Yanis Varoufakis's Blog, page 67
March 13, 2020
March 12, 2020
March 11, 2020
EUROLEAKS: Letting light in to how crucial decisions are made (or not) in the EU
On March 14, for the first time, European citizens will be able to take a front seat in the meetings where their future is decided: DiEM25’s #EuroLeaks will take YOU inside the Eurogroup that has no standing in law, but where the most far-reaching decisions about all our lives are made.
WHY AND WHY NOW?
– Because YOU have the right to hear what YOUR elected officials are deciding in YOUR name. Democracy without transparency is impossible. If you do not know what your elected officials are doing on your behalf, you cannot pass judgement on them.
– Because what happened in Greece back in 2015 is typical of the EU’s approach to all crises – across Europe.
– Because in the age of “fake news,” accurate, unfiltered information is the only way to upend low-transparency centres of power and fend off propaganda.
– Because Brexit was largely propelled by the unacceptable decision-making process at the heart of the EU. #Euroleaks will also provide invaluable insights into how flimsily crucial decisions for the world economy are reached. Learning these lessons is a prerequisite for transforming Europe, and DiEM25’s #Euroleaks is a service to democrats around the world.
– Because we as DiEM25 don’t take “no” for an answer and we’re willing take on the Establishment everywhere, at the ballot box like we did with European Spring, in court like we did in our lawsuit against the ECB, and on the streets like we did last month to support our Advisory Panel member and transparency champion Julian Assange.
– Because only RADICAL TRANSPARENCY will help us democratise Europe and legitimise its institutions.
WE NEED YOU FULLY ONBOARD
There is only one way we are funding this action, and that is from LOTS and LOTS of people like you making small donations.
If you’ve been waiting for the right time to donate, this is it!
Yanis Varoufakis: “Syriza Was a Bigger Blow to the Left Than Thatcher” – JACOBIN
Former Greek finance minister Yanis Varoufakis told Jacobin why he’s publishing his secret recordings of the critical Eurogroup meetings of 2015 — and why the Left around Europe is struggling to overcome Syriza’s disastrous legacy.
INTERVIEW BY
George Souvlis
When Syriza was voted out of office in July 2019, the once great hope of the European left could not even claim partial successes. Elected in January 2015 on the promise of saving Greece from austerity, in its early months the government led by Alexis Tsipras insisted that it was preparing a confrontation with the Troika of European institutions. Yet just hours after a referendum on July 5, 2015 in which 61 percent of Greeks refused a fresh round of austerity, Tsipras folded to European demands. After further memoranda swallowed by Syriza, Greece is set to remain subject to Troika policies until 2060.
Tsipras’s capitulation on referendum night also saw the departure of Finance Minister Yanis Varoufakis. Throughout the first months of the Syriza government he had done battle with Greece’s creditors at the Eurogroup — the informal, indeed secretive meeting of eurozone finance ministers which exercises effective political control over the single currency. At thirteen Eurogroup meetings, Varoufakis insisted that Europe should plan debt relief rather than continue with eternal austerity in the name of a debt that could never be paid. Yet his appeals to abandon the strategy of “extend and pretend” were quickly shut down.
Greece may have drifted out of the headlines, but austerity measures continue apace — and the institutions running the eurozone remain as opaque as ever. On February 14, 2020, Varoufakis — today a member of the Greek parliament for the MeRA25 party — offered the parliament’s president a USB stick with his recordings of the fateful Eurogroup meetings from 2015. The president refused to accept them: but Varoufakis is now promising to publish them online early in March.
In a far-reaching interview, he spoke to Jacobin’s George Souvlis about his experience as Greek finance minister, how he’s seeking to overcome Syriza’s disastrous record, and how the European issue skewered Labour in Britain.
GS
Recently, you offered the president of the Greek parliament the recordings of Eurogroup meetings from the period you were finance minister. Would you like to tell us briefly what these proceedings are about? What did they bring up that hadn’t been known until now? And why do you think the president of the parliament refused to accept them?
YV
After five years of lying about what was going on in these Eurogroup meetings, the Troika’s domestic political forces in Greece panicked at the thought that they would hear with their own ears what truly went down there.
As if to confirm that anti-democrats demand that we live in darkness and opacity, they are now demanding that no one should be able to witness how the Troika personnel refused to engage in any serious policy debate with me, of how they closed down every avenue to an honorable agreement, of their technical incompetence and, above all else, of their black propaganda with which they tried to portray me as a rude recalcitrant that tabled no serious proposals — when precisely the opposite was true.
Why release these files now? Two events led me to the decision: First, the new right-wing New Democracy government recently legislated the sale of nonperforming mortgages to funds that will trigger mass evictions of families that, due to the never-ending crisis, cannot service their mortgages.
From May ,1 2020, a new wave of misery is going to engulf our already defeated population. In Parliament, where I lead MeRA25 (DiEM25’s new progressive party in Greece), the prime minister and his ministers took turns to “explain” what they are doing by blaming their new liquidationist drive on … me and the manner in which I “upset” my finance minister colleagues in those Eurogroup meetings in 2015!
The second reason is that my former government colleagues in Syriza have just leaked an internal review of what they did wrong since 2014 and why they were defeated in the July 2019 general election.
Their main conclusion seems to be that their finance minister in 2015 (me!) antagonized his colleagues in the Eurogroup, failing to table reasonable proposals, being recalcitrant etc. (i.e., Syriza fully adopted the Troika’s narrative). These developments convinced me that the fake news concerning the 2015 Eurogroup meetings are providing the cover for a new wave of assaults against the weakest of citizens. Only by letting the public know what happened in there, can we defend the majority who are about to be assaulted again.
GS
Looking at Syriza’s record, what do you think were the missed opportunities? Did Syriza fail to prepare Greek society as a whole for what would happen if the Troika said no to the government’s proposal?
YV
I’m not an expert on Syriza — I wasn’t even a member! The reason I got involved with Syriza was because of my direct relations with Alexis Tsipras and two or three other people who were coming to me to discuss debt bondage and how to get out of it. It was only when they told me that [they were interested in my] answer to questions such as how to stop the European Central Bank from shutting down the banks, how do we plan for the possible transition to a national currency if need be … that I thought, OK, since they claimed to agree with what needed to be done in the short term, to use a fantastic opportunity to escape Greece from the debtors’ prison, I couldn’t say no.
Did I trust that they had a blueprint for the future? No, but nobody does. The Bolsheviks had no blueprint for what would follow after 1917. If you want an operational plan before every revolution, then no revolution will take place. So, when comrades within Syriza said to me after the surrender of Tsipras on July 5, 2015, “Oh but Yanis, you didn’t really have an operational plan,” I said, “so bloody what?” You do not break with the past, you do not push history to the brink only if you know exactly what’s going to follow after. We had enough of an operational plan.
What happened in 2012, whether they broke from their tradition or not, is neither here nor there for me. It is not as if they had a splendid legacy or a notable tradition to behold. Even the Eurocommunists that preceded Syriza never impressed me as particularly radical. I hoped that the gravity of the historical moment would create ruptures and the gravitational force that would forge a popular front for change. I still believe that if two or three people, Tsipras primarily, had not buckled during the first five or six months of 2015, those forces would, indeed, have been unleashed. Greeks like to say that the fish starts rotting from the head down. All those good people, Syriza people, who ended up as functionaries of the oligarchic establishment following Tsipras’s surrender in July 2015 would have been good comrades at the forefront of the great fight if the head had not begun to rot.
GS
After the full four-year experience of the Syriza government, how would you evaluate its economic performance? Any different from the previous Troika-dictated governments?
YV
They were more adamant and efficient in the application of austerity, more ruthless in privatizations, and as Wolfgang Schäuble said, the only government that actually saw through the Troika program.
GS
Do you think one of the problems that Syriza’s agreement with the Troika produced was to discredit the Left as a viable political option in the eyes of the Greek electorate? What can be done to overcome that, and do more than be seen as more of the same?
YV
I’d agree with you, but you’re understating the case. Syriza’s capitulation was the worst blow against the Left for decades.
This was a party that had carried on its shoulders the aspirations of progressives around the globe, not just in Greece and Europe. They hoped that it would remain uncompromised in its fight against the worst kind of austerity and against the worst kind of lie — that you can escape a wholesale crisis of capitalism through greater indebtedness, which comes with austerian strings attached that shrink national income.
This was, in a sense, an even worse blow against the Left than Thatcher. She destroyed the unions and introduced the dogma of TINA: There Is No Alternative. Syriza’s capitulation extended TINA to the Left. It was as if the Left acknowledged that there is, indeed, no alternative. Watching the faces of the Troika leaders stand side by side with Syriza ministers and listening to the latter parrot the Troika leaders’ language that austerity would be defeated by the growth that austerity would bring — there could be no greater legitimation than that for their illegitimate austerity and miscellany of colonial policies.
Podemos was effectively finished the day after — through Pablo Iglesias, they effectively endorsed Tsipras’s surrender. The sense of defeat for the Left across Europe was the greatest boon both for the establishment and the fascist international.
GS
How would you interpret New Democracy’s policies since its election?
YV
We are now in the tenth year of a massive crisis of Greek capitalism. The first phase saw wholesale panic among the establishment, reflecting the panic of Wall Street, the City, Deutsche Bank and so on. It was only worse here because the foundations of Greek capitalism are even flimsier and there was this panic to sign on the dotted line of gigantic loans, for the sake of arresting the oligarchy’s own collapse. This was the first Memorandum, the €110 billion loan from the Troika in May 2010.
The second phase was the second Memorandum, the purpose of which was, once the first bailout monies were used to make whole the French and German banks, to stabilize the Greek banking sector and bourgeoisie. They used up that second €110 billion loan to that purpose at the time when the middle classes were suffering just as much as the working class. The third phase came with the Syriza government which, after the summer of 2015 capitulation, signed two Memoranda: the Third Memorandum [accepted in July 2015, contrary to the referendum result] and then a “silent” Fourth one in August 2018, that bound Greece to Troika policies until 2060.
By that third phase, we have a very interesting new development. Up until then, everybody was losing, except the very few oligarchs who never lose. But some time between 2017 and summer 2018, a segment of the Greek upper middle class managed to latch on to rent-seeking activities from which they profit massively while the rest of society continues to sink into bankruptcy. That includes everyone connected to the hedge funds and vulture funds that purchase nonperforming loans from the banks. Buying up a mortgage whose face value is €100,000 for €4,000 or €8,000 it is very difficult to lose money — especially now that house prices are rising again.
Suddenly, a whole cabal of hedge funds, of advisors, of accountants, of parasites, are making the highest profit rates in global capitalism, here in Greece. It’s a bit like vultures feasting on the flesh of a dying corpse. It was Syriza’s government that oversaw this new phase. You can see that from how those who bought Greek public bonds in 2016, 2017, made the greatest returns in the bond market worldwide, even though the Greek state is bankrupt and the debt burden continues to get heavier every day.
New Democracy won last July and essentially promised to maximize the rents of that class. Being a coalition between quasi-fascists and neoliberals, New Democracy under Kyriakos Mitsotakis has to balance the total liberalization of the market for the little people’s liquefied private wealth, through the purchase of nonperforming loans, with the kinds of nationalism and organized misanthropy which the xenophobic, neofascist element of the party needs. The combination of the two brings about a new form of authoritarianism, because when you evict people from their homes you need a strong ruthless police force and a band of bailiffs to do it. But it’s the same police force you need to support the eviction of people from squats and the clash with anti-establishment forces.
So, this is not just a political choice. It’s part of Greece’s political economy. Syriza’s Fourth Memorandum created circumstances for a new parasitic oligarchy to rise up, profiting from the continued bankruptcy of the many, and created circumstances of increased authoritarianism and violence against Greek society.
GS
But the authoritarianism increased already under Syriza . . .
YV
That’s part of what I’m saying — Syriza started in 2017–18 to serve the interests of the parasitic oligarchy. They oversaw the creation of new class conflicts in which they had to take the side of the oligarchy. This is obvious on many different fronts, e.g., the fire sale of lucrative airports and the railways to the normalization of casualized, rented labor. The Syriza official narrative is that they were forced by the Troika into surrender, which is of course true once you have ruled out resistance. Even if it were true that escape from the troika’s debt prison was impossible (which it is not), they refuse to countenance the option of resigning their posts and returning to the streets alongside the oligarchy’s victims. By choosing to stay on, in order ostensibly not to forfeit government to the Right, they were co-opted by the oligarchy — the most permanent defeat possible.
Final confirmation of the wholesale defeat was what the Syriza government did in Lesbos. Did the Troika force them to create Moria, the unspeakable concentration camp for refugees? Syriza did that. Once progressives surrender on one large issue, austerity for instance, they become ripe to surrender on almost every issue.
GS
It’s very impressive how Syriza present everything as inevitable, there was no other choice . . .
YV
TINA!
GSBut at all levels. For example, before they got elected, they had a program to democratize the police, not even connected to the European Union. But they didn’t even do the minimal stuff here, for instance prohibiting political violence.
YV
You’re quite right. But that proves my earlier point that when you buckle on the important and crucial issues, like to the Troika, you’ll buckle on everything. So, you’re right, they could have democratized the police — but they didn’t. They could have not imprisoned refugees — but they did. They could have not signed the Merkel-Erdogan treaty — but they signed it. There was no reason, no pressure from Brussels or Germany, to enter a sordid alliance with Benjamin Netanyahu, and to push Greece — traditionally pro-Palestinian and critical of the Israeli state’s ethnic cleansing in Palestine — into the arms of someone like Netanyahu, whom every progressive Israeli I know loathes. It was the apotheosis of the domino effect.
GS
In July, MeRA25 — the Greek section of DiEM25 — elected nine members to the Greek parliament. Can you give us some impression where its voters come from, how you built labor support, and support among students?
YV
We’ve done some research. It’s really very difficult for people in a party bubble, especially a new one like ours, to know. We got 196,000 votes. Most commentators assumed they were disheartened former Syriza voters who came to MeRA25. We have the hard data now, that under 50 percent of those who voted for us had ever voted for Syriza before. Twenty to 30 percent used to vote for the Right.
But that’s not surprising. The magnificent aspect of the referendum of 2015 is that right-wing working-class voters disentangled themselves from the establishment parties they used to support — and voted for “No.” That same night they were betrayed by Tsipras. They needed to go somewhere. A lot flocked back to New Democracy, a lot voted for Syriza because they thought “better to be tortured by a torturer who’s not enthusiastic about it” than one that is, but some of them came to us, in continuity with their anti-establishment vote in 2015.
