All this Germany bashing and his constant condescending remarks remove a tad of his credibility, which is unfortunate when making such audacious claims. Is there anyone here on HN who has further reading advice on these claims (E.g that the € is malice by design)?
>All this Germany bashing and his constant condescending remarks remove a tad of his credibility
I think it’s the exact opposite. He’s speaking from the experience of being in the Eurogroup and negotiating directly with Germany. Anything he has to say on the matter is far more credible than any of the pro-Euro claims made by people who have no skin in the game.
>Is there anyone here on HN who has further reading advice on these claims (E.g that the € is malice by design)?
It’s a bit dated now, but pretty much anything Keynes wrote about trade balances under the Bretton Woods system corroborate what Varoufakis says. He really presents a pretty standard Keynesian perspective on monetary unions, so you won’t have to look far.
Not direct malice, but naive over-optimism gone a little too far, perhaps. Krugman has written and spoken a lot about this in a way that's accessible to the interested layman. Search for "krugman optimal currency area", or see https://krugman.blogs.nytimes.com/2012/06/24/revenge-of-the-....
The point is that there are definitely economic benefits to the simplicity and low-overhead of currency union among equal and near-equal partners, but when economic conditions vary greatly between regions (or more correctly, when economic conditions change differently over time in various regions), there can be a greater benefit to having different currencies that can trade at different levels against each other to assist in the proper valuation of resources in either region.
There's no 100% right answer, and national boundaries are not necessarily the "optimal" borders for currency areas, but obviously there are practical issues to weigh as well.
So I think it's obviously wrong to say "the Euro is bad". It's a great thing for France and Germany and Belgium and the Netherlands and several other countries in the Eurozone. But expanding the Euro to Greece maybe was a bit too far.
That said, the EU could do a lot via policy to make up for the problems caused by the imbalance of economic conditions between Greece and Germany, but ... they aren't doing nearly enough.
He’s a pop icon more than an economist these days. He understands his market/base and pitches to them. Framed as an entertainer, he does well.
The Euro’s design balances Germany’s paranoia surrounding inflation with the South’s preference for rebalancing its economies though devaluation. With the benefit of hindsight, a terrific compromise wasn’t found. Obvious fixes, which include a Eurozone FDIC analogue and a European fiscal authority for basic social services like unemployment insurance and housing subsidies, are opposed by pretty much every country’s politicians. (The rich because they don’t want to subsidise the poor, but do want to keep selling to them on credit. The poor because they don’t want to lose their jobs to a unified entity in Brussels.)
It´s complicated. To believe that the Euro is malice by design you would need to believe that current Macro Economics - which most economists are happy to agree is deeply flawed - is not only deeply flawed but is deliberately flawed and promulagated by a bunch of people who know it´s flawed and actually do understand the system well enough to do so maliciously.
To which the only response is seriously, have you met these people?!
However, knowing that it is deeply flawed, and knowing why, does reveal a bunch of economists pointing out it wasn´t a great idea before it happened, but not as it happens for quite the right reasons.
It can be observed, there are so many competing economics tribes at the moment, one of them is always bound to be right on something.
The reason it was a bad idea, is that economics doesn´t think very hard if at all about what the implications are of the banking system happily expanding the monetary system for each country at different rates, and it really didn´t think about what the impact of loan securitisation would be on things like inter-bank liquidity flows.
I did not detect any bashing in the video, except toward the whole Euro. On the contrary, I found he was trying very hard not to point fingers at anybody. Also, he asked many times the audience to challenge future panelists (ex. Steve Bannon) on their ideas, and he did so in a very respectful manner. English is not my first language, so I may have missed some things. Could you expand on what part you think he was bashing on Germany or being condescending ?
From a Greek perspective, he's not wrong. Germany forced Greece's hand and made them take out a loans they could not pay rather then let them default on their loans as many bankrupt countries are wont to do.
Now, sure, Germany had the upper hand knowing that While Syriza had passed a referendum to default that they did not have the heart for it and the Germans called their bluff. In retrospect, Greece would have probably been better off than they are now. While different, it's not all that different from the tactics China is taking in South Asia and Africa when they provide loans they know can't be repaid by the counties they lend them to (often secured by natural resources or infrastructure).
