Adults in the Room: My Battle with Europe's Deep Establishment

by Yanis Varoufakis

That which feels to many like a conspiracy of the powerful is simply the emergent property of any network of super black boxes.

The result is a network of power within other pre-existing networks, involving participants who conspire de facto without being conscious conspirators.

This is how networks of power control the flow of information: through co-opting outsiders and excluding those who refuse to play ball.

The deficits of countries like Greece were the reflection of the surpluses of countries like Germany. While the drachma devalued, these deficits were kept in check. But when it was replaced by the euro, loans from German and French banks propelled Greek deficits into the stratosphere.

Suddenly three French banks faced losses from peripheral debt at least twice the size of the French economy.

France’s top officials knew that Greece’s bankruptcy would force the French state to borrow six times its total annual tax revenues just to hand it over to three idiotic banks.

This was the beauty of the Greek bailout, at least for France and Germany: it dumped most of the burden of bailing out the French and German banks onto taxpayers from nations even poorer than Greece, such as Portugal and Slovakia.

If you have ever wondered why Europe’s establishment is so much keener on austerity than America’s or Japan’s, this is why. It is because the ECB is not allowed to bury the banks’ sins in its own books, meaning European governments have no choice but to fund bank bailouts through benefits cuts and tax hikes.