Varoufakis is not the only Africanist Economist in Syriza. Lapavitsas, a Professor at the School of Oriental and African Studies, too is convinced that his country ought to split off from Europe, squeeze through the Suez Canal, sail past the Equator and claim its rightful place between Mugabe's Zimbabwe and a Mozambique ruled by a resurrected Samora Machel.
Is Lapavistas stupider than Varoufakis? Let us weigh up the evidence
1) Lapavistas thinks accepting a bailout will be recessionary- i.e. aggregate demand will fall. This is false. If liquidity is restored, Aggregate Demand will go up. If there is no bail out, Greece loses its export market. Investment dries up. The Greek slump actually began before Govt spending was curtailed because of the poor climate for start-ups. Lapavistas, quite ludicrously, speaks of a mere 3 months of pain before Grexit restores prosperity. External depreciation takes 18 months under the best of circumstances. As for his proposed 1 to 1 conversion to the Drachma, European Law holds that Contracts denominated in Euros have to be paid in Euros. As for Vulture funds suing in U.S courts and grabbing Greek assets, our boy has nothing to say.
By contrast, Varoufakis simply puts his hands down the back of his pants and draws out fistfuls of shit which he calls chocolate cake.
Advantage Varoufakis.
2) Varoufakis moans that the bailout is Versailles, Lapavistas says it's not Brest Litovsk, it buys no time for the Bolsheviks (i.e. Syriza) to reorganize and rearm so as to kill their own people more plentifully than the Germans.
Advantage Lapavistas.
3) Varoufakis is for Privatisation. Lapavistas invokes Harold Macmillan's 'Selling the family Silver' fallacy. When I sell an asset, I get cash now and nothing later. When the Govt sells an asset, it gets cash now as well as tax revenue on the stream of profits that the asset generates in, more efficient, private hands.
Lapavistas now leads by one point.
4) Lapavitsas says Euro mechanisms are 'reified class practice'. Fiat money always is. Nothing can change this. So you have to get out of the Euro. Also the Drachma. Cowrie shells are the way to go.
Varoufakis is getting desperate. He blurts out, to a bunch of hedge fund managers- i.e. the vultures who profit from the collapse of a monetary union- that he tried to hack the Tax files of every citizen. He gets charged with treason. Suddenly he's all over the news, shoving his hands down the back of his pants and feasting on his own shit.
Sorry, Lapavitsas. Your cowrie shells aint gonna cut it. Go back to SOAS and concentrate on trying to fuck up genuinely black people you worthless gobshite.
Showing posts with label Varoufakis. Show all posts
Showing posts with label Varoufakis. Show all posts
Saturday, 8 August 2015
Friday, 7 August 2015
Naked Greek Aggression against India!- fatwa Stathis Gorgouris!
Pyrrho came to Punjab along with the Macedonian invaders. Instead of drinking lassi and dancing bhangra the fellow got talking to some naked Digambaras, gymonosophists as the Greeks called them, and learnt- if not syadvada- then at least the catuskoti 'trilemma'. Later, Timon- an over the hill lap-dancer refused re-employment as a bouncer at the establishment responsible for his infamy, thus becoming the archetype of the tenure denied Liberal Arts Post Grad- penned Pyrrhonist 'Silloi' (lampoons) to put paid to Phenomenology's Procrustean project with respect to such Platonic Shadows as constitute Psilosophy's pathologies of Thought.
So far so good. The Greeks- not even that Demetrius, defeated by Kalinga's Karevail in Magadha, and whom Modi was recently mocked for mentioning- were not aggressors towards India. They enriched it immeasurably.
Even if Ind, which Wine conquered without Violence, had been unreceptive; Nonnus's Dionysicaca- or its echoes in Camoen's Lusiadas- reminds us that amphorae shipped to Amaravathi via Arikamedu, and for that reason returned unsold, yet earned their vendor a profit- so much richer and more robust had the vintage grown during that round trip.
Syriza’s extraordinary problem – which would not be faced by any other political party in government – was to alter internal institutional frameworks under conditions of external institutional assault.
So, Stathis is saying, if some other party desiring to alter the internal institutional framework had been elected- Golden Dawn for example- the Troika would not have gone in for 'external institutional assault.' Okay. Maybe the Troika are secret Nazis. Fine. But Greece also has a Communist Party, a Green Party, a Classical Liberal Party and so on, all of whom would want to change the 'internal institutional framework'. Why does Stathis think they would not have faced any problem from the Troika? There is only one possible answer. Other parties might think they want to alter the internal framework, they might even try to alter it, but- because their Political Theory is not correct- it would be a case of impossible attempt. Thus no collision with the Troika would occur.-
Although the history of the Left has produced an extraordinary theoretical legacy, which continues to be the nucleus of almost all radical thinking, it has nonetheless left a trail of extraordinary failures in practice.
Anyone who thinks that Syriza as a left phenomenon has ended, been coopted or defeated, etc., is thinking too much too fast. Too much complexity is being swept carelessly under the rug. For this reason, despite everyone’s intense attention to the recent traumatic developments, it’s worth conducting an assessment of the full trajectory of Syriza in government.
Radicalising democracy
As a prelude to mapping the details, let me confess that the overall course of events has made me aware of the weakness of theoretical predeterminations, and especially of the dangerous tendency, common in left thought, of grasping at schematic theoretical straws in the face of the perplexing circuitry of politics in action – all in some fashion remnants of the history of the left, no matter how dressed up with new terminologies and allegedly new significations.
The field of historical action in the last few months has exceeded the theoretical armory that is presumed to be somehow its strongest signifying capacity, so that in all its turns, sometimes even counter-intended manifestations, historical action needs to be considered in itself, from its own standpoint, as it is happening and in the terms that it sets as it is happening, rather than encountered from the safety of our preexisting theories.
Left governmentality
My wager here is to investigate a terrain that we can name left governmentality which has emerged as a problematic challenge with the worldwide, even if politically and culturally heterogeneous, phenomenon of the assembly movements since the Arab Spring, to which Syriza’s rise owes a great deal.
So far so good. The Greeks- not even that Demetrius, defeated by Kalinga's Karevail in Magadha, and whom Modi was recently mocked for mentioning- were not aggressors towards India. They enriched it immeasurably.
Even if Ind, which Wine conquered without Violence, had been unreceptive; Nonnus's Dionysicaca- or its echoes in Camoen's Lusiadas- reminds us that amphorae shipped to Amaravathi via Arikamedu, and for that reason returned unsold, yet earned their vendor a profit- so much richer and more robust had the vintage grown during that round trip.
Wine.
Not piss.
Soma, of course, was in such short supply that there was a market for my Vedic ancestor's urine.
But no export market.
Credentialised Academia was not yet Globalised.
Ever since it became so, we have exported plenty of Professors who take the piss out of their subject.
Spivak, Sen, the two Guhas, the list is endless.
By contrast, Greece can boast only a solitary Varoufakis.
A hyphenated Greek, true.
But then our biggest clowns are wholly ex-pat and hyphenated in all but name.
Still, India can't rest on its laurels.
Take the case of Stathis Gorgouris- a Literature Prof. at Columbia.
He is openly challenging Spivak's title to be the most illiterate pretend Lefty on Earth!
You don't believe me?
Take a gander at his article in Open Democracy published today.
Syriza’s extraordinary problem – which would not be faced by any other political party in government – was to alter internal institutional frameworks under conditions of external institutional assault.
So, Stathis is saying, if some other party desiring to alter the internal institutional framework had been elected- Golden Dawn for example- the Troika would not have gone in for 'external institutional assault.' Okay. Maybe the Troika are secret Nazis. Fine. But Greece also has a Communist Party, a Green Party, a Classical Liberal Party and so on, all of whom would want to change the 'internal institutional framework'. Why does Stathis think they would not have faced any problem from the Troika? There is only one possible answer. Other parties might think they want to alter the internal framework, they might even try to alter it, but- because their Political Theory is not correct- it would be a case of impossible attempt. Thus no collision with the Troika would occur.-
Although the history of the Left has produced an extraordinary theoretical legacy, which continues to be the nucleus of almost all radical thinking, it has nonetheless left a trail of extraordinary failures in practice.
A theoretical legacy which continually prompts extraordinary practical failures is either shite ab ovo or has been implemented exclusively by shite people. Either way, 'the nucleus of radical thinking' needs to either stop being shite or so exclusively adversely selective of its exponents.
Fuck me, this Stathis dude might be on to something! I'm not saying he could redeem our own corrupt Kafila caravan of tenured shitheads- they kissed Satan's rectal ring long ago- but maybe he can put our young people on the right path.
I understand the dialectical relation between theory and practice, of course, but we have to admit that in real historical terms this dialectic is terribly uneven, to the degree in fact that it may render questionable a great many of these theoretical achievements, which, if we are going to be rigorously leftist about it, cannot really stand entirely on their own.
I understand the dialectical relation between theory and practice, of course, but we have to admit that in real historical terms this dialectic is terribly uneven, to the degree in fact that it may render questionable a great many of these theoretical achievements, which, if we are going to be rigorously leftist about it, cannot really stand entirely on their own.
Cool! Spivak and Sen never spoke like this coz there was a Left Front Govt. in their home State. Thus, they had to 'extend and pretend' that their indebtedness to RAND's Arrow or that sociopath of Ann Randian proportions, Paul de Man, served some occult 'subversive' purpose.
To this general account, I now add a series of realizations that have arisen from the experience of a government of the left in Greece since Syriza was elected, a complex, circuitous, contradictory, and internally conflictual trajectory that is still unfolding in full force.
To this general account, I now add a series of realizations that have arisen from the experience of a government of the left in Greece since Syriza was elected, a complex, circuitous, contradictory, and internally conflictual trajectory that is still unfolding in full force.
Anyone who thinks that Syriza as a left phenomenon has ended, been coopted or defeated, etc., is thinking too much too fast. Too much complexity is being swept carelessly under the rug. For this reason, despite everyone’s intense attention to the recent traumatic developments, it’s worth conducting an assessment of the full trajectory of Syriza in government.
Radicalising democracy
As a prelude to mapping the details, let me confess that the overall course of events has made me aware of the weakness of theoretical predeterminations, and especially of the dangerous tendency, common in left thought, of grasping at schematic theoretical straws in the face of the perplexing circuitry of politics in action – all in some fashion remnants of the history of the left, no matter how dressed up with new terminologies and allegedly new significations.
The field of historical action in the last few months has exceeded the theoretical armory that is presumed to be somehow its strongest signifying capacity, so that in all its turns, sometimes even counter-intended manifestations, historical action needs to be considered in itself, from its own standpoint, as it is happening and in the terms that it sets as it is happening, rather than encountered from the safety of our preexisting theories.
Okay, Stathis has gone overboard with the satire here. Indeed, it was this passage which led me to blow the whistle on this naked Greek incursion into territory upon which Spivak has raised the Triranga- viz. writing meaningless, lefty sounding, shite.
I understand how exasperating this is – indeed as exasperating as it has been to experience this phenomenon of the left in government. My hunch is – because it’s too early to tell – that this exasperation with experience and this theoretical incapacity arise directly out of the radical democratic process that makes the Syriza phenomenon different (perhaps even unique) in the history of the Left. It is, in other words, the very precarious, disorderly, an-archic, unpredictable, groundless, perilous, open-ended and resistant-to-closure ‘nature’ of democracy that has radicalized this already uneven dialectical relation between theory and practice in favor of the second.
I understand how exasperating this is – indeed as exasperating as it has been to experience this phenomenon of the left in government. My hunch is – because it’s too early to tell – that this exasperation with experience and this theoretical incapacity arise directly out of the radical democratic process that makes the Syriza phenomenon different (perhaps even unique) in the history of the Left. It is, in other words, the very precarious, disorderly, an-archic, unpredictable, groundless, perilous, open-ended and resistant-to-closure ‘nature’ of democracy that has radicalized this already uneven dialectical relation between theory and practice in favor of the second.
