just more honest about it.

    Fighting is already escalating with PKK killing Turkish Cops, Soldiers, and Innocent Civilians for being “IS Sympathizers,” in their homes, kidnapping people, and marching openly in streets with arms. Erdogan is cracking down hard in response and its escalating further with the UK banning travel to Turkey so far.

    So expect refugees and spillover towards Greece.

    Like you said Ian, Greece should just open the floodgates and say to Europe, “Here you motherfuckers, tell us to defile our mothers’ graves, reap what you fucking sowed assholes.”

    Since starting, the Global War on Terrorism has been continuously escalating, resulting in a 100,000+ Coalition Deaths, 120,000+ Militants deaths, and 500,000+ Civilian Deaths minimum. Add in Syrian Civil War and the numbers climb even higher. With Turkey now drawn into the mess with a million plus Syrian Refugees in its borders and a renewed PKK insurgency, fighting is going to inevitably spill into Greece.

    Syriza needs to ask itself, who is better for their security? Putin who has a track record of containing his wars and winning them with minimal causalities? Or the US which can’t keep the WoT contained and is involving ever escalating numbers of countries and causing more Nations to become failed states and break up?

  24. Re: Grillo.

    See, I agree that there ought to be a Plan B, but I understand why, in this case, there wasn’t. In non-continental English media of whatever stripe, there seems to be a general incomprehension about the attachment of even the losers to the European integration process, that goes down to the popular level. I know many Europeans who will agree with me that it’s not working but will still be reluctant to let anyone push the car in reverse, as it were.

    That is the pull of Europeanism. And the only point at which Europeanism can be overcome — so that the sort of “destroy the village to save it” kind of solution that people here favour can be contemplated — is when it is absolutely clear that everything has been tried. Lo and behold, Schaeuble presented that moment; he made it explicitly clear that he, a known convinced European federalist, was still willing to put the car in reverse if he wasn’t the driver’s seat.

    So now, Beppe, let’s have it. Come out with your plan for de-Euroization, and present it to the Italian people. (Instead of carping at Tsipras.) Make it detailed and explicit, and leave no doubt that you will implement it first thing when the M5S comes to power. If it ever does. In particular, lay out what you think will happen re deposit flight when it looks like you will win.

    By the way, here’s some FT scuttlebut (to be taken with a pinch of salt) about the Left Platform’s Euro exit idea. If you want to talk about people with no plan…

    These are the people who are willing to vote against the deal and split Syriza, but if the FT article is untrue, it’s even worse: they’re willing to vote against a deal without even a hint of a Grexit plan. But the plan they’re alleged to have is pretty bad. It’s worse when it turns out that Russian aid was a football and Putin was actually Lucy. How disappointing for the Putinophiles here, if true. Again, Unnamed Senior Official, take with pinch of salt.

  25. Oh, and this is a very clear and complete distillation of the Eurocrat view on the bailout deal, ie, why they think it will “work”. And the answer is Eurofudge. Like I said, what the Eurocrats *wanted* little Alexis to do was to come to the fudge factory with Uncle Jean-Claude.

    But for this to be possible, interest payments must always be made on time, and the sanctity of debt contracts must always take precedence over electoral promises regarding pensions, wages, and public spending. Now that Prime Minister Alexis Tsipras’s government has been forced to acknowledge the unqualified priority of debt servicing, and can now benefit from unlimited monetary support from the ECB, Greece should have little problem supporting its debt burden, which is no heavier than Japan’s or Italy’s.

    Very explicitly, debt takes precedence over democracy. This principle has been restored.

    This raises a key issue that the Tsipras government and many others misunderstood throughout the Greek crisis: the role of constructive hypocrisy in Europe’s political economy. Gaps between public statements and private intentions open up in all political systems, but these become huge in a complex multinational structure like the EU. On paper, the Greek bailout will impose a fiscal tightening, thereby aggravating the country’s economic slump. In practice, however, the budget targets will surely be allowed to slip, provided the government carries out its promises on privatization, labor markets, and pension reform.

    No one seriously thinks that the stupid bailout deal will work like it does on paper. The terms are intended merely to be public punishment — it is the neoliberalism that matters, not surpluses.

