The Joe Walker Podcast - The Man Who Defied Europe - Yanis Varoufakis

Episode Date: July 26, 2018

Joe speaks with former Greek Finance Minister Yanis Varoufakis, the man who defied Europe to save Greece -...See omnystudio.com/listener for privacy information.

From Swagman Media, this is the Jolly Swagman Podcast. Here are your hosts, Angus and Joe. Hello there, ladies and gentlemen. How are you? Welcome back to the Jolly Swagman Podcast. It's great to have you here. I'm Joe Walker, and this week my guest is Yanis Varoufakis, the former finance minister of Greece. So who is Yanis? Well, before he was thrust onto the political and international stage, he was a reasonably famous academic economist. He had taught at the universities of Cambridge and Sydney. He was a professor at the University of Athens and at the University of Texas, Austin. He'd co-authored an acclaimed textbook on game theory

and was generally regarded as somewhat of a public intellectual. But then at the end of 2014, Greece's left-wing Syriza party looked stunningly close to an historic victory. The party's leader, Yanis' former friend and now Greece's prime minister, Alexis Tsipras, called on Yanis and said to him that if we win, we want you to be our finance minister. Well, Yanis accepted the call, was elected to the Hellenic parliament, and in January 2015 was sworn in as the Greek finance minister, a man with an unenviable task, charged with saving a country that was on the brink of collapse. Greece was mired in debt, it was deeply insolvent, unable to service its debts as a nation, and yet the European Troika, which consists of the European Commission,

the European Central Bank, and the International Monetary Fund, was seeking to impose a further loan on the Greek people, a new loan which would have impoverished them for generations, which would have shrunk their GDP and made it even harder to pay back their existing loans. Now, why on earth would they do that? Well, if you don't already know the answer to that, you'll have to listen to the podcast to find out. But needless to say, Yanis refused to accept the conditions of the European program.

And six months later, in July 2015, he resigned as the Greek finance minister. And again, if you don't know the answer to why he did that, you'll have to listen to this podcast. But whatever you think of his politics, for me, Giannis represents an archetypal hero. He is someone who was by no means a career politician, but had real soul in the game, sacrificed himself for the collective, and was prepared to stand and fall for his principles. I admire him greatly, and I enjoyed this conversation so much. Before I throw to the conversation, just a notification from me.

The first 15 to 20 minutes of the chat are quite academic. Now, I asked Giannis about some core economic concepts. I asked him about why the household is a bad analogy for government spending. And I asked him about game theory, the subject of much of his academic work. For me, these things are very interesting, but if you find them dry, I encourage you to listen through anyway. We normally start podcasts with the stories and the anecdotes, but I decided to

start with some academic questions in this discussion because, well, for two reasons. Firstly, I think it establishes Giannis' credentials as an economist. But secondly, I think it informs the intellectual backdrop to a lot of what happened during the Greek government debt crisis. So that's my reasoning. If you find the academic discussion dry, listen through anyway or skip ahead because when we start talking about the great government debt crisis, that's when the fireworks really begin and this podcast just gets better and better. So without much further ado, please enjoy my conversation with Yanis Varoufakis.

Yanis Varoufakis, thank you for joining me. It's a great pleasure. Thank you. So I'm very excited to speak with you. I've followed your writing and your speaking for a long time. You're a very hard guest to prepare an interview for because there's so much written about you and by you. I want to talk to you about your incredible experiences in 2015 as Greece's finance minister. I want to talk to you about some of your views about the direction that the world is heading. But before we get into all that, I thought perhaps

we might start on a rather academic note and ask you, what do you think some key economic concepts are for somebody in their 20s who hasn't studied economics and doesn't intend to study an economics degree but some key ideas that they should learn to be a minimum effective citizen well to begin with the the main concept the concept of economic surplus in shakespearean terms is superflux what is left over at the end of the year in terms of surplus production, the source of all profit, wealth, and savings. It's very important to keep in mind that what motivates growth, what motivates the building of civilization, the building of bureaucracies, of states, of companies, of our capacity to improve our circumstances comes from the production of surplus.

