Greek ex-minister Varoufakis on austerity

This video from Britain says about itself:

Yanis Varoufakis on Jeremy Corbyn and capitalism

14 September 2015

Yanis Varoufakis talks to Paul Mason about Jeremy Corbyn, Labour, the media and capitalism.

From daily The Morning Star in Britain:

‘Lesson 1: The enemy is always within’

Thursday 17th September 2015

When YANIS VAROUFAKIS appeared at TUC Congress, he said the ‘magnificent’ Greek people were ready for the struggle with financiers — only to be betrayed by his own party. And he warned that fearful leaders could one day be the downfall of Britain’s people too. Joe Gill reports

GREEK ex-finance minister Yanis Varoufakis brought some rock star glamour to the opening of the TUC Congress on Sunday in Brighton. He smiled for selfie shots with delegates at a 1,000-plus meeting. Delegates were high on the back of Jeremy Corbyn’s stunning victory in the Labour leadership battle the day before.

Varoufakis gave an inside account of the madness of the bailout talks with the EU troika and the way the Greeks withstood intimidation from outside and within to vote down the new austerity loan this summer. However, he noted with sadness that while the people were up for a showdown with euro finance ministers, some in the Syriza party were not. He also warned the Corbyn camp of the challenges it will face in the coming months.

“Throughout this campaign which began yesterday and will end with the general election, it will be a focal point for progressive people throughout the world. You will be facing a wall-to-wall campaign of vilification, a campaign to discredit Jeremy, to discredit the labour movement.

“You will be told that if Jeremy wins, the UK will become another Greece.”

On the 2008-9 financial crisis he said it proved that austerity was a non-starter and that the ruling elites were fully aware of this, but used it as a weapon to redistribute wealth — and to punish Greece and its left-wing Syriza government for the temerity of putting EU diktats to Greek voters.

After the bankers broke the economy “the state ended up holding the baby. The same people who served the interests of the bankers during the era of Ponzi growth turned to what I call Ponzi austerity — fake austerity — to ensure the costs of the crisis were passed on to those who never benefited from the Ponzi growth in the first place.

“The British economy began to recover after 2009, then George Osborne put his foot on the brake. What did he do immediately after that? He removed his foot, he stopped doing austerity; austerity was very light in Britain. It was used as an instrument to affect a savage redistribution of income.

“From a macroeconomic perspective it was very very light. Greece’s austerity was eight times as harsh. What was effect on Greece? We lost 28 per cent of national income, we lost one third of the jobs. We had a spectacular increase in poverty.

“Austerity doesn’t work. George Osborne knows that.

“Another element that will be very important for the Jeremy Corbyn team to understand: the practice of quantitative easing (QE) has been exemplary in maintaining some equilibrium in the macroeconomy of Britain while at the same time using austerity as a narrative to justify the transfer of income from the have-nots to the haves.

“This QE was quite remarkable even by the standards of Europe and the United States. Where did that money go? It went to purchasing mortgages, purchasing derivatives, purchasing bonds. Purchasing those pieces of paper that elevate the value of asset prices, but have nothing to do with industry, like house prices in London, like share prices in companies.

“The Bank of England extended liquidity to banks, banks extended liquidity to companies. And what did companies do with that liquidity when people of Britain did not have enough money to buy more stuff? They bought back their own shares. They did not invest in productive activity, in jobs.”

He continued: “There has been no surge in investment in the sectors which are essential for the future of Britain. That was a spectacular failure by David Cameron and Osborne. And why did they not get challenged? They did not get challenged because the Labour Party lobotomised itself some time ago.

“Now in Greece we had contractionary contraction — the greatest austerity ever.

“What should you do? You are embarking on a long path which is going to excite all of us. Firstly, the Labour Party needs to stiffen its lip. For 30 years now we have had a one-sided class war. The only party in Britain that disowned the class war was the Labour Party. Mrs Thatcher, Mr Major, Mr Blair, were exemplary class warriors, fighting for the interests of the class they represented. There was socialism for the bankers and the spivs, and unfettered markets for everyone else.”

Since the 1980s capital itself was diminished, fragmented, and financialised, added Varoufakis. But he warned the British labour movement against looking backward as they look for economic strategies in the coming period.

“We should not rush to the past for solutions. We have to be critical. [In the 1980s] we in the labour movement were defending tooth and nail towers that were crumbling because of the disruptive technologies of the time. From the Greek perspective, having coal-fired electricity stations is a no-no.

“We have to revive the spirit of Harold Wilson in the 1960s and the white heat of technology, except this time it shouldn’t be the white heat of technology — it should be the cool breeze of green technologies.

“The emerging markets have cottoned on to the importance of having a publicly owned development banks. Brazil has one, China has one, the US doesn’t need one because it has the military-industrial complex, which operates as their magnificently efficient development bank. In Britain we need one.”

He supported the idea of people’s QE as advocated by Corbyn’s economic team, pointing out its right-wing origins: “People’s QE was a right-wing idea — helicopter money — created by Milton Friedman.

