Does the master of game plans have a master plan?
Most people who’ve read George Orwell’s 1984 will remember the word ‘newspeak’ he gave to the habit Big Brother had of using one word to describe its antonym. Those suffering in southern and south-eastern Europe will be well aware by now that a consistent trick employed by neoliberals is to use the word reform to mean “go back 150 years”.
In this latest week of surreal mayhem, I’ve seen the term used by the FT, the Wall St Journal, the EC, Bloomberg, the Telegraph and the Frankfurter Allgemeine Zeitung. They all mean the same thing – light regulation, lower taxes and greater wealth inequities; but applying them to Greece is, to say the least of it, surreal: taxed to hell by a Berlin driven Troika from the north – and sat upon by a crooked, wealthy oligarchy above who’ve never been regulated about anything – it’s hard to think of a more inequitable distribution of wealth than in that unfortunate country, given that half the population is skint, and half the young are jobless. In maths, filthy rich divided by zero = infinity. Infinity is it: there’s nothing bigger.
They surely cannot mean ‘reforming’ the oligarchy (although Syriza plan to obliterate it) because they’ve been the group favoured by the Troika from Day One. The Troika can’t have failed to notice that Veryzealous is also very fat with little piggy eyes, and little Antonikis an idiot; but that’s who they wanted on the team.
By ‘reform’, what they mean is selling State assets bought by and owned on behalf of The People to bankers and multinationals they represent in order to continue the greatest shift in social structure ever seen in modern times: the complete transfer of power from the citizen to banks and globalists. In a nutshell, the wealth of labour being given to capital. But not capital invested in an economy dedicated to the greatest contentment of the greatest number: no, to interbank trading, inventing money through the fractional reserve system, and making 1.5% of people unfeasibly rich.
The one gangster acting as top Capo for The Mob in this instance is Mario Draghi. The crooked guy in City Hall is Wolfgang Schauble, who doesn’t entirely trust the Capo. These two singularly unpleasant people led the austerity attack on Greece, and the Varoufakis ambush last Friday fortnight. Draghi is encouraging HNWIs in Athens to get their money out, while Schauble’s spooks spread rumours (alongside the CIA) throughout Greece – all of them suggesting that the Syriza government is just days away from default. They insist that Greece is staring down the barrel of Grexit, but it isn’t because nobody can do that….and the gun isn’t loaded.
So I ask again, why oh why didn’t this alleged master of Game Theory Yanis Varoufakis – who may be a narcissist, but is far from stupid – simply walk out of the ambush on that perfidious Friday?
None of the excuses I’ve heard for Varoufakis’s behaviour make any sense at all to me. I’m told that, not being Greek, I don’t understand. I’m told he wanted to buy time. Before that I was told Yanis was shrewdly flying steerage all over the EU to get new adherents to the cause. But it isn’t working, is it?
So I’ve been ringing and asking and digging and hypothesising, and oddly enough it wasn’t long – eight days isn’t much time at all – before I arrived at what to me is the only explanation left that doesn’t brand Varoufakis a coward, and Alexis Tsipras the latest Tony Blair on the block. So herewith five points I think significant, from which some informed speculation and dot-joining can emerge.
1. Four months is a ridiculously short period of time to do anything on this scale: the pressure, rumours, financial tightening and orchestrated press speculation are merely there to keep Syriza’s head spinning. Ditto the ‘reforms’ which the Athens government clearly isn’t going to carry out, because they’re antithetical to the Party’s philosophy.
2. Syriza’s leaders know they can’t keep their faded rainbow of leftists in order for four months, during which nothing gets done. The whole thing nearly came off the rails Sunday fortnight when the Party grasped the extent of the Varoufakis climbdown.
3. Earlier this week, Syriza raised E1.3bn in restructuring bonds without any EU or ECB involvement. It’s a drop in the ocean, but it’s something Nia Demokratia never managed. It’s a start, and it suggests to me that the Greek government is dipping a toe in the water while demonstrating that maybe credit is not a closed shop for them after all. (It gives the lie, for instance, to a rather silly piece in The Economist today suggesting that Syriza’s ‘readiness to go so close to the edge has hurt the economy and brought the state close to bankruptcy’. Oh per-leeeez).
4. Yesterday – as the euro began to sink further into the quicksand – Draghi proved how weak his hand really is by raising the ELA limit for Greek banks: the week before last, if you recall, he was threatening to turn off the tap. Varoufakis cannot fail to have spotted this.
5. A senior and reliable London City contact (who would only talk off the record) told me last Tuesday, “The [Greek] crisis has raised doubts about the long-term survival of the euro hugely. Maybe it’s not the same in Berlin or New York, but on this floor the majority of us are absolutely certain that the Troika has far more to lose than the Greeks. Whether the Greeks realise that is another matter”. So in short, we have the neoliberal press insisting that Greece is in trouble, but the sharp end in the City telling the truth. Makes you think.
