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Assange, Varoufakis, Brexit
Assange, Varoufakis, Brexit
A friend of mine here in Athens, Greece, named Wayne Hall, who’s of Australian descent but moved here at about the time Napoleon headed for St. Petersburg, and works as a translator and language teacher, sent me a mail a few days ago that I thought was interesting.
In particular, Wayne referred to a video I didn’t know existed, of Julian Assange hosting a get-together in the Ecuadorian embassy in London on the night of the Brexit referendum, June 23, 2016, that includes a video (sound) link to Yanis Varoufakis who was in Rome at the time.
Julian was receiving visitors and broadcasting! How times have deteriorated, it’s heart-rendering, and it’s so painfully good to see him here in better days…. That video is below. The sound quality of Varoufakis speaking is really bad, and I don’t have the equipment here to work on that, but Wayne was kind enough to transcribe it. See also below.
What I found especially intriguing is the difference in view between the two: Varoufakis wanted (wants) the UK to stay in the EU, in order to reform it from within. And he thinks (thought) that his cross-European party, DiEM 25, can play a role in that. Even though it has no seats in the EU parliament, not then, and not now.
Assange, on the other hand, was pretty much pro-Brexit. He was quite clear about this (a few hours before the referendum results were in):
[..] if there is a Leave or even if the vote is very close, which it surely is, it is something that calls into question the political legitimacy of the European Union in the way it has been conducted so far. And really it’s quite incredible that it came to this.
…click on the above link to read the rest of the article…
This is Italy. This is not Sparta.
“European Stocks Surge Celebrating New Spanish, Italian Governments”, says a Zero Hedge headline. “Markets Breathe Easier As Italy Government Sworn In”, proclaims Reuters. And I’m thinking: these markets are crazy, and none of this will last more than a few days. Or hours. The new Italian government is not the end of a problem, it’s the beginning of many of them.
And Italy is far from the only problem. The new Spanish government will be headed by Socialist leader Pedro Sanchez, who manoeuvred well to oust sitting PM Rajoy, but he also recently saw the worst election result in his party’s history. Not exactly solid ground. Moreover, he needed the support of Catalan factions, and will have to reverse much of Rajoy’s actions on the Catalunya issue, including probably the release from prison of those responsible for the independence referendum.
Nor is Spain exactly economically sound. Still, it’s not in as bad a shape as Turkey and Argentina. A JPMorgan graph published at Zero Hedge says a lot, along with the commentary on it:
The chart below, courtesy of Cembalest, shows each country’s current account (x-axis), the recent change in its external borrowing (y-axis) and the return on a blended portfolio of its equity and fixed income markets (the larger the red bubble, the worse the returns have been). This outcome looks sensible given weaker Argentine and Turkish fundamentals. And while Cembalest admits that the rising dollar and rising US rates will be a challenge for the broader EM space, most will probably not face balance of payments crises similar to what is taking place in Turkey and Argentina, of which the latter is already getting an IMF bailout and the former, well… it’s only a matter of time.
Hotel Europa
On Friday, in This is the End of the Euro, I said: The euro has become a cage, a prison for the poorer brethren. The finance minister proposed by 5-Star/Lega and refused by Italian president Mattarella, Paolo Savona, has called the euro a German cage.
There are now stories spreading that the coalition, Savona first of all, were secretly planning an exit from the euro. A series of slides Savona prepared in 2015 on how to exit the euro is used as evidence of that secret plan. But the slides are not secret. Yes, he has said that it’s good to have a plan to leave ‘if necessary’. But that’s not the same as secretly planning such a move.
Every country should have such a plan, and you would hope they do. A government that doesn’t is being very irresponsible. But it’s true, this is how both the EU and the euro have been designed: not just as a prison, but as a prison without any doors or windows. No way to get out. And that will prove to be its fatal flaw.
It has more such flaws, for sure. The inequality of its members, which allows for the richer to feed on the poorer, is a big one. The US founders were smart enough to provide for transfer payments from rich to poorer, the EU founders couldn’t be bothered with that lesson. They must have studied it, though, and rejected it.