Wow! Stathis is saying Syriza is shit. Maybe it wouldn't have been shit if it had come to power by the bullet, not the ballot. Perhaps, if Tsipras could put to death any of his colleagues who fucked up or failed to toe the line, things would have been better.
Okay, this sounds like standard Stalinist shite. But our Literature Professor adds a twist- he calls attention to the word an-archic (without a leader). The reference is to Athens in 404 B.C- the year of the Thirty Tyrants- with the Troika taking the place of the victorious Spartans.
Thus the meaning is 'not only is Syriza shit, it is Thirty Tyrants type shit. The Troika are fucking over even the embryo of Greek Democracy and replacing it by Globalised Oligarchy pure and simple. Tsipras, or if not him, whichever of his fellow 'Thirty Tyrants' has the biggest balls, is the new Critias- not a meretricious traitor at all, but a literary useful idiot. Plato can now have his Republic & Socrates a belated martyrdom. The damage has been done. Lefty shite is now sillography simply. Varoufakis, the new Demosthenes, rises up to utter his Phillipic but then grins strangely, shoves his hands down the back of his pants and fetching out fistfuls of his own faeces, claims it to be Chocolate Cake and starts eating it. But then, like Marie Antoinette, this peacock is a hyphenated Austrian- a 'Hayekian-Marxist'- so it is just as well that he not just tells the people he has impoverished to eat cake but also demonstrates from whence that confectionery can costlessly be procured.
Left governmentality
My wager here is to investigate a terrain that we can name left governmentality which has emerged as a problematic challenge with the worldwide, even if politically and culturally heterogeneous, phenomenon of the assembly movements since the Arab Spring, to which Syriza’s rise owes a great deal.
Why does Stathis say 'wager'? Is this a, not Pascalian special pleading, but sound Pyrrhonist 'epoche' or bracketing like our own Bhagvad Gita?
If so, this posh Greek-American Professor is an Ariadne, not a Daedelus, and thus a fitting spouse for Ahimsa's Saqi.
He may be only hyphenated Greek, and teach at Columbia, but-recalling how far Euginides exceeds Rushdie- a stupid Indian like me needs to sit up and take notice.
I started this post in a militant mood. I thought, here is a Prof. with a Greek name trespassing on Ind's indalmoi of imbecility. But, fuck it, turns out even American-Greek Profs. at Columbia can't write utterly worthless shite because they know there are stupid Indians-okay, maybe there's just one really stupid Indian, namely me- who read stuff written by smart people coz they don't want to be a traitor to their own suffering people all their fucking lives.
This guy, though camouflaging himself in Spivakese- the phrase 'Left Governmentality' could be as foolish as 'strategic essentialism'- nevertheless himself points to a way of excising the idiocy of Agamben if not the vocabulary of crisis.
A couple of years ago- Stathis wrote as follows (bear in mind, he was writing for shitheads)
If it is indeed the case that, per Schmitt’s dictum, “the sovereign is he who decides on the exception” then we need to rethink sovereignty. Mere thinking about whether sovereignty is or is not a matter of exception is inadequate. Surely, we are forced to rethink sovereignty in a world where global economic agents, fully deterritorialized and beyond the boundaries of traditionally understood sovereignty, make direct political decisions that determine real territories, the terrains where actual people dwell. The essential sign of the sovereign in societies since the advent of capitalism is not the State (and therefore monarchy and law) but the national economy. The erosion of national economy as prerequisite of national independence is now the case everywhere in the world, no exceptions – another impetus to let go of the discussion of sovereignty as an extension of the monarchical law tradition of imperial Christendom.
In a society fighting against capitalist values – I am not being utopian – sovereignty needs to be located in unexceptional collective political action. Unexceptional because it can only take place every day – not once in so many years at a ballot box ritual – and it must take place by unexceptional people, people who are not in the business of politics.
- See more at: http://www.newphilosopher.com/articles/the-question-is-society-defended-against-whom-or-what-in-the-name-of-what/#sthash.CqXNVRSR.dpufSchmitt was schitt. Karl Lueger, as Mayor of Vienna, decided the 'exception'- a Yid was a Yid unless he himself liked the guy, in which case he was a Goy. That's why Lueger wasn't Sovereign. Hitler, on the other hand...fuck it, I'm not drunk enough for a reductio ad Hitlerum yet. Anyway, the Courts did in fact protect one or two Jews from Himmler.
Sovereignty is a concept which can only arise in a repeated game. Otherwise it is Fortuna simply- the transient shadow of Empery cast by the Weltgeist's Vulture.
Stathis is saying that that 'Left Governmentality' can exist as an Aumann signaller in a repeated game correlated equilibrium.
He may not be aware of the maths that proves market forces militate for sillier Schelling segregation and more tortuous 'Local Public Good' Tiebout model diversity than would be the case under contested- i.e. mimetic desire type- hegemony.
Still, Literature, which is what he teaches, has shown him the way. This guy's C.V might sound as shite as one of our own, but the fucker is Greek. What he is saying can help us. Bastard! We gotta fatwa his ass!
What?
I'm being hasty?
Stathis is too a posh pretend-Lefty talking ultracrepidarian Credentialist gobshite?
Evidence?
Here it is.
This strict isonomy (substitutability) of political actors ensures that the “self” in autonomy is unable to ever come to full self-sufficiency, full archē, for the limits of the self are the otherness of the other, who is utterly substitutable in a process of itinerant othering which makes the key element of autonomy to be self-alteration. This is best understood in theatrical terms where I is an other (Rimbaud) achieves meaning in a constitutive way: where the “I” inheres an otherness that makes the identitary utterance of being (“I am”) not quite adequate. Rimbaud’s famous phrase J’est un autre disarticulates the Cartesian cogito (Je suis) but also the Kantian anthropological prerogative that identifies the human being as the animal who can say “I”, for in this case “I” cannot be enacted but by the third person verb form, so that “to be” becomes demonstrably the verb of being an other - See more at: http://www.newphilosopher.com/articles/the-question-is-society-defended-against-whom-or-what-in-the-name-of-what/#sthash.CqXNVRSR.dpuf
Okay. I admit, the above sounds bad- indeed, rotten enough to be tenure-seeking Babu.
But, Stathis has once again instrumentalized oxymoron to preach a sermon from Samuelson.
If isonomy obtains, so does ergodicity.
Politics is empty.
Alterity is Genidentity- deadlocked Concurrency a la Djikstra's starving philosophers.
This is the mystics' Yoga Vasisth cashing out as the metic Vyadh.
Stathis, unlike Yuddhishtra whom God vouchsafed an education in Statistical Decision Theory as well as the 'Song of the Billionaire Butcher', has had a purely American, wholly Credentialist, 'literary' (i.e. shite) education. Nevertheless, he hasn't forgotten how to be Greek. Look at the following-
In democracy, one may say that the “I” is already an other because the utterance I am is already caught in the sharing of archē (metechein tēs archēs is Aristotle’s exact phrase), mediated by lot, by being allotted (nemein) equally the responsibility of political action. This would be an answer to those who think that substitutability is the weapon of consumer capitalist homogenization. For in that case substitutability takes place entirely in the language of numbers, while in democracy the equivalence is predicated on the recognition of every one’s heterogeneous otherness. Unlike how liberalism promotes and underlies the confusion of equality with social homogenization, I am talking here of political equivalence in a social sphere of ineradicable differentiation and contention. This is an equivalence that cannot be mathematized, since its operating system is not logic (of numbers) but lot (nomos). - See more at: http://www.newphilosopher.com/articles/the-question-is-society-defended-against-whom-or-what-in-the-name-of-what/#sthash.CqXNVRSR.dpuf
Christ says 'ye are as Gods', meaning when it falls to your lot to serve on a Jury, or hold some other Public Office, you must judge not according to your own preferences and prejudices but in a manner that might be apophatic- no question of 'Public Justification' here giving scope for hired sophists (the Paraclete itself began its career as an Athenian ambulance chasing attorney)- but must be Hannan Consistent, i.e. minimise regret according to the Muth rational Mulitplicate Weight Update Algorithm, Evolution itself uses. This militates for not homogeneity but Nature's infinite variety which Custom can not stale.
Yuddhishtra's Vishada was cured by this knowledge; Arjuna, being an agent, not a principal, had his Depression dispelled by Krishna's Theophany, but Pyrrho actually talked to some naked Indian dudes rather than just getting gay with them and...what? Could Athenian Democracy really have been repaired? Dunno. But its recurrent Alcibiades adventurists would more quickly have despaired.
Christ.
A Greek word.
Triumvirate or Troika, nothing imposed on Greece isn't transubstantiated.
Popular Sovereignty, the Rule of Law, Xenophilia
Greece will make a Holy Trinity of the challenges it faces.
Even this worthless Hindu will benefit.
Fuck are you waiting for?!
Fatwa Stathis immediately!
Thursday, 6 August 2015
Varoufakis's flawed Game Theory
Some months ago, Game Theory was getting headlines across the world in connection with Grexit.
Zero Hedge had the best brief analysis but it was beside the point because, as Varoufakis pointed out, Greece was not playing a 'bargaining' game. It knew its own pay-off from Grexit was catastrophic whereas that for the Eurogroup was potentially positive because its credibility might increase by getting rid of a bad apple off its own bat rather than under pressure from the Market.
This being the case, what type of game was Varoufakis playing?
Look at things from his point of view. He believed he was smart. He knew he was Hayekian (i.e. pro-market) on the crucial question of Greece's bloated, inefficient, feather-bedded Public Sector. He was a Europeanist, not a Nationalist, wishing to strengthen Europe's legitimacy vis a vis Athens by making the former, not the latter, more democratic (i.e. creating a situation where Greece's small population would have less weight in decision making compared to the huge population of the 'core' countries).
Thus, 'subsidiarity' would stop meaning that Greece could be a unique Tiebout model (i.e. choose its own mix of Taxes and Public Goods) and start meaning that Greece would be run by people with Greek names but a completely foreign outlook. In other words, this ex-pat amateur politician wouldn't need to worry about Greece's complicated internal politics because 'Democratic Accountability' would no longer be to the Greek voter but the European voter- in which case, naturally, the abstract language of Economics, in which he had an absolute advantage, gained salience over purely local shibboleths.
If such indeed were Varoufakis's beliefs, what type of game would he have wanted to play? The answer, I think, is he was looking for an Aumann correlated equilibrium- i.e. a situation where all parties can get to a mutually beneficial agreement in a repeated game by the help of 'public signals' from a wiser being above the fray. Just as wily Odysseus still requires some helpful nudges from the Goddess Athena, so too, did Europe. True, the Odyssey is a story of terrible travail but only because the Olympian Gods were at odds with each other. Varoufakis, as a Game Theorist, was however aware that if all agents are rational and their beliefs are unambiguous and common knowledge then conditions for 'Aumann agreement ' obtain- i.e. it would be impossible for them to 'agree to disagree'. Instead, an 'Aumann signaller' will quickly be recognized by all parties and so agreement can be arrived at much more quickly and lower computational cost.
We all know that Varoufakis failed ignominiously. What was his excuse? He is quoted as saying- '“There are elements that want to go back and tell their constituencies, ‘We humiliated the Greek government.’ There are elements that want us to fail, hoping that our government will be replaced. This isn’t constructive. Sometimes I wish they had a skilled game theorist on their side.”
How should we parse this statement? Let us look at 2 radically different interpretations, two extremes that define a hermeneutic spectrum, before weighing the evidence and making up our minds.
1) anti-European-
'Some voters in Europe are either sadists or harbor animus against Greeks. Thus they will vote for those who say 'we insulted and injured Greece'.
'Furthermore, some powerful interest groups at the heart of European Politics want new popular Parties like Syriza to fail. They want 'regime change' from which they themselves profit regardless of the will of the local people.
'This type of European voter, this type of vested interest group manipulating things at the center of European decision making, is not interested in constructing a better Europe. They have a 'zero sum' mentality. It is not enough that they get richer, more powerful. No. Someone has to become poorer and weaker, someone has to be insulted and injured for them to feel happy.
'This being the case- Europe is another name for Colonial domination and the arbitrary tyranny of an occulted cabal harboring racist views towards Greeks and motivated by an unappeasable ire against popular democracy, transparent Govt., no matter where it raises its flag.
