ChambptIf the Varoufakis memorandum ‘deal’ is so respectable, why do none of the players, or their Party bigwigs, or the markets, like it?

There’s a piece in the online magazine Counterpunch at the moment purporting to show how Greek finance minister Yanis Varoufakis has ‘kept Greece in the euro by its fingernails’. Without going over the same tedious ground yet again, nobody can do that, because Greece doesn’t need to cling onto anything: once you’re in the euro, there’s no way out.
The piece continues as follows:

‘So, those who think that Varoufakis should have given the Eurogroup an ultimatum (“Reduce our debts or we’ll leave.”) simply don’t understand the nature of the negotiations.  Varoufakis was forced to operate  within very strict parameters. Given those limitations, he nabbed a very respectable deal.’

If I had a Pound for every expert who responded to an injection of reality with “no no, you don’t understand” I’d be a very rich man indeed. QE, derivatives, the gold price, the euro’s value, UK ‘growth’, fractional reserve banking, the Manchester United owning Glazer brothers, ludicrously over-priced bourses, the EC’s finances, and BoJ asset purchases have all been ‘sold’ to me over the years are the best way forward…when they are obvious disaster areas waiting to happen.
In this case, it’s the idea that what Varoufakis signed last week was a ‘very respectable deal’. I’d like to put one simple question to the Game Players: if the deal is so good, why does no side – there are more than two – want it?
The Greek KKE doesn’t want it, 8 senior Syriza MPs don’t want it, and yesterday afternoon Merkel was given a seriously rough ride by her own CDU Upper Circle. I’ve yet to meet a single anti-federalist who likes it…but I’ve been told a dozen times that Varoufakis has “bought time”. He has: but is it peace in our time, or time for things to get worse for the Greeks?

Even the fairly large print of the Memorandum makes YV’s job impossible, and it isn’t helped by the obviously manipulated departure of bank deposits. Four months from now they will be back around the same table, and there is just one thing alone that might make Yanis’s hand stronger: Italy turning to sh*t – which it could do….and ought to do.
But if your main adversary is an Italian crook heading up the ECB, I wouldn’t hold your breath on it. In that four months, there’ll be 24/7 smearing and trolls, manufactured bank panics, and pretty much anything they can think of to take Syriza’s eye off the ball. Last month, a record €12.2 billion left Greek banks: that is more  than any outflows experienced during any of the previous Greek crises and bailouts. Zero Hedge is now confirming the Slogpost of last week when it says ‘the Troika did everything in its power to accelerate the bank run in order to crush any negotiating leverage Varoufakis may have had’.
As for Tsipras himself, his hardest task will be to keep the Coalition together…plus social protests and unrest coming from the KKE and Golden Dawn…both of whom are virulently anti-euro.

I wrote earlier this week that Varoufakis missed his chance to exploit the enormous Bundesbank v ECB v France rift – the thing that will do for the entire EU in time regardless of anything else that might happen. But he failed to call the bluff. That’s all Draghi had: bluff.

Today, with this marvellous deal nobody likes, the euro has fallen further, and now stands at 1.38 to Sterling. If he had walked last Friday, Troika2 would’ve been in l’ordure profonde. There is an old adage that says, “When you borrow £10,000 from a bank, it’s your problem. When you borrow $280billion and can’t pay it back, it’s the bank’s problem”. So far, EU citizens haven’t paid a red cent of any of the funny-money involved in bailing out Greece. Now they will have to…and it could tip at least two of them – Spain and Italy – over the edge. This is the size of the opportunity Varoufakis missed.

On verra. But I remain at a loss to see what Greece has gained here…except the bewildered disrespect of a lot of the neutrals.


  1. I was under the impression that there wasn’t supposed to be a gain for Greece. Troika2 would not have behaved the way they did if they were serious about helping Greece, no the idea is to keep Greece in servitude.


  2. Reblogged this on Machholz's Blog and commented:
    the financial system based on never-ending accumulation of debts is shear madness! Time to reset the whole system! Who pays I hear you ask ?? WHY the 1% of course! These debts were created out of money that was created out of thin air and at the pressing of a button in the ECB : MY answer : Press another button ,the Delete button!


