(Varoufakis:) Germany won’t spare Greek pain – it has an interest in breaking us

[Ghost Dog]

Yanis Varoufakis, former Greek finance minister
Friday 10 July 2015 19.25 BST
http://www.theguardian.com/commentisfree/2015/jul/10/germany-greek-pain-debt-relief-grexit

Greece’s financial drama has dominated the headlines for five years for one reason: the stubborn refusal of our creditors to offer essential debt relief. Why, against common sense, against the IMF’s verdict and against the everyday practices of bankers facing stressed debtors, do they resist a debt restructure? The answer cannot be found in economics because it resides deep in Europe’s labyrinthine politics...

... The euro is a hybrid of a fixed exchange-rate regime, like the 1980s ERM, or the 1930s gold standard, and a state currency. The former relies on the fear of expulsion to hold together, while state money involves mechanisms for recycling surpluses between member states (for instance, a federal budget, common bonds). The eurozone falls between these stools – it is more than an exchange-rate regime and less than a state.

And there’s the rub. After the crisis of 2008/9, Europe didn’t know how to respond. Should it prepare the ground for at least one expulsion (that is, Grexit) to strengthen discipline? Or move to a federation? So far it has done neither, its existentialist angst forever rising. Schäuble is convinced that as things stand, he needs a Grexit to clear the air, one way or another. Suddenly, a permanently unsustainable Greek public debt, without which the risk of Grexit would fade, has acquired a new usefulness for Schauble.

What do I mean by that? Based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone.

________________
Comment ( sacco ):

"Based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone."

That was my conclusion in February when you were elected, Yanis. That, and to assign the maximum possible blame to SYRIZA and avoid the IMF and most powerful EZ leaders accepting any.

Merkel's (and Schäuble's) role in this fiasco is that, even as the most powerful leader in the Eurozone, she has consistently avoided presenting any hint of the realities of life in a curreny union (i.e. transfers or surplus recycling) to her electorate (even though the success of the Euro has been vastly to Germany's profit), seemingly for fear of losing ground in the opinion polls and worry about how any hint of realism might be exploited by AfD. (German friends tell me that this is rather typical of her lack of courage and initiative on difficult matters — that she usually prefers to wait until somebody else appears who can catch the blame; David Cameron has certainly been a sucker for this punishment in the past.)

Of course, though, the longer she persists and the more acute the Greek crisis becomes, the more costly any eventual admission of the facts of life might be: through her persistent avoidance of actually doing anything to manage the issue she has allowed her self to be pushed into a corner from which there is no easy or cheap escape. Thus Greece must now be sacrificed in an orgy of blame in order that none of the actors with any power to alter the course of events need accept any fault: "we were always right and all the blame for everything lies with the profligate and unreasonable Greeks." Of course, the failure of the overwhelmingly powerful parties to guide the situation to a less completely catastrophic resolution (and the horribly expensive drag it continues to impose on European economies) gives the lie to this position but, sadly, it can still be retailed in the superficial politics of the national media, especially because the facts of how the Greek economy was 'managed', particularly during 2004–09, provide the kernel of truth to lend credibility to the misleading, facile, and short-sighted narrative assembled around it. Horribly short-sighted —to allow narratives of national virtue, vice and morality to develop— given the well-known historical trope that whenever currency union has been tried without mechanisms for transfers of surplus recycling it has provoked resentment and the rise of far-right nationalist populism in both the stronger and the weaker regions! ...

[PoliticAverse]

1. "Greeks, rightly, shiver at the thought of amputation from monetary union" - and there it is,

the problem. They're unwilling to leave the Euro and so didn't put any effort into making that a possibility.

Unwilling to take responsibility for running their own currency, they had to accept whatever was being
offered to them.

So in the end Syriza brought yet another government to Greece built on a platform of lies by pretending
to people that austerity could be eliminated without abandoning the Euro.

============================================================
"Lead the Greek people out of the eurozone"... "get back your democracy"...
http://www.democraticunderground.com/1017277690

[Sunk in Tupelo]

2. It's terrible what the Greek people are going through.

And not deserved in my opinion. Cronyism in the former Greek governments and insider dealing with EU insiders is what brought Greece so much pain. Germany seems to have benefitted greatly. Personally I don't think it is correct to try to make the beautiful Greek culture into the homogenous work driven culture that is Germany. They are two totally different lifestyles. It's sad that human value is measured in dollars instead of the character of the people.