'This evil Europe, hell bent on 'winner take all' vindictiveness, will destroy itself. Those whom the Gods wish to destroy they first make mad. Hate and Envy and the determination to control everything have driven the corrupt cabal, and their Racist voters, pathologically insane.
'Sometimes I feel pity for them- I wish they had at least one intelligent person in their ranks- a skilled Game theorist who could do the necessary complicated calculations and, no matter how hate-filled he might himself be, nevertheless recognize the cold and immutable mathematics that seals the doom of his own side. These evil men may indeed go over the cliff like the Gadarene swine. But let them at least have heard the truth, for they are men not pigs, before going to destruction'.
2) pro-European-
'The Euro, like the ERM it replaced, is vulnerable to Market attacks. What happens is, like a Lion hunting gazelles, the hedge fund managers zero in on the weakest member of the herd. Zahavi, a Zoologist whose handicap principle is extensively studied by Game Theoreticians- showed that if strong gazelles engage in stotting behaviour- i.e. jumping in a showy fashion- they can distract the Lion so that the weak gazelle is saved. All gazelles benefit if Lions go hungry and their cubs starve. It makes sense for strong members of a currency union to take on this type of cost because in saving the weakest member they also benefit themselves.
'However, in Europe there are some stupid and ignorant people who don't understand that the gazelle can triumph over the Lion. They have the ideology of the 'victim' who blames his own weakness for his predicament. Knowing they themselves will sooner or later fall victim to the Lion, their only pleasure in life is hearing that for now some other has met that grizzly fate and so they can live on another anguished day.
'There is one consoling philosophy such 'victims' might cling to. It is the belief that by being bullied, a gazelle can turn into a Lion. They can say 'if Greece is bullied and humiliated, it will decide to become stronger. Thus our strength is increased.
However, this is a delusive philosophy. It keeps the weak weak and denies them even the Gospel of Popular Democracy.
If you try to bring down the elected Govt. of your neighbor, who will speak for you when the cabal running things throws off its democratic disguise in your own home country? Do you really save on your heating bills if your neighbor's house is set on fire by debt-collectors from the Utility company?
What is happening in the Eurogroup is not constructive. Greece has a vision of a better Aumann correlated Equilibrium for us all. The only losers will be the 'vulture funds' and opportunistic Money Market speculators. Democracy's victory is Plutocracy's defeat. This is a mathematical truth. I wish the other side had a good Game Theorist. Then I could sit quietly and not have to attract publicity. After all, I too am European. How will it profit me to gain the fame of a Cassandra?
As I said these are the 2 extremes of the spectrum for the reception of Varoufakis's account of his European negotiations.
I discount (1)- the anti-European interpretation because it is now clear that everyone- except 'useful idiots' like Krugman and Galbraith- knew that Europe won't suffer much, indeed might gain, from Grexit. A Club that weeds out the weakest while starving, not just the lion, but even the vulture needs fear no attack. We human beings dominate the planet, though we are puny compared to our chimpanzee cousins. Homo homini lupus has been the secret of our success.
What about (2)?
Surely, the interpretation I have given does not square with Varoufakis's actual utterances? He has never mentioned Aumann correlated equilibrium or the Zahavi handicap principle or anything of the sort.
To do the former, he would need to present a proper model showing how the ECB could work better and the Euro fulfill a higher economic function than at present envisaged. This has not happened.
To appeal to the latter, he would need to have used emollient words to stroke the ego of the Germans and other Nordics, using flattering, thymotic, arguments to get them to engage in 'stotting' such that the pain is taken by the Money Managers of New York and London and Tokyo and Shanghai. Did he in fact do any such thing? No. This second Demosthenes, rose up to deliver a blistering Phillipic, but suddenly decided to put his hands down the back of his pants and pull out a fistfuls of shit which he called 'chocolate pudding' and which he proceeded to eat. He got very angry when his colleagues in the Eurogroup refused to share his tasty treat. He shouted it was illegal for them to go off and dine on their own far away from the spectacle of his coprophagy. But he couldn't get an injunction from the European Court to force the Eurogroup to allow him to eat his own shit at their dinner table. Still, he mentions this terrible illegality to us all the time. Good for him. This is a Marie Antoinette hasn't just told her people to eat cake but to show from where it can be costlessly procured.
Was Varoufakis's Game theory flawed? My conclusion- no he was stupid and ignorant simply. Most Professors are.
Zero Hedge had the best brief analysis but it was beside the point because, as Varoufakis pointed out, Greece was not playing a 'bargaining' game. It knew its own pay-off from Grexit was catastrophic whereas that for the Eurogroup was potentially positive because its credibility might increase by getting rid of a bad apple off its own bat rather than under pressure from the Market.
This being the case, what type of game was Varoufakis playing?
Look at things from his point of view. He believed he was smart. He knew he was Hayekian (i.e. pro-market) on the crucial question of Greece's bloated, inefficient, feather-bedded Public Sector. He was a Europeanist, not a Nationalist, wishing to strengthen Europe's legitimacy vis a vis Athens by making the former, not the latter, more democratic (i.e. creating a situation where Greece's small population would have less weight in decision making compared to the huge population of the 'core' countries).
Thus, 'subsidiarity' would stop meaning that Greece could be a unique Tiebout model (i.e. choose its own mix of Taxes and Public Goods) and start meaning that Greece would be run by people with Greek names but a completely foreign outlook. In other words, this ex-pat amateur politician wouldn't need to worry about Greece's complicated internal politics because 'Democratic Accountability' would no longer be to the Greek voter but the European voter- in which case, naturally, the abstract language of Economics, in which he had an absolute advantage, gained salience over purely local shibboleths.
If such indeed were Varoufakis's beliefs, what type of game would he have wanted to play? The answer, I think, is he was looking for an Aumann correlated equilibrium- i.e. a situation where all parties can get to a mutually beneficial agreement in a repeated game by the help of 'public signals' from a wiser being above the fray. Just as wily Odysseus still requires some helpful nudges from the Goddess Athena, so too, did Europe. True, the Odyssey is a story of terrible travail but only because the Olympian Gods were at odds with each other. Varoufakis, as a Game Theorist, was however aware that if all agents are rational and their beliefs are unambiguous and common knowledge then conditions for 'Aumann agreement ' obtain- i.e. it would be impossible for them to 'agree to disagree'. Instead, an 'Aumann signaller' will quickly be recognized by all parties and so agreement can be arrived at much more quickly and lower computational cost.
We all know that Varoufakis failed ignominiously. What was his excuse? He is quoted as saying- '“There are elements that want to go back and tell their constituencies, ‘We humiliated the Greek government.’ There are elements that want us to fail, hoping that our government will be replaced. This isn’t constructive. Sometimes I wish they had a skilled game theorist on their side.”
How should we parse this statement? Let us look at 2 radically different interpretations, two extremes that define a hermeneutic spectrum, before weighing the evidence and making up our minds.
1) anti-European-
'Some voters in Europe are either sadists or harbor animus against Greeks. Thus they will vote for those who say 'we insulted and injured Greece'.
'Furthermore, some powerful interest groups at the heart of European Politics want new popular Parties like Syriza to fail. They want 'regime change' from which they themselves profit regardless of the will of the local people.
'This type of European voter, this type of vested interest group manipulating things at the center of European decision making, is not interested in constructing a better Europe. They have a 'zero sum' mentality. It is not enough that they get richer, more powerful. No. Someone has to become poorer and weaker, someone has to be insulted and injured for them to feel happy.
'This being the case- Europe is another name for Colonial domination and the arbitrary tyranny of an occulted cabal harboring racist views towards Greeks and motivated by an unappeasable ire against popular democracy, transparent Govt., no matter where it raises its flag.
'This evil Europe, hell bent on 'winner take all' vindictiveness, will destroy itself. Those whom the Gods wish to destroy they first make mad. Hate and Envy and the determination to control everything have driven the corrupt cabal, and their Racist voters, pathologically insane.
'Sometimes I feel pity for them- I wish they had at least one intelligent person in their ranks- a skilled Game theorist who could do the necessary complicated calculations and, no matter how hate-filled he might himself be, nevertheless recognize the cold and immutable mathematics that seals the doom of his own side. These evil men may indeed go over the cliff like the Gadarene swine. But let them at least have heard the truth, for they are men not pigs, before going to destruction'.
2) pro-European-
'The Euro, like the ERM it replaced, is vulnerable to Market attacks. What happens is, like a Lion hunting gazelles, the hedge fund managers zero in on the weakest member of the herd. Zahavi, a Zoologist whose handicap principle is extensively studied by Game Theoreticians- showed that if strong gazelles engage in stotting behaviour- i.e. jumping in a showy fashion- they can distract the Lion so that the weak gazelle is saved. All gazelles benefit if Lions go hungry and their cubs starve. It makes sense for strong members of a currency union to take on this type of cost because in saving the weakest member they also benefit themselves.
'However, in Europe there are some stupid and ignorant people who don't understand that the gazelle can triumph over the Lion. They have the ideology of the 'victim' who blames his own weakness for his predicament. Knowing they themselves will sooner or later fall victim to the Lion, their only pleasure in life is hearing that for now some other has met that grizzly fate and so they can live on another anguished day.
'There is one consoling philosophy such 'victims' might cling to. It is the belief that by being bullied, a gazelle can turn into a Lion. They can say 'if Greece is bullied and humiliated, it will decide to become stronger. Thus our strength is increased.
However, this is a delusive philosophy. It keeps the weak weak and denies them even the Gospel of Popular Democracy.
If you try to bring down the elected Govt. of your neighbor, who will speak for you when the cabal running things throws off its democratic disguise in your own home country? Do you really save on your heating bills if your neighbor's house is set on fire by debt-collectors from the Utility company?
What is happening in the Eurogroup is not constructive. Greece has a vision of a better Aumann correlated Equilibrium for us all. The only losers will be the 'vulture funds' and opportunistic Money Market speculators. Democracy's victory is Plutocracy's defeat. This is a mathematical truth. I wish the other side had a good Game Theorist. Then I could sit quietly and not have to attract publicity. After all, I too am European. How will it profit me to gain the fame of a Cassandra?
As I said these are the 2 extremes of the spectrum for the reception of Varoufakis's account of his European negotiations.
I discount (1)- the anti-European interpretation because it is now clear that everyone- except 'useful idiots' like Krugman and Galbraith- knew that Europe won't suffer much, indeed might gain, from Grexit. A Club that weeds out the weakest while starving, not just the lion, but even the vulture needs fear no attack. We human beings dominate the planet, though we are puny compared to our chimpanzee cousins. Homo homini lupus has been the secret of our success.
What about (2)?
Surely, the interpretation I have given does not square with Varoufakis's actual utterances? He has never mentioned Aumann correlated equilibrium or the Zahavi handicap principle or anything of the sort.
To do the former, he would need to present a proper model showing how the ECB could work better and the Euro fulfill a higher economic function than at present envisaged. This has not happened.
To appeal to the latter, he would need to have used emollient words to stroke the ego of the Germans and other Nordics, using flattering, thymotic, arguments to get them to engage in 'stotting' such that the pain is taken by the Money Managers of New York and London and Tokyo and Shanghai. Did he in fact do any such thing? No. This second Demosthenes, rose up to deliver a blistering Phillipic, but suddenly decided to put his hands down the back of his pants and pull out a fistfuls of shit which he called 'chocolate pudding' and which he proceeded to eat. He got very angry when his colleagues in the Eurogroup refused to share his tasty treat. He shouted it was illegal for them to go off and dine on their own far away from the spectacle of his coprophagy. But he couldn't get an injunction from the European Court to force the Eurogroup to allow him to eat his own shit at their dinner table. Still, he mentions this terrible illegality to us all the time. Good for him. This is a Marie Antoinette hasn't just told her people to eat cake but to show from where it can be costlessly procured.
Was Varoufakis's Game theory flawed? My conclusion- no he was stupid and ignorant simply. Most Professors are.