Well, Germany used the Euro and their influence on the ECB as a strategic weapon to boost their own economy and exports (as opposed to treating the Eurozone as a union).
They also blatantly disregarded EU's and their own rules (e.g. regarding deficits) when it was for their own benefit.
There are people who, while adults, still believe in unicorns, and tooth fairies, and big nation states with huge national industries and interests looking for the good of the union and the common market, and so on. There also are pragmatists who understand politics.
If anything, the problem with Varoofakis, was that he was more of the latter.
Can you specify where you hear him be condescending? Also no bashing of Germany in there, unless you see describing specific mechanisms by which german banks profited from the Greeks, as bashing Germany.
The Euro and the design of the European Union economic system is turning into a prime example of groupthink and denial. There is a very good book on the subject that goes through it all from the start: Eurozone Dystopia https://www.amazon.co.uk/Eurozone-Dystopia-Groupthink-Denial...
Varoufakis has found his attention niche in bashing the euro and became popular in certain circles for this. That the euro is malicious by design is obviously ridiculous.
Now here's one fact that nationalists don't like: the euro has a number of aims, including its symbolism of a united Europe, to stabilise the many small currencies and prevent speculation harming it [1], etc. But one of its key ideas is of course also to drive the EU countries closer. All of the EU as we know it today stems from two premises: (1) we are stronger/better off together and (2) we have to bring a.of Europe together and connect it to avoid that it may ever again become a battlefield.
This second lesson, stemming from hundreds of European wars and the nightmares of WW 1 & 2 ist of course fundamentally contrary to the idea of national autonomy. Germany is not going to attack France because both sides would essentially be destroyed and unable to function independently. The same is true for all other EU countries (including the UK, which is why Brexit is such a nightmare for all sides).
Why was the euro so harmful for Greece (Varoufakis' home country)? Two reasons, (1) because it wasn't finished, politicians lost the political will to dare to finalise the project (banking union, eurozone budget, ...) as it meant to give up more power and control to the EU. (2) Greece LIED and produced false national statistics for decades. They didn't actually fulfil the minimum criteria to join the euro. Successive governments falsified the numbers - and when it all came tumbling down (when one government was finally honest!) the Greek citizens paid the price. Greek politicians, over decades, had found it was easier to lie and produced false numbers than actually address the multitude of structural problems Greece faced. The rest of the EU then bailed it out but as a condition for this demanded rather painful reforms. Those were probably too harsh/sudden in many ways, but the real blame should still be attributed to the ones who caused the issue to begin with: the Greek governments that lived off unsustainable debt and got elected for promising more unsustainable spending - and then hid it all with invented numbers.
[+] [-] l4u532|7 years ago|reply
[+] [-] MsMowz|7 years ago|reply
I think it’s the exact opposite. He’s speaking from the experience of being in the Eurogroup and negotiating directly with Germany. Anything he has to say on the matter is far more credible than any of the pro-Euro claims made by people who have no skin in the game.
>Is there anyone here on HN who has further reading advice on these claims (E.g that the € is malice by design)?
It’s a bit dated now, but pretty much anything Keynes wrote about trade balances under the Bretton Woods system corroborate what Varoufakis says. He really presents a pretty standard Keynesian perspective on monetary unions, so you won’t have to look far.
[+] [-] skywhopper|7 years ago|reply
The point is that there are definitely economic benefits to the simplicity and low-overhead of currency union among equal and near-equal partners, but when economic conditions vary greatly between regions (or more correctly, when economic conditions change differently over time in various regions), there can be a greater benefit to having different currencies that can trade at different levels against each other to assist in the proper valuation of resources in either region.
There's no 100% right answer, and national boundaries are not necessarily the "optimal" borders for currency areas, but obviously there are practical issues to weigh as well.
So I think it's obviously wrong to say "the Euro is bad". It's a great thing for France and Germany and Belgium and the Netherlands and several other countries in the Eurozone. But expanding the Euro to Greece maybe was a bit too far.
