Thursday, 30 July 2015

Varoufakis's 'treason',

Three years ago, some Eurozone finance minister prepared contingency plans for returning to their original currency if the Euro became untenable. Why should Varoufakis be charged with treason for his 'Chatham House rule' off the record, private, broadcast reference to a cloak and dagger 'Plan B' involving hacking the Greek Income Tax (which is an independent agency like Britain's) confidential database?

The obvious answer is that an action is treasonous if it is both illegal AND damaging to one's country. Varoufakis is being singled out because his actions as Finance Minister appear to have hurt his country while the evidence he has himself provided (albeit saying he would deny saying what he was being recorded as saying!) served only to burnish his own reputation, at least to his own mind, while damaging that of his country at a crucial time.

As a Member of Parliament he enjoys immunity unless this is cancelled by his colleagues. It seems unlikely that they will turn on one of their own but Greek politics, in these troubled times, has thrown up more than one surprise. Perhaps Varoufakis will be made the 'pharmakos'- the ritual scapegoat- whose ceremonial slaying purges a collective malaise. Pity and Terror will be awakened in our breast as this great Game Theoretician whose hamartia- or tragic flaw- was that he loved his country too well to play the Stoic hand he'd been dealt, is pilloried in the agora and pushed off the steep crag of the Acropolis.
I'm kidding.
Varoufakis is a character out of Aristophanes not Aeschylus.
He has turned Greece's tragedy into a farce about one peacocking ex-Professor.

He is accused of harming his country.
His reply amounts to the assertion that he hasn't harmed himself-  & that's all that matters.
Yet, he has done both.
This is his response to the treason charge. My comments are in bold.