We’re doing really well among the young — precariat, students, and so on. If you look at seventeen- to twenty-five-year-olds, we scored something like 13–14 percent, against 3.4 percent overall. Meanwhile, we’re doing abysmally above the age of forty-five with less than 1 percent over sixty-five. We face a major challenge with the older generation, even though we are the only ones who really oppose what’s happening to their pensions and the evictions and foreclosures. We have a lot of work to do to get to them, primarily because they do not use the social media that is our only means of disseminating our proposals and positions. We also need to overturn the demonization, of me personally and anyone who opposed the Troika, blasted into people’s living rooms daily by the establishment TV stations. Social media is our only way of contacting voters.
GS
MeRA25 speaks of constructive and realistic disobedience — what does this mean for the party strategy?
YV
Campaigning for socialism that will come at some time in the future is irrelevant to people who can’t put food on the table and are about to lose their home today or by the end of the week. Telling them that all these terrible things won’t happen when we have socialism invites a tired look — and a dismissive “get off.” Then they go back home and privatize their fears and vote for a lesser evil among the larger parties. Maximalism, in the final analysis, is not revolutionary.
For us, the policy of constructive disobedience is the only way to be truly progressive and pragmatic. That doesn’t mean compromising, like pragmatism in the sense of believing in civilizing capitalism and proposing to manage it. My understanding of “pragmatic” is different. Take, for instance, the foreclosures and evictions. The government has pushed through parliament a bill for liquidating smallholders and passing on their property to vulture funds. We can say no to that — of course we do, alongside other forces. But it is far more effective to say to people: here is something they could have done within the present framework instead of what they did.
So, for instance, we demonstrate that a public bad bank can be created— completely legal within the EU framework — to which the bad loans are transferred in exchange for public bonds whose value is shored up by the value of the mortgaged properties and some state guarantees. This way, all evictions can end with the debtors’ loan being frozen ad infinitum for a monthly fee that covers the bad bank’s operations, and which does not exceed, say, one-third the homeowners’ disposable income. This is something the government could have done today under the existing legal and regulatory framework to protect indebted households and small business.
If you point out to suffering families and small entrepreneurs this road not taken by the government, they immediately ask: “why did they not do this, if it was within their own law and even philosophical framework to do it?” When you explain that they chose not to do it because they have adopted as their own the interests of the vulture funds, then they get angry and are far more prone to join the movement than if you were to try to convert them to socialism.
This is our policy of constructive disobedience: You put forward constructive, moderate proposals that even the Right could implement tomorrow morning. And then you build a movement of civil disobedience to oppose the government’s decision not to implement it.
GS
What are your plans for MeRA25?
YV
One completely fair criticism is that MeRA25 is not a grassroots party — yet. We have people in the grassroots but we’re not fully connected to existing movements, and we don’t even have a fully-fledged party mechanism. It couldn’t be otherwise — about fifty of us decided to create a party from scratch, because we’d had enough of this complete surrender to hopelessness and to the Troika. We managed to gather almost 200,000 votes in our first attempt and enter Parliament. That was a magnificent feat, but only a first step.
The next great wager is to convert MeRA25 into a grassroots movement connected to existing movements and give it a democratic structure it now lacks. The only way to do that was to start a process leading to a deliberative party Congress in the end of May.
Every day, local branches meet with and support representatives of local communities, fighting against gold mines, against attempts to shut down cooperatives in Thessaloniki, against the privatization of garbage disposal, the destruction of river systems and forests, against drilling for oil and gas, the casualization of labor, school closures … we’re moving in the direction of building the party from the bottom up, using the Congress as a pretext.
We have a very ambitious agenda, and we’ll be taking it around Greece. Not only to demonstrate how clever we are, but to allow people who didn’t even know of the party’s existence to become part and parcel of the process of developing that agenda, in a fully participatory manner.
GS
If it was in government would your party want to stay in the European Union at all costs — or on what conditions?
YV
Before saying more on this, it is important to distinguish between Grexit and Brexit, two situations that people wrongly conflate. Brexit became prominent, and successful, because it was a home-grown campaign, reflecting opposition to Britain’s membership of the European Union from both Left and Right.
Grexit, in contrast, became big news not because of a domestic campaign to get Greece out of the European Union, or the euro, but as a threat from the Troika to a succession of Greek governments: submit your people to stringent austerity and sell us your family silver for a pittance, or we shall reduce you to a pulp by throwing you out of the euro.
So, there are two fundamentally different propositions. One concerns the eurozone and one concerns the European Union. From where I stand, a left-wing campaign to exit the EU is a terrible idea, even if one agrees — as I do — that it was a mistake to enter the EU. Why not exit if you should not have entered? For two good reasons: First, exiting will not return you to where you would have been had you not entered. Secondly, as Brexit has shown, any attempt at Lexit [an exit from the Left] will only blow an inauspicious wind in the sails of right-wing exiters. Turning now to the membership of the euro, which is quite different from membership of the EU; I am vilified by the Right and Syriza as someone prepared to get out of the euro — a charge that I am confessing to. Yes, in 2015 I was prepared to exit the euro (and to reissue a national currency) if the alternative were debt bondage. I still am ready to exit the euro, and so is MeRA25, even though it is not our proposal.
Our proposal, that we put to the electorate with some success last July, was simple: we shall unilaterally (i.e., without negotiating with the Troika) legislate the minimum that needs to be done to stop the majority of Greeks from falling deeper into hopelessness. If the Troika, in its wisdom, chooses to throw us out of the euro, let them do their worst. Even though it will cost us dearly in the short run, in the long run our people will be better off. Moreover, if we believed this and acted defiantly, the Troika would most likely hold back as Grexit would cost them around €1 trillion.
That’s our stance more generally: on policies regarding nonperforming loans, on primary surpluses, on taxation, on what to do with debt, we are not going to negotiate with the Troika or with Brussels. We shall legislate the minimum requirements for making the Greek political economy sustainable again — and leave it to the Troika to decide whether they want to punish us, and themselves, via Grexit. This is not a bluff, for a simple reason: whether they proceed with Grexit or not, the majority of Greeks will be better off in the longer run than if we capitulated like Syriza.
To recap, we are not naïve. We have no doubt that the Troika or Brussels will thoroughly reject every single proposal we make. But we are not going to negotiate them. The mistake in 2015 was to negotiate these things. A MeRA25 government will legislate unilaterally those minimum requirements for making Greece sustainable again. If they want to throw us out of the eurozone for that, we invite them to do so, without ever proposing it ourselves.
GS
Do you think the size of the Labour Party’s defeat in Britain had to do with Brexit?
YV
From the moment Jeremy Corbyn became Labour leader, the preponderant powers within the party behaved in a way that highlighted their determination to get rid of him even if that meant keeping the Tories in power forever. They tried one coup after another against Jeremy, in a manner that made very clear that preventing Labour becoming genuinely progressive on foreign policy and domestic policy was paramount to them. Just as the Democratic establishment would rather have Trump in the White House than Bernie Sanders.From the perspective of Brexit, I find it astonishing that the greatest losers of all time, the hard Remainers — the very people who misjudged the atmosphere in Britain, the very people who effectively shot themselves in the foot by dismissing the referendum outcome as an error by idiots who should never have had the right to vote, the very people who antagonized good working-class people who happened to disagree with them on Brexit, the very people who pushed for a second referendum not as a means of democratizing Britain but simply in order to annul the first, and in so doing, created the circumstances for Boris Johnson to become prime minister and do a hard Brexit — these amazing losers have the audacity to blame Jeremy Corbyn for Labour’s defeat. I find that a wonderful combination of audacity and ill-judgement.Jeremy’s position on Brexit has been eminently sensible, from the beginning. His nuanced and unenthusiastic support for Remain was the correct call, as far as I’m concerned. What he said was, people like us — him, me, others — were against entering the European Economic Community in the 1970s, as was the wonderful Tony Benn, on good democratic grounds. But after forty-three years of being part and parcel of the EU, extricating Britain from a wholly undemocratic EU will, in the end, do considerable damage to those whom we consider our people. So, on balance, we supported Remain, with a view to work for a Labour government that, when in Brussels, vetoes the hell out of the neoliberal attitudes within the EU. That was an eminently nuanced and responsible position.After the referendum, which we lost, it was responsible to respect the result and say, well we lost, let’s try and implement a Brexit that minimizes the cost to the working class. So, we proposed a customs union that doesn’t wreck the supply lines that keep Nissan in Sunderland and close alignment with the single market. And what was the reaction of the hard Remainers? To lambast Jeremy Corbyn’s sensible position while demonizing Brexiteer Labour voters and demanding a second referendum by which to correct the verdict of the first one.Corbyn kept telling them that, if they kept doing this, both Labour and the Remain vote would be divided while the Tories, after some internal pogrom, would unite under the hard Brexit flag. After all, is this not history’s lesson — that the Tories, driven by a remarkable urge to serve the ruling class’s interests, will always unite in the end? The moment Boris Johnson took over from Theresa May, I could see the writing on the wall: our side of British politics had lost, because we would be divided between Remainers and Leavers.The Labour manifesto — and Jeremy was right again, here — did win the argument. Without doubt, a very substantial majority of people agreed with renationalizing parts of the railway that suck — even the Tories are saying they may have to renationalize Southern Rail. They agreed with the idea of free broadband, a public utility that boosts productivity massively for small companies, families, and so on. They agreed with the green transition policies, the national investment bank. But in the end, Brexit was weaponized by hard Remainers less fearful of a hard-right, hard Brexit Johnson government than a Corbyn-led radical Labour Party.
Yanis Varoufakis during his speech in Hellenic Parliament. Dimitrios Karvountzis / Pacific Press / LightRocket via Getty
INTERVIEW BY
George Souvlis
When Syriza was voted out of office in July 2019, the once great hope of the European left could not even claim partial successes. Elected in January 2015 on the promise of saving Greece from austerity, in its early months the government led by Alexis Tsipras insisted that it was preparing a confrontation with the Troika of European institutions. Yet just hours after a referendum on July 5, 2015 in which 61 percent of Greeks refused a fresh round of austerity, Tsipras folded to European demands. After further memoranda swallowed by Syriza, Greece is set to remain subject to Troika policies until 2060.
Tsipras’s capitulation on referendum night also saw the departure of Finance Minister Yanis Varoufakis. Throughout the first months of the Syriza government he had done battle with Greece’s creditors at the Eurogroup — the informal, indeed secretive meeting of eurozone finance ministers which exercises effective political control over the single currency. At thirteen Eurogroup meetings, Varoufakis insisted that Europe should plan debt relief rather than continue with eternal austerity in the name of a debt that could never be paid. Yet his appeals to abandon the strategy of “extend and pretend” were quickly shut down.
Greece may have drifted out of the headlines, but austerity measures continue apace — and the institutions running the eurozone remain as opaque as ever. On February 14, 2020, Varoufakis — today a member of the Greek parliament for the MeRA25 party — offered the parliament’s president a USB stick with his recordings of the fateful Eurogroup meetings from 2015. The president refused to accept them: but Varoufakis is now promising to publish them online early in March.
In a far-reaching interview, he spoke to Jacobin’s George Souvlis about his experience as Greek finance minister, how he’s seeking to overcome Syriza’s disastrous record, and how the European issue skewered Labour in Britain.
GS
Recently, you offered the president of the Greek parliament the recordings of Eurogroup meetings from the period you were finance minister. Would you like to tell us briefly what these proceedings are about? What did they bring up that hadn’t been known until now? And why do you think the president of the parliament refused to accept them?
YV
After five years of lying about what was going on in these Eurogroup meetings, the Troika’s domestic political forces in Greece panicked at the thought that they would hear with their own ears what truly went down there.
As if to confirm that anti-democrats demand that we live in darkness and opacity, they are now demanding that no one should be able to witness how the Troika personnel refused to engage in any serious policy debate with me, of how they closed down every avenue to an honorable agreement, of their technical incompetence and, above all else, of their black propaganda with which they tried to portray me as a rude recalcitrant that tabled no serious proposals — when precisely the opposite was true.
Why release these files now? Two events led me to the decision: First, the new right-wing New Democracy government recently legislated the sale of nonperforming mortgages to funds that will trigger mass evictions of families that, due to the never-ending crisis, cannot service their mortgages.
From May ,1 2020, a new wave of misery is going to engulf our already defeated population. In Parliament, where I lead MeRA25 (DiEM25’s new progressive party in Greece), the prime minister and his ministers took turns to “explain” what they are doing by blaming their new liquidationist drive on … me and the manner in which I “upset” my finance minister colleagues in those Eurogroup meetings in 2015!
The second reason is that my former government colleagues in Syriza have just leaked an internal review of what they did wrong since 2014 and why they were defeated in the July 2019 general election.
Their main conclusion seems to be that their finance minister in 2015 (me!) antagonized his colleagues in the Eurogroup, failing to table reasonable proposals, being recalcitrant etc. (i.e., Syriza fully adopted the Troika’s narrative). These developments convinced me that the fake news concerning the 2015 Eurogroup meetings are providing the cover for a new wave of assaults against the weakest of citizens. Only by letting the public know what happened in there, can we defend the majority who are about to be assaulted again.
GS
Looking at Syriza’s record, what do you think were the missed opportunities? Did Syriza fail to prepare Greek society as a whole for what would happen if the Troika said no to the government’s proposal?
YV
I’m not an expert on Syriza — I wasn’t even a member! The reason I got involved with Syriza was because of my direct relations with Alexis Tsipras and two or three other people who were coming to me to discuss debt bondage and how to get out of it. It was only when they told me that [they were interested in my] answer to questions such as how to stop the European Central Bank from shutting down the banks, how do we plan for the possible transition to a national currency if need be … that I thought, OK, since they claimed to agree with what needed to be done in the short term, to use a fantastic opportunity to escape Greece from the debtors’ prison, I couldn’t say no.
Did I trust that they had a blueprint for the future? No, but nobody does. The Bolsheviks had no blueprint for what would follow after 1917. If you want an operational plan before every revolution, then no revolution will take place. So, when comrades within Syriza said to me after the surrender of Tsipras on July 5, 2015, “Oh but Yanis, you didn’t really have an operational plan,” I said, “so bloody what?” You do not break with the past, you do not push history to the brink only if you know exactly what’s going to follow after. We had enough of an operational plan.