That said, the EU could do a lot via policy to make up for the problems caused by the imbalance of economic conditions between Greece and Germany, but ... they aren't doing nearly enough.
[+] [-] JumpCrisscross|7 years ago|reply
The Euro’s design balances Germany’s paranoia surrounding inflation with the South’s preference for rebalancing its economies though devaluation. With the benefit of hindsight, a terrific compromise wasn’t found. Obvious fixes, which include a Eurozone FDIC analogue and a European fiscal authority for basic social services like unemployment insurance and housing subsidies, are opposed by pretty much every country’s politicians. (The rich because they don’t want to subsidise the poor, but do want to keep selling to them on credit. The poor because they don’t want to lose their jobs to a unified entity in Brussels.)
[+] [-] neffy|7 years ago|reply
To which the only response is seriously, have you met these people?!
However, knowing that it is deeply flawed, and knowing why, does reveal a bunch of economists pointing out it wasn´t a great idea before it happened, but not as it happens for quite the right reasons.
It can be observed, there are so many competing economics tribes at the moment, one of them is always bound to be right on something.
The reason it was a bad idea, is that economics doesn´t think very hard if at all about what the implications are of the banking system happily expanding the monetary system for each country at different rates, and it really didn´t think about what the impact of loan securitisation would be on things like inter-bank liquidity flows.
And here we are.
[+] [-] magic-chicken|7 years ago|reply
[+] [-] mc32|7 years ago|reply
Now, sure, Germany had the upper hand knowing that While Syriza had passed a referendum to default that they did not have the heart for it and the Germans called their bluff. In retrospect, Greece would have probably been better off than they are now. While different, it's not all that different from the tactics China is taking in South Asia and Africa when they provide loans they know can't be repaid by the counties they lend them to (often secured by natural resources or infrastructure).
[+] [-] coldtea|7 years ago|reply
They also blatantly disregarded EU's and their own rules (e.g. regarding deficits) when it was for their own benefit.
There are people who, while adults, still believe in unicorns, and tooth fairies, and big nation states with huge national industries and interests looking for the good of the union and the common market, and so on. There also are pragmatists who understand politics.
If anything, the problem with Varoofakis, was that he was more of the latter.
[+] [-] polotics|7 years ago|reply
[+] [-] neilwilson|7 years ago|reply
[+] [-] pergadad|7 years ago|reply
Now here's one fact that nationalists don't like: the euro has a number of aims, including its symbolism of a united Europe, to stabilise the many small currencies and prevent speculation harming it [1], etc. But one of its key ideas is of course also to drive the EU countries closer. All of the EU as we know it today stems from two premises: (1) we are stronger/better off together and (2) we have to bring a.of Europe together and connect it to avoid that it may ever again become a battlefield.
This second lesson, stemming from hundreds of European wars and the nightmares of WW 1 & 2 ist of course fundamentally contrary to the idea of national autonomy. Germany is not going to attack France because both sides would essentially be destroyed and unable to function independently. The same is true for all other EU countries (including the UK, which is why Brexit is such a nightmare for all sides).
Why was the euro so harmful for Greece (Varoufakis' home country)? Two reasons, (1) because it wasn't finished, politicians lost the political will to dare to finalise the project (banking union, eurozone budget, ...) as it meant to give up more power and control to the EU. (2) Greece LIED and produced false national statistics for decades. They didn't actually fulfil the minimum criteria to join the euro. Successive governments falsified the numbers - and when it all came tumbling down (when one government was finally honest!) the Greek citizens paid the price. Greek politicians, over decades, had found it was easier to lie and produced false numbers than actually address the multitude of structural problems Greece faced. The rest of the EU then bailed it out but as a condition for this demanded rather painful reforms. Those were probably too harsh/sudden in many ways, but the real blame should still be attributed to the ones who caused the issue to begin with: the Greek governments that lived off unsustainable debt and got elected for promising more unsustainable spending - and then hid it all with invented numbers.
[1] e.g. see https://www.investopedia.com/ask/answers/08/george-soros-ban...
[+] [-] unknown|7 years ago|reply
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