As 2011 is drawing to a close, with the ECB only having managed to paper over the deepening cracks of the eurozone, it is time to allow ourselves to abandon the barricades for ten days or so. If the soldiers in the Great War’s killing fields could maintain a humane ceasefire, tend to the wounded, and bury their dead, we too can afford to put a cap for a while on our hectic rythm. Anyhow, the Crisis will be back with hideous vengeance soon after the New Year. Ending 2011 with a fable for our times
Greece’s foreign debt was 399 BN EUR by mid-2011. It was composed of 174 BN EUR in the central government; 208 BN EUR in the banking sector and 17 BN EUR in other sectors. Many people ask these days how foreigners could lend so much money to Greece. Let me tell a tale how this could have happened. Any similarities with actual persons and/or banks are strictly coincidental. Imagine that there are 3 major banks in Europe: the Merkel-Bank AG; the Sarkozy-Bank S. How Greece could build up so much foreign debt - a purely fictional short story
In this remarkable short story, Klaus Kastner (Kleingut) offers a fictionalised account of how Europe’s banks channelled billions to their Greek counter parties. It makes for excellent cross reading with my recent take on the Ant and the Grasshopper fable. [Click here for Klaus’ original post.) The race to lend Greece: A short story by Klaus Kastner
Interviewed on RT’s Boom-Bust show on themes already covered in posts here and here. In his latest Financial Times column Wolfgang Münchau concurs with much of what I have written here (on the Greek social economy’s deep coma) and here (on the reasons why investors are piling in) but goes on to suggest that Greece should seriously consider exiting the Eurozone. In today’s post I offer an evaluation of his argument. In brief, I argue that, while Münchau’s assessment of the situation on the ground is spot on, the use of the ‘nuclear option’ (i.e. threatening to exit the Eurozone) is neither desirable nor necessary as a means of forcing Europe to change its ways. Continue reading
"The book is one of those exceedingly rare publications of which one can say they are urgent, timely and absolutely necessary." - Terry Eagleton "Yanis is one of the best, brightest and most innovative economists on the planet" - Steve Keen, author of Debunking Economics "In the most comprehensive guide to the contemporary economic crisis yet written, Yanis Varoufakis traces out the path from post-war US economic supremacy to the current predicament. The Global Minotaur: America, The True Origins of the Financial Crisis and the Future of the World Economy (Economic Controversies) (9781780320144): Yanis Varoufakis
The Global Minotaur | Zed Books In this remarkable and provocative book, Yanis Varoufakis explodes the myth that financialisation, ineffectual regulation of banks, greed and globalisation were the root causes of the global economic crisis. Rather, they are symptoms of a much deeper malaise which can be traced all the way back to the Great Crash of 1929, then on through to the 1970s: the time when a 'Global Minotaur' was born. Just as the Athenians maintained a steady flow of tributes to the Cretan beast, so Europe and the rest of the world began sending incredible amounts of capital to America and Wall Street. Thus, the Global Minotaur became the 'engine' that pulled the world economy from the early 1980s through to the financial collapse of 2008. Today's deepening crisis in Europe is just one of the inevitable symptoms of the weakening Minotaur; of a global 'system' which is now as unsustainable as it is imbalanced.
Y. Varoufakis posts on The Global Minotaur