Galbraith on Greece

[gnk]

Re: Pilger on Greece

It's interesting to note that most non-Greek analysts that have never lived in Greece think that a Grexit is the best option, whereas in Greece, only the extremists (neo nazi and hard core Marxists) want to leave the Eurozone. In Greece, 70% of the population and all governments including SYRIZA so far do not want Grexit.

Why is that? Do they know something about their country that outsiders don't?

The IMF does not come knocking at your door unless there is something truly wrong going on. And that something always exists well before the IMF enters the picture.

Self reform for Greece is nearly impossible. And it is not just the Oligarchs - to only single them out is to ignore a lot. It's a broad societal issue that also involves powerful state unions, powerful voting blocks such as retirees, powerful special interests such as the legal guild, etc...

Unfortunately, reform from the outside will never be 100% altruistic either.

To date, I have rarely, if ever, seen an analyst or economist truly address, in a comprehensive manner, the Greek problem while providing a viable solution, if there is one. They all have their biases.

[gnk]

Re: Varoufakis in private conference call with Hedge Fund Managers

Here in Greece, Varoufakis has lost most of his luster. In my opinion, judging him on results, he has been an utter disaster costing Greece tens of billions. Instead of taking political realities into consideration, and understanding the boundaries he could never change, he risked a country's present and future on the gamble he could change the Eurozone - and failed spectacularly.

To put it another way - he was given a job - Finance Minister of a troubled Nation, not Architect of the Eurozone. Judging from what I see in the Greek economy today, and what I saw 8+ months ago, he failed.

I also think he has an ego problem, as well as some ego-based psychological issues. Ever since Krugman publicly stated his "shock" at SYRIZA's poorly planned and executed negotiations strategy, it seems to me Varoufakis has become "unhinged" in his erratic quest to define or redefine his disastrous legacy.

He will not go gently into the night. He will likely self destruct as he unintentionally adds names to his list of detractors.

I can no longer take much of what he says at face value. I think most followers of the Greek story have already or will have reached that conclusion in the near future.

Months ago, I predicted that he may become a sacrificial lamb. Now, I see a near insane, loose canon self destructing.

The media love this type of story. And Varoufakis, once the darling of the media, will now experience the ugly side of the media.

The media smells blood, and the feeding frenzy has commenced.

[Chris Coles]

Re: Varoufakis in private conference call with Hedge Fund Managers

Here in Greece, Varoufakis has lost most of his luster. In my opinion, judging him on results, he has been an utter disaster costing Greece tens of billions. Instead of taking political realities into consideration, and understanding the boundaries he could never change, he risked a country's present and future on the gamble he could change the Eurozone - and failed spectacularly.

To put it another way - he was given a job - Finance Minister of a troubled Nation, not Architect of the Eurozone. Judging from what I see in the Greek economy today, and what I saw 8+ months ago, he failed.

I also think he has an ego problem, as well as some ego-based psychological issues. Ever since Krugman publicly stated his "shock" at SYRIZA's poorly planned and executed negotiations strategy, it seems to me Varoufakis has become "unhinged" in his erratic quest to define or redefine his disastrous legacy.

He will not go gently into the night. He will likely self destruct as he unintentionally adds names to his list of detractors.

I can no longer take much of what he says at face value. I think most followers of the Greek story have already or will have reached that conclusion in the near future.

Months ago, I predicted that he may become a sacrificial lamb. Now, I see a near insane, loose canon self destructing.

The media love this type of story. And Varoufakis, once the darling of the media, will now experience the ugly side of the media.

The media smells blood, and the feeding frenzy has commenced.

Then will you please give us your view of this paper written by Richard Koo; which seems to me to be contrary to your view expressed above.

http://yanisvaroufakis.eu/2015/07/27...y-richard-koo/

https://varoufakis.files.wordpress.c...oo-150715e.pdf

[gnk]

Re: Varoufakis in private conference call with Hedge Fund Managers

It's not a contrary view - it's on a completely different issue altogether. There's a difference between economic theory, and political reality.

On his first days on the job, he told the Greek people, and the world, the memorandum no longer exists, Greece does not need the 7 billion Euro last payment under the previous memorandum, and there will be no more Troika officials visiting Greece.

Where is Greece now? 40 Billion Euro bank run, raided municipal and hospital accounts, capital controls, frozen economy, and worse Memorandum - with Troika officials in Athens right now. And what, pray tell, was his back up plan should the Eurogroup not recognize his brilliant economic mind in a 6 month period?

I shook my head back in late January/early Feb, and said, this will not end well. And I am no genius like Varoufakis. I'm just an average Joe.