    These structural reforms are much more important than fiscal targets, both in symbolic terms for the rest of Europe and for the Greek economy. Moreover, the extension of ECB monetary support to Greece will transform financial conditions: interest rates will plummet, banks will recapitalize, and private credit will gradually become available for the first time since 2010. If budget targets were strictly enforced by bailout monitors, which seems unlikely, this improvement in conditions for private borrowers could easily compensate for any modest tightening of fiscal policy.

    And once neoliberalism is properly implemented, QE will paper over everything, just like with Uncle Sam. Hooray?

    Smell the Eurofudge.

  26. EmilianoZ

    Now Euroization means Germanization. Doktor Schaeubble has a masterplan for countries deemed suitable enough for Germanification. Southern countries dont make the list, not even France even though the northern half of France is at the same latitude as the southern part of Germany. But that is a good thing. Who wants to be Germified anyway?

    The problem is now practical. How to get out without too much damage? If a southern country wants out, there will be a bank run. If Germany and its acolytes get out, there wont be any bank run there, but people in southern countries might still want to buy dollars or pounds in anticipation of the devaluation. Some kinda capital controls must be established in a sudden manner. But that wouldn’t be very democratic. That’s quite a conundrum for technocrats. People at Naked Capitalism love this kinda wonky discussions.

  27. Pelham

    Leo Panitch suggested on TRNN earlier this week — in sympathy with Tsipras — that Syriza could use vast state means at its disposal to meet the austerity terms of the troika while easing the burden on the poorest Greeks by distributing food and medicine, etc.

    Of course, even if the deep state and its institutions were fully responsive to the Greek government — which doesn’t seem likely — such an on-the-ground humanitarian effort would require massive planning.

    And massive planning is precisely what Syriza failed to do over the past few months as they apparently made no effort to prepare for withdrawal from the euro and to introduce a new currency, as they should have done as a backup measure.

  28. markfromireland

    What “vast state means” would those be? And please amongst those means don’t talk about the administrative resources of the state. With very very few exceptions the Greek civil service is a bad joke, bloated, inefficient, ineffective, and corrupt to its core from top to bottom.


  29. markfromireland

    Varoufakis transcript

    The London-based Official Monetary and Financial Institutions Forum, headed by two ex-Financial Times scribes – chairman John Plender and managing director David Marsh – on Monday released a 24-minute audiotape of a teleconference they held nearly two weeks ago with Yanis Varoufakis, the former Greek finance minister.

    Details of the call were first revealed by the Greek daily Kathimerini, and much of most sensational revelations Varoufakis made were about a surreptitious project he and a small team of aides worked on to set up a parallel payments system that could be activated if the European Central Bank forced the shutdown of the Greek financial system.

    But Varoufakis also made some other interesting allegations, including claims the International Monetary Fund believes the Greek bailout is doomed and that Alexis Tsipras, the Greek prime minister, offered him another ministry shortly after he was relieved as finance minister.

    We’ve had a listen to the entire call, and transcribed most of it – excluding some inconsequential asides to the teleconference’s hosts, Messrs Marsh and Norman Lamont, the former UK finance minister.

    The recording starts with an apparent interruption of the speakers; the teleconference operator announces that the call is now being recorded. Then Varoufakis begins:

    The thing is, I have to admit we did not have a mandate for bringing Greece out of the euro. What we had a mandate to do was to negotiate for a kind of arrangement with the eurogroup, with the European Central Bank that would render Greece sustainable within the eurozone.

    The mandate went a bit further, at least in my estimation. I think the Greek people had authorised us to peruse energetically and vigorously that negotiation to the point of saying that if we can’t have a viable agreement, then we should consider getting out.

    The problem was that, once you are inside the grasps of a monetary union, it is ever so hard to create the kind of public dialogue which is necessary in order to prepare people for what comes, for the process of disengagement from the currency union, while at the same time not precipitating a collapse.

    It’s a little bit like, imagine if you had to prepare a population, an electorate, for a devaluation, a very large devaluation, 12 months before it takes place, through a dialogue. You can understand that this is an impossibility. We don’t have a currency which we can devalue vis-à-vis the euro. We have the euro. What I keep telling people is that, in our estimation, it would have taken 12 months.