And to distinguish between physical surplus, actually economic surplus, from financial numbers. Financial numbers are utterly fictitious. Finance is crucial to capitalism, but nevertheless, it's a means, it's not an end. The end is economic surplus. That's number one. Number two, the fundamental profound difference between potatoes, gadgets, cars, on the one hand, that is commodities, standard commodities, and two endeavors that have become commodified, but nevertheless remain very, very different,

fundamentally, profoundly different to potatoes, gadgets, cars, and so on. And that is human labor and finance, money. Human labor is an essential input. It is the most essential input into the production process. It's become commodified over the centuries. So people buy and sell their labor. You advertise your labor services. You sell them.

You sign labor contracts for it. Similarly, finance, money. Money is also a commodity. You buy it and you sell it, not only in the foreign exchange markets, but also in terms of lending money that's effectively a form of supply of a precious input into economic life. But the point I'm making is that if you make the mistake of thinking of money and labor on the one hand, in the same way that you think of potatoes, gadgets, and cars,

then you've completely misunderstood capitalism. We've made the economists make this mistake. From the first economics 101 in universities, they teach models of micro behavior, whether you are buying or selling cars or potatoes or your labor power or your money, it's exactly the same thing. And it's not exactly the same thing. And there's a profound fundamental misunderstanding that comes out of this confusion. And lastly, the microeconomy, your own family or business budget and economics obeys laws that are very, very different to the laws of the macroeconomy

of the economy of Australia or the European Union or the United States or Brazil. So what applies to you personally, what applies to your business, what applies to your business, what applies to any micro unit, really very often proves to be exactly the opposite of what applies at the level of the state. So, for instance, and this is pertinent to the whole discussion of austerity,

better tightening at the level of your private budget is essential when your income is falling. But if the state tries to do the same thing and tries to behave as if it is an individual or a company, then we have a complete disaster in our hands. These are the basic components of a primary in economic education. So in your estimation, what percentage of citizens in a Western nation like Australia or the US or Greece understand those three core economic concepts? Well, interestingly, the less they've had to do with academic economics, the greater the chance that they have a commonsensical approach and a fair understanding to these issues. And education economics, in what passes as scientific economics, is detrimental to one's

capacity to grasp these basic concepts. I want to drill down on the third one you mentioned, because I find it very interesting. Tell us again, what's wrong with the household analogy for government spending? Why does it break down because a lot of times you hear and you know i remember growing up in australia under the howard government and a lot of people would kind of advocate the thrifty housewife version of government spending where you know we need to get back to surplus deficit equals bad but is it as simple as that no this is um if you want the height of economic illiteracy it's politically motivated

there's no there's a logic to it but it's got nothing to do with economic logic it's uh a logic that is detrimental to the smooth functioning of a macroeconomy like Australia. And the reason why this analogy breaks down and why it is dangerous is, if you want, boils down to a very simple fact. And that is that whereas you and I, in our personal life, are blessed with a strict independence between our income and our expenditure. That is not the case for a state or for any economy. So, to put it bluntly, if tonight, wherever you are, in Sydney, I don't know where you are, you decide not to go out to a restaurant in the eastern suburbs or wherever, and instead you stay at home and cook some pasta. You save money. And if your personal budget is in the red, that's a good thing to do.

And you should be thrifty. Because if you don't, then you fall deeper into debt. But the reason why belt tightening, staying at home rather than going to a restaurant, is a good idea in your case when you have budget-constrained problems. It's because, as I said, you are subject to this pristine independence between your income and your expenditure. The fact, in simple words,

that you are going to stay home at night and not spend, let's say, a hundred bucks at a restaurant means that you've saved 100 bucks, but your income has not shrunk. It is independent of your expenditure. Now, let's move on to the level of a macroeconomy. Let's take Australia. And remember in 2008, when the financial sector worldwide was collapsing, there was a global recession, the Great Recession. If the government in Australia at the time did what Mr. Howard's government would have proposed, if it had indulged the belt-tightening logic. What would have happened is this.