Credit were credit’s due: Yanis Varoufakis said it best when he compared the EU to the Eagles’ Hotel California. A few lines:
Mirrors on the ceiling
The pink champagne on ice
And she said “We are all just prisoners here, of our own device”
And in the master’s chambers
They gathered for the feast
They stab it with their steely knives
But they just can’t kill the beast
…click on the above link to read the rest of the article…
Jeffrey Sachs Still Promotes Disaster
Amedeo Modigliani Elvira Resting at a Table 1919
One of the most prominent actors in the book, the man behind the term ‘shock therapy’ for economies, is Jeffrey Sachs, a Harvard prodigy. In an interview at the time, Klein had this to say:
Q: You mention the shift from shock therapy to shock-and-awe, but there are also attempts to soften the image of neoliberalism. Jeffrey Sachs, the economist who pioneered shock therapy, wrote his latest book on The End of Poverty. Is there any more to this than a rebranding exercise?
A: A lot of people are under the impression that Jeffrey Sachs has renounced his past as a shock therapist and is doing penance now. But if you read The End of Poverty more closely he continues to defend these policies, but simply says there should be a greater cushion for the people at the bottom. The real legacy of neoliberalism is the story of the income gap. It destroyed the tools that narrowed the gap between rich and poor.
The very people who opened up this violent divide might now be saying that we have to do something for the people at the very bottom, but they still have nothing to say for the people in the middle who’ve lost everything.
…click on the above link to read the rest of the article…
DiEM25: Europe Without Nations or Religion
Fred Lyon Barbary Coast 1950
I started writing some lines as a response to my friend. Then it became a bit more. Wouldn’t you know… And then it was a whole article. So here’s my comments to it first, and then the original by someone calling themselves ‘dross22′. Now, in case I haven’t made this sufficiently abundantly clear yet, in my view Yanis’ knowledge and intellect is probably far superior to mine, and I’m a fan. But…
I don’t mean to imply that the views in the comment posted at DiEM25 are those of Yanis, but I do think it’s good to point out that these views exist within the movement. Moreover, as I wrote a few days ago, Yanis himself also thinks the EU should become ‘a federal state’. And I don’t agree with that. In fact, I think that’s a sure-fire way to absolute mayhem. Catalonia is only the latest example of why that is. Greece is an obvious other.
From that post on the DiEM25 site (see full text below):
[..] .. local European nationalism must be eradicated by creating a common European state. But a progressive European state would inevitably require a sense of identity that, in true progressive spirit, is radically opposed to religion. It would be hypocrisy to exclude Islam. Pluralism of values is a weapon of the establishment and we have to do away with it. In a Europe that is green nobody can afford pluralism in regards to lifestyle choices.
…click on the above link to read the rest of the article…
Varoufakis: “In 1967 There Were The Tanks And In 2015 There Were The Banks”
Varoufakis: “In 1967 There Were The Tanks And In 2015 There Were The Banks”
It was back on January 31 of this year, long before the “game theoretical” approach of Greek negotiations with the Eurogroup and ECB in particular and the Troika, and now Quadriga in general was revealed, that we first forecast with absolute accuracy just what the middle, and end game, of the Greek negotiation with Europe (and vice versa) will be:
… today the ECB’s Erikki Liikanen, tired of pleasantries and dealing with what to Europe is a completely incomprehensible and illogical stance, one which is essentially a massive defection by Greece in the European “prisoner’s dilemma”, and which while leading to a Greek financial collapse and Grexit – both prerequisites to a subsequent Greek economic recovery unburdened by the shackles of the Euro – would also unleash a European depression, came out and directly threatened Greece that it now has 1 month until the end of February to reach a deal with the Troika, or else the ECB would cut off lending to Greek banks, in the process destroying the otherwise insolvent Greek banking sector.
And since only the ECB backstop has prevented a banking sector panic, the ECB is essentially betting the house, and the sanctity of the Eurozone (because after a Grexit all bets are off which peripheral leaves next) that the threat, and soon reality, of a bank run will finally force Varoufakis and Tsipras to sit at the negotiating table with the understanding that not they but the Troika has all the leverage.
…click on the above link to read the rest of the article…
What Happens When Economists Talk Politics
What Happens When Economists Talk Politics
As the “Varoufakis Files” provide everyone interested in the Greek tragi-comedy with an additional million pages of intriguing fodder -we all really needed that added layer of murky conspiracy, re: the Watergate tapes-, a different question has been playing in my head. Again. That is: Why are economists discussing politics?
Why are the now 6 month long Greece vs Troika discussions being conducted by the people who conduct them? All parties involved are apparently free to send to the table whoever they want, and while that seems nice and democratic, it doesn’t necessarily make it the best possible idea. To, in our view, put it mildly.