    Varoufakis is then interrupted by Marsh, who suggests the Greek government was weakened by not having a viable Grexit plan in place during negotiations with its creditors and asks whether Varoufakis believes Grexit is still possible.

    Oh absolutely, absolutely, I think this agreement is not viable and Dr Wolfgang Schäuble, the German finance minister, is hell-bent on effecting a Grexit, so nothing is over.

    But let me be very specific and very precise on this. The prime minister, before he became prime minister, before we won the election in January, had given me the green light to come up with a Plan B. I assembled a very able team, a small team, as it had to be, because that had to be kept completely under wraps, for obvious reasons. And we’ve been working since the end of December, beginning of January, on creating one.

    Let me give you, if you are interested, some of the political and institutional impediments that made it hard for us to complete the work, and indeed to activate it. The work was more or less complete, we did have a Plan B, but the difficulty was to go from the five people who were planning it to the 1,000 people that would have to implement it. For that, I had to receive another authorisation, which never came.

    Then Varoufakis goes into the main revelations that everyone has focused on: his efforts to create a parallel payment system by hacking into the country’s tax system.

    Let me give you an example. We were planning along a number of fronts, I’ll just mention one. Take the case of the first few moments when the banks are shut, the ATMs stop functioning and there has to be some parallel payment system by which we keep the economy going for a little while to give the population the feel that the state is in control and that there is a plan.

    What we planned to do is the following. There is the website of the tax office, like there is in Britain and everywhere else, where citizens, taxpayers go into the website, they use their tax file number, and they transfer through web banking monies from the bank account to their tax file number so as to make payments on VAT, on income tax, and so on and so forth.

    We were planning to create, surreptitiously, reserve accounts attached to every tax file number without telling anyone. Just to have this system function under wraps and at the touch of a button to allow us to give PIN numbers to tax file number holders, taxpayers, so when, let’s say – take for instance the case where the state owes €1m to some pharmaceutical company for drugs purchased on behalf of the National Health Service. We could immediately create a digital transfer into that reserve account of the tax file number of the pharmaceutical company and provide them with the PIN number so that they could use this as a kind of parallel payment mechanism by which to transfer whichever part of those digital monies they wanted to any tax file number to whom they owed money, or indeed to use it in order to make tax payments to the state.

    That would have created a parallel banking system while the banks were shut as a result of the ECB’s aggressive action, to give us some breathing space. This was very well developed and I think it would have made a very big difference, because very soon we could have extended it using apps on smart phones. It would become a functioning and functional parallel system. Then of course this would be euro denominated, but at a drop of a hat, it could be converted to a new drachma.

    Now let me tell you, and I thank this is a quite fascinating story, what difficulties I faced. The general secretariat of public revenues, within my ministry, is controlled fully and directly by the troika. It was not under control of my ministry, of [unclear] ministry, it was controlled by Brussels. The general secretary is appointed, effectively, through a process that troika-controlled and the whole mechanism within. It’s like Inland Revenue in the United Kingdom being controlled by Brussels. I am sure as you’re hearing these words, your hair is standing up. Ok. So problem number one.

    The general secretariat of information systems, on the other hand, was controlled by me as minister. I appointed a good friend of mine, a childhood friend of mine, who had become a professor of IT at Columbia University in the States, and so on, I put him there because I trusted him to develop the system. At some point, a week or so after we moved into the ministry, he calls me up and says to me: “You know what, I control the machines, I control the hardware. I don’t control the software.” The software belongs to the troika-controlled general secretariat for public revenues.

    What do we do? So we had a meeting, just the two of us, nobody else knew. He said: “Listen, if I ask for permission from them to start implementing this programme then the troika will immediately know we are designing a parallel system.” Well, I said, “That won’t do, we don’t want to reveal our hand at this stage.” So I authorised him, and you can’t tell anyone that, this is totally between us, to hack…

    At this point, Lamont interrupts Varoufakis to remind him there are others on the call, adding “they will not tell it to their friends.” Varoufakis chuckles:

    I know, I know, I know they are. Even if they do, I’ll refute, I’ll deny I said it.