What happened in 2012, whether they broke from their tradition or not, is neither here nor there for me. It is not as if they had a splendid legacy or a notable tradition to behold. Even the Eurocommunists that preceded Syriza never impressed me as particularly radical. I hoped that the gravity of the historical moment would create ruptures and the gravitational force that would forge a popular front for change. I still believe that if two or three people, Tsipras primarily, had not buckled during the first five or six months of 2015, those forces would, indeed, have been unleashed. Greeks like to say that the fish starts rotting from the head down. All those good people, Syriza people, who ended up as functionaries of the oligarchic establishment following Tsipras’s surrender in July 2015 would have been good comrades at the forefront of the great fight if the head had not begun to rot.
GS
After the full four-year experience of the Syriza government, how would you evaluate its economic performance? Any different from the previous Troika-dictated governments?
YV
They were more adamant and efficient in the application of austerity, more ruthless in privatizations, and as Wolfgang Schäuble said, the only government that actually saw through the Troika program.
GS
Do you think one of the problems that Syriza’s agreement with the Troika produced was to discredit the Left as a viable political option in the eyes of the Greek electorate? What can be done to overcome that, and do more than be seen as more of the same?
YV
I’d agree with you, but you’re understating the case. Syriza’s capitulation was the worst blow against the Left for decades.
This was a party that had carried on its shoulders the aspirations of progressives around the globe, not just in Greece and Europe. They hoped that it would remain uncompromised in its fight against the worst kind of austerity and against the worst kind of lie — that you can escape a wholesale crisis of capitalism through greater indebtedness, which comes with austerian strings attached that shrink national income.
This was, in a sense, an even worse blow against the Left than Thatcher. She destroyed the unions and introduced the dogma of TINA: There Is No Alternative. Syriza’s capitulation extended TINA to the Left. It was as if the Left acknowledged that there is, indeed, no alternative. Watching the faces of the Troika leaders stand side by side with Syriza ministers and listening to the latter parrot the Troika leaders’ language that austerity would be defeated by the growth that austerity would bring — there could be no greater legitimation than that for their illegitimate austerity and miscellany of colonial policies.
Podemos was effectively finished the day after — through Pablo Iglesias, they effectively endorsed Tsipras’s surrender. The sense of defeat for the Left across Europe was the greatest boon both for the establishment and the fascist international.
GS
How would you interpret New Democracy’s policies since its election?
YV
We are now in the tenth year of a massive crisis of Greek capitalism. The first phase saw wholesale panic among the establishment, reflecting the panic of Wall Street, the City, Deutsche Bank and so on. It was only worse here because the foundations of Greek capitalism are even flimsier and there was this panic to sign on the dotted line of gigantic loans, for the sake of arresting the oligarchy’s own collapse. This was the first Memorandum, the €110 billion loan from the Troika in May 2010.
The second phase was the second Memorandum, the purpose of which was, once the first bailout monies were used to make whole the French and German banks, to stabilize the Greek banking sector and bourgeoisie. They used up that second €110 billion loan to that purpose at the time when the middle classes were suffering just as much as the working class. The third phase came with the Syriza government which, after the summer of 2015 capitulation, signed two Memoranda: the Third Memorandum [accepted in July 2015, contrary to the referendum result] and then a “silent” Fourth one in August 2018, that bound Greece to Troika policies until 2060.
By that third phase, we have a very interesting new development. Up until then, everybody was losing, except the very few oligarchs who never lose. But some time between 2017 and summer 2018, a segment of the Greek upper middle class managed to latch on to rent-seeking activities from which they profit massively while the rest of society continues to sink into bankruptcy. That includes everyone connected to the hedge funds and vulture funds that purchase nonperforming loans from the banks. Buying up a mortgage whose face value is €100,000 for €4,000 or €8,000 it is very difficult to lose money — especially now that house prices are rising again.
Suddenly, a whole cabal of hedge funds, of advisors, of accountants, of parasites, are making the highest profit rates in global capitalism, here in Greece. It’s a bit like vultures feasting on the flesh of a dying corpse. It was Syriza’s government that oversaw this new phase. You can see that from how those who bought Greek public bonds in 2016, 2017, made the greatest returns in the bond market worldwide, even though the Greek state is bankrupt and the debt burden continues to get heavier every day.
New Democracy won last July and essentially promised to maximize the rents of that class. Being a coalition between quasi-fascists and neoliberals, New Democracy under Kyriakos Mitsotakis has to balance the total liberalization of the market for the little people’s liquefied private wealth, through the purchase of nonperforming loans, with the kinds of nationalism and organized misanthropy which the xenophobic, neofascist element of the party needs. The combination of the two brings about a new form of authoritarianism, because when you evict people from their homes you need a strong ruthless police force and a band of bailiffs to do it. But it’s the same police force you need to support the eviction of people from squats and the clash with anti-establishment forces.
So, this is not just a political choice. It’s part of Greece’s political economy. Syriza’s Fourth Memorandum created circumstances for a new parasitic oligarchy to rise up, profiting from the continued bankruptcy of the many, and created circumstances of increased authoritarianism and violence against Greek society.
GS
But the authoritarianism increased already under Syriza . . .
YV
That’s part of what I’m saying — Syriza started in 2017–18 to serve the interests of the parasitic oligarchy. They oversaw the creation of new class conflicts in which they had to take the side of the oligarchy. This is obvious on many different fronts, e.g., the fire sale of lucrative airports and the railways to the normalization of casualized, rented labor. The Syriza official narrative is that they were forced by the Troika into surrender, which is of course true once you have ruled out resistance. Even if it were true that escape from the troika’s debt prison was impossible (which it is not), they refuse to countenance the option of resigning their posts and returning to the streets alongside the oligarchy’s victims. By choosing to stay on, in order ostensibly not to forfeit government to the Right, they were co-opted by the oligarchy — the most permanent defeat possible.
Final confirmation of the wholesale defeat was what the Syriza government did in Lesbos. Did the Troika force them to create Moria, the unspeakable concentration camp for refugees? Syriza did that. Once progressives surrender on one large issue, austerity for instance, they become ripe to surrender on almost every issue.
GS
It’s very impressive how Syriza present everything as inevitable, there was no other choice . . .
YV
TINA!
GSBut at all levels. For example, before they got elected, they had a program to democratize the police, not even connected to the European Union. But they didn’t even do the minimal stuff here, for instance prohibiting political violence.
YV
You’re quite right. But that proves my earlier point that when you buckle on the important and crucial issues, like to the Troika, you’ll buckle on everything. So, you’re right, they could have democratized the police — but they didn’t. They could have not imprisoned refugees — but they did. They could have not signed the Merkel-Erdogan treaty — but they signed it. There was no reason, no pressure from Brussels or Germany, to enter a sordid alliance with Benjamin Netanyahu, and to push Greece — traditionally pro-Palestinian and critical of the Israeli state’s ethnic cleansing in Palestine — into the arms of someone like Netanyahu, whom every progressive Israeli I know loathes. It was the apotheosis of the domino effect.
GS
In July, MeRA25 — the Greek section of DiEM25 — elected nine members to the Greek parliament. Can you give us some impression where its voters come from, how you built labor support, and support among students?
YV
We’ve done some research. It’s really very difficult for people in a party bubble, especially a new one like ours, to know. We got 196,000 votes. Most commentators assumed they were disheartened former Syriza voters who came to MeRA25. We have the hard data now, that under 50 percent of those who voted for us had ever voted for Syriza before. Twenty to 30 percent used to vote for the Right.
But that’s not surprising. The magnificent aspect of the referendum of 2015 is that right-wing working-class voters disentangled themselves from the establishment parties they used to support — and voted for “No.” That same night they were betrayed by Tsipras. They needed to go somewhere. A lot flocked back to New Democracy, a lot voted for Syriza because they thought “better to be tortured by a torturer who’s not enthusiastic about it” than one that is, but some of them came to us, in continuity with their anti-establishment vote in 2015.
We’re doing really well among the young — precariat, students, and so on. If you look at seventeen- to twenty-five-year-olds, we scored something like 13–14 percent, against 3.4 percent overall. Meanwhile, we’re doing abysmally above the age of forty-five with less than 1 percent over sixty-five. We face a major challenge with the older generation, even though we are the only ones who really oppose what’s happening to their pensions and the evictions and foreclosures. We have a lot of work to do to get to them, primarily because they do not use the social media that is our only means of disseminating our proposals and positions. We also need to overturn the demonization, of me personally and anyone who opposed the Troika, blasted into people’s living rooms daily by the establishment TV stations. Social media is our only way of contacting voters.
GS
MeRA25 speaks of constructive and realistic disobedience — what does this mean for the party strategy?
YV
Campaigning for socialism that will come at some time in the future is irrelevant to people who can’t put food on the table and are about to lose their home today or by the end of the week. Telling them that all these terrible things won’t happen when we have socialism invites a tired look — and a dismissive “get off.” Then they go back home and privatize their fears and vote for a lesser evil among the larger parties. Maximalism, in the final analysis, is not revolutionary.
For us, the policy of constructive disobedience is the only way to be truly progressive and pragmatic. That doesn’t mean compromising, like pragmatism in the sense of believing in civilizing capitalism and proposing to manage it. My understanding of “pragmatic” is different. Take, for instance, the foreclosures and evictions. The government has pushed through parliament a bill for liquidating smallholders and passing on their property to vulture funds. We can say no to that — of course we do, alongside other forces. But it is far more effective to say to people: here is something they could have done within the present framework instead of what they did.
So, for instance, we demonstrate that a public bad bank can be created— completely legal within the EU framework — to which the bad loans are transferred in exchange for public bonds whose value is shored up by the value of the mortgaged properties and some state guarantees. This way, all evictions can end with the debtors’ loan being frozen ad infinitum for a monthly fee that covers the bad bank’s operations, and which does not exceed, say, one-third the homeowners’ disposable income. This is something the government could have done today under the existing legal and regulatory framework to protect indebted households and small business.
If you point out to suffering families and small entrepreneurs this road not taken by the government, they immediately ask: “why did they not do this, if it was within their own law and even philosophical framework to do it?” When you explain that they chose not to do it because they have adopted as their own the interests of the vulture funds, then they get angry and are far more prone to join the movement than if you were to try to convert them to socialism.
This is our policy of constructive disobedience: You put forward constructive, moderate proposals that even the Right could implement tomorrow morning. And then you build a movement of civil disobedience to oppose the government’s decision not to implement it.
GS
What are your plans for MeRA25?
YV
One completely fair criticism is that MeRA25 is not a grassroots party — yet. We have people in the grassroots but we’re not fully connected to existing movements, and we don’t even have a fully-fledged party mechanism. It couldn’t be otherwise — about fifty of us decided to create a party from scratch, because we’d had enough of this complete surrender to hopelessness and to the Troika. We managed to gather almost 200,000 votes in our first attempt and enter Parliament. That was a magnificent feat, but only a first step.
The next great wager is to convert MeRA25 into a grassroots movement connected to existing movements and give it a democratic structure it now lacks. The only way to do that was to start a process leading to a deliberative party Congress in the end of May.
Every day, local branches meet with and support representatives of local communities, fighting against gold mines, against attempts to shut down cooperatives in Thessaloniki, against the privatization of garbage disposal, the destruction of river systems and forests, against drilling for oil and gas, the casualization of labor, school closures … we’re moving in the direction of building the party from the bottom up, using the Congress as a pretext.
We have a very ambitious agenda, and we’ll be taking it around Greece. Not only to demonstrate how clever we are, but to allow people who didn’t even know of the party’s existence to become part and parcel of the process of developing that agenda, in a fully participatory manner.
GS
If it was in government would your party want to stay in the European Union at all costs — or on what conditions?
YV
Before saying more on this, it is important to distinguish between Grexit and Brexit, two situations that people wrongly conflate. Brexit became prominent, and successful, because it was a home-grown campaign, reflecting opposition to Britain’s membership of the European Union from both Left and Right.
Grexit, in contrast, became big news not because of a domestic campaign to get Greece out of the European Union, or the euro, but as a threat from the Troika to a succession of Greek governments: submit your people to stringent austerity and sell us your family silver for a pittance, or we shall reduce you to a pulp by throwing you out of the euro.
So, there are two fundamentally different propositions. One concerns the eurozone and one concerns the European Union. From where I stand, a left-wing campaign to exit the EU is a terrible idea, even if one agrees — as I do — that it was a mistake to enter the EU. Why not exit if you should not have entered? For two good reasons: First, exiting will not return you to where you would have been had you not entered. Secondly, as Brexit has shown, any attempt at Lexit [an exit from the Left] will only blow an inauspicious wind in the sails of right-wing exiters. Turning now to the membership of the euro, which is quite different from membership of the EU; I am vilified by the Right and Syriza as someone prepared to get out of the euro — a charge that I am confessing to. Yes, in 2015 I was prepared to exit the euro (and to reissue a national currency) if the alternative were debt bondage. I still am ready to exit the euro, and so is MeRA25, even though it is not our proposal.
Our proposal, that we put to the electorate with some success last July, was simple: we shall unilaterally (i.e., without negotiating with the Troika) legislate the minimum that needs to be done to stop the majority of Greeks from falling deeper into hopelessness. If the Troika, in its wisdom, chooses to throw us out of the euro, let them do their worst. Even though it will cost us dearly in the short run, in the long run our people will be better off. Moreover, if we believed this and acted defiantly, the Troika would most likely hold back as Grexit would cost them around €1 trillion.
That’s our stance more generally: on policies regarding nonperforming loans, on primary surpluses, on taxation, on what to do with debt, we are not going to negotiate with the Troika or with Brussels. We shall legislate the minimum requirements for making the Greek political economy sustainable again — and leave it to the Troika to decide whether they want to punish us, and themselves, via Grexit. This is not a bluff, for a simple reason: whether they proceed with Grexit or not, the majority of Greeks will be better off in the longer run than if we capitulated like Syriza.
To recap, we are not naïve. We have no doubt that the Troika or Brussels will thoroughly reject every single proposal we make. But we are not going to negotiate them. The mistake in 2015 was to negotiate these things. A MeRA25 government will legislate unilaterally those minimum requirements for making Greece sustainable again. If they want to throw us out of the eurozone for that, we invite them to do so, without ever proposing it ourselves.
GS
Do you think the size of the Labour Party’s defeat in Britain had to do with Brexit?