For perspective, please allow me to go back to something I wrote 3,5 months ago, May 12 2015:
Greece Is Now Just A Political Issue
[..] the EU/troika anno 2010 decided to bail out German and French and Wall Street banks (I know there’s an overlap) – instead of restructuring the debts they incurred with insane bets on Greece and its EU membership- and put the costs squarely on the shoulders of the Greek population.
This, as I said many times before, was not an economic decision; it was always entirely political. It’s also, by the way, therefore a decision the ECB should have fiercely protested, since it’s independent and a-political and it can’t afford to be dragged into such situations. But the ECB didn’t protest. [..]
The troika wants the Syriza government to execute things that run counter to their election promises. No matter how many people point out the failures of austerity measures as they are currently being implemented in various countries, the troika insists on more austerity. Even as they know full well Syriza can’t give them that because of its mandate. Let alone its morals.
…click on the above link to read the rest of the article…
Someone Pull The Plug or This Will End in War
Someone Pull The Plug or This Will End in War
I was going to write up on the uselessness of Angela Merkel, given that she said on this week that “giving in to Greece could ‘blow apart’ the euro”, and it’s the 180º other way around; it’s the consistent refusal to allow any leniency towards the Greeks that is blowing the currency union to smithereens.
Merkel’s been such an abject failure, the fullblown lack of leadership, the addiction to her right wing backbenchers, no opinion that seems to be remotely her own. But I don’t think the topic by itself makes much sense anymore for an article. It’s high time to take a step back and oversee the entire failing euro and EU system.
Greece is stuck in Germany’s own internal squabbles, and that more than anything illustrates how broken the system is. It was never supposed to be like that. No European leader in their right mind would ever have signed up for that.
Reading up on daily events, and perhaps on the verge of an actual Greece deal, increasingly I’m thinking this has got to stop, guys, there is no basis for this. It makes no sense and it is no use. The mold is broken. The EU as a concept, as a model, has failed and is already a thing of the past.
It’s over. And anything that’s done from here on in will only serve to make things worse. We should learn to recognize such transitions, and act on them. Instead of clinging on to what we think might have been long after it no longer is.
…click on the above link to read the rest of the article…
With Yanis Gone, Now Troika Heads Must Roll
With Yanis Gone, Now Troika Heads Must Roll
Now that Yanis Varoufakis has resigned, in the kind of unique fashion and timing that shows us who the real men are, it’s time to clear the other side of the table as well. The new finance minister, Euclid Tsakalotos, should not have to face the same faces that led to Europe’s painful defeat in yesterday’s Greek referendum.
That would be an utter disgrace, and the EU would not survive it. So we now call for Juncker, Lagarde, Schäuble, Dijsselbloem, Draghi, Merkel and Schulz to move over.
It’s time for the Troika to seek out some real men too. It cannot be that the winner leaves and all the losers get to stay.
The attempts to suppress the IMF debt sustainability analysis were a shameful attempt to mislead the people of Greece, and of Europe as a whole. And don’t forget the US: Lagarde operates out of Washington.
It cannot be that after this mockery of democracy, these same people can just remain where they are.
It’s time for Europe to show the same democratic heart that Varoufakis has shown this morning. And if that doesn’t happen, all Europeans should make sure to leave the European Union as quickly as they can.
Because that would prove once and for all that the EU is no more than a cheap facade, a thin veil behind which something pretty awful tries to hide its ugly face.
Here is Yanis’ explanation behind his resignation:
Minister No More! (Yanis Varoufakis)
The referendum of 5th July will stay in history as a unique moment when a small European nation rose up against debt-bondage. Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25th June ultimatum comes with a large price tag attached. It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms.
…click on the above link to read the rest of the article…
The Biggest Issue Now Is “The Math”
The Biggest Issue Now Is “The Math”
Some quick pre-market observations from Bloomberg’s Richard Breslow
Just Don’t Nip Out for a Haircut
The Greek citizenry voted and the handicappers got it very wrong. The result of the vote was called much earlier than anyone expected. It wasn’t close.