Economic theories aside, he was an utter disaster as a politician. His economic moralizing to politically constrained members of the Eurogroup while a nation's economy crashed is something I could never forgive.

There is a lot of activity going on in Parliament right now - a Varoufakisgate, or Drachmagate, or whatever you want to call it. It's an investigation and Greek politics being what it is, will make great theater for the media.


Varoufakis’ “cloak-and-dagger” Plan B is up for investigation


Greek Supreme Court send Varoufakis law suits to Parliament


EU slams 'false' Varoufakis claims on Greece

[Chris Coles]

Re: Varoufakis in private conference call with Hedge Fund Managers

Yes, I do see where you are coming from. He failed to achieve what was needed.

The other side of the story, from the viewpoint of my place, outside of Greece; is that in setting out to change the Eurozone; he highlighted the underlying difficulties facing everyone else in Europe.

From your viewpoint he has been a disaster, and I do understand your point of view; from mine; history might end up seeing him in a different light altogether, as he brought out into open view, the difficulties he faced in trying to change; what you see as an impossible task that should never have been started in the first place..

A classic example of being caught between a rock and a hard place; and he did not succeed.

[gnk]

Re: Varoufakis in private conference call with Hedge Fund Managers

Thanks Chris for seeing where I am coming from, and I respect your viewpoint as well, because I too have viewed and judged things from afar, whereas my views may have been different had I lived closer to the action.

[Chris Coles]

Re: Varoufakis in private conference call with Hedge Fund Managers

Thanks Chris for seeing where I am coming from, and I respect your viewpoint as well, because I too have viewed and judged things from afar, whereas my views may have been different had I lived closer to the action.

In all fairness to Varoufakis, one last point needs to be made. He was appointed; in which case those surrounding him knew what he was going to try to do. So the arguments must also apply to everyone sat at the table while he was there. Yes, I do understand that he was afterwards asked to step down.

A very good example of the need to succeed; or face the music when you do not.

My first read of the story regarding the "hacking" gave me the impression that he was trying to get hold of a copy of the core software to enable his team, (he is NOT a software guru, but he does have direct contact with Steam, a major software developer in the US as one of their advisors), to come up with a better version more suited to the need to dig into the tax affairs of those currently avoiding all attempts to tax them.

If that is correct, then he was trying to do the best for his nation; rather than play games.

We will have to watch the ongoing debate and not expect to get at the truth for perhaps a long time.

[gnk]

Re: Varoufakis in private conference call with Hedge Fund Managers

Agreed, Varoufakis was not alone, and Tsipras had a team of advisers. Ultimately the blame should fall on Tsipras, and he has publicly stated that. But I also believe Varoufakis was too much of a hawk, and should have known better.

I don't doubt Varoufakis' concern for Greece's future. I think he lacked the political skills though. I think he underestimated how slow moving change is in the EU. I would have preferred Greece not to have gone to the brink, and that the greater debate of the EU's future be done in a less chaotic environment, without Greece sacrificing the economic stability (in my view) it gained last year.

Honestly, I still don't fully understand the hacking episode fully, there are a lot of conflicting stories from different sources. It still needs fleshing out I think. There is a recent news article regarding Galbraith's involvement, but it's in Greek, I'm going to read it now.
Funny how this thread has come full circle with Galbraith.

[Thailandnotes]

Re: Varoufakis in private conference call with Hedge Fund Managers

Galbraith speaks

http://www.politico.eu/article/varou...money-bailout/

2nd comment worth reading

Galbraith's contribution to http://yanisvaroufakis.eu/

http://yanisvaroufakis.eu/2015/07/27...kis/#more-9524

[astonas]

Re: Pilger on Greece

It's interesting to note that most non-Greek analysts that have never lived in Greece think that a Grexit is the best option, whereas in Greece, only the extremists (neo nazi and hard core Marxists) want to leave the Eurozone. In Greece, 70% of the population and all governments including SYRIZA so far do not want Grexit.

Why is that? Do they know something about their country that outsiders don't?

It all depends on whether the difference of opinion arises from differences in understanding, or in objectivity.

It might be true that not a single person outside Greece could ever understand it. That is one possibility.

But it might also be true that many locals might lack the objectivity to enthusiastically take on painful steps in the short term, for economic benefits in the long term. The proximity and severity of that pain could well explain all of that 70% number, without providing any information at all about whether a given path is objectively advisable. This discrepancy is particularly possible if one has a nation that has been told innumerable times by various politicians that change is simply not needed, and that their place in the EMU is assured even without it.