YV
From the moment Jeremy Corbyn became Labour leader, the preponderant powers within the party behaved in a way that highlighted their determination to get rid of him even if that meant keeping the Tories in power forever. They tried one coup after another against Jeremy, in a manner that made very clear that preventing Labour becoming genuinely progressive on foreign policy and domestic policy was paramount to them. Just as the Democratic establishment would rather have Trump in the White House than Bernie Sanders.From the perspective of Brexit, I find it astonishing that the greatest losers of all time, the hard Remainers — the very people who misjudged the atmosphere in Britain, the very people who effectively shot themselves in the foot by dismissing the referendum outcome as an error by idiots who should never have had the right to vote, the very people who antagonized good working-class people who happened to disagree with them on Brexit, the very people who pushed for a second referendum not as a means of democratizing Britain but simply in order to annul the first, and in so doing, created the circumstances for Boris Johnson to become prime minister and do a hard Brexit — these amazing losers have the audacity to blame Jeremy Corbyn for Labour’s defeat. I find that a wonderful combination of audacity and ill-judgement.Jeremy’s position on Brexit has been eminently sensible, from the beginning. His nuanced and unenthusiastic support for Remain was the correct call, as far as I’m concerned. What he said was, people like us — him, me, others — were against entering the European Economic Community in the 1970s, as was the wonderful Tony Benn, on good democratic grounds. But after forty-three years of being part and parcel of the EU, extricating Britain from a wholly undemocratic EU will, in the end, do considerable damage to those whom we consider our people. So, on balance, we supported Remain, with a view to work for a Labour government that, when in Brussels, vetoes the hell out of the neoliberal attitudes within the EU. That was an eminently nuanced and responsible position.After the referendum, which we lost, it was responsible to respect the result and say, well we lost, let’s try and implement a Brexit that minimizes the cost to the working class. So, we proposed a customs union that doesn’t wreck the supply lines that keep Nissan in Sunderland and close alignment with the single market. And what was the reaction of the hard Remainers? To lambast Jeremy Corbyn’s sensible position while demonizing Brexiteer Labour voters and demanding a second referendum by which to correct the verdict of the first one.Corbyn kept telling them that, if they kept doing this, both Labour and the Remain vote would be divided while the Tories, after some internal pogrom, would unite under the hard Brexit flag. After all, is this not history’s lesson — that the Tories, driven by a remarkable urge to serve the ruling class’s interests, will always unite in the end? The moment Boris Johnson took over from Theresa May, I could see the writing on the wall: our side of British politics had lost, because we would be divided between Remainers and Leavers.The Labour manifesto — and Jeremy was right again, here — did win the argument. Without doubt, a very substantial majority of people agreed with renationalizing parts of the railway that suck — even the Tories are saying they may have to renationalize Southern Rail. They agreed with the idea of free broadband, a public utility that boosts productivity massively for small companies, families, and so on. They agreed with the green transition policies, the national investment bank. But in the end, Brexit was weaponized by hard Remainers less fearful of a hard-right, hard Brexit Johnson government than a Corbyn-led radical Labour Party.
For the Jacobin site, click here
Climate change is capitalism’s Waterloo – IRISH EXAMINER
Steven Mnuchin’s snide remark about teenage climate activist Greta Thunberg at this year’s World Economic Forum meeting in Davos outraged liberal commentators. US treasury secretary Mnuchin, responding to Thunberg’s call for an immediate exit from fossil fuel investments, said that she should go to college “to study economics” before “she can come back and explain that to us”.
Two days earlier, Trump had referred to climate scientists as “the heirs of yesterday’s foolish fortune tellers”.
The Trump administration’s attitude to climate change, and to those campaigning for drastic measures to contain it, is ugly, nasty, and wrong. But behind the crassness and toxicity of Trump, Mnuchin, et al is cold logic and brutal honesty: Their politics is the only authentic defence of contemporary capitalism.
And, judging by Mnuchin’s patronising advice to Thunberg, they understand that mainstream economics, unlike climate science, is their friend.
I, too, could not contain myself after Mnuchin’s Davos remark. “Mnuchin, sadly, makes sense,” I tweeted. “If Greta were to study mainstream economics, she would spend several semesters studying models of markets in which neither a climate disaster nor an economic crisis is possible.
Many fellow economists were unhappy with my tweet. One tweeted back: “Not sure which undergrad programs you’re looking at, but all the Econ 101 courses that I know of involve market failures, where climate change is the main example.” Quite right. But it is, I fear, beside the point.
While many examples and concepts in economics courses would, no doubt, strengthen Thunberg’s resolve and arm her with powerful arguments against the likes of Mnuchin and Trump, she would also feel frustrated and undermined by economics and its effect on her fellow students.
One reason is the discipline’s framing and default settings. We all know the power of the default or baseline. In societies where organ donation is the default setting — automatic without a signed opt-out — the supply of transplant organs is substantially larger than in countries where people must carry donor cards. Framing is crucial when the human mind and heart must be energised against some ill.
Economics is no exception. The economic textbooks Thunberg would have to read begin with models of markets where the unfettered private profit drive is shown, mathematically, to serve the public interest.
Only after she has learned these theorems, and has practised the mental gymnastics needed to derive their mathematical proofs, will she be exposed to ‘exceptions’ — for example, ‘externalities’ of the production process, like climate-change-inducing pollution, which imposes costs not fully borne by the polluter.
The very framing of market failures as an ‘exception,’ perhaps caused by some ‘externality,’ is an immense propaganda victory for the Trumps and Mnuchins of this world.
Worse, unlike organ donation, for which any society can decide to reverse the framing by making donation the default, college economics professors cannot simply reverse the framing by teaching externalities and market failure as the general case and then presenting perfectly competitive markets as exceptions.
The iconic theorems of economics cannot be proven in the presence of externalities. Alas, it is these proofs that impress students and the rest of society, especially those in power, and which give economics professors their discursive hegemony within the social sciences, not to mention the lion’s share of public and private funding.
Viewed from this perspective, Mnuchin knowingly (or instinctively) delivered more than a sneering put-down. Were Thunberg to take his advice, she would be weakened.
A degree in economics, rather than in science, politics, or history, would either crush her spirit or divert her from endeavors that could make her even more dangerous than she already is to the economic interests Trump represents.
Some lament the Trump administration’s animosity toward young people and toward scientists who speak common sense about a massive threat that we should confront through global cooperation.
But Trump and his cabal appear to understand something that their liberal detractors do not: One cannot acknowledge the perils of climate change, commit to reversing it, and continue to think of capitalism as a natural system that can be tweaked to deliver shared, green prosperity.
Trump gets it: climate change is capitalism’s Waterloo. There is simply no feasible path toward the re-stabilisation of the climate that is consistent with the maintenance of capitalism’s main pillars. The system we live in, unlike the one implied by college economics textbooks, turns on a pathological, dynamic recycling mechanism: Oligopolies extract exhaustible value from humans and nature at breakneck speed, financed by debt-turbocharged financialisation, which, in turn, fuels the extractive oligopolies.
This ‘technostructure,’ as John Kenneth Galbraith christened this mechanism in his 1967 book, The New Industrial State, will never willingly accept the limits on physical growth and extraction necessary for containing climate change, because it could not survive.
With the political class utterly dependent on it for campaign financing, any cap, quota, or emissions trading scheme imposed by government will prove cosmetic and, ultimately, impotent. In the same way that economics students study market failures as exceptions to an otherwise well-functioning market system, centrist reformers undergo the Sisyphean task of imagining a reformed, green capitalism.
Uncouth and disagreeable, Trumpism is nonetheless an honest manifestation of the historic moment when late capitalism pushed humanity past the point of no return.
Trump urges us to carry on, while Mnuchin suggests that Thunberg numb her soul with the opium of mainstream economics. The only alternative to their policy of accelerated climate change, to the oil and finance curses that drive capitalism, is the wholesale disintegration of today’s technostructure.
Do we have the stomach for it?
– Yanis Varoufakis, a former finance minister of Greece, is leader of the MeRA25 party and professor of economics at the University of Athens.
Two days earlier, Trump had referred to climate scientists as “the heirs of yesterday’s foolish fortune tellers”.
The Trump administration’s attitude to climate change, and to those campaigning for drastic measures to contain it, is ugly, nasty, and wrong. But behind the crassness and toxicity of Trump, Mnuchin, et al is cold logic and brutal honesty: Their politics is the only authentic defence of contemporary capitalism.
And, judging by Mnuchin’s patronising advice to Thunberg, they understand that mainstream economics, unlike climate science, is their friend.
I, too, could not contain myself after Mnuchin’s Davos remark. “Mnuchin, sadly, makes sense,” I tweeted. “If Greta were to study mainstream economics, she would spend several semesters studying models of markets in which neither a climate disaster nor an economic crisis is possible.
Many fellow economists were unhappy with my tweet. One tweeted back: “Not sure which undergrad programs you’re looking at, but all the Econ 101 courses that I know of involve market failures, where climate change is the main example.” Quite right. But it is, I fear, beside the point.
While many examples and concepts in economics courses would, no doubt, strengthen Thunberg’s resolve and arm her with powerful arguments against the likes of Mnuchin and Trump, she would also feel frustrated and undermined by economics and its effect on her fellow students.
One reason is the discipline’s framing and default settings. We all know the power of the default or baseline. In societies where organ donation is the default setting — automatic without a signed opt-out — the supply of transplant organs is substantially larger than in countries where people must carry donor cards. Framing is crucial when the human mind and heart must be energised against some ill.
Economics is no exception. The economic textbooks Thunberg would have to read begin with models of markets where the unfettered private profit drive is shown, mathematically, to serve the public interest.
Only after she has learned these theorems, and has practised the mental gymnastics needed to derive their mathematical proofs, will she be exposed to ‘exceptions’ — for example, ‘externalities’ of the production process, like climate-change-inducing pollution, which imposes costs not fully borne by the polluter.
The very framing of market failures as an ‘exception,’ perhaps caused by some ‘externality,’ is an immense propaganda victory for the Trumps and Mnuchins of this world.
Worse, unlike organ donation, for which any society can decide to reverse the framing by making donation the default, college economics professors cannot simply reverse the framing by teaching externalities and market failure as the general case and then presenting perfectly competitive markets as exceptions.
The iconic theorems of economics cannot be proven in the presence of externalities. Alas, it is these proofs that impress students and the rest of society, especially those in power, and which give economics professors their discursive hegemony within the social sciences, not to mention the lion’s share of public and private funding.
Viewed from this perspective, Mnuchin knowingly (or instinctively) delivered more than a sneering put-down. Were Thunberg to take his advice, she would be weakened.
A degree in economics, rather than in science, politics, or history, would either crush her spirit or divert her from endeavors that could make her even more dangerous than she already is to the economic interests Trump represents.
Some lament the Trump administration’s animosity toward young people and toward scientists who speak common sense about a massive threat that we should confront through global cooperation.
But Trump and his cabal appear to understand something that their liberal detractors do not: One cannot acknowledge the perils of climate change, commit to reversing it, and continue to think of capitalism as a natural system that can be tweaked to deliver shared, green prosperity.
Trump gets it: climate change is capitalism’s Waterloo. There is simply no feasible path toward the re-stabilisation of the climate that is consistent with the maintenance of capitalism’s main pillars. The system we live in, unlike the one implied by college economics textbooks, turns on a pathological, dynamic recycling mechanism: Oligopolies extract exhaustible value from humans and nature at breakneck speed, financed by debt-turbocharged financialisation, which, in turn, fuels the extractive oligopolies.
This ‘technostructure,’ as John Kenneth Galbraith christened this mechanism in his 1967 book, The New Industrial State, will never willingly accept the limits on physical growth and extraction necessary for containing climate change, because it could not survive.
With the political class utterly dependent on it for campaign financing, any cap, quota, or emissions trading scheme imposed by government will prove cosmetic and, ultimately, impotent. In the same way that economics students study market failures as exceptions to an otherwise well-functioning market system, centrist reformers undergo the Sisyphean task of imagining a reformed, green capitalism.
Uncouth and disagreeable, Trumpism is nonetheless an honest manifestation of the historic moment when late capitalism pushed humanity past the point of no return.
Trump urges us to carry on, while Mnuchin suggests that Thunberg numb her soul with the opium of mainstream economics. The only alternative to their policy of accelerated climate change, to the oil and finance curses that drive capitalism, is the wholesale disintegration of today’s technostructure.
Do we have the stomach for it?
– Yanis Varoufakis, a former finance minister of Greece, is leader of the MeRA25 party and professor of economics at the University of Athens.
Brexit: A rational choice for the wrong reasons? – Financial News & Project Syndicate
The motives and thinking behind Brexit were even less worthy than those behind US President Richard Nixon’s move in 1971 to ditch the Bretton Woods system. But, as with the “Nixon shock,” there is a singular underlying historical factor that explains Brexit.
ATHENS – At pivotal historical moments, rational political ruptures often are brought about for all the wrong reasons. UK Prime Minister Boris Johnson’s Brexit may prove to be a case in point,
When US President Richard Nixon ditched the Bretton Woods system in August 1971, his reasons were shortsighted. Overwhelmed by domestic pressures to impose ineffective price controls and placate his blue-collar supporters, Nixon took his eye off the larger picture. Still, he was following a sound instinct: historical forces had ruled against the sustainability of that remarkable post-war global monetary system. Once America went from being a net global creditor to being a debtor economy in sustained deficit to the rest of the capitalist world, Bretton Woods was condemned to extinction, because the Federal Reserve could no longer guarantee a fixed exchange rate with the Deutsche Mark, yen, franc, and so on.
To be sure, the median American worker’s income and living standards have never recovered from the so-called Nixon shock, and the resulting financialization of capitalism has been detrimental to humanity. But that does not take anything away from the deeper rationality of Nixon’s decision.
The motives and thinking behind Brexit were even less worthy than those behind Nixon’s move. Nurtured by austerity-fueled discontent, trading on xenophobia, and riding on the coattails of false promises, Brexit and its backers won the day for many bad reasons. And, like the Nixon shock, most of those who voted for the man who implemented Brexit will, most likely, lose out, while many others will profit handsomely. The working-class neo-Tories who enabled this historical rupture will suffer in quiet desperation the consequences of their choice.
But is there, as with the Nixon shock, a singular underlying historical factor that explains Brexit? There is: the creation of the euro.
Portraying necessity as a virtue, euro-loyalist politicians, opinion makers, and bureaucrats extol the European Union’s flexibility by describing the eurozone as a union within a union, or a club within a club. While this description is formally correct, it fails to capture the centrifugal forces that the euro unleashed. Once the single currency was created, in the designed absence of common debt instruments and a common deposit insurance facility, the EU train was put on a track leading inexorably to a junction. There, it could turn sharply toward federation or continue on the same route until, running out of track, it disintegrated.