During a recession, that is the definition of recession, the private sector reduces its expenditure. So consumers spend less because their incomes have shrunk. Companies, because they anticipate a loss in demand, spend less in investment, maybe in labor, maybe they do not hire people that they would have hired, or they fire some of their existing workforce. So, during the recession, total private sector expenditure shrinks. Of course, as private expenditure shrinks, the government's tax take also shrinks.

So suddenly the government has a budget deficit or an increase in the budget deficit. Now, any knee-jerk reaction along the lines of austerity, the Howard logic, that, oh, my goodness, our deficit is going up, we need to tighten the government's belt, we need to reduce public expenditure, would be absolutely ludicrous because if the government indulges in belt tightening, reduces its expenditure at a time when private expenditure is falling, then the sum of private and public expenditure shrinks even faster. And here is the difference with your budget situation. Unlike in your case where your income is independent of your expenditure, in the case of Australia as a nation, as an economy, the sum of private and public expenditure is Australia's national income. So you see, there is no independence.

There is complete dependence between total expenditure and total income. Actually, there is no independence. There's complete dependence between total expenditure and total income. Actually, there's an identity. Total expenditure in Australia equals Australian GDP, total Australian income. So effectively, what the government does by cutting during a recession its public expenditure along the lines of belt tightening is it shrinks much faster than would need to be the case GDP, national income. the lines of belt tightening is it shrinks much faster than would need to be the case, GDP, national income. And then it's like a cat, a very silly cat chasing its own tail, because the whole point of reducing public expenditure during a recession is to cut down the deficit, the budget deficit.

But the government very soon realizes that even though it cut down public expenditure, that has forced even lower the level of the tax take of the government's taxes because it has precipitated a faster shrinkage of GDP. And then the government says, oh, my God, it didn't work. Let's cut the expenditure even further. And this is a never-ending story. The more it does it, the more it realizes that it misses its targets. So it's a very silly idea to treat the government budget like a private budget. Fantastic.

The other academic point I want to ask you about before we move on to some more personal backgrounds is about game theory because that's the topic of your famous textbook, which I've got right here. And I think game theory will be familiar to a lot of our listeners, but for the benefit of people who aren't familiar, I was wondering if you might give us an outline of the prisoner's dilemma because I think this sort of applies to what happened between Greece and the Troika, which we might discuss a bit later on. Well, let's begin by defining what a game is. It's not about fun and games.

A game, in game theoretical terms, is defined as any social interaction where the outcome of what you do does not only depend on what you do but also depends on what others do so you know when it comes to uh whether you would get soaked or not when you leave the house that's not a game it's all if you wanted to a game between you and the weather but the weather doesn't give a damn about whether you carry an umbrella or not so uh you do not influence uh the weather simply by carrying an umbrella or not. So you do not influence the weather simply by carrying an umbrella or not carrying an umbrella. So this is just a decision you have to make.

You balance the probability of rain against the probability of sunshine. You balance the costs of walking like an idiot with an umbrella during a sunny day against the cost of being drenched during a rainy day. And you make a decision. That is a decision that does not involve a game. But any decision, like a game of chess, setting a price when you know that your competitors are going to set their price in reaction to the price you set. Any decision of what to wear in a party.

You go to a party and you think, okay, what shall I wear? It depends on what you think others will wear. Is it going to be formal or is it not going to be formal? But the others are caught in the same situation. They have to wonder what you're going to wear. So, you see, that's another social interaction where the outcome,

how silly or how good you feel when you are at the party, depends on this, what we call strategic interdependence this interdependence being the result of um an outcome that depends on what you think the others will do and what they will do depends on what you think they think that you think and so on okay so that's what the game is uh a prison a prisoner's dilemma a prisoner's dilemma or a free rider's problem, is a very particular game. It's a very paradoxical game. It's one where you and I have a common interest.

