Greek Bailout Deal: Greatest Ever Macroeconomic Management Disaster

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Greek Bailout Deal: Greatest Ever Macroeconomic Management Disaster
by Stephen Lendman
Former Greek Finance Minister Yanis Varoufakis expressed this view in a BBC interview. “This program is going to fail whoever undertakes its implementation,” he said.
Asked how long it would take, he said it “failed already.” It’s Greece’s death sentence on top of all the human pain and suffering imposed – unconscionable governance no one should accept.
Pressure in Brussels was intense, said Varoufakis. Monied interests and their representatives don’t negotiate. They demand – their way, or else.
“We were given a choice between being executed (or) capitulation,” Varoufakis explained. Tsipras chose the latter option instead of the obvious alternative one: voluntary Grexit, leaving a sinking ship, defaulting on odious debt, regaining monetary and fiscal control along with regaining full national sovereignty beholden to no foreign powers.
Banks will reopen Monday. Capital controls remain in place – restricting withdrawals to 60 euros daily (420 a week).
The European Council approved a near worthless seven billion euro bridge loan – so Athens can send most of it to Frankfurt and Washington making due ECB and overdue IMF payments.
Meanwhile, Tsipras replaced opposition ministers with ones accepting his betrayal. Energy Minister Panagiotis Lafazanis and two of his deputies were sacked.
Deputy Labor Minister Dimitris Stroutoulis and Deputy Defense Minister Costas Isychos are out. Former Deputy Finance Minister Nadia Valavani resigned earlier this week Tryfon Alexiadis replaced her.
Tsipras ruled out snap elections. Interior Minister Nikos Voutsis suggested possibly later in September or October.
Days earlier, 109 of SYRIZA’s 201 Central Committee members called Troika action a “coup.” Saying “(t)he agreement with the institutions was the result of a threat of an immediate financial strangling and is a new memorandum, with unbearable and humiliating conditions of oversight, which is catastrophic for our country and our people.”
On July 15, German broadsheet Die Zeit published Varoufakis’ article headlined “(German Finance Minister) Dr. Schauble’s Plan for Europe: Do Europeans approve?”
Saying five months of talks led to impasse because Schauble planned them this way – to force Greek capitulation to outrageous demands.
His “mission was to block any deal building on the common ground between our freshly elected government and the rest of the Eurozone,” Varoufakis explained.
“(F)ive months of intense negotiations never had a chance.” Schauble knew what he wanted and stayed hardline, yielding nothing.
He wants Greece expelled from the Eurozone “to discipline member-states resisting his very specific plan for restructuring the Eurozone.”
How does Varoufakis this? He said so. He wants Greece’s government “asphyxiate(d).” He wants its banks shut down.
Varoufakis asked Die Zeit’s readers: “Is this a Plan that you approve of? Is this Plan good for Europe?”
Schauble wants greater Eurozone political control – with a European budget commissioner having final say over member countries with authority to override their policies not following rules he sets, and a Eurozone parliament operating the same way.
His plan (drafted with German Deputy Defense Committee chairman Karl Lamers) “is at odds with any notion of democratic federalism,” said Varoufakis.
It advocates “negative powers” able to override member state governments and the rights of their populations. Schauble wants “political union that runs contrary to the basic principles of a democratic federation,” he stressed.
He left unexplained how much is lost by surrendering monetary and fiscal control to Troika authorities as the price of Eurogroup membership.
It keep no minutes, has no written rules, is answerable to no one but its authority with a central bank operating ad hoc – making things up as it goes along with “no body politic to provide the necessary bedrock of political legitimacy on which fiscal and monetary decisions may rest,” Varoufakis explained.
Schauble’s plan adds “political authoritarianism” to an already unworkable system. Grexit would “kickstart the process of” implementing what he has in mind.
The Eurozone was doomed from inception. Unworkable ideas can’t stand the test of time. Greece is the first crack in the system. Expect others to follow. It’s just a matter of time before dissolution becomes reality.
Stephen Lendman lives in Chicago. He can be reached at
His new book as editor and contributor is titled “Flashpoint in Ukraine: US Drive for Hegemony Risks WW III.”
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Stephen Lendman
Stephen Lendman
Stephen Lendman was born in 1934 in Boston, MA. In 1956, he received a BA from Harvard University. Two years of US Army service followed, then an MBA from the Wharton School at the University of Pennsylvania in 1960. After working seven years as a marketing research analyst, he joined the Lendman Group family business in 1967. He remained there until retiring at year end 1999. Writing on major world and national issues began in summer 2005. In early 2007, radio hosting followed. Lendman now hosts the Progressive Radio News Hour on the Progressive Radio Network three times weekly. Distinguished guests are featured. Listen live or archived. Major world and national issues are discussed. Lendman is a 2008 Project Censored winner and 2011 Mexican Journalists Club international journalism award recipient.