    So, we decided to hack into my minister’s own software programme in order to be able to bring it all, to just copy, just copy the codes of the tax systems’ website onto a large computer in his office, so he can work out how to design and implement this parallel payment system. We were ready to get the green light from the prime minister when the banks closed in order to move into the general secretariat of public revenues, which was not controlled by us but is controlled by Brussels, and to plug this laptop in and to energise the system.

    I’m trying to convey to you the kind of institutional problems that we had, and institutional impediments to carrying out an independent policy for ameliorating the affects of having our banks being closed down by the ECB.

    Lamont then interrupts Varoufakis, calling the revelations “truly shocking”, adding “I won’t ever forget that”. He then asks whether Varoufakis thinks debt relief will ever be granted as part of the new bailout programme.

    My great worry at the moment on behalf of my good friend Euclid Tsakalotos…is that the IMF and Dr Schäuble and the ESM are engaged in a game that is absolutely the opposite of straight forward. On the one hand, we’re being told the ESM will only provide this must-discussed loan of more than €80bn if the IMF is on board. The IMF is coming out with debt sustainability analyses which quite clearly, stated for direct quotes, that the Greek debt is not sustainable and according to its own rules the IMF cannot participate in any new bailout. I mean, they’ve already violated their rules twice to do so, but I don’t think they will do it a third time. I think they are kicking and screaming that they are not going to do it a third time.

    So there is a very serious danger here that the Greek parliament – not in my name, but in the name of the majority who voted last night – will approve the very stringent measures, reforms they call them but they are nothing but cost-cutting exercises without much reforming going on. But anyway, that we will push through parliament these prior actions, as they’re being called, but then at the end of the day, the ESM and the IMF will not be able to coordinate so as to provide that huge loan. Not that I want that huge loan to be provided…but I think there is a major battle between the institutions, the ESM, the European Commission, the IMF and Dr Schäuble.

    Dr Schäuble and the IMF have a common interest: they don’t want this deal to go ahead. Wolfgang has quite clearly said to me he wants Grexit. He thinks this extended attempt is unacceptable. This is the one point where we see eye to eye. I agree with him, too, for completely different reasons, of course. The IMF does not want an agreement because it does not want to have to violate its charter again and to provide new loans to a country whose debt is not viable. The Commission really wants this deal to go ahead, Merkel wants this deal to go ahead. So what has been happening over the last five months is now projected into the very short term, only it is on steroids – that is this complete lack of coordination between the creditors.

    Marsh then takes the floor to ask about France, noting that Varoufakis has in the past argued that Berlin is being overly tough with Greece in order to send signals to Paris.

    The French are terrified. They’re terrified because they know if they’re going to shrink their budget deficit to the levels that Berlin demands the Parisian government will certainly fall. There is no way that they can politically handle the kinds of austerity which is demanded of them by Berlin. And when I say by Berlin, I mean by Berlin, I don’t mean Brussels. I mean Berlin.

    So they are trying to buy time. This is what they’ve been doing now, as you know, for a couple of years. They’ve been trying to buy time in terms of an extension of the time period during which they will have to reduce their deficit to below 3.5 per cent, 3 per cent, the Maastricht criteria in the Stability and Growth Pact.

    At the very same time, Wolfgang Schäuble has a plan…. This is one of the very sweet moments in one’s life when one does not have to theorise, because all I did was to convey the plan as Dr Schäuble described it to me. The way he described it to me is very simple. He believes the eurozone is not sustainable as it is. He believes there has to be some fiscal transfers, some degree of political union. He believes for that political union to work without federation, without the legitimacy that a properly-elected federal parliament can render, can bestow upon an executive, it will have to be done in a very disciplinarian way. He said explicitly to me that a Grexit, a Greek exit, is going to equip him with sufficient bargaining power, with sufficient terrorising power in order to impose upon the French that which Paris is resisting. What is that? A degree of transfer of budget-making powers from Paris to Brussels.

    Lamont then asks about the ECB. He notes that there has been a lot of vitriol aimed at ECB president Mario Draghi from Athens, accusing him of acting politically during the crisis. But Lamont argues Draghi has “bent over backwards” not to be political during the Greek standoff.

    Mario Draghi has handled himself as well as he could, and he tried to stay out of this mire, the political mire, impressively. I have always held him in high regard. I hold him in even higher regard now, having experienced him over the last six months. Having said that, the European Central Bank is set up in such a way that it is so highly political, it is impossible not to be political.

