Following the latest Greek election, I was interviewed on the ABC’s 7.30 Report. In the interview (which you can watch here),
I presented a gloomy, yet realistic, view that it really matters little
now what happens in Greece. “Greece is finished”, I argued, as long as
the derailment of Europe’s euro-system is proceeding unhindered. Read on
for the transcript:
LEIGH SALES, PRESENTER: Joining us now from Athens is the Greek economist Yanis Varoufakis.
The obvious question is: what happens now?
YANIS VAROUFAKIS, ECONOMICS, ATHENS
UNIVERSITY: Well, the derailment of the train that is the eurozone,
which started with Greece and then other carriages started leaving the
tracks sequentially – Ireland, Portugal, now Spain – is continuing. And
yesterday’s vote is not going to change that at all. All exuberance and
celebrations are completely and utterly misplaced. I’m afraid that the
eurozone and Europe is continuing along the path of the last two years
of a cascade of errors, a comedy of errors. Just look at Spain, what is
happening there today. Look at what is happening in Italy. Unless the
logic or what passes as logic in the European approach to this crisis
alters and alters fast, very soon the eurozone will be history.
LEIGH SALES: Well, let’s stick with the
big picture for the moment before we drill down into Greece. What do you
think could happen then to avert that disaster as you see it?
YANIS VAROUFAKIS: I’m sorry, I didn’t hear you because there’s a lot of noise – could you repeat that question?
LEIGH SALES: I will. What do you think needs to happen to avert the disaster as you see it?
YANIS VAROUFAKIS: Three things, the very
simple steps that need to be taken. Look, in Europe, whether it’s
Greece or Spain, what we have now is we have insolvent banks that are in
a deadly embrace with insolvent states. So, the states get – borrow
money from the centre of Europe in order to give to the banks and banks
borrow to give to the state and both banks and states are sort of locked
into a deadly embrace with another sinking very fast. So what we need
to do is we need to break this nexus between insolvent banks and
insolvent states. So, the way to do this is to unify the banking system,
to Europeanise it in the European Union and have it being funded
directly not through national governments. That’s a very simple step,
but it’s a step it seems too far for the European Union.
Secondly what you need is a
mutualisation, a kind of common debt, like in Australia we have, you
know, the Federal Government having its own debt over and above states.
And thirdly we need an investment policy which runs throughout the
eurozone. Because you have a secondly currency area, you need to have an
investment strategy, a recycling mechanism for the whole thing. Unless
we have these things, and Germany doesn’t want to have these things, I’m
afraid there is absolutely nothing to avert the continuation of this
slow motion derailment.
LEIGH SALES: Just to go back to Greece
specifically, the politicians in Greece couldn’t even agree on the terms
of a televised debate during the election campaign. How are they going
to compromise on measures to fix the Greek economy?
YANIS VAROUFAKIS: They cannot fix the
Greek economy. The Greek economy is finished. The Greek economy is in a
great, great depression. The growing social economy is in its long, long
winter of discontent. There is no power, no force within the Greek
economy, with Greek society that can avert – it’s like – imagine if we
were in Ohio in 1931 and we were to ask: what can Ohio politicians do to
get Ohio out of the Great Depression? The answer is nothing.
LEIGH SALES: So what then happens to Greece?
YANIS VAROUFAKIS: It depends on what
happens in the eurozone. Just like what happened in Ohio depended of the
rise of President Roosevelt and the New Deal, unless we have a new deal
for Europe, Greece is not going to get a chance. Now it doesn’t mean
that if Europe fix itself, Greece will fix itself. It’s a necessary
condition that the eurozone finds a rational plan for itself. It’s not a
sufficient condition. Europe may fix itself and Greece, being so flimsy
and malignant, may still have huge problems and never recover. But
until and unless the eurozone finds a rational plan for stopping this
train wreck throughout the European Union, throughout the eurozone,
Greece has no chance at all.
LEIGH SALES: I read some statistics
today that seven out of 10 Greeks want to emigrate. How would you
describe the national mood there?
YANIS VAROUFAKIS: This is a our Great
Depression. Not only in an economic sense, but also in a psychological
sense. Greeks are in a catatonic state. One moment, in a state of rage,
another, this is a typical case of manic depression. There are no
prospects. There is no light at the end of the tunnel. There are
sacrifices, but nobody gets a feeling that these are sacrifices that
take the form of some kind of investment in turning the corner. This is
the problem when you are stuck in a eurozone which is really badly
designed, which is collapsing and which does not give opportunities to
its flimsier parts to escape through some kind of redemptive crisis.
LEIGH SALES: Yanis Varoufakis, we can
hear how noisy it is there. Thank you very much for making the time to
speak to us tonight.
YANIS VAROUFAKIS: Thank you.
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