A response to Yanis Varoufakis: Why vote YES at the Greferendum

on sky news
Yanis Varoufakis posted on his blog today his reasons for supporting the NO vote at this ‘referendum’. I offered my view on Sky News in London this morning, click below for video:
Interview at Sky News
Here is my response, after each of Yanis’ points:
Varoufakis: Negotiations have stalled because Greece’s creditors (a) refused to reduce our un-payable public debt and (b) insisted that it should be repaid ‘parametrically’ by the weakest members of our society, their children and their grandchildren

iGlinavos: The IMF that is the target of Tsipras ire, is the only section of the Troika that consistently argued in favour of debt-reduction. It is Syriza that chose to offer an adjustment package that destroys any hope of recovery, a package moreover that needs such steep adjustment due to the 6 months of neglect of the real economy by Prof. Varoufakis.

Varoufakis: The IMF, the United States’ government, many other governments around the globe, and most independent economists believe — along with us — that the debt must be restructured.

iGlinavos: Yes, the debt needs to be restructured, but defaulting and bankrupting the country seems unrelated to achieving that goal.

Varoufakis: The Eurogroup had previously (November 2012) conceded that the debt ought to be restructured but is refusing to commit to a debt restructure.

iGlinavos: The reason for the refusal is the total lack of trust due to Varoufakis and Tsipras deceitful and incompetent negotiating technique. A sensible set of measures implementing the 20 February agreement would have avoided the current liquidity problem and banking collapse, plus it would have allowed by now a structured discussion on debt relief.

Varoufakis: Since the announcement of the referendum, official Europe has sent signals that they are ready to discuss debt restructuring. These signals show that official Europe too would vote NO on its own ‘final’ offer.

iGlinavos: Continuing to call the set of documents that form the basis of this farcical referendum ‘final offer’ is deceitful and blatantly wrong. It was a negotiation in process. The referendum itself prevents a proper discussion on debt relief.

Varoufakis: Greece will stay in the euro.  Deposits in Greece’s banks are safe.  Creditors have chosen the strategy of blackmail based on bank closures. The current impasse is due to this choice by the creditors and not by the Greek government discontinuing the negotiations or any Greek thoughts of Grexit and devaluation. Greece’s place in the Eurozone and in the European Union is non-negotiable.

iGlinavos: Prof. Varoufakis is lying to you. Greece will not stay in the Euro if the vote is NO. The banking collapse that will follow will necessitate the issuance of IOUs that will fundamentally undermine the country’s position in the Euro. The bank closures were the fault of Mr Tsipras who caused a bank run with his referendum announcement on Friday evening. For Varoufakis, the country’s place in the EU is non-negotiable, yet leaving the EU is the only way to leave the Euro which Varoufakis himself will need to ask for in order to recapitalise the banking system.

Varoufakis: The future demands a proud Greece within the Eurozone and at the heart of Europe. This future demands that Greeks say a big NO on Sunday, that we stay in the Euro Area, and that, with the power vested upon us by that NO, we renegotiate Greece’s public debt as well as the distribution of burdens between the haves and the have nots.

iGlinavos: Voting NO ensures that the banks will not reopen with the Euro as their currency. Ensures that wages and pensions will be paid with IOUs or useless Drachmas. Voting NO will risk Greece leaving the Union. Voting NO risks everything every Greek since 1974 has worked for.

DO NOT THROW AWAY THE FUTURE OF OUR CHILDREN VOTE YES ON SUNDAY.

NAI

@iGlinavos

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12 thoughts on “A response to Yanis Varoufakis: Why vote YES at the Greferendum

  1. “The reason for the refusal is the total lack of trust due to Varoufakis and Tsipras deceitful and incompetent negotiating technique. A sensible set of measures implementing the 20 February agreement would have avoided the current liquidity problem and banking collapse, plus it would have allowed by now a structured discussion on debt relief.”

    Look, this is about regime change, the other side is therefore not negotiating in good faith. They do not want to help Greece. Otherwise the troika would have snapped up the offer of Tsipras which he tabled yesterday, for example.

    As far as a “structured discussion” about debt relief is concerned, there will not be a discussion with the current Greek government. That is crystal clear. The Germans are set against it.

    So the vote should be “NO” and if Greece want a restructuring of debt it has to force the issue by defaulting, which it is doing now.

    “Prof. Varoufakis is lying to you. Greece will not stay in the Euro if the vote is NO. The banking collapse that will follow will necessitate the issuance of IOUs that will fundamentally undermine the country’s position in the Euro. ”

    The Greek banks do not rely on the ECB any more for further funding. Capital controls now make further ELA unnecessary. So the Euro will remain the currency of Greece. A supplementary currency, issued temporarily, will stabilize and strengthen the Greek economy and cut it loose from the reins of the troika. Once the economy is stabilized, it can do away with a temporary currency a few years down the line.