  3. “When you borrow £10,000 from a bank, it’s your problem. When you borrow $280billion and can’t pay it back, it’s the bank’s problem”.

    But when you owe your bank £280bn and threaten to walk away, the bank can’t stop you using the currency you borrowed in. You can still use pound coins to buy your breakfast, and they will buy the same breakfast tomorrow as today.

    Thats not the case for Greece. If they threaten to walk out of the euro unless they get what they want, and their bluff is called, then they have to go, or cave (as they have done). And if they do go, and set up their own currency, as they will have to, that turns the Greek economy into something akin to a Mad Max world, rather than the 1930 Britain it resembles today. It means Greek purchasing power just halves or more overnight. It means companies who borrowed in euros from foreign backs are de facto bankrupt as their borrowings have just doubled over night, and are in a currency different to their profits (if any). It means years of legal wrangling in the courts over contracts denominated in euros. It means capital controls and bank closures while a whole new financial system is worked out, which might take weeks or months, which in turn means people with no cash to buy food. There just is no example of a country abandoning one currency and setting up its own overnight. Doing it with years of preparation is hard enough, doing it in a weekend is a recipe for utter catastrophe.

    So the Greeks have no alternative but to buckle under the Euro heel. They have got their knackers caught between a rock and a hard place, and the Eurozone know it.


  4. ‘There just is no example of a country abandoning one currency and setting up its own overnight’. Try Slovakia in 1993.


  5. Sorry if these questions are obvious, but:
    1. Can’t Greece default without leaving the euro?
    2. If the whole game was rigged to get Greece into the EU in the first place, can’t Syriza declare ‘odious debt’ and sod the lot of ’em?
    3. How does the EU get away with not producing audited accounts for 20 years?


  6. Panop
    All 1st-rate questions.
    Greece MUST default without leaving the euro
    Syriza is now in the business of scrabbling around for excuses as to why it didn’t stand up to the gunslingers.
    All very disappointing.


  7. As I commented in a previous thread, having researched Yanis V and his political/economic position (really you don’t have to look farther than his own blog) it is obvious that he is a completely dyed-in-the-wool EUtarian. There was never, ever any chance he would threaten the viability of the Euro, Eurozone or the Commission. Like all the rest of European politicians outside of nationalist and complete fringe parties if it came to a choice between doing the best for Greece or doing the best for the EU, well goodbye Greece. Just as the LibLabCon would and have sacrificed the UK’s interests to the good of the EU.

    I cannot believe that Tsipras did not know this which means that if the negotiations were a poker game they were playing with a 7 high, which means the whole thing was nothing but a charade.


  8. If Germany has this ‘Get Out of Jail Free’ card then, surely there is a large unobtrusive bunker somewhere will all the old currency sitting it it? Maybe for other too. Or did the EU envisaging this situation callously witness the destruction of all sovereign currencies?


  9. If Greece defaults on it’s loans, I don’t think that more Euros will be forthcoming. In that case Greece will do the only thing it can do and that is start printing Drahmas…………. OR the members of the EU will change their thinking and consider themselves one country and accept this sending money south (until the end of time) just like we ship money down to the state of Mississippi here in the US.


  10. Sorry if I sound tediously repetitive about this but save for Golden Dawn, no Greek political party is prepared to tell the Germans to sod off and for that matter to tell the EU the same thing. But we all know ( because all the newsfakers in the establishment media say it) the GD are a bunch of Nazis, do we not??
    When we begin to realize that the so called “extreme right wing ” nationalists have been “right” indeed, as in right on the money, not only when they name the main enemy of mankind, as the Cabal of western Banksters who hold all the establishment political parties enthralled in their web, but also in most of the measures they suggest we take against this situation, then maybe, just maybe, something can be done about this sad state of affairs. As a basic measure I suggest that we advance the suggestion to lots of our less perceptive friends that these “extremists” are not so extreme after all, and the remedies they suggest are valid.


  11. If YV (aka King Midas In Reverse, wow, remember The Hollies and good old Graham Nash?) seriously intends to use the Alexandrian solution to unravel this Gordian knot, he needs to sharpen both his sword and his wits. My theory is that the game is rigged and he always knew it. These days the idea of a charismatic politician with steely determination is more or less an oxymoron, and morons are ten a penny, but sooner or later one will surely emerge and just say “no”. That’s another theory, of course; it might not be a very good one but it does have some historical precedent. Without such a person or persons things look too bleak to contemplate. I also have a theory about the Brontosaurus but this is neither the time nor the place..