    Don’t forget the ECB, the central bank of Greece – because that’s what the ECB is, it’s the central bank of all our member states – the central bank of Greece is a creditor of the Greek state, and therefore it is also [break in audio] once it is the lender of last resort, supposedly, and the enforcer of fiscal austerity. Now, that violates, immediately, the supposed distinction between fiscal and monetary policy. It puts Draghi in a position where, in acting as a creditor when we came into power, he had to discipline us, he had to actually asphyxiate us sufficiently in order to yield to the demands of the creditors, while at the same time keeping our banks open. So God could not do this in a non-political way.

    Then Marsh asks a final two-part question: first, is it important that Greece finally become part of the ECB’s bond-buying programme, known as quantitative easing (QE), and secondly, what are Varoufakis’ future plans – and what is his relationship with Tsipras like now? For those not following the crisis closely, Greece has been shut out of the ECB’s QE programme since its inception because its rules bar any country that is undergoing a bailout review from having its bonds purchased by Frankfurt.

    What the ECB is doing is increasing ELA by €900m in order to give a little bit more liquidity through the ATMs that were very severely circumscribed up until now. The question of quantitative easing is I think crucial. If Greece does not get onto the bandwagon of quantitative easing over the next few months, then that’s it. There’s absolutely no way that Greece can stay in the eurozone.

    But for this to be meaningful, first they need to restructure the Greek debt. The idea of the German government, that we would first have to successfully complete a programme that cannot be completed successfully and then we can have debt restructuring, effectively annuls the whole idea of quantitative easing.

    On the question of my relationship with Alexis, look, I have a very strong personal relationship with him…. Yesterday, I voted against him. I crossed the floor. It was very painful for me. I could see he was very upset by that. We met afterwards, he was sitting down, I was passing by him, he extended his arm very warmly. I sort of went towards him and we hugged, and kissed even. There is this.

    But at the same time, at the moment what I’m experiencing is this, you know, I’ve become the traitor of the party. You know how it feels when you cross the floor suddenly. You cross the floor not because you shifted, but because everybody else has shifted. They’ve undergone a mutation. Suddenly they have adopted the language that I’ve been countering for the last six years – with them. But now they have adopted it.

    So I’m not sure what kind of relationship we’re going to have. Up until yesterday Alexis was very keen to say to me that he will definitely need me. He offered me another ministry only a few days ago. I said no because I don’t care about having a ministry. What I care about is a sustainable Greek debt, a sustainable Greek economy.

    What we’re doing now, whatever the reasons are, the measures we introduced yesterday through parliament will choke the Greek private sector, a private sector that has already suffered so much in Greece over the last five years. I’m going to stay in parliament. I really love being a backbencher. I have only been a backbencher for a week, and it’s great. It gives me the opportunity to speak out, and to write and to visit friends outside of Greece.

    Marsh wraps up the teleconference by noting there were 84 callers from around the world, and reminding everyone Varoufakis’ remarks were under the so-called Chatham House rules, which means the information can be passed on but Varoufakis should not be cited as the source of the information.


  30. markfromireland

    Sing it once more and this time try to sing it with feeling:

    Something is rotten with the eurozone’s hideous restrictions on sovereignty

    Yanis Varoufakis

    Given the absence of a central bank to support the state’s endeavours, the Greek government’s arrears to the private sector (individuals and companies) have been perpetually deflationary since 2008. Indeed, arrears — due to significantly delayed returns from value added and income tax, and payments to suppliers — consistently exceeded 3 per cent of gross domestic product for five years. Meanwhile, a feedback effect boosts tax arrears which, in turn, reinforce the cycle of generalised illiquidity.

    Our simple idea was to allow for multilateral cancellation of arrears between the state and the private sector using the tax office’s existing web-based payments platform. A reserve account could be created per tax file number on the tax office’s web interface and be credited with arrears owed by the state to that individual or organisation. Tax file number holders would be able to transfer credits from their reserve account either to the state (in lieu of tax payments) or to any other tax file number reserve account.