    Do not forget that an exit from the Euro means that Germans will have to explain to their tax-payers why they have to fund an 80bn loss for Greece (German part of EU financing), when a debt relief program now would have cost them perhaps 20bn – 30bn.

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    • Chris says:

      Prolonged capital controls have the potential to completely tank the economy. It doesn’t have to happen, but it is a serious risk.

      But besides that Syrzia really messed up the negotiations. They had the opportunity to change the discourse earlier this year and win allies and what do they instead? They unite the rest of the eurozone with their intransigence and admittedly special negotiation tactics. Debt relief was always on the table, just not in the big, garish way they wanted. They should have gone for lower interest rates and try to push back the repayment dates. That might just have worked with especially the debt wary German public, would have prevented the other European states from loosing face and would have been a de-facto debt relief. Yeah, sure, Syrzia wouldn’t have been able to score a lot of political points, but come on, you gotta jump over your own shadow once in a while.

      You still owe that money, even if you default. That just means that you can’t repay it. A full-on and messy Greek default would mean a prolonged period of legal uncertainty, just as it happened in Argentina. In the worst case, and I am absolutely not sure it would pan out that way, the creditors might be able to get their hands on European money earmarked for Greece.

      However, I agree a temporary currency is one way to go about this in the short run. But you know what? You just made the rich with foreign bank accounts richer, and everybody who depends on welfare poorer. Quite ironic for a socialist government, isn’t it?

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      • “You just made the rich with foreign bank accounts richer, and everybody who depends on welfare poorer. Quite ironic for a socialist government, isn’t it?”

        A supplementary temporary currency does not mean it will be lower in value.than Euro. It could even be higher. So it could be advantageous to hold temporary currency rather than Euro.

        It is not that difficult to design a temporary currency like that.

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    • mikenetherlands says:

      Absolute nonsens. Kees Vendrik, chairman of our Court of Audit, told us in our newspapers 1 of june 2015 that the money we lend to Greece never returns. Nobody in Holland and Germany believes that Greece will pay its depts. And exactly that make the people so angry. And nobody had to vote, because the question had to be do you want to stay in the euro and have we sigh on the dots yes or not.

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  2. Bertie says:

    “The bank closures were the fault of Mr Tsipras who caused a bank run with his referendum announcement on Friday evening. ”
    Why did the ECB refused to raise the ELA on sunday, while it is its role to ensure the safety of the eurozone. And Greece is still in the Eurozone!

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    • Chris says:

      Because it is only allowed to lend to solvent banks and they are de-facto insolvent now that the Greek state has defaulted.

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    • Beka says:

      Easy answer: more than 2/3 of the Governing Council of the ECB voted for it. Why did more than 2/3 of member country governors think that this is the case? The bank run would have had destroyed the banks before the referendum. Even if the ECB would have not touched the ceiling Greek banks would be broken by now (now they will be broken after the referendum if YES or NO). ELA is just for solvent banks. If you are solvent usually you do not need ELA for a prolonged period of time. Besides, Greek banks solvency was depending on the solvency of the Greek state and according to the IMF debt is unsustainable. The funny thing is that if Tsipras gets debt relief the own banks will insolvent and Greek depositors will be bailed in. The socialist let the rich transfer their money abroad so that the small man will pay: http://www.zerohedge.com/news/2015-07-03/greek-banks-considering-30-haircut-deposits-over-%E2%82%AC8000-ft-reports

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    • mikenetherlands says:

      I can give you the answer. ELA help is nog legal onder EU law. Simply, the risk was getting tot high and the policans from our coutry’s were understading they had no mandate of their voters tot do so with their tax money. Nobody was blackmailing. They already sufferd polical damage because they werd to soft on Greece. In the public opion. That was the problemen. Read the Dutch newspapers andere you understand the problemen.

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  3. “The funny thing is that if Tsipras gets debt relief the own banks will insolvent and Greek depositors will be bailed in. The socialist let the rich transfer their money abroad so that the small man will pay:”

    Why would Greek banks be insolvent if the EU decides to write off 120bn of the 240bn debt Greece owes to them (and IMF)?

    Nothing to do with Greek banks at all.

    And as far as solvency status is concerned, if Greek banks’ solvency were ever an issue, Greece should copy Germany what they did when the commercial bank Hypo Real Estate went bust. They nationalised it, set up a Bad Bank with HRE’s bad debts, and privatized the rest.

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