Much was made last week of the abrogating of responsibility by PM Tsipras by allowing the referendum. How can mere citizens be trusted with understanding such difficult issues? Issues that the technocratic experts got nowhere with. No one expected the result. No one was set up for the result. Chaos will ensue. But here we are, admittedly early the next morning and the markets are remarkably calm
Merkel and Hollande will meet. The ECB will meet. The Greek cabinet will meet. Cool heads will prevail. The unpopular Varoufakis is not gloating, he is resigning. The base case remains that a deal will happen because it must happen. The Greek people may have gotten us closer to a deal than all of the summits ever could
EUR/USD has held inside last Monday’s range. Two Mondays in a row, the pair has traded below 1.1000 and quickly rejected those lower prices. The 100-DMA (1.1057) is looking more like a pivot than a line in the sand. USD/JPY has bent, but not broken; 122.00 continues to be an important level and is holding. Watch the JPY as a measure of safe-haven demand
I remain a USD bull and still think EUR/USD will go lower, but its resilience in light of all the news is impressive.
Bund futures are higher, but holding well below the 55-DMA (153.61). U.S. 10-yr futures are holding below the important 127-00 level. Watch 126-16 as interesting support. Below there we are back into familiar territory
…click on the above link to read the rest of the article…
Troika Maneuvering to Rig Greek Referendum
Troika Maneuvering to Rig Greek Referendum
In a TV interview, Mr. Varoufakis said very clearly, “This is a very dark moment for Europe. They have closed our banks for the sole purpose of blackmailing what? Getting a ‘Yes’ vote on a non-sustainable solution that would be bad for Europe.”
I must admit, most politicians do not come even close to the truth, but Varoufakis seems to be the ONLY finance minister who understands the demands of the Troika are not plausible for any nation. Merkel has tried to skirt any responsibility by saying this is a Troika decision. One must seriously ask, are those in the Troika just totally brain-dead? Their blackmail and economic war against Greece will be evidence to ensure that Britain leaves the EU. The ONLY thing that saved Britain was Maggie Thatcher’s effort to keep Britain out of the euro for she knew far too well where it would lead. The view in Poland is also now anti-euro. Any Brit who now does not vote to get out of the EU and the grips of the Troika is ignorant of world events and the political power play going on.
The EU leaders will not travel to Athens until after the referendum. Suddenly they realize that their powers are so off the wall that they dare not expose their own schemes. Hollande of France wants a resolution for he fears a Frexit is gaining momentum. Obama wants a resolution, fearing Greece will be forced into the arms of Russia, breaking down NATO.
Yet through all of this, there is no hope because those in power are clueless. The Troika refuses to solve the euro crisis because they only see their own self-interest and assume they can force their will upon all the people.
…click on the above link to read the rest of the article…
I Fear The Greeks, Even When They Bring Gifts
I Fear The Greeks, Even When They Bring Gifts
Just another normal morning at the Automatic Earth. Shaking off the local drink – when in Rome.. – and perusing a thousand views and pieces, many on the inevitable topic of ‘Da Referendum’. And I got to say, I can’t even tell whether it’s just me, but there is this huge divide between what a simple vote can and should be, and how it is perceived and presented.
And no, it’s not my ouzo-riddled stupor, it’s what common sense I have left that has me wondering what causes the divide. Case in point, Bloomberg has a piece called “Tsipras Asking Grandma to Figure Out If Greek Debt Deal Is Fair”. The implied connotation being that asking grandma about anything other than knitting patterns and souvlaki recipes is asking for trouble. What does she know? Politics should be decided by politicians. Well, and bankers of course. And Bloomberg editors. Did I mention economists?
Tsipras Asking Grandma to Figure Out If Greek Debt Deal Is Fair
Economists with PhDs and hedge-fund traders can barely stay on top of the vagaries of Greece’s spiraling debt crisis. Now, try getting grandma to vote on it. That’s what Prime Minister Alexis Tsipras is doing by calling a snap referendum for July 5 on the latest bailout package from creditors.
The 68-word ballot question namechecks four international institutions and asks voters for their opinion on two highly technical documents that weren’t made public before the referendum call and were only translated into Greek on Saturday. Worse, they may no longer be on the table. IMF chief Christine Lagarde told the BBC late on Saturday that “legally speaking, the referendum will relate to proposals and arrangements which are no longer valid.”