This is my imaginary piece, dated 7th September 2015, which might perhaps move somewhere nearer to an explanation of WTF is going on:
‘What the Troika – and especially the ECB – underestimated last February was Mr Varoufakis’s willingness to challenge the accepted shibboleths. Initially taken by surprise on Fatal Friday – and puzzled by the frequency with which his Party Leader Alex Tsipras was ringing Merkel in Berlin – on his return to Athens, both men quickly agreed that, while the EU was bluffing, as and when the euro got into trouble they would need a money supply from elsewhere….and they didn’t have that.
‘The ‘deal’ they brought back was a hard one to sell to Syriza, and this was only achieved by taking the most influential members into their confidence about the new Game Plan. This Varoufakis defined as “seeking and then demonstrating independence” – first of all to the markets, then to the media, and finally to the Greek people. Each Syriza minister was in turn briefed to start the sort of reforms the Government (not the Troika) wanted to enact, but muddy the waters with Brussels and Berlin about what shape the reform would actually take. “We must make hay while the sun shines,” he told one intimate, “we have four months of bailout – let’s spend within budget, but in the People’s favour”.
‘The two leaders were also gambling on some situations in the eurozone beyond Greece becoming unmanageable during the four-month interregnum. Austria was a surprise candidate, but by the end of March it was clear that France had no intention of meeting its budget targets or ‘reforming’ to get the deficit ‘down’. Even the suggestion of a Troika coming in ‘to help’ was greeted by howls from the Socialist hard Left and Marine LePen’s Far Right Front Nationale. The gigantic Franco-German split at the heart of the EU was becoming increasingly apparent: the markets were nervous, and the euro continued to tumble. France’s debt bonds spiked, forcing the ECB to surreptitiously buy lots of it. At this point, both the Bundesbank in Frankfurt and the Schauble tendency in Berlin came out of the closet, launching barely veiled attacks on Draghi – who was by now chucking QE at the situation in order to do for European stock markets and banks what three bouts of QE had achieved in the US.
‘As this story unfolded, Varoufakis continued to distance himself from eurozone insanity when talking to lenders. Astonishingly – by stressing that Greece would not get any QE – he made a compelling case for investment in Greece being almost a safe haven. “We will be accountable,” he told them, “the ECB won’t. Our real economic position won’t be hidden behind Draghi’s tricks. Remember how he subordinated you illegally in Cyprus?”
‘It was Italy, however, that changed every game. Already courting Russian support, Italian PM Renzi was also keen to be seen standing on his own two feet: eurosceptic support had been growing, and privately the Italian leader saw the ‘austerity programme’ as insane. But all plans were blown out of the water when (as in Austria) the ‘bad bank’ fantasy became a real live nightmare. Economy Minister Pier Carlo Padoan tried frantically throughout February to accelerate the planned hidey-hole for toxic loans, but the amount was massive even by eurozone standards: Italian banks were sitting on 330 billion euros of loans, the vast majority of which stood no chance of being repaid. The colossal sum was equivalent to a fifth of Italy’s gdp — and had trebled in seven years. This (added to an economy showing no sign of recovery) had by late April switched the lenders’ focus away from Greece towards both France and Italy. Bond yields began to spike….but less so in Greece.
‘When the next major Eurogroupe summit took place in mid-June, Greece remained illiquid – and in default on its IMF loans. But Christine Lagarde had been able – with help from Wall Street and Washington – to fudge the issue. Varoufakis, meanwhile, enjoyed not only irritating Dijessilbloem and Schauble on the Italian and French problems, but also to casually point out that the German electorate was up in arms – and switching in droves to the anti-euro Alternativ fur Deutschland. In turn, the acrimonious atmosphere between the ECB, Berlin and Paris was obvious. And finally, the UK election’s huge popular vote for the europhobic Ukip Party promised a Brexit from the EU within two years
‘The net result of this was hugely increased negotiating power for Athens. In secret session, Yanis Varoufakis cut an amazing deal whereby – in return for some secret ECB-funded debt relief – Greece would pay off 30% of the IMF loan with money raised on the markets….and come off the Bailout Programme within two months. Effectively, the Greek finance minister was offering Lagarde the chance to keep a clean sheet, and not to be a further problem for the already beleaguered EC-ECB axis. Varoufakis returned to Athens a national hero. Wolfgang Schauble, meanwhile, returned to Berlin…and suggested to both Jens Weidmann and Angela Merkel that it was time to go back to the Mark.
‘Two months on, nobody quite knows what either Greece or Germany will do next. But the fate of the euro seems to have been sealed’.
Personally, I find this analysis sound, but unlikely. It can easily be dismissed as naively optimistic. But on the other hand, if this isn’t the Syriza game plan, then what the Hell are they up to?