Let me be clear: I certainly grant that you are sophisticated enough to understand the full complexity of the situation, and the subtleties of why ordoliberal reforms are needed. But can you really say that all 70% agreeing about the Euro's importance are using the same logic to get there? iTulip contributors aren't always the most representative members of their geographical regions, when it comes to depth of understanding, and objectivity of analysis.

If one looks at all the polls, people don't want Grexit, but neither do they want their society to be changed by the Euro. And one of those has to come, sooner or later, regardless of what people want. Not because other nations are being unreasonable, or demands are being undemocratically imposed. But just because membership in an "ever-closer Europe" was always explicitly and openly intended to be an agent of change for every nation on the continent. That was kind of the whole point, really. That was always the mechanism - homogenization - by which it was going to make war impossible. So if a nation has no interest in changing to homogenize, it really doesn't belong in Europe in the first place.


It might be worth noting that when northeastern ordoliberal states, undertook their various "austerity" programs, it was usually with the support of the domestic electorate. It was generally understood and agreed upon that exacerbating the short term discomfort would be beneficial for the longer-term prognosis. So they ran into the change, rather than away from it. Get it over with fast, so the expected benefits can start to come sooner. Pull the Band-Aid off quickly. Grasp the proverbial nettle.

That is one of the major aspects that appears most questionable in Greece today, and it is what makes so many wonder whether Greece is capable of the reforms necessary to make it Eurozone-compatible. Even the "agreed-upon" third bailout deal that was "passed" in the greek language by parliament, is apparently turning out to be different in the fine print from the english-language wording that was agreed on through negotiation, with attempts to add clauses exempting a number of large interest groups. So you get "agricultural reforms" - with exemptions for all farmers. Not exactly helpful.

If the people themselves do not choose to embrace reforms, any externally driven changes will be subjected to exactly this sort of death-by-a-thousand-papercuts that we see, in this third attempt, as in prior ones:

First the reforms are decried by leadership as external aggression.
Then they are "accepted" by political leaders, but under duress.
Then they are "passed into law", but with enough loopholes squeezed in to neuter their main effects.
Then they are delayed in administrative execution by bureaucrats who take their mission from the MP's subtext, rather than the law's text.
Then they are evaded by the central targets of the reforms, using the loopholes built in earlier.
Then they are protested, until greater economic damage comes from sticking to them, than giving in...

... and on and on. But at no point does the actual, originally intended, reform ever happen. Greece is still running away from, and not into, reform. That seems not to have changed at all, with this third package.

So the central question is not even "do the people of Greece say they need reform?" That question ultimately means nothing at all. Instead, one must ask "what makes this attempt to implement reform different from previous attempts?"

A week or two ago, the thinking was that this might be different. The threat of Grexit was a bigger sword of Damocles, pointed directly at banking interests as well as Greece, and the reforms were more structural than before. Let's look back at that now.

Unfortunately, from what I'm reading, the method of the lawmakers appears to be the exactly the same as always. For as much talk as there was in the press of the Greek government "capitulating" to creditors, the laws actually being passed are following exactly the same playbook as under Samaras -- resistance to any and all change, and the use of legal loopholes and exemptions to achieve that, regardless of what the bill's official title has to be, and what its externally-touted english-language "equivalent" has to say.

And then there's the next hurdle: even if the laws themselves are ultimately forced into consistency with agreed-upon language through imposed Troika oversight, the implementation is still subject to all the other layers of foot-dragging and obstructionism that existed before. In many ways, this is a civil service issue, as much as it is an elected official issue.

But in the end, without a principally internal reform mindset, there simply can be no reform, no matter how big an external "sword" exists. There's too many tiny details for outside watchers to watch over, too many exemptions to track. In the game of bureaucrats, there is no doubt that Greece has, and will always have, the home-field advantage.

So even from far away, even this early in the process, we are already starting to see that this time just isn't different -- at all.

The deal was met with relief, because the worst fate was seen to have been escaped. If reform were ever to be real, a deal would NOT have been met by relief, but by a grim determination to execute a viable plan to change. "Relief" is the emotion you feel when you think the hardest part is behind you.

Self reform for Greece is nearly impossible. And it is not just the Oligarchs - to only single them out is to ignore a lot. It's a broad societal issue that also involves powerful state unions, powerful voting blocks such as retirees, powerful special interests such as the legal guild, etc...

From the beginning of this crisis, we have been asking in one form or another whether the grand European experiment of unifying culture through economic necessity was possible, or merely a nice idea that wouldn't hold up when push came to shove. Whether monetary culture was an outcome, or a driver. There was some skepticism, and some cautious optimism. I was hopeful, though not always optimistic.

I think it's very nearly time to conclude that the experiment, at least in regards to Greece, may have failed.