    Suppose, for example, Company A is owed €1m by the state and owes €30,000 to an employee plus another €500,000 to Company B, which provided it with goods and services. The employee and Company B also owe, respectively, €10,000 and €200,000 in taxes to the state. In this case the proposed system would allow for the immediate cancellation of at least €210,000 in arrears. Suddenly, an economy like Greece’s would acquire important degrees of freedom within the existing European Monetary Union.

    In a second phase of development that we did not have the time to consider properly, smartphone apps and citizens’ cards could add a degree of flexibility and accessibility guaranteeing wide adoption. The envisaged payments system could be developed to substitute for the absence of fully functioning public debt markets, especially during a credit crunch such as the one that has afflicted Greece since 2010. Private sector agents could be eligible to purchase credits from the tax office’s web interface, using their normal bank accounts, and to add them to their reserve account. These credits could be used after, say, one year to extinguish future taxes at a discount (for example, 10 per cent).

    As long as the total tax credits were capped, and their magnitude fully transparent, the result would be a fiscally responsible increase in government liquidity and a quicker path back to the money markets to which governments, such as Greece’s had lost access.

    As I was handing over the reins of the finance ministry to my friend Euclid Tsakalotos on July 6, I presented a full account of the ministry’s projects, priorities and achievements during my five months in office. The new payments system outlined here was part of that presentation. No member of the press took any notice.

    But when a subsequent telephone discussion with a large number of international investors, organised by my friend Norman Lamont and David Marsh of the official monetary and financial institutions forum, was leaked despite the Chatham House rule that we agreed with listeners, the press had a field day. Committed to unlimited openness and full transparency, I granted OMFIF permission to release the tapes.

    While I understand the press’s excitement emanating from elements of that exchange, such as having to consider unorthodox means of gaining access to my own ministry’s systems, there is only one matter of significance from a public interest perspective. There is a hideous restriction of national sovereignty imposed by the troika of lenders upon Greek ministers who are denied access to departments of their ministries pivotal in implementing innovative policies. When sovereignty loss, due to unsustainable official debt, yields suboptimal policies in already stressed nations, one knows that there is something rotten in the euro’s kingdom.

    The writer is the former finance minister of Greece

    Ssource Financial Times: Something is rotten with the eurozone’s hideous restrictions on sovereignty –

  31. Varoufakis is brilliant…but I don’t think his plan would have worked. Nevertheless, his analysis is top-notch and the defamation campaign, disgusting.

    But yes. As I told y’all. This is all. About. France. I can’t decide which situation is more delight

  32. [oops hit post button by accident]

    …-ful to MLP and FN, a Grexit or a non-Grexit.

  33. drfrank

    The conversation could benefit from a bit more granularity.

    What do we know about what Tsipras et al. have done in Greece? For instance, have they encouraged spontaneous emergence of alternative local currencies–where the butcher pays his child’s music teacher with an IOU and the music teacher passes it on to her hair dresser, who redeems it for a leg of lamb? Did farmers and shepherds and backyard gardeners gear up for possible shortages of imported food? Were key drugs and other imports stockpiled?

    All their attention seems to have gone to the Euro project ideal and the negotiations, which played into the position of the creditors.

    At the level of negotiations per se, it seems the Greeks were badly beaten.

    Not only because the creditors were inflexible, but because the Greeks failed to insist on a counterparty capable of making decisions and delivering. Can you imagine a commercial loan workout where one side makes concessions, like those passed by the Greek Parliament, without surety that the counterparty can and will perform?

    It seems the Greeks did not perceive that, for the creditors, the request for new money would simply mean more “loss content” on credit extensions already known to be incapable of being repaid. The Greeks were unprepared for the demand for collateral as a condition for additional advances –the $50b of assets and the subordination of deposit accounts at the banks– and they did not negotiate minimum release prices to avoid fire sales nor protections in the event of bank “resolutions” conducted by the creditors.

    Most surprising of all is their failure to respond to Schauble’s 5 year holiday idea with a counterproposal, for example: $200 b cash now, no strings; a solution from the institutions including the Central Bank for the problem of international transfers during the holiday period; clear, detailed and irrevocable criteria for rejoining the Euro, including rescheduled debt terms; debt service standstill during the holiday period; with provisions for extended repayment at reduced interest if no return to the Euro is achieved. A solution to the Euro/Drachma question would likely fall out of this negotiation.