Let's say we have a choice between colluding and not colluding and competing. And let's say we are in a situation where it would be, if we were both going to do the same thing, that is both collude or both compete, both of us would be better by colluding. You can imagine that. You have a restaurant and I am the only competitor on that strip, somewhere in Newtown or North Sydney or wherever. And we collude and we push prices up a bit. And let's say that our restaurants are more or less of the same caliber. or North Sydney or wherever, and we collude and we push prices up a bit. Let's say that our restaurants are more or less of the same caliber,

good quality restaurants. So if we manage to collude, then both of us are going to have higher profits. Compared to competing and trying to slash prices, undermining each other, the result then will be effectively we have eliminated a large share of our profits. So you would have thought that, okay, since we have a common interest to collude, that collusion is more probable. συνθήκες όπου η προσπάθεια για το μετρήσιμο του πλήρωματος ή του βιώματος ή του χρησιμοποιητικού μετρήσιμου ή του συμπεριφερεισμού του χρησιμοποιητικού μετρήσιμου προκειίνεται στην μινιμιζόμενη του πλήρωματος. Η ανοιχτήση των χρησιμοποιητικών βιώματων, των κίνητρων και τ.χ. Γιατί? Γιατί η στρατήρα του διευθυντικού διευθυντικού διευθυντικού είναι μια που ό,τι και το άλλο άτομο κάνει, ό,τι και το αντιμετρικό σας κάνει ή το αντιμετρικό σας κάνει, dilemma is one where whatever the other person does, whatever your opponent does or your

competitor does, you are better off not colluding. Think about it in the sense of, well, let me give you a very silly example that I think is a good one that's not even economic. You go to a concert and everybody would be better off, let's say it's an open-air concert down the domain, everybody would be better off to be sitting down and enjoying the music, feeling relaxed and not getting tired. But if everybody stands, you don't get a better view, nobody gets a better view, and everybody's worse off because you're standing instead of sitting. Now, everybody has a benefit from sitting, everybody agreeing to sit down, right?

But, and here is the treacherous logic of the prisoner's dilemma, as a person, personally speaking, individually speaking, you are better off standing whatever the others do. And think about it. If the others are sitting, you're better off standing because you get a much better view. If everybody else is standing, well, it's very silly to be sitting down because you won't see anything. So everybody ends up standing, and everybody's worse off than they would be sitting down. Similarly with entrepreneurs. Everybody tries to slash prices to compete, to undermine their competitor. The result is that nobody is making profits

because everybody slices prices and then nobody makes profits. That's, if you want, the kernel of the paradox between what is in your private interest and what would be in the collective interest and how the private maximization drive undermines your well-being. Got it. So the technical summary then would be something like the reward for unilaterally competing is greater than the prize for colluding together is greater than the payoff for competing together is greater than the payoff for trying to collude if the other person's competing yeah but let's put it even more briefly yeah it's a situation where the

pursuit of private interest undermines both individual interest and collective interest yeah the classic tragedy of the commons yes that's right brilliant so that is uh that is all the academic questions i'm going to ask you janice and i want to sort of shift gears now okay tell me about your parents well my father is still alive and kicking. He's actually next door. He's 94. He was born and raised in Cairo, Egypt. A Greek-French family.

There was a very multinational, multicultural, highly sophisticated community of expats, of Europeans primarily in Cairo back then in the 1920s and 1930s and 40s. He's a product of that one, of that community. You know, a community that astonishingly spoke five, six languages. And then in 1946, he made a very strange decision. In the middle of a civil war in Greece, he made a very strange decision in the middle of a civil war in Greece. He followed his heart and he decided to go to Athens to study chemistry at the University of Athens. And he got caught up in the civil war and ended up for four years in a concentration camp for left-wingers, almost by accident.