My understanding is that the focus of debate in passing the package wasn't on the external "sword" at all. Not even a little. Instead, after the expected grandstanding, the concerns of parliament came down to local interests, and how to best shield them from reform. The last and biggest external threat that could possibly be applied within Europe has been brought out, pointed at Greece, and it just wasn't enough to even dent, let alone overcome, the durable local domestic political culture. A triumph of democracy, to be sure. But also a failure of externally-driven reform.

Gnk, you say that self-reform for Greece is impossible. I concede that point. But we can now see that without internal reform happening first, externally forced reform is equally impossible. Those aren't mutually incompatible statements. But they do point to only one logical conclusion: that reform - of any kind - is impossible under the conditions similar to the current ones.

Sooner or later, through Grexit now, Grexit later, or some other devastating endogenous or exogenous event, the "current conditions" will change. Maybe more luck will come to Greece then, and I hope Greece is recognizable when it does.

Some version of "Europe" will also continue from here on out. But it will consist of whatever subset of Europe has already unified its culture to a certain extent, before joining the EMU or EU. Cultural evolution within the EU will continue to happen, but it will be slow, and not easily be accelerated by broad economic incentives.

If purely economic pressure could drive cultures to blend within the EMU, it would have begun by now.

But it didn't.

And since the biggest threat available in peacetime is already on the table, when this round still fails to work, we will be fully justified in concluding that it can't. We haven't watched it all the way through yet. Something great could conceivably happen. But initial signs are extremely discouraging.

We are learning that Europe's power to change cultures is still exclusively a gating function, not also a forcing function. Europe at this point only wields cultural influence through selective admission of states who have reformed, and not through application of economic pressure to states that are already members. Increased EMU pressure simply increases the amount of backlash, but not the rate of progress.

These limitations may change, in time. But such change will certainly come too late to help Greece. Greece's never-ending crisis is the exact reason other states are now backing away from the "ever-closer" union. Only a prior resolution to the Greek question can reverse that.

[touchring]

Re: Pilger on Greece

From the beginning of this crisis, we have been asking in one form or another whether the grand European experiment of unifying culture through economic necessity was possible, or merely a nice idea that wouldn't hold up when push came to shove. Whether monetary culture was an outcome, or a driver. There was some skepticism, and some cautious optimism. I was hopeful, though not always optimistic.

Can unification of distinct culture really work? There hasn't been many cases in history where distinct cultures can be unified through peaceful means or even through war.

Even the all powerful religion can't unify culture as Christians and Muslims from different countries can still have different cultures.

[gnk]

Re: Pilger on Greece

Regarding that 70% - ask a public sector worker what has to be done about private sector tax collections - and you will get a similar response to the Troika's. Ask a small business owner what needs to be done about bureaucracy and public sector unions, etc... and again, a similar response to the EU. Ask any young person about pension reform, and well, you get the picture. Ask all Greeks about their political system, and a near unanimous view will emerge - it is incompetent.

Greeks know that reforms are necessary, yet want only other Greeks to reform. A while back, I mentioned that Greece has a hyper-democracy - in a derogatory manner - meaning all groups get their wishes, and that the oligarch meme is not as relevant as it is being portrayed. I hope now people understand what I was trying to describe. It's not a select few oligarchs or a bankster issue that is the sole central problem. It's democracy without self reform/sacrifice, greater-good, responsibility, balancing of interests - whatever you want to call it.

A hard crash will correct Greece only in terms of financial budgeting. The goal for Greece is not just to be Euro-compatible. The goal for Greece is to become a modern, viable, functioning state, not some backwater 1970s style Balkan nation.

Right now reforms are being watered down - that is Greek democracy in action. All interest groups are represented, not just the oligarchs. Funny - most can name an oligarch in just about every emerging nation - who can name an oligarch in Greece? Yet many western analysts are solely glued to the oligarch/bankster meme in explaining Greece's shortcomings.

I still believe that the current path is possible. Only an outsider can balance these internal interest groups, and I hope the power of the EU purse strings can accomplish this.

Yet, what you write, or conclude, astonas, is indeed in the back of my mind, and it is a very real concern.

Greece is a small country, and as such, many people have contacts that are merely one or two degrees from those in Government. I'll ask a few people in Athens that I know are in the thick of things and report back.

My current view is that although Tsipras can get a Memorandum passed in Parliament, he can't get it fully implemented. But if the EU adheres to the purse strings approach - a piecemeal funding on an evaluation basis, then Tsipras will need an election to clean up his party.

Since 2009, merely 6 years ago, do you know how many Prime Ministers Greece has gone through? Six. Four were elected, two were acting/caretaker PMs. Is that a symptom of a viable country?