Sunday, 2 August 2015
Varoufakis rotting on about the Eurozone.
Here is the rotter Varoufakis rotting on about the Eurozone- (my comments are in bold)
A paradox lurks in the foundations of the eurozone. No paradox lurks in the foundation of the Eurozone provided its Central Bank is genuinely independent of any and every Govt. Why? Money is the solution to a coordination game for a unit of account and a store of value. No doubt, Credit Creation does need a Govt. to provide Law and Order and plug market failures but, to fulfill its function it must appear independent. Otherwise the Govt could use it for deficit financing and gain an invisible tax type windfall due to temporary money-illusion. A Govt. controlled Money Supply is a paradox- it is a case of the poacher being appointed game-keeper without his pay-off matrix being changed.
Governments in the monetary union lack a central bank that has their back, while the central bank lacks a government to support it. Rubbish. The Central Bank needs Govts. to plug market failures. It is in its own interest to back Governments which do their job properly. The ECB is not causing a problem for any Govt. which is truthful and follows the rules. It can't help Varoufakis because he is a liar and his policies would destroy Greece. Suppose this was not the case. Suppose the ECB, or a post Grexit Greek Central Bank, backed him to the hilt. What would happen? Hyperinflation and Economic collapse.
This paradox cannot be eliminated without fundamental institutional changes. But there are steps member states can take to ameliorate some of its negative effects. One such step that we contemplated during my tenure at the Greek ministry of finance focused on the chronic liquidity shortage of a stressed public sector and its impact on the long-suffering private sector.
The phenomenon is both the cause and consequence of delayed tax payments to the state, reinforcing the cycle of generalised illiquidity.
To address this problem, our simple idea was to allow the multilateral cancellation of arrears between the state and the private sector using the tax office’s existing payments platform. Taxpayers, whether individuals or organisations, would be able to create reserve accounts that would be credited with arrears owed to them by the state. They would then be able to transfer credits from their reserve account either to the state (in lieu of tax payments) or to any other reserve account.
Suppose, for example, Company A is owed €1m by the state; and it owes €30,000 to an employee — plus another €500,000 to Company B, which provided it with goods and services. The employee and Company B also owe, respectively, €10,000 and €200,000 in taxes to the state. In this case the proposed system would allow for the immediate cancellation of at least €210,000 in arrears.
Okay, lets try this. My cousin Vivekides Iyeromogolou pays 100 Euros cash in bribes to get a Govt. contract to supply 100,000 of worthless rubbish- profits to be split according to the time honored formula such that all relevant wheels are greased.
Currently, since the ECB won't play ball, Vivekides gets nothing but a Credit in the Govt. ledger- which discourages him from such activity.
Under Varoufakis's scheme, however, he can immediately- no questions asked- trade this 100,000 to some guy who genuinely owes that much in taxes. Currently this guy is paying up in Euros using his domestic Bank account because that Bank might go bust anyway. Under the new scheme he can have his cake and eat it too. Essentially you now have the possibility for a complicated deal where a criminal with some 'black Euros' can get a 10,000 credit in his Bank account so as to create a 'legal' front for his criminal gang, by paying Vivekides 1000 Euros cash down in return for which Vivekides hands over his 100,000 credit for worthless rubbish. This 100,000 credit eventually finds its way to a genuine tax payer- a, perhaps, not over scrupulous businessman holding 'blue Euros' (on an analogy with the Argentinian blue dollar, which functions like an unofficial foreign exchange auction) arising from off the books, or falsely invoiced, transactions by exporters, who now settles with the Greek Treasury at a much smaller sacrifice of Internationally accepted fungible assets than would otherwise be the case. Everybody wins- except the Greek Treasury which gets stuck with its own worthless scrip. Varoufakis just fucked over his own Govt.- again!
Currently, since the ECB won't play ball, Vivekides gets nothing but a Credit in the Govt. ledger- which discourages him from such activity.
Under Varoufakis's scheme, however, he can immediately- no questions asked- trade this 100,000 to some guy who genuinely owes that much in taxes. Currently this guy is paying up in Euros using his domestic Bank account because that Bank might go bust anyway. Under the new scheme he can have his cake and eat it too. Essentially you now have the possibility for a complicated deal where a criminal with some 'black Euros' can get a 10,000 credit in his Bank account so as to create a 'legal' front for his criminal gang, by paying Vivekides 1000 Euros cash down in return for which Vivekides hands over his 100,000 credit for worthless rubbish. This 100,000 credit eventually finds its way to a genuine tax payer- a, perhaps, not over scrupulous businessman holding 'blue Euros' (on an analogy with the Argentinian blue dollar, which functions like an unofficial foreign exchange auction) arising from off the books, or falsely invoiced, transactions by exporters, who now settles with the Greek Treasury at a much smaller sacrifice of Internationally accepted fungible assets than would otherwise be the case. Everybody wins- except the Greek Treasury which gets stuck with its own worthless scrip. Varoufakis just fucked over his own Govt.- again!
Suddenly, an economy such as Greece’s would acquire important degrees of freedom within the existing European monetary union. In a second phase of development, which we did not have time to consider properly, the system would be made accessible through smartphone apps and identity cards, guaranteeing that it would be widely adopted.
In other words all current tax payers with access to black or blue Euros would immediately be able to buy 'tax Euros' for pennies. The Treasury gets worthless 'tax Euros' which no one will be willing to receive for the supply of stuff which aint worthless simply. Govt. can't buy anything. It can't raise any revenue. The State has withered away- thanks to Varoufakis's genius. No doubt, as a former President of the Black Student's Alliance at Essex university circa 1978, Varoufakis will be declared President for Life by the grateful Greek people whose desire to adhere to the 'Europeanist' project actually meant joining Zimambwe and Somalia and Sudan as IMF defaulters because as Varoufakis said 'Greeks are the Blacks of Europe'.
The envisaged payments system could be developed to create a substitute for fully functioning public debt markets, especially during a credit crunch such as the one that has afflicted Greece since 2010. Organisations or individuals could buy credits from the tax office online using their normal bank accounts, and add them to their reserve account. These credits could be used after, say, a year to pay future taxes at a discount (for example, 10 per cent). Not 10 percent, but something which asymptotically approaches 100 percent.
As long as the total level of tax credits was capped, and fully transparent, the result would be a fiscally responsible increase in government liquidity and a quicker path back to the money markets. It doesn't matter if tax credits are capped or not, what matters is their velocity of circulation. Modern technology means this can rise exponentially with respect to any 'transparency' audit. The Govt. has just given away for a farthing all its future tax revenues. it can still approach the market but only with privatization offers.
Handing over the reins of the finance ministry to my friend, Euclid Tsakalotos, on July 6, I presented a full account of the ministry’s projects, priorities and achievements during my five months in office. The new payments system outlined here was part of that presentation. No member of the press took any notice.
But when a subsequent telephone discussion with a large number of international investors, organised by my friend Norman Lamont biggest loser in History till you came along, and David Marsh smooth talking literary stock broker of the London-based Official actually not official at all Monetary and Financial Institutions Forum, was leaked — despite the Chatham House rule we agreed with listeners, under which speakers are not identified — the press had a field day. Committed to unlimited openness and full transparency, I granted OMFIF permission to release the tapes. And were thus revealed to be so stupid as to say 'I will deny I will say what I am saying' even though the thing was being recorded. Moreover, you have now authorized them to release the tape. In any case, no 'Chatham Rule' applies to a confession of criminal conspiracy. If one of your listeners thought you had provided evidence of having broken the law, they had a duty to report it.
While I understand press excitement about elements of that exchange, such as having to consider unorthodox means of gaining access to my own ministry’s systems, only one matter is of significance from a public interest perspective. There is a hideous restriction of national sovereignty imposed by the “troika” of lenders on Greek ministers, who are denied access to departments of their ministries pivotal in implementing innovative policies. You wanted to hack the Public Revenue Secretariat which is independent. George Osborne can't get my tax records- thus discovering that I am actually David Cameron's English tutor (as I have repeatedly explained Dave is actually a French Cambodian lady-boy who took my on-line conversational English course and even now turns to me for help with his diction)- because though the HMRC is a branch of Govt. it is non-ministerial. Why are you boasting about conspiring to commit a crime? How fucking stupid are you Whathefuckis?
When a loss of sovereignty, arising from unsustainable official debt, yields suboptimal policies in already stressed nations, one knows that there is something rotten in the euro’s kingdom. No question. What was rotten was you. The Eurogroup gave you a hearing, then decided to meet without you. You- with your brilliant grasp of law- said 'that's illegal' and rushed to brief the best barrister to approach the European Court for an injunction. I'm kidding. You asked someone at the Secretariat who, surprise surprise, simply quoted the Eurogroup's own view that it was an informal body.
Suppose the European Court had granted you an injunction- i.e. suppose the Eurozone has a design flaw- then something really would be rotten at the heart of the zone. But, since it can get rid of bad apples, this no longer seems to be the case.
Why speak of sub-optimal policies? You are shit. What fucking optimal policies could you implement? The Eurozone prevented you from destroying Greece. That's the real story here.
Wednesday, 29 July 2015
Varoufakis's 'treason',
Three years ago, some Eurozone finance minister prepared contingency plans for returning to their original currency if the Euro became untenable. Why should Varoufakis be charged with treason for his 'Chatham House rule' off the record, private, broadcast reference to a cloak and dagger 'Plan B' involving hacking the Greek Income Tax (which is an independent agency like Britain's) confidential database?
The obvious answer is that an action is treasonous if it is both illegal AND damaging to one's country. Varoufakis is being singled out because his actions as Finance Minister appear to have hurt his country while the evidence he has himself provided (albeit saying he would deny saying what he was being recorded as saying!) served only to burnish his own reputation, at least to his own mind, while damaging that of his country at a crucial time.
As a Member of Parliament he enjoys immunity unless this is cancelled by his colleagues. It seems unlikely that they will turn on one of their own but Greek politics, in these troubled times, has thrown up more than one surprise. Perhaps Varoufakis will be made the 'pharmakos'- the ritual scapegoat- whose ceremonial slaying purges a collective malaise. Pity and Terror will be awakened in our breast as this great Game Theoretician whose hamartia- or tragic flaw- was that he loved his country too well to play the Stoic hand he'd been dealt, is pilloried in the agora and pushed off the steep crag of the Acropolis.
The obvious answer is that an action is treasonous if it is both illegal AND damaging to one's country. Varoufakis is being singled out because his actions as Finance Minister appear to have hurt his country while the evidence he has himself provided (albeit saying he would deny saying what he was being recorded as saying!) served only to burnish his own reputation, at least to his own mind, while damaging that of his country at a crucial time.
As a Member of Parliament he enjoys immunity unless this is cancelled by his colleagues. It seems unlikely that they will turn on one of their own but Greek politics, in these troubled times, has thrown up more than one surprise. Perhaps Varoufakis will be made the 'pharmakos'- the ritual scapegoat- whose ceremonial slaying purges a collective malaise. Pity and Terror will be awakened in our breast as this great Game Theoretician whose hamartia- or tragic flaw- was that he loved his country too well to play the Stoic hand he'd been dealt, is pilloried in the agora and pushed off the steep crag of the Acropolis.
I'm kidding.
Varoufakis is a character out of Aristophanes not Aeschylus.
He has turned Greece's tragedy into a farce about one peacocking ex-Professor.
He is accused of harming his country.
His reply amounts to the assertion that he hasn't harmed himself- & that's all that matters.
Yet, he has done both.
This is his response to the treason charge. My comments are in bold.
The bizarre attempt to have me indicted me on… treason charges, allegedly for conspiring to push Greece out of the Eurozone, reflects something much broader. You were caught on tape saying you and Schnauble want Greece out of the Eurozone. You knew you were being recorded (thus negating any denial you might later issue) yet stated that you had set in motion a conspiracy, in a cloak and dagger fashion, with the aim of changing your country's currency from the Euro to the Drachma 'at the push of a button.' This is not just an allegation but an admission of the charge you speak of as being treasonous. What is this 'broader' thing you refer to which lies behind the charge to which your own recorded statement is an indefeasible admission of guilt?
