Earlier quoted context omitted.
And they ARE making sure the debt is going to be repaid.
Nope, they will almost certainly default on a large proportion of it.
That remains to be seen. Until now, it was quite the opposite.
Review of “Adults in the Room” by Yanis Varoufakis
111–120 of 133 posts
Re: Review of “Adults in the Room” by Yanis Varoufakis
#112"The first revelation is that not only was Greece bankrupt in 2010 when the EU bailed it out, and that the bailout was designed to save the French and German banks, but that Angela Merkel and Nicolas Sarkozy knew this; and they knew it would be a disaster." The treasury departments of the French and German banks had loaded up on GGBs - Greek Govt Bonds because they yielded more basis points than eg German Govt bonds,…
Didn't Greece falsify data for years? That would explain the AAA ratings.
In its entire history Greece never had an AAA rating. The highest was A+/A1 in 2004. In 2008/09 it was at A/A-.
Re: Review of “Adults in the Room” by Yanis Varoufakis
#113Earlier quoted context omitted.
Were the banks truly deceived, or just hoping that they could cash in and be bailed out?
1. The incentives were just so aligned that I think a lot of people might have had their private misgivings, but held their nose and went ahead. Apart from the AAA rating, government bonds also had a very low risk rating in the Basel accords (Basel I, and Basel II that just came into effect during the global financial crisis 2008). Basically, the Basel accords specify a minimum capital adequacy ratio, that is a certa…
In Basel 2 indeed government bonds need indeed to have a rating of AA (AA- IIRC) or higher to be considered completely risk-free. However Greece never reached an AA rating, it was A in 2008.
Re: Review of “Adults in the Room” by Yanis Varoufakis
#114Earlier quoted context omitted.
Also of interest is Varoufakis on EconTalk[0] interview in 2013, almost two years before the Greek electoral victory of Syriza and Varoufakis taking the political position of finance minister. You might hear from this interview how Varoufakis looked at Greece's crisis negotiation-position with the EU: that for Greece, similar to the employee-management structure of Valve, there was a lack of hierarchy between peers a…
> Varoufakis, it seems, sincerely thought he would bring "enlightened" new ideas of successful software development management to a negotiation table of frustrated, advantaged, EU financial stalwarts. What he thought (and later stated) was that people would be interested in solutions instead of blaming, finger pointing and political games. He reminds me of a goal-oriented team member versus the team members who want…
> people would be interested in solutions instead of blaming, finger pointing and political games.
Would anyone be interested in bureaucratic machinations over solutions? Varoufakis' ex post facto statement sounds bitter and judgemental and to be expected in the face of his failure.
If you listen to his EconTalk episode, you get a sense of an admirable and optimistic person who, when faced with the defensive positioning of EU stalwarts, represented his ideas in a naive and condescending way that denied himself and the Greek people he represented the chance to establish trust and the proper report to begin alternative negotiations in earnest. His economic ideas might be perfectly salient but his self-introduction at the bailout talks did not represent those ideas very well.
Re: Review of “Adults in the Room” by Yanis Varoufakis
#115Earlier quoted context omitted.
Or rather it'll happen again and again until the casino is turned into a viable and competitive economy. I wouldn't blame the Germans and French for trying to contain a crisis at its origin..
> Or rather it'll happen again and again until the casino is turned into a viable and competitive economy. By what mechanism? Each round of cuts drives up unemployment and poverty, and cutting expenses hasn't solved the deficit because trashing the economy has destroyed tax revenues. The first few rounds were rationalization, but they were too little too late. At this point the deep restructuring that's still needed…
Cutting expenses has not solved the _debt_ problem, but has surely solved the _deficit_. Greece has a strong primary surplus.
Re: Review of “Adults in the Room” by Yanis Varoufakis
#116Earlier quoted context omitted.
> Or rather it'll happen again and again until the casino is turned into a viable and competitive economy. By what mechanism? Each round of cuts drives up unemployment and poverty, and cutting expenses hasn't solved the deficit because trashing the economy has destroyed tax revenues. The first few rounds were rationalization, but they were too little too late. At this point the deep restructuring that's still needed…
Cutting expenses has not solved the _debt_ problem, but has surely solved the _deficit_. Greece has a strong primary surplus.
> but has surely solved the _deficit_. Greece has a strong primary surplus.
No, it hasn't. The "primary surplus' doesn't include any debt repayments.
Re: Review of “Adults in the Room” by Yanis Varoufakis
#117Earlier quoted context omitted.
Cutting expenses has not solved the _debt_ problem, but has surely solved the _deficit_. Greece has a strong primary surplus.
> but has surely solved the _deficit_. Greece has a strong primary surplus. No, it hasn't. The "primary surplus' doesn't include any debt repayments.
Yes, exactly. I said "too little too late" because a primary surplus doesn't resolve crippling debt - at this point it looks like the debt is far too large to handle with any kind of sensible short-term spending cuts.
Re: Review of “Adults in the Room” by Yanis Varoufakis
#118Earlier quoted context omitted.
Didn't Greece falsify data for years? That would explain the AAA ratings.
It borders on the impossible to fake data on this scale and in such amounts. The deficit forecast for 2009 (the year the crisis started) was 3.7 which got revised to 12.5 percent at the end of that year. Any sufficiently large institution or cooperation that wanted to have access to the real data, could have done so with minimal effort, you can't hide a 10% budget gap. The false data Greece reported to get into the E…
> It borders on the impossible to fake data on this scale and in such amounts.
It's quite far from being impossible. Actually, it's a widely known fact that a string of greek governments systematically falsified Greece's books, and it actually culminated with Greece going as far as hiring Goldman Sachs to hide their double-digit deficits.
> The false data Greece reported to get into the Eurozone was an open secret,
That's the old attempt at diffusion of responsibility that often pops up. It's the same old tired argument: once the fact that Greece did in fact cooked its books and falsified their accounting for years, there comes the argument that they still have no responsibility for their own actions because somehow.... others might have known they were falsifying their records?
It's a lame excuse, and it never sticks.
Re: Review of “Adults in the Room” by Yanis Varoufakis
#119Earlier quoted context omitted.
Didn't Greece falsify data for years? That would explain the AAA ratings.
So did Italy and possibly France. It was a very well known, old trick. Of course it's Greece's fault, but everybody else (Germany, France, Italy, etc.) were on the same page. Greece didn't cheat anyone, it just went along with what it was proposed to in order to get in the common currency. Accusing Greeks of false statistics and what-not was part of political propaganda in Greece and abroad more than anything else.
> Greece didn't cheat anyone,
So falsifying their accounting to hide double-digit deficits as well as tehir massive debt is not cheating anymore?
Re: Review of “Adults in the Room” by Yanis Varoufakis
#120Earlier quoted context omitted.
Greece has been cooking the books for a long time, even their entrance into the EU was fradulant. Greece is the blame here via its decades of fraud that finally caught up with it. As a Greek-American with an interest in Greece being successful I think all the finger pointing at Wall Street or Germany is asinine. Greece is horribly corrupt and tax dodging is like its national sport. Its like someone turned Chicago int…
> I think all the finger pointing at Wall Street or Germany is asinine. 1. They knew what Greece was up to. 2. They facilitated it - or turned a blind eye. 3. They benefited from it. I don't see how it's unreasonable for everyone to share the blame for this. Sadly the cost can't be shared as equally as the blame.
So your big argument that everyone is to blame is that somehow you assume that others might have suspected that Greece did extensively falsified their accounting to hide double-dgit deficits and massive debt?
Because I'm pretty sure that greek governments decided all for themselves to pile up even more debt and falsify their records to hide it from the public.