But then, of course, that turned him into a committed left-winger, unsurprisingly. Then, well, my mother was, she was the first student of chemistry, first female student of chemistry in the University of Athens. She effectively broke down barriers in order to get in. She faced a great deal of discrimination. She came from a centrist family, but she had a personal dislike of leftists, communists, because

of a personal experience that she had. Nothing substantial, but enough to make a young woman dislike them. So she joined that university-wide organization, was recruited for a few months. And her first job, the first assignment they gave her was to keep tabs on a communist

that had just come back from a concentration camp, back to the university. And that happened to be my dad, and the rest is history. So my father ended up working in the steel industry, and he's still the chairman of the board of that particular steel factory in Greece. My mother became a biochemist, then she went into local government, she became a vice mayor of the city where I was born, and then died in 2008.

So that's the long and the short of it. So how long was your father held in the concentration camp? In different ones, all up for years. And he was a student? 1946 to 90. He was a student at that time? Oh, yeah, yeah, yeah. He was a first-year student.

He was a mature student. He came to Greece later because he had a very cushy job at the bank in Cairo and decided to leave that to go to university and study chemistry. And when he arrived, the student's Union was completely divided between left and right. But they were trying at the time to find a kind of modus vivendi, the left and the right. So they decided to have a commonly agreed president of the union. And my father, having arrived from Cairo, he arrived like a UFO, in the sense that he was completely unattached

to any of those factions. So both sides, the right and the left, went to him and said, look, would you like to be the president? We would support you. So he said yes, he did it, and then a few months later, as the civil war was building up again, leading to a carnage a few months later, the government and the university authorities doubled tuition fees. And my father, thinking that this was, I think you're right, his job and remit as the president of the Students' Union

was to go to the dean, to the vice chancellor, let's say, to the rector, to be precise, and to make a very civilized complaint about the doubling of tuition fees during a time when students didn't have enough money to eat. And when he was coming out, he was apprehended by secret police and he was beaten up.

And that's the beginning of it, because two hours later, a senior policeman broke into his office and apologized for having experienced this beating and said, you know, we can see you're a good kid, you know, you come from a good family and so on, sign this piece of paper and go home without apologies. And that piece of paper was a denunciation of communism. And my father said, because he

was brought up in the spirit of liberalism, of the French Revolution from his mother, Rousseau and Voltaire and all that, he said, I'm sorry, I'm not a Buddhist, but if you ask me to sign a denunciation of Buddhism, I'm not going to do it because it's not your right as an organ of the

state to make me sign any declaration about my beliefs. So I'm not a Muslim. I'm not going to denounce Islam. I'm not a communist. I'm not going to denounce communists. If I've done something wrong, arrest me. Otherwise, let me go.

And the result was that for four years, he was in a concentration camp with communists, and therefore he joined the Communist Party of Greece. Wow. So you obviously grew up with that story of his resistance and standing firm on his principles. I'm not going to be bullied by any powerful institution and I'm not going to sign on the dotted line just because they think it's in my interest to do so. I want to sort of fast forward now to the 16th of April, 2015, and you actually begin your book, Adults in the Room, with this story. But you're in a bar in Washington, D.C., and the great Larry Summers, who was U.S. Treasury Secretary and a president of Harvard University, meets you at the bar to discuss the Greek

crisis. And at the very end of the conversation, he asks you a question. What was that question and what was your answer? Well, you've got to remember, I was Greece's finance minister at the time and I was embroiled in a very tough negotiation with one of the world's worst and most powerful creditors.

And Larry Summers met me as part of a relationship that we developed over the phone and email, a very helpful relationship to me. He was there. We were meeting as friends. He was there to help me. That's an important context before I answer your question as to what question. You see, the question he asked

me was not an adversarial one. He was trying to suss out who I am and he was trying to work out how to help me in the best possible way, not because he liked me or he didn't like my politics. I didn't like his politics, he didn't like mine, but we had a marriage of convenience

if you want, because we had a common interest. He saw that what was happening in Greece, what the European Union was doing to Greece, was in the end detrimental to the interests of the United States. So we had a common cause, if you want. So then you come to the question. In order to work out what kind of person I am and how he could help me more effectively, he said to me, he gave me a little speech first, that there are two kinds of politicians. There are the outsiders who speak their mind and are truthful and tell the world whatever it is that they believe in, but they immediately get rejected by the system.