Greeks don't fear the drachma per se, Greeks fear being left alone with their current incompetent political system/ruling elites. They also recognize that all the interest groups are strangling their government. They will rarely admit this. I know a few that do - they even go so far as to say that they would be happy to see foreigners running the various government departments.

[Polish_Silver]

greeks want reform?

. . .
Greeks know that reforms are necessary, yet want only other Greeks to reform. . ..

That's what I was wondering. No one wants to lose out. Surely other countries have this problem, but maybe it is worse in Greece?

I mean, try to talk pension/medicare reform in the US. The medical costs are eating the country alive.

[Woodsman]

Re: greeks want reform?

Oligarchs? What oligarchs? Oh, THOSE oligarchs. The ones who hold all the power and stand athwart history yelling "more!"

FP Magazine: Misrule of the Few, How the Oligarchs Ruined Greece

By Pavlos Eleftheriadis

Greece has failed to address such problems because the country’s elites have a vested interest in keeping things as they are. Since the early 1990s, a handful of wealthy families -- an oligarchy in all but name -- has dominated Greek politics. These elites have preserved their positions through control of the media and through old-fashioned favoritism, sharing the spoils of power with the country’s politicians. Greek legislators, in turn, have held on to power by rewarding a small number of professional associations and public-sector unions that support the status quo. Even as European lenders have put the country’s finances under a microscope, this arrangement has held.

The fundamental problem facing Greece is not economic growth but political inequality. To the benefit of a favored few, cumbersome regulations and dysfunctional institutions remain largely unchanged, even as the country’s infrastructure crumbles, poverty increases, and corruption persists. Greek society also faces new dangers. Overall unemployment stands at 27 percent, and youth unemployment exceeds 50 percent, providing an ideal recruiting ground for extremist groups on both the left and the right. Meanwhile, the oligarchs are still profiting at the expense of the country -- and the rest of Europe.

----
Most Greeks get their news from television, and eight private channels, all controlled by well-known businesspeople, share over 90 percent of the market. Some of the owners, such as Yiannis Alafouzos, who founded the Skai media group, are shipping magnates whose businesses rely little on state contracts and licenses. But most have their hands in a broad array of businesses that depend heavily on government patronage. Vardis Vardinoyannis, a lead investor in Greece’s largest television station, Mega, controls two petroleum companies, Motor Oil Hellas and Vegas Oil & Gas, in addition to holding a significant stake in Greece’s biggest bank, Piraeus. Other Mega shareholders include George Bobolas, whose gold-mining operation relies on government licenses and whose construction company built facilities for the 2004 Olympics, and Stavros Psycharis, whose business interests range from printing to real estate to tourism.
Mega, like nearly all of Greece’s television stations and newspapers, has long operated at a loss. But as a leaked U.S. diplomatic cable from 2006 explained, the owners don’t care. They keep the stations afloat “primarily to exercise political and economic influence” -- to ensure, in other words, that they continue to profit from the government. That’s why the country’s 11 million citizens have so many television channels and newspapers to choose from -- Bobolas and Psycharis each own newspapers, as well -- and why independent journalists have so few outlets for their work.
-----
Greece’s accession to the European Union, in 1981, was supposed to improve things. EU membership, however, did not weaken traditional Greek hierarchies; it strengthened them. It was while the Greek economy was catching up to the rest of Europe -- providing the oligarchs with new sources of credit and cash -- that the country’s institutions began to break down. Greece now ranks near the bottom of European countries when it comes to social mobility and near the top of rankings measuring inequality -- a problem that Greek politicians and the media have almost entirely ignored. Even at the height of its spending before the crisis, Athens offered few benefits to the poor. Today, over 90 percent of the unemployed receive no government assistance whatsoever, some 20 percent of Greek children are estimated to live in extreme poverty, and millions of people lack health insurance. Moreover, after seven years of recession, none of the major political parties has proposed any serious reforms to the welfare state or to the health-care system in order to achieve universal coverage. They haven’t even expanded a pilot program to offer free lunches at public schools.

Reform may be slow in coming and resisted, but only because the status quo benefits ruling Greek elites. The average Greek, well they would benefit most from reform and so will see none. They'll have to content themselves with the crumbs falling off the table so Greek billionaires can continue buying bigger yachts and Manhattan apartments.

My "favorite" Greek oligarch is Peter C. Georgiopoulos, CEO of Genco Shipping (GNK). He gets double points because he lives in NYC and is a former banker and trader at ... wait for it... Drexel Burnham Lambert.

[Chris Coles]

Re: greeks want reform?

Would an Anti-Trust approach have any effect? Force the breakup of the ownerships of these families?