It reflects a determined effort to de-legitimise our five-month long (25th January to 5thJuly 2015) negotiation with a troika incensed that we had the audacity to dispute the wisdom and efficacy of its failed program for Greece. Newsflash! Your negotiation with the troika was de-legitimised by a complete and utter defeat. What further 'determined effort' is needed? Only you are being singled out for a treason charge- no one else. But then this whole crisis has only been about you all along hasn't it? No one else matters.
The aim of my self-styled persecutors is to characterise our defiant negotiating stance as an aberration, an error or, even better from the perspective of Greece’s troika-friendly oligarchic establishment, as a ‘crime’ against Greece’s national interest. You negotiated with the Troika in a self-aggrandizing manner, raising your own profile but costing your country dear. If you did indeed, as you proudly boast to Norman Lamont and some stock-broker type and his merchant banker pals, do something illegal (thus glamorous in your eyes, you over-grown adolescent) then you are guilty of treason. A 'defiant negotiating stance' is an aberration, it is an error, if its result is having to settle for worse terms than were originally offered and, what is more, having to do it in a meek and chastened spirit. Yet, that is what happened. Has Greece's 'national interest' been damaged? Yes, by you. Your actions increased avoidable pain for Greeks and damaged your country's reputation in the worst possible way at a crucial time. Suppose you were an unemployed fishermen newly elected to Parliament. Then you would have a viable excuse for what you did. You could say 'i didn't know, I didn't understand, I'm new at this. For God's sake do as you like with me- send me to jail, shoot me- but help my people!' and Greece's reputation would be restored. Bankers will say to themselves- 'well, the Greeks made a mistake. Now they have wised up. They are good people at bottom. We can work with them to build trust and understanding.'
The problem, Yannis, was that you presented yourself as a smart guy- a Professor of Economics. You blustered and bragged and turned everything into a personal duel in which you were bound to win because you were just so much cleverer than the Machine Politician mediocrities whom, in your imagination, you were crossing swords with.
My dastardly ‘crime’ was that, expressing the collective will of our government, I personified the sins of:
- Facing down the Eurogroup’s leaders as an equal that has the right to say ‘NO’ and to present powerful analytical reasons for rebuffing the catastrophic illogicality of huge loans to an insolvent state in condirion of self-defeating austerity But you didn't actually face anyone down did you? You blustered and bragged and then quietly slunk off the stage while your Government had to make a humiliating climb-down after having inflicted a disastrous Bank closure, at peak Tourist season, on a country which just a few months previously had seemed to be turning the corner. In what way did you 'rebuff catastrophic illogicality'? You were asking for a loan while simultaneously demanding a write-off. Who does that? When asking for more money to tide you over you imply that you will later be able to repay everything. You don't say 'Bastard! Cancel my debt! Oh, and give me some more money while you're about it.' Extend and Pretend means pretending you will pay everything back. What about your contention that 'austerity is self-defeating' when it comes to paying back debt? Is there any Economic rationale for it? No. Greece has a high propensity to import. GDP had to fall by 25 per cent just to get the trade balance out of the red. But a trade surplus is required to pay back loans. If the only way to do it is by shrinking Greek GDP till its people can't import anything for their own consumption and thus the whole of their net export earnings are available for servicing & retiring debt, then austerity isn't 'self-defeating' at all- from the point of view of its creditors. What is self defeating is to lend money to a country so it can reflate and run a bigger trade deficit which will mean having to borrow more down the line. You, Yannis, have fixated on the Debt to GDP ratio as if it means something in this context. It means nothing. Everything depends on the Trade Balance as your pal Krugman knows very well. Japan can have a very high Debt ratio but so long as most debt is held domestically and it has a structural trade surplus, there is no monetary crisis (though, no doubt there could be dynamic effects). Put it another way. Suppose I start snorting cocaine and quit my job. I'm a million in the hole. Can I get out of it? Sure. I can go into re-hab, get a sponsor, clean up my act, get a new job or start a business and then, on the basis of what I can afford to pay, do a deal with my creditors. What matters is that I'm currently spending less than I earn and there is evidence I really have turned over a new leaf. This is common sense. What would be crazy is my turning up at my Bank Manager's office shouting- 'You bastard! I leveraged myself to the hilt with you so as to buy nose candy. Now I've lost my job so I'm now ten times more leveraged than before! You must lend me a hundred thousand so I can show it as Income before blowing it on coke thus reducing my leveraging back to what it was!'
- Demonstrating that one can be a committed Europeanist, strive to keep one’s nation in the Eurozone, and, at the very same time, reject Eurogroup policies which damage Europe, deconstruct the euro and, crucially, trap one’s country in austerity-driven debt-bondage So a committed Europeanist is someone who believes Europe should forgive one's debts while lending yet more money so as to increase imports and thus produce a trade deficit requiring yet more borrowing! In that case, Mugabe is a very good Europeanist! He will be happy to take European money on those terms! But, I forget, you were President of the 'Black Students' alliance' at the University of Essex in 1978. When people pointed out that you were self-evidently white, you said 'The Irish and the Greeks are the blacks of Europe'. Ireland has swallowed bitter medicine and mended its ways. Cyprus was always more responsible but unlucky in its exposure to Greece and its funny little ways. Ireland's credibility as a Knowledge Industry and Financial Services hub has been restored. Cyprus is no basket case. No one questions either countries 'Europeanist' credentials. They do question yours, Yannis because your policy to the Eurozone is one that has landed your country in the select company of Sudan, Somalia and Zimbabwe as an IMF defaulter. No doubt this makes you very proud. But is Mugabe really ready to admit you to the Greater Zimbawean Union? Will you finally get the last laugh on those who nagged at you saying 'Yannis, you simply are not Black. People in Essex may think Greece is located in sub-Saharan Africa and that you are exceptionally fair-skinned for a Greek, but people in Essex are notoriously stupid. What's next? Will you become President of the Chinese Students' Federation? Will you put on a wig and proclaim yourself Matriarch of the Lesbian Society? Come off it Yannis, paidi mou. Accept you are just another White nerd, not a heroic Zulu warrior.'
- Planning for contingencies that leading Eurogroup colleagues, and high ranking troika officials, were threatening me with in face-to-face discussions Plan by all means. But keep those plans secret because bragging about them can damage your country's National interest.
- Unveiling how previous Greek governments turned crucial government departments, such as the General Secretariat of Public Revenues and the Hellenic Statistical Office, into departments effectively controlled by the troika and reliably pressed into the service of undermining the elected government. What unveiling are you talking about? Were Troika officials disguised as Zorba the Greek or Melina Mercouri? What did you do- snatch away their zithers or pull off their blonde wigs? Mina Andreeva says you are a liar. Why haven't you proved her wrong by now? With all this unveiling you have been doing, you must have a truckload full of documents evidencing illegal and ultra vires actions by the troika. Or, paidi mou, was all the unveiling just going on inside your head?
It is amply clear that the Greek government has a duty to recover national and democratic sovereignty over all departments of state, and in particular those of the Finance Ministry. If it does not, it will continue to forfeit the instruments of policy making that voters expect it to utilise in pursuit of the mandate they bestowed upon it. Okay! So your party is guilty of treason because it failed in its duty to 'recover national and democratic sovereignty'. But you were a Minister in your Party's Administration. You are equally guilty. You did not say 'I have resigned because I could not fulfill my constitutional duty to 'recover national sovereignty'. Let us look at what you did say- Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted “partners”, for my … “absence” from its meetings; an idea that the prime minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the ministry of finance today.- in other words, instead of doing your duty, you ran away and sulked because those horrible usurping Nazis may have had a 'preference' for your 'absence' and you are such a sensitive little flower that you couldn't face them anymore.
In my ministerial endeavours, my team and I devised innovative methods for developing the Finance Ministry’s tools to deal efficiently with the troika-induced liquidity crunch while recouping executive powers previously usurped by the troika with the consent of previous governments. You did not devise anything. As you yourself said, in a taped conversation with Norman Black Wednesday Lamont you only spoke to 5 people whereas 1000 people would have had to be involved for such 'tools' to be effective. What was your Plan B? Wasn't it that, instead of pre-paying taxes in Euro, people could do so more cheaply through a secondary market in debt instruments? How would that have improved matters for any but the super-rich?
Instead of indicting, and persecuting, those who, to this day, function within the public sector as the troika’s minions and lieutenants (while receiving their substantial salaries from the long-suffering Greek taxpayers), politicians and parties whom the electorate condemned for their efforts to turn Greece into a protectorate are now persecuting me, aided and abetted by the oligarchs’ media. I wear their accusations as badges of honour.Because of you- who received a salary from the Greek tax payer- the Troika has imposed stiffer terms on Greece. Suppose you had resigned saying- 'Greece is a Protectorate. National Sovereignty has been lost. I can't, in good conscience, continue receiving a salary as a Govt. Minister because the Govt. has illegally abdicated National Sovereignty.' In that case, there might be some logic to what you are saying now. But, you yourself said that you only resigned because maybe some foreigner had some 'preference' for your 'absence' and one must always please the foreigner because that is the meaning of being a Greek Minister.
The proud and honest negotiation that the SYRIZA government conducted from the first day we were elected has already changed Europe’s public debates for the better. Yes. Everyone agrees you are a shithead. Even Krugman says he was taken aback by your incompetence. The debate about the democratic deficit afflicting the Eurozone is now unstoppable. Absolutely. We now understand that shitheads can get elected and hold high profile Ministerial jobs and it may take four or five months before such shitheads realize there is a 'preference' for their 'absence' and take the hint and resign. Democratic deficit arises from the informational asymmetry which permits shitheads to get elected and the lag before everyone realizes this is the case and expresses a 'preference' for their 'absence'. Alas, the troika’s domestic cheerleaders do not seem able to bear this historic success. What historic success are you talking about Yannis? You stood before the European leaders, like the orator Demosthenes delivering a Phillipic, but then put your hand down your pants and pulled out a fistful of shit which you claimed to be chocolate pudding. Worthless man, you ate that 'chocolate pudding' and became offended when others refused to share your tasty meal. No doubt, this was a historic success- for the cause of Coprophagy- but only in your own mind, paidi mou! Their efforts to criminalise it will crash of the same shoals that wrecked their blatant propaganda campaign against the ‘No’ vote in the 5th July referendum: the great majority of the fearless Greek people. But, Yannis you say that Tsipras was looking for a 'Yes' vote. Also, if Greeks are so fearless why did your Govt. kakk itself and climb down so ignominiously? You kakk yourself because you like eating your own shit. But then you aren't really a Game Theorist at all- just an academic engaging in pointless methodenstreit with no real world application. Had you not been worthless you could have taken power back from the Troika by showing you could do a better job. Even if you are too stupid to do auction design in the way that Ken Binmore did to get 10 billion for the Treasury on the 3G auction, still you could have found good auction design people. Instead of 50 billion from Privatization you could have shown how double that was feasible. Instead of wasting your time trying to hack your own Govt. database for a counter-productive Plan B, you could have at least pretended to have commissioned genuinely path breaking work in combining I.T solutions with mechanism design. You, like Kaushik Basu- a far more eminent man- illustrate the folly of hiring Academic Game Theorists for roles which require some basic political savvy or common sense.
As for treason, that charge fails because, coprophagous clown, you lack mental competence. The truth is, if you ever actually spoke to that childhood chum of yours, the I.T Prof from Columbia, you'd have known that a laptop plugged into the Tax database couldn't bring back the drachma 'at the push of a button'. It would take years of reprogramming mainframes in COBOL to achieve that.
This is Yves Smith, from Naked Capitalism, talking to Pando-
This is Yves Smith, from Naked Capitalism, talking to Pando-
Q: One of the core intractable problems you have been beating the drum on lately is essentially this: No matter what Greece does, they’re screwed. Austerity is destroying Greece, but a Grexit would be far worse, utterly catastrophic. Why is that? Is there any way out?
It's the IT!