They are thrown out. And in the end, even though they are still truthful and honest about their convictions, in the end they don't matter. And there are the insiders, the ones who stay within, within the fold of the establishment, of the deep establishment. They get access to information that outsiders don't ever get to see. And they may have some kind of influence within the realm of the deep establishment. Not great influence, but some degree of influence. And then he popped the question, so Yanis, what are you, an outsider or an insider? What was your answer?

Well, my answer was that I'm here to do a job. I'm here because I'm the only reason why I got into politics was because Greece is in debt bondage. We have a public debt that is like a huge ball and chain around the necks of the people of Greece. So my job is to effectively cut them loose from that. And I will do whatever it takes to achieve this. So this means I will have to behave like an insider. By the way, he added in his description of the insider that the golden rule of insiders

is that they never turn against other insiders, and they never tell those on the outside what's happening with them. So I said to him, yeah, I'm quite happy to go along with things. I'm a natural outsider, but I have a job to do. And if this means that I have to play along the rules of the insider, I will. But the moment the membership of the inside means that I have to ditch my people and allow them to remain in chains, then I'm out.

And of course, a few months later, I was out. Yes, we will come to that later, I'm sure. But help me understand that distinction a little better. What factors do you think lead someone to becoming an insider? Oh, it's the lure of power or the lure of a semblance, an illusion of power. It's also what he said. It's what Larry Summers said. Once you are on the inside, you get patted on the back by people who are powerful.

You have access to information, crucial information, important information that others don't have. And you have it made. Look at all of them. They're revolving doors. Once you are on the inside, even if you are not reelected as a politician, you find a cushy job with the World Bank and the IMF and the European Commission, the Reserve Bank of Australia. Then after that, you get a job at Goldman Sachs.

After that, you go back into private, public sector, public sector. Then you may get reelected again as part of the conservative or establishment political party. It's a very cushy existence to be on the inside. That's one. But I think there's something more powerful at play here. The manner in which secret societies manage to magnetize individuals by making them feel that they're special,

but by making them feel that they're part of a select cohort, I think the psychological influence of that is gigantic. I've seen good friends of mine, people that were jangling outsiders like I was back in 2015 when we all entered the government. I've seen how they've been transformed, how their membership of the inside, becoming insiders, completely transformed them, changed them as psychological entities.

And it's remarkable to see. And let's not forget that the best drama, the best theater, the best novels built on that theme. So I want to ask you about the Greek crisis now. And first, I want to paint a picture of the prevailing atmosphere in what you call bailout is stand which was post 2010 greece and i want to ask you about two stories that helped to set that scene the first i found quite poignant what that was about. Well,

2012 was two years after Greece became bankrupt and got caught up in this Ponzi scheme of the bailouts. Poverty was rising extremely fast and most people were feeling that it was as if, you know, the earth had subsided

and we were falling into a black hole. That's what most people were feeling. So what then I did was to issue a public call and ask people to ask, to answer, to send an answer, a one-word answer to two questions. They could choose which questions they answer. So one was, what do you want to, what are you most scared of? What are you most threatened by, in one word? And the other question was, what is it that you want to preserve the most, to safeguard? So all sorts of words came, but what was fantastic was that, and what she then did

was she took each one of those words, she created a hundred black metal boxes, and she put each one, each word in one of those metal boxes, and it created an installation with sound and fury and visuals, and she called it It's Time to Open the Black Boxes, the idea being that unlike the airplane where the black box is discovered after the accident, the idea is to open the black box before our society crashes. So that's more, she's the artist. But what was interesting was that the word that came back with the greatest frequency was the word dignity. It's what the Greeks feared that they were losing the most and what they wanted to preserve the most.

And it was fantastic. It was not jobs. It wasn't money. It wasn't savings. It was dignity. Wow. And tragically, there was a wave of suicides washing over the country at that time. I think the suicide rate in Crete might have been the worst, and that's traditionally a very proud island.