The bizarre attempt to have me indicted me on… treason charges, allegedly for conspiring to push Greece out of the Eurozone, reflects something much broader. You were caught on tape saying you and Schnauble want Greece out of the Eurozone. You knew you were being recorded (thus negating any denial you might later issue) yet stated that you had set in motion a conspiracy, in a cloak and dagger fashion, with the aim of changing your country's currency from the Euro to the Drachma 'at the push of a button.' This is not just an allegation but an admission of the charge you speak of as being treasonous. What is this 'broader' thing you refer to which lies behind the charge to which your own recorded statement is an indefeasible admission of guilt?
It reflects a determined effort to de-legitimise our five-month long (25th January to 5thJuly 2015) negotiation with a troika incensed that we had the audacity to dispute the wisdom and efficacy of its failed program for Greece. Newsflash! Your negotiation with the troika was de-legitimised by a complete and utter defeat. What further 'determined effort' is needed? Only you are being singled out for a treason charge- no one else. But then this whole crisis has only been about you all along hasn't it? No one else matters. 
The aim of my self-styled persecutors is to characterise our defiant negotiating stance as an aberration, an error or, even better from the perspective of Greece’s troika-friendly oligarchic establishment, as a ‘crime’ against Greece’s national interest. You negotiated with the Troika in a self-aggrandizing manner, raising your own profile but costing your country dear. If you did indeed, as you proudly boast to Norman Lamont and some stock-broker type and his merchant banker pals, do something illegal (thus glamorous in your eyes, you over-grown adolescent) then you are guilty of treason. A 'defiant negotiating stance' is an aberration, it is an error, if its result is having to settle for worse terms than were originally offered and, what is more, having to do it in a meek and chastened spirit. Yet, that is what happened. Has Greece's 'national interest' been damaged? Yes, by you. Your actions increased avoidable pain for Greeks and damaged your country's reputation in the worst possible way at a crucial time. Suppose you were an unemployed fishermen newly elected to Parliament. Then you would have a viable excuse for what you did. You could say 'i didn't know, I didn't understand, I'm new at this. For God's sake do as you like with me- send me to jail, shoot me- but help my people!' and Greece's reputation would be restored. Bankers will say to themselves- 'well, the Greeks made a mistake. Now they have wised up. They are good people at bottom. We can work with them to build trust and understanding.'
The problem, Yannis, was that you presented yourself as a smart guy- a Professor of Economics. You blustered and bragged and turned everything into a personal duel in which you were bound to win because you were just so much cleverer than the Machine Politician mediocrities whom, in your imagination, you were crossing swords with.
My dastardly ‘crime’ was that, expressing the collective will of our government, I personified the sins of:
  • Facing down the Eurogroup’s leaders as an equal that has the right to say ‘NO’ and to present powerful analytical reasons for rebuffing the catastrophic illogicality of huge loans to an insolvent state in condirion of self-defeating austerity But you didn't actually face anyone down did you? You blustered and bragged and then quietly slunk off the stage while your Government had to make a humiliating climb-down after having inflicted a disastrous Bank closure, at peak Tourist season, on a country which just a few months previously had seemed to be turning the corner. In what way did you 'rebuff catastrophic illogicality'? You were asking for a loan while simultaneously demanding a write-off. Who does that? When asking for more money to tide you over you imply that you will later be able to repay everything. You don't say 'Bastard! Cancel my debt! Oh, and give me some more money while you're about it.'  Extend and Pretend means pretending you will pay everything back. What about your contention that 'austerity is self-defeating' when it comes to paying back debt? Is there any Economic rationale for it? No. Greece has a high propensity to import. GDP had to fall by 25 per cent just to get the trade balance out of the red. But a trade surplus is required to pay back loans. If the only way to do it is by shrinking Greek GDP till its people can't import anything for their own consumption and thus the whole of their net export earnings are available for servicing & retiring debt, then austerity isn't 'self-defeating' at all- from the point of view of its creditors. What is self defeating is to lend money to a country so it can reflate and run a bigger trade deficit which will mean having to borrow more down the line. You, Yannis, have fixated on the Debt to GDP ratio as if it means something in this