“Why can’t a development bank issue bonds to the City of London to fund a green new deal? This will not push up house prices in London. You are not pushing up the share value of media companies — you are supporting the development of real productive green technologies directly.

“There are lessons from Greece. They will use fear against progress. You must return the favour by showering them with reason, with compassion, and with even a degree of self-deprecation.

“You must be steadfast when the character assassination escalates beyond belief. I’ve experienced that. Alexis Tsipras experieced that.

“Beyond that, you must always believe as Roosevelt said, that the only thing to fear is fear itself, and the people who are there can be made not to fear fear.

“It is important that we believe that because the saddest piece of news I bring you is that we the leaders didn’t believe.

The magnificent people of Greece responded to a terroristic act — they [the ECB and troika] shut down the banking system.

“Draghi and the eurogroup said the Greek banks were solvent but warned me to keep my mouth shut or he might change his mind. He told me: ‘You have to protect their solvency by keeping your mouth shut.’

“On June 27 the eurogroup said they had no choice but to shut the Greek banks down — because we [Syriza] dared to put [the new loan agreement] to the Greek people in a referendum. I could not responsibly sign this agreement because I knew we could not repay it.

“That was considered an act of irresponsibility that deserved the reaction on their part of shutting down the banks. And I can’t look at the Latvian, Slovenian or German finance minister in the eye and say I am going to sign this loan agreement and we’re going to pay the money back, because I knew we couldn’t — and they knew we couldn’t.

“The Greek media was beaming into their homes that if they vote No they will be destroying their land, they will be destroying their country — and they responded to this with a 62 per cent No vote.”

Varoufakis went on to say that the “magnificent Greek people” had shown that they could not be bullied, and were not prepared to surrender, but sadly that could not be said of the Syriza government.

“This was the first time in history that creditors have offered a loan to a sovereign nation that the creditors know will ensure that the old loan and the new loan cannot be repaid.

“We were elected with 36 per cent and 62 per cent said No [to the bailout]. That No was a No to the fearmongers. The message I took from this 62 per cent was: we don’t want to be taken out of the eurozone, we want an hourable agreement within the eurozone. We want compromise, not to be compromised. If they push us through the mud and humiliation, then let them do their worst.

“But comrades, to finish on a slightly pessimistic note and a word of caution to what is happening here [in Britain]: the enemy is always within. The enemy is always the Ramsay MacDonalds, the enemy is the fear in our ranks. Try to excise it from your hearts and the hearts of your leaders.”

Yanis Varoufakis: Europe is sliding back into the 1930s and we need a new movement: here.

13 thoughts on “Greek ex-minister Varoufakis on austerity

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  5. Varoufakis & Diem25

    BREAKING: Noam Chomsky joins Yanis Varoufakis’ Movement Diem25 – Democracy in Europe Movement 2025.

    “The formation of the European Union,” explained Chomsky, “was a highly encouraging step forward in world affairs, with great promise.” However, in view of the American scholar, the EU “now faces severe threats, from within, tracing in no small measure to the attack on democracy.”
    Noam Chomsky joins a growing list of intellectuals and global personalities’ endorsing DiEM25. Julian Assange, Ken Loach, James K. Galbraith, Saskia Sassen, Walter Baier and Brian Eno are among the more than 17,000 members who have joined DiEM25 since the movement’s foundation last February 9th in Berlin./ Regula Horner, 14 March 2016, Facebook.
    CAMBRIDGE, MASSACHUSETTS, March 14, 2016– Distinguished American linguist, philosopher and political activist, Noam Chomsky, has officially endorsed DiEM25, the Democracy in Europe Movement launched last month by Greece’s former Finance Minister, Yanis Varoufakis. / “The formation of the European Union,” explained Chomsky, “was a highly encouraging step forward in world affairs, with great promise.” However, in view of the American scholar, the EU “now faces severe threats, from within, tracing in no small measure to the attack on democracy.”/ Noam Chomsky joins a growing list of intellectuals and global personalities’ endorsing DiEM25. Julian Assange, Ken Loach, James K. Galbraith, Saskia Sassen, Walter Baier and Brian Eno are among the more than 17,000 members who have joined DiEM25 since the movement’s foundation last February 9th in Berlin. “activism, 14 March 2016.


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  7. Tuesday 26th April 2016

    posted by Morning Star in Features

    The former Syriza finance minister has weighed into the British EU referendum debate, but VINCE MILLS is far from convinced by his rationale

    YANIS VAROUFAKIS, for very good reasons, is seen as a voice of resistance against EU authoritarian, neoliberal aggression.

    He was sacked from the Syriza-led Greek government because he did not want to accede to the demands of the EU elite that Greece intensify its six-year depression by accepting yet more austerity.

    Left critics at the time asked what he proposed as an alternative to a Greek exit from the EU, or at least an exit from the euro.

    Varoufakis neither then, nor now has answered that question in a convincing way for many on the left.

    His intervention in the British debate seems to be similarly lacking in theoretical depth or practicable strategies. I am not even clear who his remarks are aimed at.