    A belated happy bidet m’sieur JW.


  12. @kfc1404

    Full agree because in a world that does not add up somebody is going to be the whipping post.
    GREECE YOU ARE IT! That’s the conclusion what decision would you make.

    Personally, out no matter the cost because you can never rebuild a people or nation if you are being held in this position and as each day passes one more day of a peoples life will be crushed to preserve the debt.


  13. @johnb

    I no longer see extremists but those with a view different to my own. If you hold a person indefinitley in a horrendous position frankly all rules are off because the person so tormented really doesn’t care about the rules if by anothers rules they are to suffer.

    Most of the anger in the world and it is everywhere is this.


  14. ghost i really do not think that the nations of the western world have been following any policies save for the madness of the international financiers for the last century. In that all inclusive list I include WW1 WW2 the cold war Viet Nam the Iraq wars etc. This is a considered opinion that grows more reinforced every time I obtain more data. I value John Wards column for his extremely detailed knowledge of the European economic system and of course for his beard. Being both hirsute and obese myself I always appreciate a good beard.


  15. I don’t understand how Greece could default & stay in the Euro. Surely all the ECB has to do to enforce their will is to stop topping up the Greek cashpoints?

    I wonder if YV was threatened with this, and that was what made him back down.


  16. Pingback: John Ward – Greece Latest: Huge Greek Bank Outflows, Euro Falling Against The £, Bundestag Backs Greece Memorandum – 28 February 2015 | Lucas 2012 Infos

  17. In ‘Shark’s Tale’, two characters negotiate a deal. When both of them state that they are unhappy with the deal, they realise that it is the best compromise available to them. That is often the way with compromises; both or all parties are left far short of what they wanted.

    As for their being no way out of the Euro … do you really believe that no way out can be manufactured if both Greece and the rest of the Eurozone want it? The mechanism is obvious: Greek banks are cut off from ECB funding. This was the threat that made Syriza retreat. ATMs across Greece would have been shut within days. The academics and intellectuals running Syriza like demos, but they don’t like riots. Sadly Athens has already seen the latter. Major civil unrest would marginalise the current leadership of Syriza as surely as the crisis has already marginalised the previous government.


  18. The theory is that the Greeks were told (probably read it here) that the ‘contracts’ were written in English law, and could therefore be enforced with worldwide seizure of Greek assets. Should not have been a surprise.I cannot believe Varu and his civil servants didn’t have the full picture before they went into battle. Unless he was betrayed. Cui bono.


  19. Dear all;some points to consider;
    1 – The banksters are neither right or left wing.They want to make money & as long as they’re making money,they’re happy.
    But of course,if you start issuing your nation’s own debt-free money (Syria,Iraq,Iran,N.Korea),they become very unhappy
    & get their N.A.T.O. pals to do something about it.Usually bringing your country their special type of freedom & democracy.
    2 – Consider the simple but highly explanatory words of Leonard Cohen;
    “Everybody knows that the dice are loaded,
    Everybody rolls with their fingers crossed.
    Everybody knows that the war is over,
    Everybody knows that the good guys lost”
    Thus for Greece,the dice were loaded & the good guys (the Greek people) lost.But the banksters will make money from this somehow,because IT’S WHAT THEY DO & HAVE ALWAYS DONE.


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  21. Why doesn’t Greece default and just adopt the USD? We’re (USA) the best at protecting our own interests. Maybe even ask for our protection — become Puerto Rico of the Med — no more worries about the Turks, ever. The Greeks wouldn’t actually need a central bank anymore and can fire everyone. New banks would have to be formed, I guess, with a lot higher reserve rate with new money. International companies in Greece that have their debts re-denominated would get hurt but that just seems like collateral damage. If a re-denomination isn’t force majeure then I don’t know what is. It doesn’t really solve the underlying problems in Greece of crappy property rights, a useless and oppressive government particularly at the local levels, and rich people who don’t pay taxes and run uncompetitive and insulated companies.


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