context. It means nothing. Everything depends on the Trade Balance as your pal Krugman knows very well. Japan can have a very high Debt ratio but so long as most debt is held domestically and it has a structural trade surplus, there is no monetary crisis (though, no doubt there could be dynamic effects). Put it another way. Suppose I start snorting cocaine and quit my job. I'm a million in the hole. Can I get out of it? Sure. I can go into re-hab, get a sponsor, clean up my act, get a new job or start a business and then, on the basis of what I can afford to pay, do a deal with my creditors. What matters is that I'm currently spending less than I earn and there is evidence I really have turned over a new leaf. This is common sense. What would be crazy is my turning up at my Bank Manager's office shouting- 'You bastard! I leveraged myself to the hilt with you so as to buy nose candy. Now I've lost my job so I'm now ten times more leveraged than before! You must lend me a hundred thousand so I can show it as Income before blowing it on coke thus reducing my leveraging back to what it was!'
  • Demonstrating that one can be a committed Europeanist, strive to keep one’s nation in the Eurozone, and, at the very same time, reject Eurogroup policies which damage Europe, deconstruct the euro and, crucially, trap one’s country in austerity-driven debt-bondage So a committed Europeanist is someone who believes Europe should forgive one's debts while lending yet more money so as to increase imports and thus produce a trade deficit requiring yet more borrowing! In that case, Mugabe is a very good Europeanist! He will be happy to take European money on those terms! But, I forget, you were President of the 'Black Students' alliance' at the University of Essex in 1978. When people pointed out that you were self-evidently white, you said 'The Irish and the Greeks are the blacks of Europe'. Ireland has swallowed bitter medicine and mended its ways. Cyprus was always more responsible but unlucky in its exposure to Greece and its funny little ways. Ireland's credibility as a Knowledge Industry and Financial Services hub has been restored. Cyprus is no basket case. No one questions either countries 'Europeanist' credentials. They do question yours, Yannis because your policy to the Eurozone is one that has landed your country in the select company of Sudan, Somalia and Zimbabwe as an IMF defaulter. No doubt this makes you very proud. But is Mugabe really ready to admit you to the Greater Zimbawean Union? Will you finally get the last laugh on those who nagged at you saying 'Yannis, you simply are not Black. People in Essex may think Greece is located in sub-Saharan Africa and that you are exceptionally fair-skinned for a Greek, but people in Essex are notoriously stupid. What's next? Will you become President of the Chinese Students' Federation? Will you put on a wig and proclaim yourself Matriarch of the Lesbian Society? Come off it Yannis, paidi mou. Accept you are just another White nerd, not a heroic Zulu warrior.' 
  • Planning for contingencies that leading Eurogroup colleagues, and high ranking troika officials, were threatening me with in face-to-face discussions Plan by all means. But keep those plans secret because bragging about them can damage your country's National interest.
  • Unveiling how previous Greek governments turned crucial government departments, such as the General Secretariat of Public Revenues and the Hellenic Statistical Office, into departments effectively controlled by the troika and reliably pressed into the service of undermining the elected government. What unveiling are you talking about? Were Troika officials disguised as Zorba the Greek or Melina Mercouri? What did you do- snatch away their zithers or pull off their blonde wigs? Mina Andreeva says you are a liar. Why haven't you proved her wrong by now? With all this unveiling you have been doing, you must have a truckload full of documents evidencing illegal and ultra vires actions by the troika. Or, paidi mou, was all the unveiling just going on inside your head?
It is amply clear that the Greek government has a duty to recover national and democratic sovereignty over all departments of state, and in particular those of the Finance Ministry. If it does not, it will continue to forfeit the instruments of policy making that voters expect it to utilise in pursuit of the mandate they bestowed upon it. Okay! So your party is guilty of treason because it failed in its duty to 'recover national and democratic sovereignty'. But you were a Minister in your Party's Administration. You are equally guilty. You did not say 'I have resigned because I could not fulfill my constitutional duty to 'recover national sovereignty'. Let us look at what you did say-  Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted “partners”, for my … “absence” from its meetings; an idea that the prime minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the ministry of finance today.- in other words, instead of doing your duty, you ran away and sulked because those horrible usurping Nazis may have had a 'preference' for your 'absence' and you are such a sensitive little flower that you couldn't face them anymore.