    He argues that “sovereignty cannot be reclaimed while remaining in Europe’s single market” and insists:
    “Brexit’s supporters argue that Britain is better off outside of the straitjacket of the EU’s legislative process while remaining within the single market.”

    This would suggest Britain becomes a member of European Free Trade Agreement (EFTA).

    Through the European Economic Area, (EEA) Agreement, the three EFTA states — Norway, Iceland and Liechtenstein — are equal partners in the EU internal market, on the same terms as the EU member states, including the free movement of goods, persons, services and capital, but having equal rights means they also have the same obligations.

    Those arguing exit from a left perspective have not been arguing this.

    Labour Leave, for example, argues: “Because the UK is the fifth-largest economy in the world, (and Norway isn’t in the top 20) Labour Leave believes the UK should take a different route outside the EU.

    “Nevertheless, the people of Norway overwhelmingly voted against joining the EU because the Norwegian Parliament decides how much it contributes to the EU and what their EU contribution is spent on.”

    And John Foster, in his recent pamphlet published by the CP, argues there would be real benefits in a British exit because “EU rules would not apply if Britain was not in EFTA and traded on the same basis as Japan, the US or China.

    “Britain’s economy is much bigger than those of Norway and Switzerland and much less dependent on EU trade.”

    These positions are simply ignored by Varoufakis and, instead, he argues: “To reclaim its democracy, Britain should vote to stay in the EU in order to confront the EU institutions from within. The operative words here being: ‘confront’ and ‘within’.”

    This assumes, despite the Greek experience, that the institutions and treaties on which the EU is based are amenable to such reform — which is odd, given that the nature, purpose and history of the EU is the prosecution of the class war at European level by different national capitalist classes through adopting a common position in exploiting labour.

    In other words, there is no coherent ruling class at a European level.

    The second straw man proposed by Varoufakis is that “Brexit will make the EU’s fragmentation faster and surer, begetting a post-modern 1930s from which the UK will not escape even if out of the EU.”

    Varoufakis believes that the EU is already disintegrating and that a British exit will hasten that process.

    This, interestingly enough, is pushing precisely the opposite argument that supporters of RIC/RISE and others made during the Scottish referendum where the supposed disintegration of the British state was to be welcomed as a blow to imperialism.

    The collapse of the imperialist EU is by contrast seen as a backward step for Varoufakis. He believes that collapse will lead to something worse.

    He gazes into his crystal ball and predicts a new Deutschmark zone, including the big players in northern Europe, Germany at the centre mired in deflation because of the strength of the Deutschmark, a Latin southern bloc, France, Spain etc crippled by high inflation and high unemployment and finally, “with ultra-nationalism, toxic social conservatism and a beggar-thy-neighbour migration and economic policy mindset taking hold in the east.”

    Since Varoufakis does not seek to justify why he believes this scenario is likely, for example why the close political and economic alliance of France and Germany will collapse, while arguing that the very same countries he believes vulnerable to ultra-nationalism will be able to generate a movement for radical reform if they remain in the EU, we will not try to construct his rationale.

    Instead we will look at the actual economic and political situation which the EU has created and continues to create. For it is the EU that is impoverishing some member states to the advantage of others, creating serious geopolitical divides; it is the EU that is imposing austerity and thereby hastening the rise of fascist and racist movements; it is the EU that is stifling economic development, and not only of European countries.

    Indeed we only need to look at steel to see how the EU works against working-class interests. On the one hand the EU does not allow member states to support a business on the grounds that it might distort competition in the single market. The final decision on whether state aid is allowed is down to the unelected European Commission.

    The EU also acts in an egregious way when dealing with economic development within its boundaries.

    Under the 2012 fiscal compact, all eurozone countries have to achieve a balanced budget by 2019.

    The annual deficit must be less than 0.5 per cent of GDP and national debt no more than 60 per cent of GDP.

    The massive cuts required have imposed severely deflationary austerity on the entire eurozone economy.

    Of course it is not bad news for all members of the EU. The poorest performers, Greece, Ireland, Portugal and Spain, have a massive trade deficit in relation to Germany, which grew exponentially between 1998 and 2006, according to Eurostat.

    It is this and the associated austerity which have given the ultra-right a base in EU countries. And this badly undermines Varoufakis’s argument for reform of the EU.

    Social democracy’s failure to confront austerity because it is wedded to the EU, among other things, is leading to electoral disaster right across Europe.

    Neofascist parties, by contrast, are on the rise in Poland, Denmark, Austria, Belgium, Hungary, Finland, Sweden and the Netherlands.

    These are the real dogs of Europe that we need to confront and we do that by throwing off the economic and political straitjacket of the EU and fighting for a Labour victory in 2020, accompanied and supported by a revival of a radical Scottish Labour Party.

    A British exit would signal the end of the dominance of the capitalist, neoliberal EU project.

    This would encourage the left in other countries to make the same journey and together we can build another Europe. It really is possible.


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