Angela Merkel faces a decision

BY YANNIS VAROUFAKIS

Athens, June 21 – Some members of the Greek government are disillusioned because I joined a  decision to seek a large loan from German taxpayers in early 2010. While there is nothing wrong per se, to borrow money, it is unacceptable to seek a loan to disguise that one has become insolvent. New credit is good, even for the insolvent, but only so long,  to decided to reform and the debt is restructured.

In May 2010, I looked at the then government as “treacherous” because I refused the first “bailout”, as it disguised the insolvency of the Greek State as a short-term liquidity problem.

But my analysis was honest: For years it was financed by the seller splurge of Nordic loans in BMWs for Greeks, a growth by a supported by consumers snowballing.

But when Lehman Brothers collapsed, idecreased our cash flows, our economy slipped into recession, bond yields shot up, and mountains of debt could not be serviced any longer.

Banks losses were unloaded onto taxpayers as public debt

In 2010 Greece owed to German taxpayers not one euro! We should leave it at that.

Irresponsible Greek borrowers and irresponsible German lenders should have to accept it and take responsibility. Instead, our governments have made on behalf of the European “solidarity” that private losses on the books of private banks have been loaded on the shoulders of the Greek and German taxpayers.

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Of course, there was the condition for these loans to rehabilitate the state budget. Under the watchful eye of the Troika, the structural deficit of the state was transformed into a surplus.Wages decreased by 37 per cent, the pensions fell by up to 48 percent, the government employment by 30 percent, consumer spending by 33 percent.

Greeks leave the country

Five years later, I took over the Ministry of Finance after the election our Syriza government.

Why we were elected?

Because in the meantime, as a result of “adjustment” economic activity had been suffocated. Unemployment shot up to 27 percent, climbed the black economy to 34 percent, and young Greeks left the country, many of them in the direction of Germany.

Meanwhile, the public debt rose to 213 billion euros (despite the debt restructuring of 2012), and the national income shrank by over 250 billion to less than 179 billion euros.

During my first visit as Minister of Finance in Berlin I met on my way to meet with Finance Minister Wolfgang Schaeuble a German official.

He asked me, half jokingly: “When do I get my money back?”

I was tempted to remind him that five years of terrible policy had destroyed the income, “be” from which money could be paid.

Or that 90 percent of loans to the Greek government went to the banks, many of them German banks.

But I bit my tongue. After all, I had rejected the bailout in 2010, because I was convinced that they would poison the relations between our peoples. Contributing to the vicious circle of mutual punishment would not help to alleviate the rift.

This is as if repeated in 2010

On the day when I was Minister of Finance, I promised not to indulge the passion of my predecessor, nonsensical loans from European taxpayers as a brief “cure” for our problems to accept.

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This is as if repeated exactly 2010! I will do the same as my predecessors – take the money, stretch the crisis in the future and do so as if they would be solved.

No thanks! That’s not why we were elected.

Related:

Last Thursday at the euro group meeting I presented a comprehensive proposal that would end the crisis and would enable Greece to repay its debt. It includes deep reforms, an automatic debt ceiling and an idea for a debt exchange within the Troika, which would not include a single euro refinancing for our state. He would, we believe, end the vicious circle that began in 2010.

Merkel has to make a decision Monday

Unfortunately, the euro group has refused to discuss our proposal. The result is that now all of the extraordinary EU summit on Monday.

We will come from our side with the decision to Brussels, further compromise, as long as we are not asked to do what previous governments did: new debt to accept under conditions that offer little hope that Greece can pay back its debts.

The German chancellor will be on Monday at a decisive choice: In an honorable agreement to enter with a government that has the “bailouts” and rejected a negotiated solution aspires.

Or follow the alarms from their governments, encouraging them to cast the only Greek Government overboard that is principled and can bring the Greek people to the path of reform. This decision, I very much fear, they must make.

Frankfurter Allgemeine : Translation

Angela Merkel steht vor der Wahl

2015-06-21