The euro’s fathers, German Chancellor Helmut Kohl and French President François Mitterrand, knew this. They were convinced that once the fork was reached, their successors would bow to the inevitable and steer, however reluctantly, toward federation. That was also the view of UK Prime Minister Margaret Thatcher, who, observing the construction of a European central bank, began to ring the alarm bells that summoned a renewed Euroskepticism and, ultimately, Brexit.
Ironically, Kohl, Mitterrand, and Thatcher made the same mistake. All three leaders assumed that the euro was, as Thatcher put it, an effort to build “a federal Europe by the back door.” It wasn’t. As we now know, when the euro came close to imploding in 2011, the EU’s decision-makers did the opposite of what Kohl, Mitterrand, and Thatcher had anticipated. With the critical junction approaching and confronting them with the federate-or-disintegrate dilemma, the locomotive’s drivers demonstrated that they preferred derailment. That was the moment when Brexit acquired a stealthy rationality.
Every historical force needs a multitude of agents to give it purchase. Brexit’s greatest agents were, ironically, two people who opposed it: Gordon Brown and Angela Merkel.
As UK Prime Minister Tony Blair’s Chancellor of the Exchequer, Brown became an enabler of Brexit by keeping, for a variety of excellent reasons, the United Kingdom out of the eurozone. Had he acceded to Blair’s preference to adopt the euro, events would have unfolded very differently. Given the size of the City of London, no EU bailout could have re-floated Britain’s banks after the 2008 financial crisis without ditching the euro’s rulebook and without forcing an immediate, clean decision: federate or return to national currencies.
Brown thus became the unwitting enabler of Merkel’s penchant for kicking the can down the road. By keeping the UK out of the euro, he permitted Germany to continue resisting federation while ensuring that Brexit remained a relatively low-cost option for the British.
Unburdened by the mammoth task of bailing out the City, Merkel concentrated on suspending democracy in deficit member states such as Ireland, Greece, and Italy, in order to impose, with the help of the European Central Bank, years of austerity that ended up miring the entire eurozone in permanent stagnation. Without that ugly suppression of democracy, and the millions of continental Europeans fleeing to a UK economy that had been re-floated by the Bank of England, the Brexit referendum would have gone the other way.
Nixon and Johnson’s ruptures confirm that whatever is unsustainable eventually finds the political agents of its collapse. Such ruptures can be simultaneously detrimental to most people’s interests and intrinsically rational and self-perpetuating.
In the United States, the long-term diminution of blue-collar workers’ prospects was counter-balanced by the stupendous gains of the top 10% and the expansion of America’s global hegemony. In this sense, the Nixon shock passed the test of history, even if it diminished most Americans’ life prospects.
Brexit may well be similarly vindicated. If Johnson ends austerity and succeeds in attracting investment in artificial intelligence and green energy (which the EU is failing seriously to fund), Brexit may come to be viewed the same way as Brown’s decision to keep the UK out of the eurozone is today: a smart move.
Taking a broader view, there are international systems that have the potential to deliver massive benefits for majorities in every participating country. Bretton Woods and the EU are prime examples. But when political leaders fail to consolidate such systems, their tragic (in the Ancient Greek sense) disintegration eventually takes on a rationality of its own, thus coming to seem inevitable and, equally important, irreversible.
ATHENS – At pivotal historical moments, rational political ruptures often are brought about for all the wrong reasons. UK Prime Minister Boris Johnson’s Brexit may prove to be a case in point,
When US President Richard Nixon ditched the Bretton Woods system in August 1971, his reasons were shortsighted. Overwhelmed by domestic pressures to impose ineffective price controls and placate his blue-collar supporters, Nixon took his eye off the larger picture. Still, he was following a sound instinct: historical forces had ruled against the sustainability of that remarkable post-war global monetary system. Once America went from being a net global creditor to being a debtor economy in sustained deficit to the rest of the capitalist world, Bretton Woods was condemned to extinction, because the Federal Reserve could no longer guarantee a fixed exchange rate with the Deutsche Mark, yen, franc, and so on.
To be sure, the median American worker’s income and living standards have never recovered from the so-called Nixon shock, and the resulting financialization of capitalism has been detrimental to humanity. But that does not take anything away from the deeper rationality of Nixon’s decision.
The motives and thinking behind Brexit were even less worthy than those behind Nixon’s move. Nurtured by austerity-fueled discontent, trading on xenophobia, and riding on the coattails of false promises, Brexit and its backers won the day for many bad reasons. And, like the Nixon shock, most of those who voted for the man who implemented Brexit will, most likely, lose out, while many others will profit handsomely. The working-class neo-Tories who enabled this historical rupture will suffer in quiet desperation the consequences of their choice.
But is there, as with the Nixon shock, a singular underlying historical factor that explains Brexit? There is: the creation of the euro.
Portraying necessity as a virtue, euro-loyalist politicians, opinion makers, and bureaucrats extol the European Union’s flexibility by describing the eurozone as a union within a union, or a club within a club. While this description is formally correct, it fails to capture the centrifugal forces that the euro unleashed. Once the single currency was created, in the designed absence of common debt instruments and a common deposit insurance facility, the EU train was put on a track leading inexorably to a junction. There, it could turn sharply toward federation or continue on the same route until, running out of track, it disintegrated.
The euro’s fathers, German Chancellor Helmut Kohl and French President François Mitterrand, knew this. They were convinced that once the fork was reached, their successors would bow to the inevitable and steer, however reluctantly, toward federation. That was also the view of UK Prime Minister Margaret Thatcher, who, observing the construction of a European central bank, began to ring the alarm bells that summoned a renewed Euroskepticism and, ultimately, Brexit.
Ironically, Kohl, Mitterrand, and Thatcher made the same mistake. All three leaders assumed that the euro was, as Thatcher put it, an effort to build “a federal Europe by the back door.” It wasn’t. As we now know, when the euro came close to imploding in 2011, the EU’s decision-makers did the opposite of what Kohl, Mitterrand, and Thatcher had anticipated. With the critical junction approaching and confronting them with the federate-or-disintegrate dilemma, the locomotive’s drivers demonstrated that they preferred derailment. That was the moment when Brexit acquired a stealthy rationality.
Every historical force needs a multitude of agents to give it purchase. Brexit’s greatest agents were, ironically, two people who opposed it: Gordon Brown and Angela Merkel.
As UK Prime Minister Tony Blair’s Chancellor of the Exchequer, Brown became an enabler of Brexit by keeping, for a variety of excellent reasons, the United Kingdom out of the eurozone. Had he acceded to Blair’s preference to adopt the euro, events would have unfolded very differently. Given the size of the City of London, no EU bailout could have re-floated Britain’s banks after the 2008 financial crisis without ditching the euro’s rulebook and without forcing an immediate, clean decision: federate or return to national currencies.
Brown thus became the unwitting enabler of Merkel’s penchant for kicking the can down the road. By keeping the UK out of the euro, he permitted Germany to continue resisting federation while ensuring that Brexit remained a relatively low-cost option for the British.
Unburdened by the mammoth task of bailing out the City, Merkel concentrated on suspending democracy in deficit member states such as Ireland, Greece, and Italy, in order to impose, with the help of the European Central Bank, years of austerity that ended up miring the entire eurozone in permanent stagnation. Without that ugly suppression of democracy, and the millions of continental Europeans fleeing to a UK economy that had been re-floated by the Bank of England, the Brexit referendum would have gone the other way.
Nixon and Johnson’s ruptures confirm that whatever is unsustainable eventually finds the political agents of its collapse. Such ruptures can be simultaneously detrimental to most people’s interests and intrinsically rational and self-perpetuating.
In the United States, the long-term diminution of blue-collar workers’ prospects was counter-balanced by the stupendous gains of the top 10% and the expansion of America’s global hegemony. In this sense, the Nixon shock passed the test of history, even if it diminished most Americans’ life prospects.
Brexit may well be similarly vindicated. If Johnson ends austerity and succeeds in attracting investment in artificial intelligence and green energy (which the EU is failing seriously to fund), Brexit may come to be viewed the same way as Brown’s decision to keep the UK out of the eurozone is today: a smart move.
Taking a broader view, there are international systems that have the potential to deliver massive benefits for majorities in every participating country. Bretton Woods and the EU are prime examples. But when political leaders fail to consolidate such systems, their tragic (in the Ancient Greek sense) disintegration eventually takes on a rationality of its own, thus coming to seem inevitable and, equally important, irreversible.
For the Financial News site click here. And for the Project Syndicate site click here.
March 10, 2020
ΜέΡΑ25: 7+1 Μέτρα Στήριξης 3,6 δις του ΕΣΥ, της εργασίας, των μικρομεσαίων, των ευάλωτων και των υποδομών
Κάθε επιδημία, βιολογική ή οικονομική, απαιτεί άμεση δράση πριν εξαπλωθεί. Την ώρα που κυβέρνηση και Eurogroup ωλιγορούν, το ΜέΡΑ25 κατέθεσε (10-3-2020) συγκεκριμένη, κοστολογημένη πρόταση άμεσης εφαρμοσιμότητας για την αντιμετώπιση της Νέας Ύφεσης που ερχόταν έτσι κι αλλιώς αλλά η οποία, λόγω κορωνοϊού θα έρθει γρηγορότερα και θα είναι βαθύτερη:
510 εκ για το Εθνικό Σύστημα Υγείας
800 εκ για τον τουρισμό
510 εκ για τους μικρομεσαίους, 300 εκ για τους Αιγαιοπελαγίτες
720 εκ για τους ευάλωτους
530 εκ για δημόσιες επενδύσεις
Σύνολο 3,6 δις ευρώ.
ΑΠΟ ΠΟΥ ΘΑ ΠΡΟΕΛΘΟΥΝ ΤΑ 3,6 δις; Από το πρωτογενές πλεόνασμα μειώνοντάς το από το 3,5% στο 1,5% του ΑΕΠ – εκεί που θα έπρεπε να είναι
ΠΩΣ ΘΑ ΝΟΜΟΘΕΤΗΘΟΥΝ ΤΑ 7+1 ΜΕΤΡΑ; Άμεσα από τη Βουλή – χωρίς καμία διαπραγμάτευση με το Eurogroup (όπως έκανε η Ιταλία χτες ρίχνοντας 10 δις στην οικονομία τους και ρίχνοντας στο μηδέν το πρωτογενές τους πλεόνασμα)
ΓΙΑΤΙ ΤΩΡΑ; Αν όχι τώρα, πότε; Μετά την επιδείνωση της Νέας Ύφεσης που θα εκτροχιάσει τα πάντα;
Ακολουθεί αναλυτική παρουσίαση: (α) των 7+1 Μέτρων, (β) του αντίκτυπου στο χρέος, (γ) της διεθνούς συγκυρίας και (δ) της ανάγκης για άμεση, μονομερή νομοθέτηση των 7+1 Μέτρων από τη Βουλή
Η Πρόταση του ΜέΡΑ25 για την αντιμετώπιση της Νέας Ύφεσης αναλυτικά
Μέτρο 1ο: Κατάργηση της προπληρωμής φόρου για το 95% των επιχειρήσεων (προσωπικές επιχειρήσεις & επιχειρήσεις με κέρδη μικρότερα των €120,000 ετησίως) | Δημοσιονομικό κόστος = €510 εκ.
Μέτρο 2ο: Έκπτωση 50% του ΦΠΑ στα νησιά του Αιγαίου και των παραμεθόριων περιοχών (με εξαίρεση τα νησιά μεγάλων αντικειμενικών αξιών, π.χ. Μύκονο, Σαντορίνη, Πάρο) | Δημοσιονομικό κόστος = €300 εκ.
Μέτρο 3ο: Άμεση πρόσληψη 7 χιλιάδων γιατρών & νοσοκόμων στο ΕΣΥ (€220 εκ.), προμήθεια ιατροφαρμακευτικού υλικού (€100 εκ.), δομικές υποδομές υγείας (€200 εκ.) | Δημοσιονομικό κόστος = €520 εκ.
Μέτρο 4ο: Μέτρα για την μείωση χρήσης μετρητών στις συναλλαγές (τα οποία βοηθούν στην εξάπλωση του ιού) – κατά το πρότυπο της πολιτικής της Κεντρικής Τράπεζας της Κίνας – και την υποκατάστασή τους από πληρωμές μέσω Διαδικτύου, χρεωστικών καρτών ή εφαρμογών | Δημοσιονομικό κόστος = €10 εκ.
Μέτρο 5ο: Ακύρωση-αναστολή φορολόγησης τουριστικών επιχειρήσεων που αποδεδειγμένα επλήγησαν από μαζικές ακυρώσεις κατά το 2020 | Δημοσιονομικό κόστος = €800 εκ.
Μέτρο 6ο: Ενίσχυση 200 χιλιάδων ευάλωτων νοικοκυριών με προπληρωμένες χρεωστικές κάρτες για ποσά €300 μηνιαίως | Δημοσιονομικό κόστος = €720 εκ.
Μέτρο 7ο: Πρόγραμμα μονιμοποίησης «αναπληρωτών» καθηγητών & δημιουργίας δομών τηλεδιασκέψεων στα σχολεία | Δημοσιονομικό κόστος = €210 εκ.
Μέτρο +1: Αύξηση λοιπών δημοσίων επενδύσεων κατά €530 εκ.
Αθροιστικά, το κόστος των 7+1 Μέτρων ισούται με €3,6 δις ή το 2% του ΑΕΠ – ποσό που θα μειώσει το πρωτογενές πλεόνασμα στο επίπεδο στο οποίο θα έπρεπε να βρίσκεται έτσι κι αλλιώς.
Ανάλυση δημοσιονομικής βιωσιμότητας της πρότασης του ΜέΡΑ25
Τα 7+1 Μέτρα που προτείνει το ΜέΡΑ25 είναι η καλύτερη ευκαιρία να ΜΗΝ αυξηθεί κι άλλο το δημόσιο χρέος ως ποσοστό του ΑΕΠ!
Είναι εύκολο να αποδειχθεί (βλ. πιο κάτω) ότι η μείωση του στόχου πρωτογενούς πλεονάσματος από το 3,5% στο 1,5% δεν θα αυξήσει το ποσοστό χρέους προς ΑΕΠ – ότι, εάν εφαρμοστούν τα 7+1 Μέτρα που προτείνω, αρκεί ένας ρυθμός μεγέθυνσης του ΑΕΠ γύρω το 1,8% για να μειώνεται το ποσοστό δημόσιου χρέους – ένας ρυθμός μεγέθυνσης πολύ πιο εφικτός εάν €3,6 δις διαχυθούν στην οικονομία υπό την μορφή επένδυσης σε νευραλγικούς τομείς όπως προτείνουμε.