Yeah. Well, Cretans are very proud people. And they have guns. Crete is the Texas of Greece. Right. For some reason, they love their guns, a.k.a. for the servants, all sorts of things. And so, you know, proud love their guns, aka for the servants, all sorts of things. And so, you know, proud people with guns kill themselves, rather than go through the indignity of admitting their bankruptcy, of begging the bankers for a restructure of their debts, and so on and so forth.

But you see, it's not just back in 2012 to this day. The suicide rate in Greece is double what it used to be before the crisis, and it is continuing. Wow. The mood in Greece wasn't just morose. It also sounded quite restless. And the second story I want to ask you about is now fast-forwarding again to when you're a finance minister. You have a dinner in a restaurant with your wife and an Australian friend.

I think the restaurant was called Exarchea, but I'm not sure if I'm pronouncing that correctly. Just tell us what happened during that meal. Well, the area is called Exarchea. Exarchea. That's the one. The restaurant is called Yandis, but that's neither here nor there. Look, this area, Exarchia, is actually where I...

When I moved from Australia to Greece in the year 2000, this is where I bought my flat. So I consider Exarchia to be my neighborhood. I don't live there anymore, but I lived there for many years, and I really love that place. And it's a place which has always been different. It was always a place that the police were very coy to enter because of the very high percentage of anarchists living there, treating Exarchia as a liberated part of the city, liberated from the police, liberated from the standard conventions of Western societies.

So it was always full of music and parties and, well, drugs as well, I should say. But it remains a very interesting part of Athens, of Europe, I would say. The anarchists have, well, by the way, it's not just one sort of anarchist. There are many competing forms of anarchists within Exarchia. Some are more violent than others. And they have this, nevertheless, this common view that Exarchia is a police and establishment free zone, a place where the state and the oligarchy's apparatus is kept out. So there was I, because I always considered myself to be an outsider anyway, going back to the original

discussion, to the earlier discussion. So, I was a minister. Thankfully, I didn't have any escorts with me, any police detail. I never did. I always tried to evade them. I found it terrible to have to be escorted by sentries. Anyway, so my wife and a friend, an Australian friend, were at the restaurant. I was in ministry.

At some point, I finished work, and I jumped on the motorcycle, and five minutes later, I was at that restaurant and packed. Now, one group of anarchists, about 60 of them, the more recalcitrant and belligerent ones, took off the fence that a minister of state should be in Exarchia. And they attacked us. They came into the restaurant with bottles. They broke them.

They threw them at us. And they tried to hit me. And they were trying to be surgical in their operation. They tried to hit me and nobody else. So were they actually trying to glass you, like really injure you or maim you? Yeah. Wow. Some of them had beer bottles which they broke off and they were holding them as weapons.

I don't think they were trying to kill me or anything like that, but they were trying to injure me sufficiently in order to humiliate me and force me out with a little bit of blood on my face. You know, teach me a lesson, that kind of thing. But so I got up and I actually asked my wife and our friend to move indoors because we were sitting in the courtyard of the restaurant. It was a very nice April evening. And of course, my wife didn't listen to me because she never does. And she just jumped on me and grabbed me and held very, very tightly onto me

and was covering my head with her hands. And I was trying to push her off, but she's very strong. And I couldn't. So the assailants were trying to hit me without hitting her, but they were failing. So there were a few blows, but they landed mostly on her and me, but mostly on her. And they felt embarrassed by that so they withdrew and they formed a line outside the restaurant about 60 of them shouting abuse and my wife and i decided we would go out and confront them and we went out and they had created a corridor allowing us to get to my motorcycle

while abusing us. So it was clear that they didn't want to injure us at that point. But they were very, very, I shouldn't say negative, they were aggressive. And screaming blue murder and swearing abuse at the representative of the state. So we sat on a motorcycle. I was about to leave, and I thought, no, I'm not going to let this go like this. So I left the motorcycle with Danae, my wife, on it, and I walked towards them and said, okay, now, these here have a splendid opportunity to abuse a minister of state in person.