Most commentators, including economists and financial analysts who haven't looked at the practical issues, argue that Greece should leave the Eurozone and go back to the drachma. Yet even after the brutal show of power by the European central bank in forcing a two-week Greek bank holiday, which did tremendous damage to the economy, an overwhelming majority of Greeks still poll as preferring to stay in the Eurozone. And do not forget that the government isn't willing to Grexit either.
These foreign pundits fail to appreciate that the Greeks have a better grip on what the issues are than they do.
Most outsiders mistakenly treat a Grexit as being like a currency depreciation — like what took place in Argentina in the early 2000s when it abandoned a dollar peg. When that happened, Argentina suffered about six to eight months of severe stress and dislocation, including at least a couple of months of real violence. But after that, it showed a good recovery, The reason large currency depreciations are initially very painful is that the price of imports goes up immediately, while it takes a while for potential buyers of the country's suddenly bargain-priced exports to rearrange their purchases and start placing orders in the cheap, devalued-currency country.
A Grexit entails a ton more. First, it entails resolving Greece's entire banking sector. Greece's banks are massively insolvent and are on ECB life support. If Greece leaves the Eurozone, it loses that aid. When Iceland had its (admittedly larger relative to GDP) banking system collapse, it took $5 billion of foreign support for its bank resolutions. Iceland has all of 330,000 people. Greece has 11 million.
Second, unlike Iceland, Greece would have to reintroduce its currency. It took eight years of planning and three years of execution for the introduction of the Euro to go smoothly. Commerce is even more dependent on electronic payments now than it was then. In Iraq, even with the logistical capabilities of the US military and three printing presses running full time, it took over a year to get its new currency distributed. The ATM component is far more burdensome than you'd imagine.
The payment system side is even more complicated. Even though it is 15 years after the Euro was launched, major banks still have mainframes as their big transaction processing engines. And they are still running the same legacy code. And any changes to it are a highly labor intensive process. As one reader explained:
What many of you "it's easy" people fail to understand is that mainframe programming is nothing like today's coding. COBOL, PL/I etc. do not support modern concepts like objects, polymorphism or anything else. Think assembly language with nicer mnemonics. XML ? Hah, there is virtually no such thing for the mainframe. There's no git, no mercurial etc. Virtually none of the tools that exist for Wintel/Linux are available to mainframers. In large organizations there are hugely cumbersome change management processes. Where I am, a simple code change might take a minimum of eight weeks to deploy, and we only have a dozen systems. Actual application changes like envisioned here would take at least six to twelve months for coding and testing, and then another four months for deployment. For large banks, I would expect the timeframes to be even longer because the systems are so critical.
Similarly, those ATMs and point-of-sale terminals? Those are run by fragmented providers. Those networks have grown up over a 40-year period. Even if Greece moves quickly, they depend on parties outside their control to make changes in a coordinated manner.
One expert who has lots of big bank mainframe experience estimates that it would take three years to convert to drachma processing. We've spoken to people who are in—or have been in—senior IT roles at TBTF [Too Big To Fail] banks and they agree with this reading. Greece's new drachma payment system will need to be up to international standards before it would be permitted to connect to existing international payment systems. Countries that have not made the grade, like the Vatican, do not get waivers. So even if Greece can kluge together some sort of domestic system in six months or a year, that does not solve its international payments problems.
18% of Greece's economy is tourism. You can pretty much kiss that goodbye with no ability to use ATMs to get cash and no ability to use credit cards in Greece. Greece is not self-sufficient in food, petroleum, or pharmaceuticals. No working payments system means no imports, unless Greek importers take their drachma across the border, dump them in bank accounts (assuming those banks will even accept drachma to open accounts — recall that they have to make systems changes to accommodate taking drachma) and do transfers from there, or take cash to the offices of suppliers. That was actually occurring during the bank holiday. Some large importers were flying to London to pay suppliers in cash.
It would be tacky for Greece to have a famine, so the Eurocrats would probably arrange for humanitarian aid. But how independent is Greece if it needs food aid? It will have only traded one form of dependency for another, and at huge cost.
Thus the most likely outcome of a Grexit is that Greece becomes a failed state.
Q: Your political sympathies lie with Syriza or at least Syriza’s end of the spectrum, but you’ve been highly critical — merciless, brutally honest — of how they’ve governed. Explain why. What has Syriza done wrong, and what could they have done better? (Related: Syriza promised it could reverse austerity but remain in the Eurozone. Did they betray voters? Did voters betray themselves with Syriza as enablers? Or is it something else?)
Syriza promised contradictory things: ending austerity, and staying in the Eurozone. Eurozone policies, particularly in the post-crisis era, are about squeezing labor.
It's hardly unusual for politicians to lie, but they normally don't tell such big lies on matters of paramount importance to voters. Admittedly, Syriza's leaders were all novices, and they appear to have genuinely believed that they could persuade Europe's leaders to change course. But as members of both right and left wing factions in Syriza recognized by the end of February, after a month of negotiating to reach an interim deal to extend the bailout, the Troika and Eurozone countries were unreceptive to Greece's "look, austerity won't work and you'll just lose more money if you keep it up" pitch. Yet [Prime Minister] Tsipras and [Finance Minister] Varoufakis refused to change course. They exhibited the Einstein definition of insanity: continuing to do the same thing, and expecting different results.
Moreover, Syriza has not lived up to its populist, anti-oligarch branding. It passed a 200 million euro humanitarian aid bill in March, yet as of May was still taking applications and has yet to disburse all the funds. Yet favored interests like the union for the state electricity utility, DEO, still has its pensions getting a subsidy of 600 million euros while other pensions are being cut. Despite massive tax evasion, Syriza has not brought any new criminal tax evasion cases. What it has done is change the members of the panels that hear those cases from judges to union reps. Similarly, during its election campaign, Syriza promised to go after oligarchs and identified an obvious target: owners of media licenses. Yet it failed to take action once it took office.
Not treason then. Just the same old clientistic rousfetia. But others were content to rob the State. You had to go and revenge porn that battered old ho bag like she was Britney Spears and it added to your rep except that's exactly what she was and so the stunt has backfired on you, paidi mou, and yours and yours alone is a now endless walk of shame.
Friday, 17 July 2015
Varoufakis on Schauble
This is Varoufakis on Schable- my comments are in bold.
2) Secondly, it would violate basic principles of Western liberal democracy.
The reason five months of negotiations between Greece and Europe led to impasse is that Dr Schäuble was determined that they would. You said he was determined to get Greece out of the Euro. Clearly, if that was his intention, he failed miserably. Negotiations between Greece and Europe did not end in an impasse. You lost.
By the time I attended my first Brussels meetings in early February, a powerful majority within the Eurogroup had already formed. Revolving around the earnest figure of Germany’s Minister of Finance, its mission was to block any deal building on the common ground between our freshly elected government and the rest of the Eurozone.[1] A deal was built. It was based on your side's abject surrender.
Thus five months of intense negotiations never had a chance. Condemned to lead to impasse, their purpose was to pave the ground for what Dr Schäuble had decided was ‘optimal’ well before our government was even elected: That Greece should be eased out of the Eurozone in order to discipline member-states resisting his very specific plan for re-structuring the Eurozone. This is no theory of mine. How do I know Grexit is an important part of Dr Schäuble’s plan for Europe? Because he told me so! Okay, Schauble is a shrewd s.o.b. He played you by saying- 'I'm gonna get you out of the Euro'. You blab this to Tsipras. He throws in the towel. All you have proved you are shit at negotiation.
I am writing this not as a Greek politician critical of the German press’ denigration of our sensible (sic!) proposals, of Berlin’s refusal seriously to consider our moderate debt re-profiling plan, of the European Central Bank’s highly political decision to asphyxiate our government, of the Eurogroup’s decision to give the ECB the green light to shut down our banks. I am writing this as a European observing the unfolding of a particular Plan for Europe – Dr Schäuble’s Plan. And I am asking a simple question of Die Zeit’s informed readers:
Is this a Plan that you approve of? Is this Plan good for Europe?
Dr Schäuble’s Plan for the Eurozone
The avalanche of toxic bailouts that followed the Eurozone’s first financial crisis offers ample proof that the non-credible ‘no bailout clause’ was a terrible substitute for political union. Wolfgang Schäuble knows this and has made clear his plan to forge a closer union. “Ideally, Europe would be a political union”, he wrote in a joint article with Karl Lamers, the CDU’s former foreign affairs chief (Financial Times, 1st September 2014).
Dr Schäuble is right to advocate institutional changes that might provide the Eurozone with its missing political mechanisms. Not only because it is impossible otherwise to address the Eurozone’s current crisis but also for the purpose of preparing our monetary union for the next crisis. The question is: Is his specific plan a good one? Is it one that Europeans should want? How do its authors propose that it be implemented?
The Schäuble-Lamers Plan rests on two ideas: “Why not have a European budget commissioner” asked Schäuble and Lamers “with powers to reject national budgets if they do not correspond to the rules we jointly agreed?” “We also favour”, they added “a ‘Eurozone parliament’ comprising the MEPs of Eurozone countries to strengthen the democratic legitimacy of decisions affecting the single currency bloc.”
The first point to raise about the Schäuble-Lamers Plan is that it is at odds with any notion of democratic federalism. A federal democracy, like Germany, the United States or Australia, is founded on the sovereignty of its citizens as reflected in the positive power of their representatives to legislate what must be done on the sovereign people’s behalf. That positive power is subject to judicial review. A Local Authority can't set an illegal rate, a Govt. can't levy an illegal tax. A sovereign country can bind itself by Treaty not to set illegal taxes or provide illegal subsidies. E.C countries already are barred from setting import taxes or providing export bounties for inter-European trade. It is no great stretch for National Budgets to be brought under the purview of a European body. Greece would have benefited if this had happened 15 years ago.
In sharp contrast, the Schäuble-Lamers Plan envisages only negative powers: A Eurozonal budget overlord (possibly a glorified version of the Eurogroup’s President) equipped solely with negative, or veto, powers over national Parliaments. The problem with this is twofold.
1) First, it would not help sufficiently to safeguard the Eurozone’s macro-economy.2) Secondly, it would violate basic principles of Western liberal democracy.
1) No political arrangement can safeguard any Macro-economy whatsoever. Otherwise, there'd be no subject called Macroeconomics. Instead, under that heading you'd have a notice saying see 'optimal political arrangement for safeguarding the Macro-economy.'
2) If Western Liberal Democracy has 'basic principles' then other truths can be derived from them. If what is proposed violates one or more such basic principle, it follows that it must violate one or more derived ratio such that an illegal action has occurred. Hence the proposal would be struck down as unconstitutional.
The Judiciary acts as countervailing power on the Executive in a negative manner- preventing it from doing certain things. It can also direct the Executive to do certain things under threat of punishment. It can't, however, take the place of the Executive and do those things itself. This does not represent some great scandal for Liberal Democracy. Rather, it is necessary to its existence.
Final ScoreThe Judiciary acts as countervailing power on the Executive in a negative manner- preventing it from doing certain things. It can also direct the Executive to do certain things under threat of punishment. It can't, however, take the place of the Executive and do those things itself. This does not represent some great scandal for Liberal Democracy. Rather, it is necessary to its existence.
Consider events both prior to the eruption of the euro crisis, in 2010, and afterwards. Before the crisis, had Dr Schäuble’s fiscal overlord existed, she or he might have been able to veto the Greek government’s profligacy but would be in no position to do anything regarding the tsunami of loans flowing from the private banks of Frankfurt and Paris to the Periphery’s private banks.[2] Why would money flow from Frankfurt to Paris if the fiscal overlord has ordered a fiscal contraction in Greece? Suppose Bankers be crazy, what is to stop the Chairman of the ECB from going on TV and saying so? Those capital outflows underpinned unsustainable debt that, unavoidably, got transferred back onto the public’s shoulders the moment financial markets imploded. Unavoidably, you cretin? Just because you, personally, fucked up as an advisor doesn't mean such stupidity was unavoidable. Post-crisis, Dr Schäuble’s budget Leviathan would also be powerless, in the face of potential insolvency of several states caused by their bailing out (directly or indirectly) the private banks. How fucking stupid are you? Don't you get that bailing out Banks, like regulating them, is the Central Bank's job?