    As for the German position, if you are a creditor trying to collect a bad debt and, after plenty of time, it is clear that it your workout program is not producing the desired result, is not being implemented as envisioned while the condition of the debtor is deteriorating, your problem is to come up with something new that will produce a resolution.

    Faced with what appears to be bottomless sinkhole, the prospect of advancing new money on top of bad debts, a bad investment from the get-go based on fraudulent data, in short, a mistake, paying to make it go away might be the best idea.

  34. Most surprising of all is their failure to respond to Schauble’s 5 year holiday idea with a counterproposal,

    How is this even slightly surprising considering the already-taken political positions? In what world could it be surprising now that the Greek side didn’t want to acknowledge candidly that they might accept a Grexit?

  35. drfrank


    It is surprising in the context of this kind of debt reestructure negotiation where, almost by definition, everything is fluid and prior positions are not necessarily meaningful. Typically, a creditor threatens a debtor with bankruptcy, the debtor quavers, takes a break and comes back and says, yes, if you do that to me, I will go into bankruptcy and you will lose, and then the creditor quavers and takes a break, etc. So positions are not fixed.

    Also, in the context where everything presented by Greece was declined, the Euro holiday idea seemed to me to be the only new thing floated, not offered, but floated, which is a clue to where the road to a deal might lie. Additionally, supposing that everything has it’s price, what is the price at which Greece would willingly embrace a 5 year holiday? I am saying that the Greek side needed to be able to state what would be its price for an exit that they could live with and even prosper.

  36. No. It is not at all surprising. Not in the least. This is not a fish-market haggle. The parties are constrained by what they have promised their electorates (and other backers) publicly, and they are constrained also by how each other would have to react to a proposal. In this situation, an offer by Greece to exit at *some* price would be construed as an offer to exit, period, and completely change the political calculation, particularly vis-a-vis Schaeuble and France.

    And if they succeed at an exit, there is no reason for them to return, and if they fail during the exit period, they would be unsuitable for resumption of Euro membership. Get the fish market out of your head.

  37. Jackrabbit

    Some historical perspective.

    In February, the new Greek government wanted to negotiate a comprehensive agreement that included structural reforms, debt restructuring, and new investment. The Troika refused and forced a 2-step process whereby Greece would describe how they would service the crushing debt load BEFORE any talks on debt restructuring. The Troika also refused to make put anything related to debt restructuring/investment in writing.

    Greek leaders appeared to be caught in a catch-22 that could bring down the new Greek government. They were attacked as incompetent and worse in the press. But they continued to resist (while continuing to insist on their devotion to europe and continuing to engage in negotiations) and never delivered a workable proposal by the April 30th deadline. When they did provide a proposal, Tsipras was immediate said to have capitulated – despite the fact that the proposal included debt restructuring (a “non-starter” for the Troika). Later he wrote an Op-Ed in Le Monde that was very damning of the Troika. He then called a referendum rather than capitulate to the Troika demands. How are these actions construed as ‘capitulation’?

    AFTER the referendum, the situation changed. Europe had a black eye as pictures of pensioners crying in front of banks that closed because the ECB had shut off liquidity went viral, and the undemocratic nature of the EU/EZ became headline news. Prior to the referendum the IMF had also come out with a statement that said that the Greek debt needed to be restructured.

    Those who cry that Tsipras’ negotiation of a ‘third bailout’ was ‘capitulation’ are the same that have been so quick to label him as having capitulated/betrayed in the weeks before. They fail (deliberately?) to recognize that although the outlines of the ‘third bailout’ look bad for Greece, the Greek government broke free of the Troika’s malignant 2-step process and will now engage in the comprehensive negotiation that they sought from the beginning (oh, and he got the banks open as well).

    IMO the real test of Tsipras’ fidelity will be found in the up-coming negotiations. He should insist on significant debt restructuring/re-profiling and a detailed implementation plan. And, with IMF and ECB having recognized that extensive restructuring/re-profiling is needed, he should not be shy about using the media if the EU/Troika are not forthcoming with what is necessary. Given his government’s resistance in the prior weeks and months, I am cautiously optimistic. Greece will also benefit from a Europe that is more aware of/awake to/angered by eurozone structural problems than ever before.