Αν ορίσουμε ως:
χ = το ποσοστό του συνολικού δημόσιου χρέους (Χ) προς το ονομαστικό ΑΕΠ (Υ) – δηλαδή χ = Χ/Υ
ε = το μεσοσταθμικό επιτόκιο αποπληρωμών του χρέους
μ = το ποσοστό μεγέθυνσης του ΑΕΠ (Υ)
π = το πρωτογενές πλεόνασμα
είναι εύκολο να αποδειχθεί ότι ο ρυθμός μεταβολής του χ, δηλαδή του ποσοστού χρέους προς ΑΕΠ, ισούται με:
(ε-μ)χ-π (*)
Άρα, για να μην αυξάνεται (ή να μειώνεται) το χρέος ως ποσοστό του ΑΕΠ πρέπει το μέγεθος (ε-μ)χ-π να ίσο (ή μικρότερο) του μηδενός. Σήμερα, το μεσοσταθμικό επιτόκιο αποπληρωμών του χρέους είναι περίπου στο ε = 2,6% και το ποσοστό χρέους χ=1,8 (δηλαδή περίπου 180% του ΑΕΠ). Αν θέσουμε ως στόχο πρωτογενούς το π=1,5% (αντί για το σημερινό π=3,5%), και αντικαθιστώντας αυτές τις τιμές στην έκφραση (*) πιο πάνω, βρίσκουμε τον ρυθμό μεγέθυνσης του ΑΕΠ έτσι ώστε το ποσοστό χρέους να μειώνεται: μ > 1,77%.
Με άλλα λόγια, αν εφαρμοστούν άμεσα τα 7+1 Μέτρα που προτείνει το ΜέΡΑ25, αρκεί ένας ρυθμός μεγέθυνσης του ΑΕΠ γύρω το 1,8% για να μειώνεται (αντί για να αυξάνεται) το ποσοστό δημόσιου χρέους. Είναι, επί πλέον, αναμφισβήτητο ότι για να επιτευχθεί η οποιαδήποτε μεγέθυνση του ΑΕΠ υπό τις σημερινές συνθήκες τα 7+1 Μέτρα του ΜέΡΑ25 είναι η μόνη ελπίδα.
Συμπερασματικά, τα 7+1 Μέτρα του ΜέΡΑ25 όχι μόνο στηρίζουν του κλάδους της οικονομίας και τις κοινωνικές ομάδες που πλήττονται από την νέα έκφανση της κρίσης που φέρνει η πανδημία του κορωνοϊού αλλά και περιορίζουν τον περαιτέρω εκτροχιασμό του δημόσιου χρέους.
Χωρίς τα 7+1 Μέτρα που προτείνει το ΜέΡΑ25 σήμερα, η Νέα Ύφεση θα είναι αναπόφευκτη και μεγάλη
Μόνη ελπίδα πρόληψης της Νέας Ύφεσης και ενίσχυσης ΕΣΥ και κοινωνίας εναντίον του ιού είναι τα 7+1 Μέτρα του ΜέΡΑ25
Η διεθνής συγκυρία
Η παγκόσμια οικονομική δραστηριότητα βασιζόταν από το 2010 σε μη βιώσιμη φούσκα (κυρίως ιδιωτικού) χρέους. Το 2020 αυτή η επίπλαστη μεγέθυνση, όπως το ΜέΡΑ25 προειδοποιεί από το καλοκαίρι του 2019, θα έδινε τη θέση της σε νέα παγκόσμια ύφεση.
Η πανδημία που προκάλεσε ο κορωνοϊός απλά μετέτρεψε το σταδιακό «ξεφούσκωμα» σε ξαφνικό «σκάσιμο» και, έτσι, επέσπευσε, και βάθυνε, την προδιαγεγραμμένη ύφεση του 2020.
Η ΠΤΩΣΗ ΤΩΝ ΧΡΗΜΑΤΙΣΤΗΡΙΩΝ ΔΕΝ ΕΙΝΑΙ ΤΟ ΠΡΟΒΛΗΜΑ. Το πρόβλημα είναι ότι, ΑΚΟΜΑ ΚΙ ΑΝ ΤΑ ΧΡΗΜΑΤΙΣΤΗΡΙΑ ΑΝΑΚΑΜΨΟΥΝ, π.χ. μέσω μεγάλων ενέσεων ρευστότητας από τις κεντρικές τράπεζες, η νέα ύφεση θα είναι σημαντική και με διάρκεια.
Η πρωτοτυπία του εν εξελίξει υφεσιακού πλήγματος είναι ότι πλήττει τόσο την ζήτηση αγαθών όσο και την προσφορά.
Βασικός μηχανισμός μετάδοσης και εμβάθυνσης της νέας έκφανσης της κρίσης θα είναι, παγκοσμίως, το ΙΔΙΩΤΙΚΟ ΧΡΕΟΣ. Π.χ. το ΔΝΤ προβλέπει ότι μια ύφεση μισή σε σχέση με εκείνη του 2009 θα «κοκκινίσει» δάνεια ύψους $19 τρις – με αποτέλεσμα τις πτωχεύσεις οι οποίες θα μειώσουν τα κρατικά έσοδα και θα αυξήσουν τις δημόσιες δαπάνες, δίνοντας έτσι το έναυσμα για νέα πίεση στο δημόσιο χρέος.
Συνοπτικά, η πανδημία που έφερε ο κορωνοϊός επιταχύνει και βαθαίνει την ήδη προδιαγεγραμμένη για το 2020 ύφεση.
Στο μεταξύ, η νομισματική πολιτική – π.χ. η ΕΚΤ – είναι ανήμπορη να βοηθήσει, καθώς τα πυρομαχικά της έχουν ήδη εξαντληθεί (π.χ. τα επιτόκια ΕΚΤ είναι ήδη στο -0,5% και οι μηνιαίες αγορές τίτλων στα €20 δις).
Άρα, οι κυβερνήσεις έχουν υποχρέωση να προβούν άμεσα σε ικανά προληπτικά μέτρα δημοσιονομικής ενίσχυσης.
Κάθε μέρα καθυστέρησης λήψης τέτοιων προληπτικών μέτρων αυξάνει το δημοσιονομικό κόστος της αντιμετώπισης της νέας ύφεσης.
ΑΜΕΣΗ ΝΟΜΟΘΕΤΗΣΗ ΤΩΡΑ, ΧΩΡΙΣ THN ΕΓΚΡΙΣΗ TOY EUROGROUP
H κυβέρνηση της Ιταλίας, που έχει λιγότερο “δημοσιονομικό χώρο” από την ελληνική ανακοίνωσε ήδη τονωτική ένεση 10 δις ευρώ – χωρίς να περιμένει την έγκριση κανενός Eurogroup. Η κυβέρνηση Μητσοτάκη με ποιό δικαίωμα δεν κάνει κάτι ανάλογο αλλά, αντίθετα, παρακαλά τν ελεημοσύνη του Eurogroup;
Η νομοθέτηση των 7+1 Μέτρων:
Δεν απαιτεί δανεικά – τα €3,6 δις είναι δικά μας χρήματα, χρήματα του ελληνικού λαού
Πρόκειται για πραγματική θωράκιση της οικονομίας στο μέτρο των δυνατοτήτων μας, και σε πλήρη ευθυγράμμιση με την διεθνή πρακτική – αφήνοντας μάλιστα κι ένα ουκ ευκαταφρόνητο πρωτογενές πλεόνασμα της τάξης του 1,5%
ΓΙΑ ΑΥΤΟ ΠΡΕΠΕΙ ΝΑ ΓΙΝΕΙ ΜΟΝΟΜΕΡΩΣ ΧΩΡΙΣ ΚΑΜΙΑ ΔΙΑΠΡΑΓΜΑΤΕΥΣΗ ΜΕ ΤΗΝ ΤΡΟΙΚΑ
ΝΔ και ΣΥΡΙΖΑ δεν ισχυρίζονται ότι είμαστε εκτός Μνημονίων; Γιατί δεν κάνουν ό,τι η Ιταλία ή η Γαλλία (που ήδη έχει πρωτογενές έλλειμμα);
Πού είναι ο πατριωτισμός της ΝΔ; Τον ξεχνούν εκτός της αίθουσας του Eurogroup;
Πού είναι η αλληλεγγύη της ΕΕ; Η κα Μέρκελ δήλωσε χτες ότι στηρίζει την Ελλάδα. Δεν χρειαζόμαστε ούτε την αλληλεγγύη τους ούτε τη στήριξή τους; Να χρησιμοποιήσουμε τα δικά μας χρήματα απαιτούμε ώστε να στηρίξουμε εμείς τα νοσοκομεία μας, τα σχολειά μας, τους μικρομεσαίους μας, τον τουρισμό μας – και με τρόπο που δεν αυξάνει το χρέος μας.
Είναι πατριωτικό και ευρωπαϊκό καθήκον η άμεση εφαρμογή των 7+1 Μέτρων που πρότεινε χτες το ΜέΡΑ25.
Σημείωση
510 εκ για το Εθνικό Σύστημα Υγείας
800 εκ για τον τουρισμό
510 εκ για τους μικρομεσαίους, 300 εκ για τους Αιγαιοπελαγίτες
720 εκ για τους ευάλωτους
530 εκ για δημόσιες επενδύσεις
Σύνολο 3,6 δις ευρώ.
ΑΠΟ ΠΟΥ ΘΑ ΠΡΟΕΛΘΟΥΝ ΤΑ 3,6 δις; Από το πρωτογενές πλεόνασμα μειώνοντάς το από το 3,5% στο 1,5% του ΑΕΠ – εκεί που θα έπρεπε να είναι
ΠΩΣ ΘΑ ΝΟΜΟΘΕΤΗΘΟΥΝ ΤΑ 7+1 ΜΕΤΡΑ; Άμεσα από τη Βουλή – χωρίς καμία διαπραγμάτευση με το Eurogroup (όπως έκανε η Ιταλία χτες ρίχνοντας 10 δις στην οικονομία τους και ρίχνοντας στο μηδέν το πρωτογενές τους πλεόνασμα)
ΓΙΑΤΙ ΤΩΡΑ; Αν όχι τώρα, πότε; Μετά την επιδείνωση της Νέας Ύφεσης που θα εκτροχιάσει τα πάντα;
Ακολουθεί αναλυτική παρουσίαση: (α) των 7+1 Μέτρων, (β) του αντίκτυπου στο χρέος, (γ) της διεθνούς συγκυρίας και (δ) της ανάγκης για άμεση, μονομερή νομοθέτηση των 7+1 Μέτρων από τη Βουλή
Η Πρόταση του ΜέΡΑ25 για την αντιμετώπιση της Νέας Ύφεσης αναλυτικά
Μέτρο 1ο: Κατάργηση της προπληρωμής φόρου για το 95% των επιχειρήσεων (προσωπικές επιχειρήσεις & επιχειρήσεις με κέρδη μικρότερα των €120,000 ετησίως) | Δημοσιονομικό κόστος = €510 εκ.
Μέτρο 2ο: Έκπτωση 50% του ΦΠΑ στα νησιά του Αιγαίου και των παραμεθόριων περιοχών (με εξαίρεση τα νησιά μεγάλων αντικειμενικών αξιών, π.χ. Μύκονο, Σαντορίνη, Πάρο) | Δημοσιονομικό κόστος = €300 εκ.
Μέτρο 3ο: Άμεση πρόσληψη 7 χιλιάδων γιατρών & νοσοκόμων στο ΕΣΥ (€220 εκ.), προμήθεια ιατροφαρμακευτικού υλικού (€100 εκ.), δομικές υποδομές υγείας (€200 εκ.) | Δημοσιονομικό κόστος = €520 εκ.
Μέτρο 4ο: Μέτρα για την μείωση χρήσης μετρητών στις συναλλαγές (τα οποία βοηθούν στην εξάπλωση του ιού) – κατά το πρότυπο της πολιτικής της Κεντρικής Τράπεζας της Κίνας – και την υποκατάστασή τους από πληρωμές μέσω Διαδικτύου, χρεωστικών καρτών ή εφαρμογών | Δημοσιονομικό κόστος = €10 εκ.
Μέτρο 5ο: Ακύρωση-αναστολή φορολόγησης τουριστικών επιχειρήσεων που αποδεδειγμένα επλήγησαν από μαζικές ακυρώσεις κατά το 2020 | Δημοσιονομικό κόστος = €800 εκ.
Μέτρο 6ο: Ενίσχυση 200 χιλιάδων ευάλωτων νοικοκυριών με προπληρωμένες χρεωστικές κάρτες για ποσά €300 μηνιαίως | Δημοσιονομικό κόστος = €720 εκ.
Μέτρο 7ο: Πρόγραμμα μονιμοποίησης «αναπληρωτών» καθηγητών & δημιουργίας δομών τηλεδιασκέψεων στα σχολεία | Δημοσιονομικό κόστος = €210 εκ.
Μέτρο +1: Αύξηση λοιπών δημοσίων επενδύσεων κατά €530 εκ.
Αθροιστικά, το κόστος των 7+1 Μέτρων ισούται με €3,6 δις ή το 2% του ΑΕΠ – ποσό που θα μειώσει το πρωτογενές πλεόνασμα στο επίπεδο στο οποίο θα έπρεπε να βρίσκεται έτσι κι αλλιώς.
Σημείωση: Το πραγματικό συνολικό δημοσιονομικό κόστος θα είναι σαφώς μικρότερο από €3,6 δις δεδομένου του πολλαπλασιαστικού αντίκτυπου των 7+1 Μέτρων – δηλαδή την αύξηση ΑΕΠ και φόρων ή, τουλάχιστον, την επιβράδυνση της ύφεσης.
Ανάλυση δημοσιονομικής βιωσιμότητας της πρότασης του ΜέΡΑ25
Τα 7+1 Μέτρα που προτείνει το ΜέΡΑ25 είναι η καλύτερη ευκαιρία να ΜΗΝ αυξηθεί κι άλλο το δημόσιο χρέος ως ποσοστό του ΑΕΠ!