In short, the new high office envisioned by the Schäuble-Lamers Plan would have been impotent to prevent the causes of the crisis and to deal with its repercussions. Moreover, every time it did act, by vetoing a national budget, the new high office would be annulling the sovereignty of a European people without having replaced it by a higher-order sovereignty at a federal or supra-national level. We KNOW the current system can be improved by addressing issues the Plan raises. We don't know it would be impotent but do know that the reasons you have given are utterly specious. Sovereignty is not annulled every time the Executive is barred from an illegal act. Judges don't suddenly turn into Chief Magistrate's of the Republic, taking over from elected officials. Instead, the Executive's menu of choice is constrained in a useful way and so they make better decisions.
Dr Schäuble has been impressively consistent in his espousal of a political union that runs contrary to the basic principles of a democratic federation in your worthless opinion. In an article in Die Weltpublished on 15th June 1995, he dismissed the “academic debate” over whether Europe should be “…a federation or an alliance of states”. Was he right that there is no difference between a federation and an ‘alliance of states’? I submit that a failure to distinguish between the two constitutes a major threat to European democracy.
Forgotten prerequisites for a liberal democratic, multinational political union
One often forgotten fact about liberal democracies is that the legitimacy of its laws and constitution is determined not by its legal content but by politics. To claim, as Dr Schäuble did in 1995, and implied again in 2014, that it makes no difference whether the Eurozone is an alliance of sovereign states or a federal state is purposely to ignore that the latter can create political authority whereas the former cannot. Says who? If Churchill had been killed, who would have succeeded him as head of the Imperial War Cabinet? Atlee? No- Jan Smuts, a South African. Switzerland is a Federal State. The British Commonwealth was an Alliance. Who would have had greater authority within their respective territories, Smuts or the Swiss President? Varoufakis knows shit, talks shit and when called to negotiate for his country in their hour of need, he puts his hands down his pants and pulls out fistfuls of shit which he then proceeds to eat claiming it to be chocolate pudding.
An ‘alliance of states’ can, of course, come to mutually beneficial arrangements against a common aggressor (e.g. in the context of a defensive military alliance), or in agreeing to common industry standards, or even effect a free trade zone. But, such an alliance of sovereign states can never legitimately create an overlord with the right to strike down a states’ sovereignty, since there is no collective, alliance-wide sovereignty from which to draw the necessary political authority to do so. How fucking metal are you? Fuck you think happened in Germany in 1866 and 1870? The Prussian King was the head of an alliance. He became not the Emperor of Germany but German Emperor with perfect legitimacy.
This is why the difference between a federation and an ‘alliance of states’ matters hugely only to you, you ignorant fuckwit. For while a federation replaces the sovereignty forfeited at the national or state level with a new-fangled sovereignty at the unitary, federal level, centralising power within an ‘alliance of states’ is, by definition, illegitimate, and lacks any sovereign body politic that can anoint it. Rubbish. The German Emperor was perfectly legitimate. Too much so, for the good of the Germans. Nor can any Euro Chamber of the European Parliament, itself lacking the power to legislate at will, legitimise the Budget Commissioner’s veto power over national Parliaments. Now you're just making things up.
To put it slightly differently, small sovereign nations, e.g. Iceland, have choices to make within the broader constraints created for them by nature and by the rest of humanity. However limited these choices, Iceland’s body politic retains absolute authority to hold their elected officials accountable for the decisions they have reached within the nation’s exogenous constraints and to strike down every piece of legislation that it has decided upon in the past. Really? Iceland is not a 'Rule of Law' country? Anyway, it has just 300,000 people. In juxtaposition, the Eurozone’s finance ministers often return from Eurogroup meetings decrying the decisions that they have just signed up to, using the standard excuse that “it was the best we could negotiate within the Eurogroup”. Unlike M.Ps returning from Westminster who bring back Hospitals and Factories and flying Unicorns for their constituents coz. the UK aint in the Eurogroup so everybody can have anything they want without any need for tiresome negotiations.
The euro crisis has expanded this lacuna at the centre of Europe hideously. An informal body, the Eurogroup, that keeps no minutes, abides by no written rules, and is answerable to precisely no one, is running the world’s largest macro-economy, with a Central Bank struggling to stay within vague rules that it creates as it goes along, and no body politic to provide the necessary bedrock of political legitimacy on which fiscal and monetary decisions may rest. Which is why you guys are desperate to stay in the Eurozone. The alternative is talking monkeys like you shitting on everything in Parliament.
Will Dr Schäuble’s Plan remedy this indefensible system of governance? If anything, it would dress up the Eurogroup’s present ineffective macro-governance and political authoritarianism in a cloak of pseudo-legitimacy. Legitimacy is a good thing, especially if it is 'pseudo' from the p.o.v of a loony toons like you- okay, maybe this kraut aint so bad. The malignancies of the present ‘Alliance of States’ would be cast in stone and the dream of a democratic European federation would be pushed further into an uncertain future. You are stupid, your dreams are toxic. Their being pushed into the future is a good thing.
Dr Schäuble’s perilous strategy for implementing the Schäuble-Lamers Plan
Back in May, in the sidelines of yet another Eurogroup meeting, I had had the privilege of a fascinating conversation with Dr Schäuble. We talked extensively both about Greece and regarding the future of the Eurozone. Later on that day, the Eurogroup meeting’s agenda included an item on future institutional changes to bolster the Eurozone. In that conversation, it was abundantly clear that Dr Schäuble’s Plan was the axis around which the majority of finance ministers were revolving.
Though Grexit was not referred to directly in that Eurogroup meeting of nineteen ministers, plus the institutions’ leaders, veiled references were most certainly made to it. I heard a colleague say that member-states that cannot meet their commitments should not count on the Eurozone’s indivisibility, since reinforced discipline was of the essence. Some mentioned the importance of bestowing upon a permanent Eurogroup President the power to veto national budgets. Others discussed the need to convene a Euro Chamber of Parliamentarians to legitimise her or his authority. Echoes of Dr Schäuble’s Plan reverberated throughout the room.
Judging from that Eurogroup conversation, and from my discussions with Germany’s Finance Minister, Grexit features in Dr Schäuble’s Plan as a crucial move that would kickstart the process of its implementation. A controlled escalation of the long suffering Greeks’ pains, intensified by shut banks while ameliorated by some humanitarian aid, was foreshadowed as the harbinger of the New Eurozone. On the one hand, the fate of the prodigal Greeks would act as a morality tale for governments toying with the idea of challenging the existing ‘rules’ (e.g. Italy), or of resisting the transfer of national sovereignty over budgets to the Eurogroup (e.g. France). On the other hand, the prospect of (limited) fiscal transfers (e.g. a closer banking union and a common unemployment benefit pool) would offer the requisite carrot (that smaller nations craved).
Setting aside any moral or philosophical objections to the idea of forging a better union through controlled boosts in the suffering of a constituent member-state, several broader questions pose themselves urgently:
- Are the means fit for the ends? Yes, because those means got shot off you.
- Is the abrogation of the Eurozone’s constitutional indivisibility a safe means of securing its future as a realm of shared prosperity? You're just babbling nonsense here.
- Will the ritual sacrifice of a member-state help bring Europeans closer together? Yup. That and a barbecue with lots of beer.
- Does the argument that elections cannot change anything in indebted member-states inspire trust in Europe’s institutions? Yes! It eliminates political risk.
- Or might it have the precise opposite effect, as fear and loathing become established parts of Europe’s intercourse? Fear and loathing, for you, we will always have with us.
What conclusion can we draw from Whatthefuckis's cri de coeur? This Schauble guy- an Accountant of some sort- got the measure of Whatthefuckis and played him like a hillbilly banjo. The result- Greece can stay in the Euro, if it grows up. Otherwise it can leave and no one will shed a tear.
Boring Accountants- 1 , 'Brilliant' Economists- 0
So, no change there then.
Comment by Yorick's bones-
REPLY to a comment by Yorick's bones-
Thank you for your comment
I appreciate the distinctions you make. We visualize Econ Policy as facing a menu of feasible choices. A particular pick may be advocated for many different reasons- some specious, some normative purely, some 'strategic' (i.e. disingenuous), some purely alethic. Furthermore, the advocate of a particular pick may have a compelling 'white box' theory- i.e. the guy saying pick x, has a convincing explanation of why picking x will set off a series of plausible events such that the objective y is achieved- whereas an opponent of x may only have a 'black box' theory backed by empirical evidence of a regularity. Finally, Econ (to Yannis's disgust) can't do interpersonal comparisons. There is no way to know whether Bill Gates getting richer is better for billions of people than a patent troll attorney engaged in a nuisance value legal case against him.
This means that any policy prescription can have some sane honest advocate
Econ as a subject is aware that there is no objective method to 'mechanically' distinguish strategic from alethic responses. This problem of 'Preference Revelation' is why Politics can't be reduced to Economics. Rather there is a supervenience relationship characterized by multiple realizability.
I interpret your first sentence as equivalent to the above- and agree.
Turning to your questions.
1) Varoufakis is a Game Theorist who tried to be a 'Conviction Politician' rather than a tactician. This means 'Kavka's toxin' has salience. Varoufakis signals he is willing to take poison at time t and it is plausible to think that he is prepared to die by taking that poison even though he knows he won't have to take the poison and will get a million dollars as a result.
If Kavka's toxin, or Newcombe type problems predominate, then a general solution lies in the trade off we make between devoting cognitive resources to alethic investigation as opposed to imperative valency. Mahatma Gandhi faced a Kavka's toxin problem. He had to be a loyal seditionist otherwise he lost obligatory passage point status between the British and the Revolutionaries. He resolved the quandary by devoting a lot of resources to imperative gestures (spinning cotton, making salt) and none to alethic investigation (he could easily have found out that the cotton he was spinning was negative value added or that sea salt was more expensive than the taxed commodity). We can forgive Gandhi because maybe he lived at a time when Brown people believed the White Man was chosen by God to be his Master and thus bound to be superior.
What about Varoufakis? He is saying 'I am swallowing Kavka's toxin (i.e. my tactics are suicidal for my country) for the sake of a Democratic Politically United Europe which will make systematic transfers from Rich to Poor regions so as to equalize real incomes and Life Chances'.
If we give Gandhi the benefit of the doubt, why not Varoufakis?
The answer is Gandhi gave up Law, he condemned its practice, long before he did silly things like spin cotton and try to make salt. Varoufakis was an economic adviser to the Greek Govt. and still is a practicing Economist- i.e. he can't avail of Gandhi's way of winning the Kavka's toxin challenge. He can't adopt a hypo-mechanist, hyper-mentalist position since his profession commits him to hyper-mechanist, hypo-mentalist alethic investigation as opposed to mystic rapture.
Is Varoufakis 'lying' or deluding himself or just incompetent? To answer that question- which involves identifying the Muth rational demarcation procedures relevant to distinguishing 'lie' from 'self-delusion' and relating this to competence under cognitive trade-offs- we first need to establish whether Varoufakis is 'wrong'- i.e. is his 'dream' Muth Rational? Would all agents, having the same information set and possessing the correct theory, identify Varoufakis's claimed objective as a Rational Expectations Eqbm, robust to hysteresis?
No. Not at all. Varoufakis's 'democratic Political Union' isn't incentive compatible. It falls at the first hurdle to be the Muth Rational 'correct' theory. Varoufakis knows this. Ergo he is acting in bad faith to all.
2) Krugman & Stiglitz & so on don't believe in Varoufakis's supposedly morally prescriptive dream for Europeans, but they do believe in a specific 'bastard Keynesian' policy prescription and interpret everything in that light. Thus, if claiming Varoufakis is right causes the Eurozone to start printing money like crazy and if this causes aggregate demand to rise, then that's a good thing because all 'austerity' is simply the result of collective stupidity- the paradox of thrift. These people are wrong and sometimes they do tell lies but essentially they are commodities in themselves. Varoufakis isn't yet a commodity in himself. His income still mainly derives from actions as an agent, not a principal.