In my ministerial endeavours, my team and I devised innovative methods for developing the Finance Ministry’s tools to deal efficiently with the troika-induced liquidity crunch while recouping executive powers previously usurped by the troika with the consent of previous governments. You did not devise anything. As you yourself said, in a taped conversation with Norman Black Wednesday Lamont you only spoke to 5 people whereas 1000 people would have had to be involved for such 'tools' to be effective. What was your Plan B? Wasn't it that, instead of pre-paying taxes in Euro, people could do so more cheaply through a secondary market in debt instruments? How would that have improved matters for any but the super-rich?
Instead of indicting, and persecuting, those who, to this day, function within the public sector as the troika’s minions and lieutenants (while receiving their substantial salaries from the long-suffering Greek taxpayers), politicians and parties whom the electorate condemned for their efforts to turn Greece into a protectorate are now persecuting me, aided and abetted by the oligarchs’ media. I wear their accusations as badges of honour.Because of you- who received a salary from the Greek tax payer- the Troika has imposed stiffer terms on Greece. Suppose you had resigned saying- 'Greece is a Protectorate. National Sovereignty has been lost. I can't, in good conscience, continue receiving a salary as a Govt. Minister because the Govt. has illegally abdicated National Sovereignty.' In that case, there might be some logic to what you are saying now. But, you yourself said that you only resigned because maybe some foreigner had some 'preference' for your 'absence' and one must always please the foreigner because that is the meaning of being a Greek Minister.
The proud and honest negotiation that the SYRIZA government conducted from the first day we were elected has already changed Europe’s public debates for the better. Yes. Everyone agrees you are a shithead. Even Krugman says he was taken aback by your incompetence. The debate about the democratic deficit afflicting the Eurozone is now unstoppable. Absolutely. We now understand that shitheads can get elected and hold high profile Ministerial jobs and it may take four or five months before such shitheads realize there is a 'preference' for their 'absence' and take the hint and resign. Democratic deficit arises from the informational asymmetry which permits shitheads to get elected and the lag before everyone realizes this is the case and expresses a 'preference' for their 'absence'. Alas, the troika’s domestic cheerleaders do not seem able to bear this historic success. What historic success are you talking about Yannis? You stood before the European leaders, like the orator Demosthenes delivering a Phillipic, but then put your hand down your pants and pulled out a fistful of shit which you claimed to be chocolate pudding. Worthless man, you ate that 'chocolate pudding' and became offended when others refused to share your tasty meal. No doubt, this was a historic success- for the cause of Coprophagy- but only in your own mind, paidi mou! Their efforts to criminalise it will crash of the same shoals that wrecked their blatant propaganda campaign against the ‘No’ vote in the 5th July referendum: the great majority of the fearless Greek people. But, Yannis you say that Tsipras was looking for a 'Yes' vote. Also, if Greeks are so fearless why did your Govt. kakk itself and climb down so ignominiously? You kakk yourself because you like eating your own shit. But then you aren't really a Game Theorist at all- just an academic engaging in pointless methodenstreit with no real world application. Had you not been worthless you could have taken power back from the Troika by showing you could do a better job. Even if you are too stupid to do auction design in the way that Ken Binmore did to get 10 billion for the Treasury on the 3G auction, still you could have found good auction design people. Instead of 50 billion from Privatization you could have shown how double that was feasible. Instead of wasting your time trying to hack your own Govt. database for a counter-productive Plan B, you could have at least pretended to have commissioned genuinely path breaking work in combining I.T solutions with mechanism design. You, like Kaushik Basu- a far more eminent man- illustrate the folly of hiring Academic Game Theorists for roles which require some basic political savvy or common sense.
As for treason, that charge fails because, coprophagous clown, you lack mental competence. The truth is, if you ever actually spoke to that childhood chum of yours, the I.T Prof from Columbia, you'd have known that a laptop plugged into the Tax database couldn't bring back the drachma 'at the push of a button'. It would take years of reprogramming mainframes in COBOL to achieve that. 