    I worry less now about Greece than about what we have seen from the media covering Greece in the last few months. But that is another story…

  38. markfromireland

    For those still following, I’m pasting the first few paragraphs of “European ‘alliance of national liberation fronts’ emerges to avenge Greek defeat” from the UK’s torygraph the entire article which surveys Greece, Spain, and Italy is well worth reading European ‘alliance of national liberation fronts’ emerges to avenge Greek defeat – Telegraph


    It has come to this. The first finance minister of a eurozone country to draw up contingency plans for a possible euro exit is under investigation for treason.

    Greece’s chief prosecutor is examining criminal charges against a five-man “working group” in the country’s finance ministry for the sin of designing a “Plan B”, a parallel system of euro liquidity and bank payments that could – in extremis – lead to a return of the drachma.

    It is hard to see how a monetary union held together by judicial power, coercion and fear in this way can have a future in any of Europe’s ancient nation states.

    The criminalisation of Grexit debate shuts off the option of an orderly return to the drachma, even though there is a high probability – some say a near certainty – that the latest EMU loan package for Greece will prove unworkable and precipitate the country’s exit from the single currency within a year. As a matter of practical statecraft, this is sheer madness.

    The Greek newspaper Kathimerini – the voice of the oligarchy – reported that the charges would include “breach of duty, violation of currency laws and belonging to a criminal organisation”, as well as violating data privacy by hacking into the Greek tax base.

    The prosecutor appears to have latched onto a legal suit by a private lawyer accusing Yanis Varoufakis of treason. It is nothing less than an attempt to destroy the mercurial former finance minister, lest he return as an avenging political force.

    Read in full: European ‘alliance of national liberation fronts’ emerges to avenge Greek defeat – Telegraph


  39. Jackrabbit

    Thanks mfi. Here’s another important development: IMF cannot join Greek rescue, board told

    “Greece wants to decide on some important reforms only in the fall and the Europeans only want to deal with the debt issue after the first review because they first want to rebuild trust,” the summary states. “The differences between the IMF’s thinking about the debt issue and what the Europeans are currently discussing are very large.”

    EZ/Schauble have promised debt reform (now in writing) but apparently want it subject to ‘conditionality’. Drip..drip..drip debt relief.

  40. S Brennan


    I saw an article on that subject, it matches what went on in Greece during the Nazi invasion, while small in number, there were upper class Greeks [and their sycophants] who viewed the Nazis invasion as a Godsend and gladly joined the tyranny. These Nazi quislings, [of Greek origin], were quite dear to Churchill, as soon as practical, he gave them weapons and British troops to continue their Nazi ways.

    The Nazi quislings, [of Greek origin] ran Greece into the ground…and having destroyed practical governance, they’d like to sell the whole thing off before they go…Greek nationalists like Yanis Varoufakis stand in the way of that sale, hence those that committed treason in April 1941, [and do so to this day], charge patriotic Greeks with treason.

    History may not repeat, but it does have a rhythm.

    Crete should secede from Greece…before it is sold to the 4th Reich.

  41. Tsigantes


    “But the terms of the eventual Grexit are now what is at stake. (Actually, the best solution would be for Germany to leave the EZ, but know on has the power to force that).”

    I understand your point of view and mostly agree. Bringing you up to date, the conclusion of most Hellenes post July 13 – and the single subject under discussion now – is Grexit : not if but when, and most important, how. This includes YES voters, workers, youth, and both the quisling bourgeoisie and patriotic bourgeoisie. Grexit is seen as inevitable. Meanwhile the negotiations on MOU3 now underway are followed with a desultory eye with limited interest and lacking conviction that MOU3 will be completed, or if it is completed, that it can stand.

    I note here that the one subject NOT put to the Greeks is Grexit. Not discussed in parliament, not properly polled, certainly no referendum, no mandarin editorials. Grexit discussion is Taboo – a political decision (IMO) aimed at external consumption. Polls at the start of May showed variously support for euro at 52%, and support for Grexit at 52%. Since nothing has happened between May and the present to increase love-of-euro, the 78% pro-euro poll magically appearing in Efemerida ton Syntakton third week of July is understood as theatre.

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