3) Schabule is an Accountant- not a good one and thus a run of the mill politician. He is associated with quite large scale transfers as well as the abject failure of Privatization type initiatives. His perceived ascendancy would tend to cause the Euro to depreciate- which is good for Germany because it increases sales to the rest of the World while paying less, as a proportion, to poorer members. Thus, in this round, the stupid Accountant won and the 'brilliant' Economist lost.
4) America is concerned that its own Corporate investments, supply chains, and intellectual property rights are protected and appreciate more than proportionately. It has shown it can bend the IMF to its will- so it is effectually hegemonic and has indeed extended the Roosevelt Corollary to the Monroe Doctrine to Europe. America has always pretended to be a bailiff but actually told other countries to forgive debts owed to them by others- which is why there were no formal, as opposed to de facto, Second War Reparations- but made sure that any haircut for its Govt. was associated with a more than proportionate gain for its Corporations. Nothing in this current Crisis has changed that- which is why the Euro has fallen against the dollar despite low oil prices.
5) No measures have been suggested that will help the Greek economy to recover. However, if that economy shrinks enough, Greece has no alternative but to recover in much more dynamic form. Ulysses did much better once Proteus, the Old Man of the Sea, got off his back. If Schabule first got Tsipras drunk on power by tricking him and if Party Politics in Greece has truly been poisoned, then well and good.
6) Shrinking the Greek Economy as well as the expected Permanent Income of Creditors is the outcome, if not the stated aim, and that's feasible, indeed salutary, ceteris paribus given that, currently, no value adding incentive compatible model for Public Sector intervention obtains.
Like most ordinary people, I feel all Europeans should have a Social Minimum, on the basis of improved factor mobility and democratic subsidiarity- such that Tiebout manorial rents are equitably distributed- and this should be gradually extended to other countries once they undergo 'demographic transition'.
Varoufakis type 'zero-sum' long term transfers can't become sustainable or significant on a continent wide scale unless 2 conditions are fulfilled
1) factors must be inelastic in supply in the 'rich' areas
2) no preference revelation or mechanism design type problem arises.
This is implausible unless the tax collectors come from the poor region and are completely honest and have access to a window of Momus and thus can see into the hearts of men.
As a matter of fact, you can have sustainable transfers where there is a countervailing benefit- for e.g. rich regions give some cash to poor regions in return for which their Investments appreciate- i.e. there is an Aumann type correlated equilibrium. Here monetary union or the gold standard (if credible) removes uncertainty and signal extraction type problems thus rendering the game positive sum.
Graciella Chichilnisky's work is relevant in this context. Normally preference diversity can't be too much or too little and so it looks as though super-states will be more fragile. However, 'limited arbitrage' is itself canalised, so to speak, provided (this is the ideal outcome under monetary union) there is increased local Public Good Tiebout model competition such that transfers are internalized under the rubric of subsidiarity. In other words, voting with one's feet replaces the farce of voting.
Comment by Yorick's bones-
Yoricks bones18 July 2015 at 04:02
I understand that times are troubled and discussions get heated. I am in principle not interested in the heat, but in the arguments that (should) drive discussions. You seem to have some, and I would like to ask you some questions about them:
(1) Do you think Varoufakis is wrong, or that he is lying? Not necessarily pertinent, but interesting.
(2) Do you also think all the nobel laureate economists (I can think of a couple) who have supported him are wrong? Or lying?
(3) Do you think that Schäuble, whose interests are at least as vested as those of Varoufakis (being more than the latter a man of politics), is being more truthful, or just more economically savvy?
(4) Or do you think that the Americans' interests in the case of the Greek crisis are as vested as the Germans' or the Greeks', if less obvious? Then what would you say they are?
(5) The way I see it, many economists have been saying that the measures that have been proposed in the current deal have historically been proven to be inefficient, if not ineffectual, in their task of cleansing and repairing the Greek economy.* Do you think the measures proposed will actually help the Greek economy recover?
* (6) I am taking the cleansing and repair of the Greek economy to be the aim of these measures, because a healthy and functional economy is a requisite for the servicing of a debt, which in turn is the creditors' alleged goal in this whole affair. Is that not so?
(1) Do you think Varoufakis is wrong, or that he is lying? Not necessarily pertinent, but interesting.
(2) Do you also think all the nobel laureate economists (I can think of a couple) who have supported him are wrong? Or lying?
(3) Do you think that Schäuble, whose interests are at least as vested as those of Varoufakis (being more than the latter a man of politics), is being more truthful, or just more economically savvy?
(4) Or do you think that the Americans' interests in the case of the Greek crisis are as vested as the Germans' or the Greeks', if less obvious? Then what would you say they are?
(5) The way I see it, many economists have been saying that the measures that have been proposed in the current deal have historically been proven to be inefficient, if not ineffectual, in their task of cleansing and repairing the Greek economy.* Do you think the measures proposed will actually help the Greek economy recover?
* (6) I am taking the cleansing and repair of the Greek economy to be the aim of these measures, because a healthy and functional economy is a requisite for the servicing of a debt, which in turn is the creditors' alleged goal in this whole affair. Is that not so?
REPLY to a comment by Yorick's bones-
Thank you for your comment
I appreciate the distinctions you make. We visualize Econ Policy as facing a menu of feasible choices. A particular pick may be advocated for many different reasons- some specious, some normative purely, some 'strategic' (i.e. disingenuous), some purely alethic. Furthermore, the advocate of a particular pick may have a compelling 'white box' theory- i.e. the guy saying pick x, has a convincing explanation of why picking x will set off a series of plausible events such that the objective y is achieved- whereas an opponent of x may only have a 'black box' theory backed by empirical evidence of a regularity. Finally, Econ (to Yannis's disgust) can't do interpersonal comparisons. There is no way to know whether Bill Gates getting richer is better for billions of people than a patent troll attorney engaged in a nuisance value legal case against him.
This means that any policy prescription can have some sane honest advocate
Econ as a subject is aware that there is no objective method to 'mechanically' distinguish strategic from alethic responses. This problem of 'Preference Revelation' is why Politics can't be reduced to Economics. Rather there is a supervenience relationship characterized by multiple realizability.
I interpret your first sentence as equivalent to the above- and agree.
Turning to your questions.
1) Varoufakis is a Game Theorist who tried to be a 'Conviction Politician' rather than a tactician. This means 'Kavka's toxin' has salience. Varoufakis signals he is willing to take poison at time t and it is plausible to think that he is prepared to die by taking that poison even though he knows he won't have to take the poison and will get a million dollars as a result.
If Kavka's toxin, or Newcombe type problems predominate, then a general solution lies in the trade off we make between devoting cognitive resources to alethic investigation as opposed to imperative valency. Mahatma Gandhi faced a Kavka's toxin problem. He had to be a loyal seditionist otherwise he lost obligatory passage point status between the British and the Revolutionaries. He resolved the quandary by devoting a lot of resources to imperative gestures (spinning cotton, making salt) and none to alethic investigation (he could easily have found out that the cotton he was spinning was negative value added or that sea salt was more expensive than the taxed commodity). We can forgive Gandhi because maybe he lived at a time when Brown people believed the White Man was chosen by God to be his Master and thus bound to be superior.
What about Varoufakis? He is saying 'I am swallowing Kavka's toxin (i.e. my tactics are suicidal for my country) for the sake of a Democratic Politically United Europe which will make systematic transfers from Rich to Poor regions so as to equalize real incomes and Life Chances'.
If we give Gandhi the benefit of the doubt, why not Varoufakis?
The answer is Gandhi gave up Law, he condemned its practice, long before he did silly things like spin cotton and try to make salt. Varoufakis was an economic adviser to the Greek Govt. and still is a practicing Economist- i.e. he can't avail of Gandhi's way of winning the Kavka's toxin challenge. He can't adopt a hypo-mechanist, hyper-mentalist position since his profession commits him to hyper-mechanist, hypo-mentalist alethic investigation as opposed to mystic rapture.
Is Varoufakis 'lying' or deluding himself or just incompetent? To answer that question- which involves identifying the Muth rational demarcation procedures relevant to distinguishing 'lie' from 'self-delusion' and relating this to competence under cognitive trade-offs- we first need to establish whether Varoufakis is 'wrong'- i.e. is his 'dream' Muth Rational? Would all agents, having the same information set and possessing the correct theory, identify Varoufakis's claimed objective as a Rational Expectations Eqbm, robust to hysteresis?
No. Not at all. Varoufakis's 'democratic Political Union' isn't incentive compatible. It falls at the first hurdle to be the Muth Rational 'correct' theory. Varoufakis knows this. Ergo he is acting in bad faith to all.
2) Krugman & Stiglitz & so on don't believe in Varoufakis's supposedly morally prescriptive dream for Europeans, but they do believe in a specific 'bastard Keynesian' policy prescription and interpret everything in that light. Thus, if claiming Varoufakis is right causes the Eurozone to start printing money like crazy and if this causes aggregate demand to rise, then that's a good thing because all 'austerity' is simply the result of collective stupidity- the paradox of thrift. These people are wrong and sometimes they do tell lies but essentially they are commodities in themselves. Varoufakis isn't yet a commodity in himself. His income still mainly derives from actions as an agent, not a principal.
3) Schabule is an Accountant- not a good one and thus a run of the mill politician. He is associated with quite large scale transfers as well as the abject failure of Privatization type initiatives. His perceived ascendancy would tend to cause the Euro to depreciate- which is good for Germany because it increases sales to the rest of the World while paying less, as a proportion, to poorer members. Thus, in this round, the stupid Accountant won and the 'brilliant' Economist lost.
4) America is concerned that its own Corporate investments, supply chains, and intellectual property rights are protected and appreciate more than proportionately. It has shown it can bend the IMF to its will- so it is effectually hegemonic and has indeed extended the Roosevelt Corollary to the Monroe Doctrine to Europe. America has always pretended to be a bailiff but actually told other countries to forgive debts owed to them by others- which is why there were no formal, as opposed to de facto, Second War Reparations- but made sure that any haircut for its Govt. was associated with a more than proportionate gain for its Corporations. Nothing in this current Crisis has changed that- which is why the Euro has fallen against the dollar despite low oil prices.
5) No measures have been suggested that will help the Greek economy to recover. However, if that economy shrinks enough, Greece has no alternative but to recover in much more dynamic form. Ulysses did much better once Proteus, the Old Man of the Sea, got off his back. If Schabule first got Tsipras drunk on power by tricking him and if Party Politics in Greece has truly been poisoned, then well and good.
6) Shrinking the Greek Economy as well as the expected Permanent Income of Creditors is the outcome, if not the stated aim, and that's feasible, indeed salutary, ceteris paribus given that, currently, no value adding incentive compatible model for Public Sector intervention obtains.
Like most ordinary people, I feel all Europeans should have a Social Minimum, on the basis of improved factor mobility and democratic subsidiarity- such that Tiebout manorial rents are equitably distributed- and this should be gradually extended to other countries once they undergo 'demographic transition'.
Varoufakis type 'zero-sum' long term transfers can't become sustainable or significant on a continent wide scale unless 2 conditions are fulfilled
1) factors must be inelastic in supply in the 'rich' areas
2) no preference revelation or mechanism design type problem arises.
This is implausible unless the tax collectors come from the poor region and are completely honest and have access to a window of Momus and thus can see into the hearts of men.
As a matter of fact, you can have sustainable transfers where there is a countervailing benefit- for e.g. rich regions give some cash to poor regions in return for which their Investments appreciate- i.e. there is an Aumann type correlated equilibrium. Here monetary union or the gold standard (if credible) removes uncertainty and signal extraction type problems thus rendering the game positive sum.
Graciella Chichilnisky's work is relevant in this context. Normally preference diversity can't be too much or too little and so it looks as though super-states will be more fragile. However, 'limited arbitrage' is itself canalised, so to speak, provided (this is the ideal outcome under monetary union) there is increased local Public Good Tiebout model competition such that transfers are internalized under the rubric of subsidiarity. In other words, voting with one's feet replaces the farce of voting.
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