This is Yves Smith, from Naked Capitalism, talking to Pando-


Q: One of the core intractable problems you have been beating the drum on lately is essentially this: No matter what Greece does, they’re screwed. Austerity is destroying Greece, but a Grexit would be far worse, utterly catastrophic. Why is that? Is there any way out?
It's the IT! 
Most commentators, including economists and financial analysts who haven't looked at the practical issues, argue that Greece should leave the Eurozone and go back to the drachma. Yet even after the brutal show of power by the European central bank in forcing a two-week Greek bank holiday, which did tremendous damage to the economy, an overwhelming majority of Greeks still poll as preferring to stay in the Eurozone. And do not forget that the government isn't willing to Grexit either. 
These foreign pundits fail to appreciate that the Greeks have a better grip on what the issues are than they do.
Most outsiders mistakenly treat a Grexit as being like a currency depreciation — like what took place in Argentina in the early 2000s when it abandoned a dollar peg. When that happened, Argentina suffered about six to eight months of severe stress and dislocation, including at least a couple of months of real violence. But after that, it showed a good recovery, The reason large currency depreciations are initially very painful is that the price of imports goes up immediately, while it takes a while for potential buyers of the country's suddenly bargain-priced exports to rearrange their purchases and start placing orders in the cheap, devalued-currency country.
A Grexit entails a ton more. First, it entails resolving Greece's entire banking sector. Greece's banks are massively insolvent and are on ECB life support. If Greece leaves the Eurozone, it loses that aid. When Iceland had its (admittedly larger relative to GDP) banking system collapse, it took $5 billion of foreign support for its bank resolutions. Iceland has all of 330,000 people. Greece has 11 million. 
Second, unlike Iceland, Greece would have to reintroduce its currency. It took eight years of planning and three years of execution for the introduction of the Euro to go smoothly. Commerce is even more dependent on electronic payments now than it was then. In Iraq, even with the logistical capabilities of the US military and three printing presses running full time, it took over a year to get its new currency distributed. The ATM component is far more burdensome than you'd imagine. 
The payment system side is even more complicated. Even though it is 15 years after the Euro was launched, major banks still have mainframes as their big transaction processing engines. And they are still running the same legacy code. And any changes to it are a highly labor intensive process. As one reader explained:
What many of you "it's easy" people fail to understand is that mainframe programming is nothing like today's coding. COBOL, PL/I etc. do not support modern concepts like objects, polymorphism or anything else. Think assembly language with nicer mnemonics. XML ? Hah, there is virtually no such thing for the mainframe. There's no git, no mercurial etc. Virtually none of the tools that exist for Wintel/Linux are available to mainframers. In large organizations there are hugely cumbersome change management processes. Where I am, a simple code change might take a minimum of eight weeks to deploy, and we only have a dozen systems. Actual application changes like envisioned here would take at least six to twelve months for coding and testing, and then another four months for deployment. For large banks, I would expect the timeframes to be even longer because the systems are so critical. 
Similarly, those ATMs and point-of-sale terminals? Those are run by fragmented providers. Those networks have grown up over a 40-year period. Even if Greece moves quickly, they depend on parties outside their control to make changes in a coordinated manner. 
One expert who has lots of big bank mainframe experience estimates that it would take three years to convert to drachma processing. We've spoken to people who are in—or have been in—senior IT roles at TBTF [Too Big To Fail] banks and they agree with this reading. Greece's new drachma payment system will need to be up to international standards before it would be permitted to connect to existing international payment systems. Countries that have not made the grade, like the Vatican, do not get waivers. So even if Greece can kluge together some sort of domestic system in six months or a year, that does not solve its international payments problems. 
18% of Greece's economy is tourism. You can pretty much kiss that goodbye with no ability to use ATMs to get cash and no ability to use credit cards in Greece. Greece is not self-sufficient in food, petroleum, or pharmaceuticals. No working payments system means no imports, unless Greek importers take their drachma across the border, dump them in bank accounts (assuming those banks will even accept drachma to open accounts — recall that they have to make systems changes to accommodate taking drachma) and do transfers from there, or take cash to the offices of suppliers. That was actually occurring during the bank holiday. Some large importers were flying to London to pay suppliers in cash.
It would be tacky for Greece to have a famine, so the Eurocrats would probably arrange for humanitarian aid. But how independent is Greece if it needs food aid? It will have only traded one form of dependency for another, and at huge cost. 
Thus the most likely outcome of a Grexit is that Greece becomes a failed state. 
Q: Your political sympathies lie with Syriza or at least Syriza’s end of the spectrum, but you’ve been highly critical — merciless, brutally honest — of how they’ve governed. Explain why. What has Syriza done wrong, and what could they have done better? (Related: Syriza promised it could reverse austerity but remain in the Eurozone. Did they betray voters? Did voters betray themselves with Syriza as enablers? Or is it something else?)
Syriza promised contradictory things: ending austerity, and staying in the Eurozone. Eurozone policies, particularly in the post-crisis era, are about squeezing labor. 
It's hardly unusual for politicians to lie, but they normally don't tell such big lies on matters of paramount importance to voters. Admittedly, Syriza's leaders were all novices, and they appear to have genuinely believed that they could persuade Europe's leaders to change course. But as members of both right and left wing factions in Syriza recognized by the end of February, after a month of negotiating to reach an interim deal to extend the bailout, the Troika and Eurozone countries were unreceptive to Greece's "look, austerity won't work and you'll just lose more money if you keep it up" pitch. Yet [Prime Minister] Tsipras and [Finance Minister] Varoufakis refused to change course. They exhibited the Einstein definition of insanity: continuing to do the same thing, and expecting different results. 
Moreover, Syriza has not lived up to its populist, anti-oligarch branding. It passed a 200 million euro humanitarian aid bill in March, yet as of May was still taking applications and has yet to disburse all the funds. Yet favored interests like the union for the state electricity utility, DEO, still has its pensions getting a subsidy of 600 million euros while other pensions are being cut. Despite massive tax evasion, Syriza has not brought any new criminal tax evasion cases. What it has done is change the members of the panels that hear those cases from judges to union reps. Similarly, during its election campaign, Syriza promised to go after oligarchs and identified an obvious target: owners of media licenses. Yet it failed to take action once it took office.

Not treason then. Just the same old clientistic rousfetia. But others were content to rob the State. You had to go and revenge porn that battered old ho bag like she was Britney Spears and it added to your rep except that's exactly what she was and so the stunt has backfired on you, paidi mou, and yours and yours alone is a now endless walk of shame.

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