Είναι εύκολο να αποδειχθεί (βλ. πιο κάτω) ότι η μείωση του στόχου πρωτογενούς πλεονάσματος από το 3,5% στο 1,5% δεν θα αυξήσει το ποσοστό χρέους προς ΑΕΠ – ότι, εάν εφαρμοστούν τα 7+1 Μέτρα που προτείνω, αρκεί ένας ρυθμός μεγέθυνσης του ΑΕΠ γύρω το 1,8% για να μειώνεται το ποσοστό δημόσιου χρέους – ένας ρυθμός μεγέθυνσης πολύ πιο εφικτός εάν €3,6 δις διαχυθούν στην οικονομία υπό την μορφή επένδυσης σε νευραλγικούς τομείς όπως προτείνουμε.
Αν ορίσουμε ως:
χ = το ποσοστό του συνολικού δημόσιου χρέους (Χ) προς το ονομαστικό ΑΕΠ (Υ) – δηλαδή χ = Χ/Υ
ε = το μεσοσταθμικό επιτόκιο αποπληρωμών του χρέους
μ = το ποσοστό μεγέθυνσης του ΑΕΠ (Υ)
π = το πρωτογενές πλεόνασμα
είναι εύκολο να αποδειχθεί ότι ο ρυθμός μεταβολής του χ, δηλαδή του ποσοστού χρέους προς ΑΕΠ, ισούται με:
(ε-μ)χ-π (*)
Άρα, για να μην αυξάνεται (ή να μειώνεται) το χρέος ως ποσοστό του ΑΕΠ πρέπει το μέγεθος (ε-μ)χ-π να ίσο (ή μικρότερο) του μηδενός. Σήμερα, το μεσοσταθμικό επιτόκιο αποπληρωμών του χρέους είναι περίπου στο ε = 2,6% και το ποσοστό χρέους χ=1,8 (δηλαδή περίπου 180% του ΑΕΠ). Αν θέσουμε ως στόχο πρωτογενούς το π=1,5% (αντί για το σημερινό π=3,5%), και αντικαθιστώντας αυτές τις τιμές στην έκφραση (*) πιο πάνω, βρίσκουμε τον ρυθμό μεγέθυνσης του ΑΕΠ έτσι ώστε το ποσοστό χρέους να μειώνεται: μ > 1,77%.
Με άλλα λόγια, αν εφαρμοστούν άμεσα τα 7+1 Μέτρα που προτείνει το ΜέΡΑ25, αρκεί ένας ρυθμός μεγέθυνσης του ΑΕΠ γύρω το 1,8% για να μειώνεται (αντί για να αυξάνεται) το ποσοστό δημόσιου χρέους. Είναι, επί πλέον, αναμφισβήτητο ότι για να επιτευχθεί η οποιαδήποτε μεγέθυνση του ΑΕΠ υπό τις σημερινές συνθήκες τα 7+1 Μέτρα του ΜέΡΑ25 είναι η μόνη ελπίδα.
Συμπερασματικά, τα 7+1 Μέτρα του ΜέΡΑ25 όχι μόνο στηρίζουν του κλάδους της οικονομίας και τις κοινωνικές ομάδες που πλήττονται από την νέα έκφανση της κρίσης που φέρνει η πανδημία του κορωνοϊού αλλά και περιορίζουν τον περαιτέρω εκτροχιασμό του δημόσιου χρέους.
Χωρίς τα 7+1 Μέτρα που προτείνει το ΜέΡΑ25 σήμερα, η Νέα Ύφεση θα είναι αναπόφευκτη και μεγάλη
Μόνη ελπίδα πρόληψης της Νέας Ύφεσης και ενίσχυσης ΕΣΥ και κοινωνίας εναντίον του ιού είναι τα 7+1 Μέτρα του ΜέΡΑ25
Η διεθνής συγκυρία
Η παγκόσμια οικονομική δραστηριότητα βασιζόταν από το 2010 σε μη βιώσιμη φούσκα (κυρίως ιδιωτικού) χρέους. Το 2020 αυτή η επίπλαστη μεγέθυνση, όπως το ΜέΡΑ25 προειδοποιεί από το καλοκαίρι του 2019, θα έδινε τη θέση της σε νέα παγκόσμια ύφεση.
Η πανδημία που προκάλεσε ο κορωνοϊός απλά μετέτρεψε το σταδιακό «ξεφούσκωμα» σε ξαφνικό «σκάσιμο» και, έτσι, επέσπευσε, και βάθυνε, την προδιαγεγραμμένη ύφεση του 2020.
Η ΠΤΩΣΗ ΤΩΝ ΧΡΗΜΑΤΙΣΤΗΡΙΩΝ ΔΕΝ ΕΙΝΑΙ ΤΟ ΠΡΟΒΛΗΜΑ. Το πρόβλημα είναι ότι, ΑΚΟΜΑ ΚΙ ΑΝ ΤΑ ΧΡΗΜΑΤΙΣΤΗΡΙΑ ΑΝΑΚΑΜΨΟΥΝ, π.χ. μέσω μεγάλων ενέσεων ρευστότητας από τις κεντρικές τράπεζες, η νέα ύφεση θα είναι σημαντική και με διάρκεια.
Η πρωτοτυπία του εν εξελίξει υφεσιακού πλήγματος είναι ότι πλήττει τόσο την ζήτηση αγαθών όσο και την προσφορά.
Βασικός μηχανισμός μετάδοσης και εμβάθυνσης της νέας έκφανσης της κρίσης θα είναι, παγκοσμίως, το ΙΔΙΩΤΙΚΟ ΧΡΕΟΣ. Π.χ. το ΔΝΤ προβλέπει ότι μια ύφεση μισή σε σχέση με εκείνη του 2009 θα «κοκκινίσει» δάνεια ύψους $19 τρις – με αποτέλεσμα τις πτωχεύσεις οι οποίες θα μειώσουν τα κρατικά έσοδα και θα αυξήσουν τις δημόσιες δαπάνες, δίνοντας έτσι το έναυσμα για νέα πίεση στο δημόσιο χρέος.
Συνοπτικά, η πανδημία που έφερε ο κορωνοϊός επιταχύνει και βαθαίνει την ήδη προδιαγεγραμμένη για το 2020 ύφεση.
Στο μεταξύ, η νομισματική πολιτική – π.χ. η ΕΚΤ – είναι ανήμπορη να βοηθήσει, καθώς τα πυρομαχικά της έχουν ήδη εξαντληθεί (π.χ. τα επιτόκια ΕΚΤ είναι ήδη στο -0,5% και οι μηνιαίες αγορές τίτλων στα €20 δις).
Άρα, οι κυβερνήσεις έχουν υποχρέωση να προβούν άμεσα σε ικανά προληπτικά μέτρα δημοσιονομικής ενίσχυσης.
Κάθε μέρα καθυστέρησης λήψης τέτοιων προληπτικών μέτρων αυξάνει το δημοσιονομικό κόστος της αντιμετώπισης της νέας ύφεσης.
ΑΜΕΣΗ ΝΟΜΟΘΕΤΗΣΗ ΤΩΡΑ, ΧΩΡΙΣ THN ΕΓΚΡΙΣΗ TOY EUROGROUP
H κυβέρνηση της Ιταλίας, που έχει λιγότερο “δημοσιονομικό χώρο” από την ελληνική ανακοίνωσε ήδη τονωτική ένεση 10 δις ευρώ – χωρίς να περιμένει την έγκριση κανενός Eurogroup. Η κυβέρνηση Μητσοτάκη με ποιό δικαίωμα δεν κάνει κάτι ανάλογο αλλά, αντίθετα, παρακαλά τν ελεημοσύνη του Eurogroup;
Η νομοθέτηση των 7+1 Μέτρων:
Δεν απαιτεί δανεικά – τα €3,6 δις είναι δικά μας χρήματα, χρήματα του ελληνικού λαού
Πρόκειται για πραγματική θωράκιση της οικονομίας στο μέτρο των δυνατοτήτων μας, και σε πλήρη ευθυγράμμιση με την διεθνή πρακτική – αφήνοντας μάλιστα κι ένα ουκ ευκαταφρόνητο πρωτογενές πλεόνασμα της τάξης του 1,5%
ΓΙΑ ΑΥΤΟ ΠΡΕΠΕΙ ΝΑ ΓΙΝΕΙ ΜΟΝΟΜΕΡΩΣ ΧΩΡΙΣ ΚΑΜΙΑ ΔΙΑΠΡΑΓΜΑΤΕΥΣΗ ΜΕ ΤΗΝ ΤΡΟΙΚΑ
ΝΔ και ΣΥΡΙΖΑ δεν ισχυρίζονται ότι είμαστε εκτός Μνημονίων; Γιατί δεν κάνουν ό,τι η Ιταλία ή η Γαλλία (που ήδη έχει πρωτογενές έλλειμμα);
Πού είναι ο πατριωτισμός της ΝΔ; Τον ξεχνούν εκτός της αίθουσας του Eurogroup;
Πού είναι η αλληλεγγύη της ΕΕ; Η κα Μέρκελ δήλωσε χτες ότι στηρίζει την Ελλάδα. Δεν χρειαζόμαστε ούτε την αλληλεγγύη τους ούτε τη στήριξή τους; Να χρησιμοποιήσουμε τα δικά μας χρήματα απαιτούμε ώστε να στηρίξουμε εμείς τα νοσοκομεία μας, τα σχολειά μας, τους μικρομεσαίους μας, τον τουρισμό μας – και με τρόπο που δεν αυξάνει το χρέος μας.
Είναι πατριωτικό και ευρωπαϊκό καθήκον η άμεση εφαρμογή των 7+1 Μέτρων που πρότεινε χτες το ΜέΡΑ25.
Σημείωση
Αν μάλιστα καταφέρναμε να εξισώσουμε το επιτόκιο αποπληρωμών με το ρυθμό μεγέθυνσης της οικονομίας, όπως προτείνει το ΜέΡΑ25 από την ίδρυσή του έως σήμερα (δηλαδή ε=μ), τότε και μηδέν να είναι το πρωτογενές πλεόνασμα το χρέος δεν θα αυξηθεί, ως ποσοστό του ΑΕΠ, ποτέ.
March 8, 2020
Coronavirus has sparked a perfect storm of nationalism and financial speculation – THE GUARDIAN
Nationalism and speculation have seldom had a better opportunity to combine forces as the one riding today on the coattails of Covid-19, known as the coronavirus. When Covid-19 leapfrogged from China to Italy, even ardent Europeanists normally appreciative of open borders joined the deafening calls to end freedom of movement across Europe’s national borders – a longstanding demand of nationalists. Meanwhile, the money men speculating on government debt are performing a classic flight from Italian to German government bonds, seeking the financial safety that only the continent’s hegemon can offer during any crisis. As if in a bid to remind us of the great contradiction of our times, Covid-19 is illuminating gloriously the freedom of money to transcend a borderless financial universe while humans remain as fenced in as ever.
Meanwhile in the United States, President Trump is combining his standard call for taller walls with a fresh instruction to moneymen to “buy the dip” in Wall Street, rather than to follow their natural instinct to seek refuge in the boring but safe bond markets. A great deal will depend on whether financiers believe Mr Trump or not, and not just because this is an election year.
If speculators do believe the American president, Wall Street will recover swiftly even before the epidemic subsides. The forces of xenophobic financialisation will then have triumphed and America’s progressives will face an uphill struggle on every political front. As for the European Union, ruling elites will breathe a sigh of relief that a new depression was avoided and return to managing as best as they can the economic stagnation of recent times, tinged this time with a large dose of additional, coronavirus-reinforced, xenophobia.
Will Wall Street follow Mr Trump’s advice to “buy the dip”? For now, the large players are in two minds. The drop in the stock market does not worry them as such. Their concern is that the recent bull market was running on increasingly suspect debt and that Covid-19 may have pricked a bubble that was going to burst anyway. Similarly in Europe, the worst spectre hovering over investors’ heads is that large corporations, relying for too long on free money from the European Central Bank, may be downgraded from investment to junk-grade – especially so at a time of stagnant domestic demand and a collapsed Chinese import market.
Taking a leaf out of the aftermath of the crash of 2008, and the Eurozone crisis that followed, bullish speculators are looking at their central banks, primarily the Fed and the ECB, to do, once again, “whatever it takes” to re-float their flagging fortunes. Two questions keep them up at night: will the central banks oblige? And if they do, will it be enough?
The first question is easy to answer: governments are impotent on both sides of the Atlantic. In the United States the federal budget deficit is already at a historic high, especially in the context of a tight labour market, while the Eurozone remains in the straightjacket of its fiscal compact. Therefore the central banks will be forced, whether they like it or not, to step up to the mark. Already we have seen announcements of lower interest rates, even of Japanese-style semi-direct purchases of government and private debt by the monetary authorities.
But will it be enough for the central banks to throw more money at the Covid-19-infected money markets? Will the economy go back to where we were a month ago if enough liquidity is pumped into the system? Or will it resemble a slow puncture that demands increasing pump-priming to stay inflated? Moreover, will the new wall of public money push back the wall of xenophobia? The sad answer to the last question is instructive about the economic ones too.
When a border closes down, it does not open again easily even if the conditions that caused its closure are largely reversed. This is a safe lesson from Europe’s recent experience. Take, for example, Austria, which closed its border with Italy following the rise of refugee arrivals in the summer of 2015. For a couple of years after that refugee wave had died out, the borders remained shut. Similarly with the borders along the Western Balkans. Why is this relevant to the question of whether increased central bank liquidity will ameliorate the effects of Covid-19 on the economy? To answer, we need to remind ourselves of what happened after the crash of 2008.
There were two responses to the 2008 crisis that saved capitalism from total collapse: the gigantic injection of liquidity into the economy by central banks, the Fed above all else; and China, whose government took it upon itself intentionally to build up the greatest private credit bubble in history to replace the lost export demand by a stupendous investment boost. The Fed’s and China’s intervention succeeded in re-floating global finance and putting stock markets onto the path of their longest growth spurt. However, the world did not go back to its pre-2008 ways.
Before 2008, Wall Street played a crucial role in recycling non-US surpluses that were the repercussion of American deficits into global investment funding. After 2008, the refloated Wall Street could not perform that task, channelling much of the abundant liquidity not to fixed capital investment but to share buy-backs and other asset purchases. The result was that the post-2008 economy is characterised by savings being permanently in excess of capital goods investment. Since savings are the supply of money and investment its demand, the permanent excess supply of money explains the permanently low, or negative, interest rates. It also explains the downward pressure on median wages against a background of rising asset prices causing unbearable inequality and thus producing the political triumphs of xenophobic nationalism.
In precisely the same way that the increased liquidity after 2008 failed to rebalance savings and investment globally, so will any renewed monetary “easing” to counter the ill effects of Covid-19 fail to return the global economy to its pre-February state. Of course, as happened after 2008, speculators will make a mint and nationalist forces will milk the ensuing discontent for all its worth.