…click on the above link to read the rest of the article…
Troika Exploits Greek Bank Run As Varoufakis Slams “Pernicious” Banking Sector “Leaks”
Troika Exploits Greek Bank Run As Varoufakis Slams “Pernicious” Banking Sector “Leaks”
As expected, no progress was made between Greek FinMin Yanis Varoufakis and EU finance ministers at Thursday’s Eurogroup meeting in Luxembourg. Varoufakiswarned his counterparts that Europe was very close to “accepting” a Greek “accident”, something the FinMin said EU officials have a “moral duty” to avoid before “uncontrollable events” occur. Varoufakis also implicitly accused the troika of attempting to incite a bank run.
While it wasn’t entirely clear what Varoufakis meant by “uncontrollable events,” it seems likely he’s referencing the fact that while politicians may be able to push back their own self-imposed deadlines as many times as they wish even to the point of rendering the entire effort “ridiculous”, — to use German Vice Chancellor and Economy Minister Sigmar Gabriel’s words — the reality on the ground in Greece is that the economy is collapsing on itself and deposit flight is now running above at €750 million euros each day. Put simply: an acute crisis of confidence among the Greek populace now risks plunging the country into a state of emergency.
In an attempt to address the quickly deteriorating situation, Brussels looks set to impose capital controls as early as this weekend and has scheduled an emergency summit on Monday. EU finance ministers will reportedly hold another meeting ahead of the summit. WSJ has more:
Eurozone leaders will try to clinch a deal on Greece’s flailing bailout at a hastily called crisis summit Monday, after finance ministers failed again to bridge the gap between Athens and its lenders.
The summit—eight days before Greece’s eurozone rescue runs out—will be one of the last chances to avert the specter of further economic meltdown for Greece and a messy exit from the eurozone.
After five months of fraught negotiations, “it is time to urgently discuss the situation of Greece at the highest political level,” said Donald Tusk, who presides over meetings of European leaders.
…click on the above link to read the rest of the article…
Greece Proposes To Become A Tax-Collecting Police State: Will “Wire” Tourists And Unleash Them As “Tax Inspectors”
Greece Proposes To Become A Tax-Collecting Police State: Will “Wire” Tourists And Unleash Them As “Tax Inspectors”
There were three notable items in the follow up, 11-page letter sent by Yanis Varoufakis earlier today to the Eurogroup, and its president “Jeroen.”
But first, by way of background, here is what happened as recapped by Reuters.
Earlier today Greece sent an augmented list of proposed reforms on Friday (see the 11 page letter attached below) but EU officials said several more steps were required before any release of aid funds. In the Yanis Varoufakis outlined plans to fight tax evasion, activate a “fiscal council” to generate budget savings and update licensing of gaming and lotteries to boost state revenues. All noble ideas, and all set to crash and burn since it has all been tried and failed in the country in which paying taxes is considered theft (by the government).
However, the expanded list of reforms arrived too late for deputy finance ministers and European Commission experts who met on Thursday to scrutinise it before a regular meeting of finance ministers of the currency area next Monday. “Whatever proposals emerge (from Varoufakis), they can’t be seen in isolation,” said a senior EU official, who declined to be named due to the sensitive nature of the talks. “They have to been seen in the overall context of all policy measures … There is no connection with the disbursements.”
One key condition for Greece to receive any more euro zone money is for Athens to reach an agreement with its three international creditors – the euro zone, the ECB and the IMF – on the implementation of reforms agreed by the previous government. Such talks have not even begun yet.
…click on the above link to read the rest of the article…
Greek and German finance ministers clash at debt relief talks
No agreement to disagree on Athens’ debts as Varoufakis brings up spectre of Greek nazism and Schäuble offers 500 German tax collectors
Greece’s radical Syriza government remained locked in a bitter standoff with its German paymasters, as finance minister Yanis Varoufakis issued a stark warning of the rise of nazism in his country if the eurozone fails to heed the democratic voice of Greek voters.
As Varoufakis completed the last leg of a whistle-stop round-Europe tour to seek support for Syriza’s plans to halt austerity and renegotiate the country’s debts, he told a tetchy press conference on Thursday in Berlin that Greece had a proud record in fighting Nazis, but ignoring the clear message from Greek electors could feed far-right forces.
“No one understands better than the people of this land how a severely depressed economy, combined with a ritual national humiliation and unending hopelessness, can hatch the serpent’s egg within its society. When I return home tonight, I will find a country where the third-largest party is not a neo-nazi party, but a nazi party,” he said, referring to the far-right Golden Dawn. “We need the people of Germany on our side.”
…click on the above link to read the rest of the article…
