Yanis Varoufakis: What
is the Minotaur? The US jettisoned Europe from the dollar zone in 1971 when the
Bretton Woods system collapsed. This was
a system that was created in 1944 and heralded the golden age of Capitalism: a
period of sustainability, reduced inequality, of low inflation and low
unemployment. In Y’s view the reason why
that period ended in 1971 (the sudden change was referred to as "the Nixon shock") was because
the Americans had had a fixed exchange rate regime created with a lot of “surplus
recycling”: (where surplus was produced they were recycled to a lot of other
areas stabilising the system: one part of the world exports more than another
part of the world and if the profit created is not passed back to the part of
the world that is the debtor then you get huge imbalances which become
destructive. such was the situation in the 1930's).
The reason why it broke apart was because the Americans lost
their surplus. The system could no longer be sustained. Since it could no
longer be sustained the US started recycling everybody else’s surpluses. How
did they do this? By sucking into their territory (this is the vacuum cleaner)
the net exports of Germany, Japan and later of China AND the profits that those
countries were making, through Wall St. So instead of using the metaphor of the
vacuum cleaner YV thought of the Minotaur. The dark secret in the guts of the
palace was that there was this beast that needed to be nurtured by tributes
from the weaker parts of that world and in exchange King Minos was providing
the stability and the recycling that was necessary. The dark secret of the
1980s and 90’s was that the US deficits were doing all the recycling. [What about our deficits?]
Y V was once on a plane with a German banker who told him:
Once I was powerful and now I’m not. Usually you associate bankers with money
and power. Before the Euro, he could set the rules and pass judgment on proposed
loans and debts. And then the Euro expanded the borders of the Deutschmark to
the rest of the Eurozone and effectively the Deutschmark was available to the
Greeks and the Portuguese. Suddenly the bankers in Frankfurt realised that the
capacity of a Greek to pay a debt has now been enhanced – he now has
Deutschmarks – the Greeks and Italians weren’t in debt before – they owned
houses so they had collateral. These were ideal customers and he had quotas
imposed by the head office – he had to lend millions every month. The banker
was no longer capable of practising the protestant ethic when it came to
selecting the debtor.
The Greeks accumulated a lot of debt, but when they were
given huge bailouts (in return for harsh austerity measures) where did the
money go? It didn’t really go to Greece. In 2009 when the banking system of the
world imploded the banks went to the government and begged for bailouts. Frau
Merkel gave 500 billion. A year later she was told Greece was going under: they
had borrowed too much (and so had Portugal, Ireland, Spain, Italy, etc.) She
didn’t want to repeat the gift. Instead of a bailout what happened was a
cynical transfer of the losses of the banks (Deutschebank, Societe General) to the Greek taxpayers – even though
they knew those shoulders were too weak to bear them. 90% of the bailouts went
to the banks that had lent too much to Greece, Spain, Ireland, Portugal etc. The
costs were spread throughout the Eurozone – even the poor Slovaks ended up
subsidising the German banks.
Yanis Varoufakis says that the Greek government was
insolvent, and the imposition of the bailout
- a huge new loan and austerity measures – cutting Greek welfare
payments and pensions –amounts to fiscal waterboarding – this is going on today.
Why didn't the Greeks leave the EU? – If the Greeks had their own currency pegged
to the Euro – as the Scots do – they would have left the EU. It takes 12 months
to create a new currency. Changing the currency is a cause of economic crisis.
He doesn’t blame the German institutions but all the
European ruling elites: French, Italians etc. Erik Berglof (Swedish) believes
that the recent institution of a European banking union will start to control
the flows of money in the EU.
The bankers move to defend their and their friends’
interests – and bankers belong to the same power elites.
Gerard Lyons – adviser to Boris Johnson – thinks technology can
spread out power but the EU s reacting to its problems by centralising power
(and so is the UK government). This he says, makes it unfit for purpose.
Yanis Varoufakis says the EU is disintegrating under the
weight of its hubris and its terrible political structure, but fears Europe
will fall into a repeat of the 1930’s. Huge rifts – fault lines across the
Rhine and the Alps. E.g. Austrian troops closing the Brenner pass. There will
be a vortex in the heart of Europe and a terrible decline.
G.L. says the EU has a lack of demand, a lack of lending, so
that the UK could do well in the global economy outside Europe. But if the EU
is to survive it must address the fundamental centralising issues at its core.
Paul Cartledge: Ancient Greeks – there was a constant
struggle between the demos and the oligarchs. Only 15% of the Greeks were
educated and objected strongly to being ruled by those who were not smart and
not educated. He also fears that the EU will fall apart and that we are going
to unleash the most unpleasant forms of mass populism and they won’t be
controlled.
YV – in ancient Athens a large minority of the citizens who
controlled the democratic process were the working poor. But the charter that our government is modelled on now is
Magna Carta which kept the hoi polloi out. The equivalent of the barons now are
the large corporations and banks. The German economic minister told Yanis Varoufakis:
“Elections cannot be allowed to change the economic policy in Greece.” So YV concludes that elections now are just a
form that contain no content.
Paul Cartledge: money corrupts – creeping oligarchy –
whichever side spends the most money tends to win. GL says there is a
democratic deficit because in Europe we cannot move the levers of economic
power – we cannot change the leaders easily.
YV – Brexit is not going to return you to sovereignty as
long as you want to stay in the single market.
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