Meanwhile in the United States, President Trump is combining his standard call for taller walls with a fresh instruction to moneymen to “buy the dip” in Wall Street, rather than to follow their natural instinct to seek refuge in the boring but safe bond markets. A great deal will depend on whether financiers believe Mr Trump or not, and not just because this is an election year.
If speculators do believe the American president, Wall Street will recover swiftly even before the epidemic subsides. The forces of xenophobic financialisation will then have triumphed and America’s progressives will face an uphill struggle on every political front. As for the European Union, ruling elites will breathe a sigh of relief that a new depression was avoided and return to managing as best as they can the economic stagnation of recent times, tinged this time with a large dose of additional, coronavirus-reinforced, xenophobia.
Speculators will make a mint and nationalist forces will milk the ensuing discontent for all its worth
Will Wall Street follow Mr Trump’s advice to “buy the dip”? For now, the large players are in two minds. The drop in the stock market does not worry them as such. Their concern is that the recent bull market was running on increasingly suspect debt and that Covid-19 may have pricked a bubble that was going to burst anyway. Similarly in Europe, the worst spectre hovering over investors’ heads is that large corporations, relying for too long on free money from the European Central Bank, may be downgraded from investment to junk-grade – especially so at a time of stagnant domestic demand and a collapsed Chinese import market.
Taking a leaf out of the aftermath of the crash of 2008, and the Eurozone crisis that followed, bullish speculators are looking at their central banks, primarily the Fed and the ECB, to do, once again, “whatever it takes” to re-float their flagging fortunes. Two questions keep them up at night: will the central banks oblige? And if they do, will it be enough?
The first question is easy to answer: governments are impotent on both sides of the Atlantic. In the United States the federal budget deficit is already at a historic high, especially in the context of a tight labour market, while the Eurozone remains in the straightjacket of its fiscal compact. Therefore the central banks will be forced, whether they like it or not, to step up to the mark. Already we have seen announcements of lower interest rates, even of Japanese-style semi-direct purchases of government and private debt by the monetary authorities.
But will it be enough for the central banks to throw more money at the Covid-19-infected money markets? Will the economy go back to where we were a month ago if enough liquidity is pumped into the system? Or will it resemble a slow puncture that demands increasing pump-priming to stay inflated? Moreover, will the new wall of public money push back the wall of xenophobia? The sad answer to the last question is instructive about the economic ones too.
When a border closes down, it does not open again easily even if the conditions that caused its closure are largely reversed. This is a safe lesson from Europe’s recent experience. Take, for example, Austria, which closed its border with Italy following the rise of refugee arrivals in the summer of 2015. For a couple of years after that refugee wave had died out, the borders remained shut. Similarly with the borders along the Western Balkans. Why is this relevant to the question of whether increased central bank liquidity will ameliorate the effects of Covid-19 on the economy? To answer, we need to remind ourselves of what happened after the crash of 2008.
There were two responses to the 2008 crisis that saved capitalism from total collapse: the gigantic injection of liquidity into the economy by central banks, the Fed above all else; and China, whose government took it upon itself intentionally to build up the greatest private credit bubble in history to replace the lost export demand by a stupendous investment boost. The Fed’s and China’s intervention succeeded in re-floating global finance and putting stock markets onto the path of their longest growth spurt. However, the world did not go back to its pre-2008 ways.
Before 2008, Wall Street played a crucial role in recycling non-US surpluses that were the repercussion of American deficits into global investment funding. After 2008, the refloated Wall Street could not perform that task, channelling much of the abundant liquidity not to fixed capital investment but to share buy-backs and other asset purchases. The result was that the post-2008 economy is characterised by savings being permanently in excess of capital goods investment. Since savings are the supply of money and investment its demand, the permanent excess supply of money explains the permanently low, or negative, interest rates. It also explains the downward pressure on median wages against a background of rising asset prices causing unbearable inequality and thus producing the political triumphs of xenophobic nationalism.
In precisely the same way that the increased liquidity after 2008 failed to rebalance savings and investment globally, so will any renewed monetary “easing” to counter the ill effects of Covid-19 fail to return the global economy to its pre-February state. Of course, as happened after 2008, speculators will make a mint and nationalist forces will milk the ensuing discontent for all its worth.
For The Guardian’s site click here
March 4, 2020
Oligarchy & Xenophobia: The only beneficiaries of Greece’s economic ‘recovery’ – The Guardian
Spring is already in the air across Greece. Even in the bleakest of times, nature’s renaissance renders hope irrepressible. But this one is proving a cruel spring for a people caught up in a decade-old crisis yielding one ritual humiliation after another.
Costas runs a small bookshop in my central Athens neighbourhood. Although jovial by constitution, he finds it difficult to hide the worry lines multiplying on his face. Fifteen years ago he put his flat up as collateral for a business loan to spruce up the bookshop. When the Greek debt crisis wreaked its havoc, it was impossible to service that loan.
Today, Costas is one of hundreds of thousands facing foreclosures by funds that have purchased debt like his from the banks at bargain basement prices. The bailiff and the auctioneer are circling above distressed homeowners and small business people such as Costas.
Intriguingly, he talks little about this, caught up in the media frenzy over the 30,000 or so refugees whom President Recep Tayyip Erdoğan of Turkey released from the camps in which they had been held and allowed them to attempt crossing into Greece. “We can barely feed ourselves. How can we help these wretched souls?” Costas laments. His predicament captures nicely how Greece’s crisis has spawned a rule of fear: the muted fear of the bailiff and the brash fear of the “other”.
Readers of the international press, which for two years has been celebrating Greece’s alleged economic recovery, will be tempted to dismiss Costas’s story as unrepresentative. They will retort that investors who bought Greek debt or shares a few years ago have banked returns that no other market has provided. What’s more, Greece’s government has been borrowing for 10 years at less than 1% interest rates. Surely being able to refinance its debt at such low interest rates is evidence of recovery?
Paradox is a Greek word for good reason: today’s Greece proves that it is perfectly possible for the state and for the majority of citizens to be sinking deeper into insolvency while the oligarchy makes a mint from trading in their assets. But why would investors lend to the Greek government cheaply if it remains bankrupt?
The reason is that the troika of Greece’s creditors – the EU, European Central Bank and the IMF – have taken 85% of government debt out of the money markets and placed it squarely on the shoulders of Europe’s taxpayers. They also deferred all repayments until after 2032 and extended another €30bn (£26bn) of official loans to the Greek government to cover its repayments to privateers. So why not lend to the Greek government at a small, yet positive, interest rate when the alternative is to lend to the German or the Dutch governments at the current negative interest rates? As long as the Greek government remains the troika’s model prisoner, lending to Greece’s insolvent state at minuscule rates is lucrative. Paradox solved!
Turning to Greece’s private sector, how can investors profit from it if it too is bankrupt? With great ease is the answer, as Costas’s case illustrates. His loan of €100,000 was sold on by his bank to a hedge fund for €8,000. If the fund auctions off his flat for €20,000, its profit rate will hit an astonishing 250%. The fact that Costas will lose both his home and his bookshop, with detrimental effects on the state’s taxes and outlays (as he begins to draw unemployment benefit), does not even appear on the radar of the hedge fund or the international media.
During the first phase of Greece’s crisis, all social classes, with the exception of the top 0.1%, found themselves in dire straits. But, from 2018, three social groups fared differently. By far the largest group, to which Costa belongs, continue to languish in debtor’s prison and to sink deeper in hopelessness. A middle group has bottomed out, living in terribly diminished albeit more stable circumstances. Finally, a small group is doing incredibly well: buoyed up by fire sales of public assets, connected to the hedge funds profiting from trades in loans like Costas’s, and linked to EU-sourced funding.
Greece’s new government, led by Kyriakos Mitsotakis, is an interesting coalition of figures from within his New Democracy party. One faction, close to the prime minister’s circle, represents the interests of the neoliberally-minded oligarchy determined to continue with the troika’s austerity and fire sales policies from which they have benefited so magnificently. A second ultra-rightist, fully xenophobic nationalist faction is the local branch of what I refer to as the nationalist international (which includes Donald Trump, Matteo Salvini, Viktor Orbán, Marine Le Pen, Narendra Modi, Jair Bolsonaro).
This fragile coalition of neoliberals and racist conservatives is kept together by a combination of free-marketeer “solutions” favouring the oligarchy (for instance, the sale of Costas’s loan and the privatisation of public assets), a domestic authoritarian drive (armed police entering universities to confront protesting students), and a Trumpian approach to migrants. The Nazi Golden Dawn party was, mercifully, kicked out of parliament, but tragically its racist narrative is now in government.
When, sooner or later, the narrative of economic recovery is exposed as a cruel lie, this government will exploit the little people’s concerns over migration to keep those like Costas placid while, for good measure, deploying the authoritarian apparatus currently under construction to liquidate their few remaining assets.
Most recently, television screens relayed a scene that reveals the continuing capacity of the Greek crisis to symbolise Europe’s conundrum: a visit to the Greek-Turkish border by a Greek prime minister who, like his predecessors, had previously surrendered fully to Chancellor Angela Merkel accompanied by Ursula von der Leyen – who was promoted by Merkel as the European commission’s new president, but who would not have been elected without Orbán’s support in the European parliament.
What were they doing? They were defending the policy, pioneered by Orbán, of violating the right that international law affords refugees to enter one’s territory to apply for asylum. In essence, they were sealing the demise of Merkel’s project of keeping the xenophobic hard right at bay. Additionally, they were unwittingly proving that Greece remains the canary in the mine.
Costas runs a small bookshop in my central Athens neighbourhood. Although jovial by constitution, he finds it difficult to hide the worry lines multiplying on his face. Fifteen years ago he put his flat up as collateral for a business loan to spruce up the bookshop. When the Greek debt crisis wreaked its havoc, it was impossible to service that loan.
Today, Costas is one of hundreds of thousands facing foreclosures by funds that have purchased debt like his from the banks at bargain basement prices. The bailiff and the auctioneer are circling above distressed homeowners and small business people such as Costas.
Intriguingly, he talks little about this, caught up in the media frenzy over the 30,000 or so refugees whom President Recep Tayyip Erdoğan of Turkey released from the camps in which they had been held and allowed them to attempt crossing into Greece. “We can barely feed ourselves. How can we help these wretched souls?” Costas laments. His predicament captures nicely how Greece’s crisis has spawned a rule of fear: the muted fear of the bailiff and the brash fear of the “other”.
Readers of the international press, which for two years has been celebrating Greece’s alleged economic recovery, will be tempted to dismiss Costas’s story as unrepresentative. They will retort that investors who bought Greek debt or shares a few years ago have banked returns that no other market has provided. What’s more, Greece’s government has been borrowing for 10 years at less than 1% interest rates. Surely being able to refinance its debt at such low interest rates is evidence of recovery?
Paradox is a Greek word for good reason: today’s Greece proves that it is perfectly possible for the state and for the majority of citizens to be sinking deeper into insolvency while the oligarchy makes a mint from trading in their assets. But why would investors lend to the Greek government cheaply if it remains bankrupt?
The reason is that the troika of Greece’s creditors – the EU, European Central Bank and the IMF – have taken 85% of government debt out of the money markets and placed it squarely on the shoulders of Europe’s taxpayers. They also deferred all repayments until after 2032 and extended another €30bn (£26bn) of official loans to the Greek government to cover its repayments to privateers. So why not lend to the Greek government at a small, yet positive, interest rate when the alternative is to lend to the German or the Dutch governments at the current negative interest rates? As long as the Greek government remains the troika’s model prisoner, lending to Greece’s insolvent state at minuscule rates is lucrative. Paradox solved!
Turning to Greece’s private sector, how can investors profit from it if it too is bankrupt? With great ease is the answer, as Costas’s case illustrates. His loan of €100,000 was sold on by his bank to a hedge fund for €8,000. If the fund auctions off his flat for €20,000, its profit rate will hit an astonishing 250%. The fact that Costas will lose both his home and his bookshop, with detrimental effects on the state’s taxes and outlays (as he begins to draw unemployment benefit), does not even appear on the radar of the hedge fund or the international media.
During the first phase of Greece’s crisis, all social classes, with the exception of the top 0.1%, found themselves in dire straits. But, from 2018, three social groups fared differently. By far the largest group, to which Costa belongs, continue to languish in debtor’s prison and to sink deeper in hopelessness. A middle group has bottomed out, living in terribly diminished albeit more stable circumstances. Finally, a small group is doing incredibly well: buoyed up by fire sales of public assets, connected to the hedge funds profiting from trades in loans like Costas’s, and linked to EU-sourced funding.
Greece’s new government, led by Kyriakos Mitsotakis, is an interesting coalition of figures from within his New Democracy party. One faction, close to the prime minister’s circle, represents the interests of the neoliberally-minded oligarchy determined to continue with the troika’s austerity and fire sales policies from which they have benefited so magnificently. A second ultra-rightist, fully xenophobic nationalist faction is the local branch of what I refer to as the nationalist international (which includes Donald Trump, Matteo Salvini, Viktor Orbán, Marine Le Pen, Narendra Modi, Jair Bolsonaro).
This fragile coalition of neoliberals and racist conservatives is kept together by a combination of free-marketeer “solutions” favouring the oligarchy (for instance, the sale of Costas’s loan and the privatisation of public assets), a domestic authoritarian drive (armed police entering universities to confront protesting students), and a Trumpian approach to migrants. The Nazi Golden Dawn party was, mercifully, kicked out of parliament, but tragically its racist narrative is now in government.
When, sooner or later, the narrative of economic recovery is exposed as a cruel lie, this government will exploit the little people’s concerns over migration to keep those like Costas placid while, for good measure, deploying the authoritarian apparatus currently under construction to liquidate their few remaining assets.
Most recently, television screens relayed a scene that reveals the continuing capacity of the Greek crisis to symbolise Europe’s conundrum: a visit to the Greek-Turkish border by a Greek prime minister who, like his predecessors, had previously surrendered fully to Chancellor Angela Merkel accompanied by Ursula von der Leyen – who was promoted by Merkel as the European commission’s new president, but who would not have been elected without Orbán’s support in the European parliament.
What were they doing? They were defending the policy, pioneered by Orbán, of violating the right that international law affords refugees to enter one’s territory to apply for asylum. In essence, they were sealing the demise of Merkel’s project of keeping the xenophobic hard right at bay. Additionally, they were unwittingly proving that Greece remains the canary in the mine.
For The Guardian’s site click here
March 2, 2020
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