Do it. Tell me what you want to tell me. So we ended up having a discussion that lasted 45 minutes. It was very abusive at first, but then in the end, it became almost a debate. And I'm very proud of that. And in the end, they said, okay, now, time to leave, okay? Get out of here. And I said, well, are you telling me that I you know I've lived here for years I cannot come to

Exarchia and their leader ostensibly their leader the person that seemed to be their leader Teran said to me but in an almost friendly manner he said when you stop being minister come back and of course I do ever since ever since I a minister. I go to the same restaurant with my wife, and sometimes the same people come, and they make a point of congregating near the restaurant so that we can see them, that they are there, in order to signal to us that, look, you're here with our consent. Don't think that we are here because we're not here anymore. That kind of thing. Wow, so they're still a bit unsettled by you.

No, but they want to make their point. You've been tainted once by government. You're no longer in government, so we're not going to attack you anymore. But know that this is our place. And you're here with our consent well just briefly before we continue this discussion how how does the country become insolvent just tell us how the the greek crisis was connected to the 2008 financial crisis well take 2008 to the 2008 financial crisis?

Well, take 2008 from another perspective. Imagine if Australia did not have its own currency in 2008. Imagine you didn't have the Aussie dollar, but you had the US dollar, which you were not in control of. And imagine that your banks were replete with the kind of derivatives that J.P. Morgan and Goldman Sachs and all these critical organizations from the other side of the Pacific were creating. The moment the recession hit, if the Reserve Bank of Australia didn't exist and it could not print more money,

and if the federal government could not finance an increase in public expenditure, which is exactly what the government did and and therefore saves Australia from a terrible recession. And imagine a situation where also the states, like the state of Tasmania, New South Wales, and so on, had to pay for their own unemployment benefits individually without federal government support and imagine that they had to save the banks of Tasmania the banks of Western Australia without the help any help from the Reserve Bank of Australia or the federal government allow me to put it to you that if that was how Australia functioned 2008 Australia would today be a failed state and the half of the year for Australia would have migrated out of Australia. That's good for you.

Got it. So during the whole period from 2010 up to before you became finance minister in 2015, you were advocating from outside of the political arena as an academic and a public intellectual I suppose we could call you and you are arguing that the great the grace should implement debt restructuring just for our audience who aren't too financially or economically literate what does debt restructuring mean and why did you think that was the best solution for Greece? Well, I think our audience knows that already. Anybody who's ever taken a loan from a bank as a business person, business man or business woman, take any business loan that has been taken during the good times on the basis of a forecast

of certain revenues for the firm, for the business. And then the business hits troubled waters, whether this is a recession, a national recession, or because the business is not going well, or the particular sector, the particular market is not doing well. And you cannot meet your repayments to the bank. As the CEO of the company, the business person, what you're going to do, of course, you're going to go to your banker and you say,

listen, I'm very much afraid that things are not looking good. I'm insolvent in the sense that if I have to continue to repay my loan the way we had agreed that I should on the basis of those forecasts, given the change in circumstances, the deterioration of my circumstances, my business circumstances, I'm going to have to shut down and then I'm going to go bankrupt and you are not going to get anything back. So, can we discuss a restructure of the loan? And a restructure of the loan usually involves a reduction in the interest rate, a prolongation of the maturity of the loan,

and sometimes, if need be, a haircut, a reduction of the loan, even a cut of the principal. This is what bankers do every day. They restructure the debts, the loans that they've given to private business, every day. This is what Wall Street does, this is what the Commonwealth Bank does, and it makes perfect sense because if you don't do it, then you end up getting nothing back. What is standard daily practice in the financial sector is what should have happened with Greece. After 2000, we had a year. We did not have the capacity, therefore, to print money to repay our debt,

which is what the United States is doing today, for instance. And Mr. Trump has a gigantic debt, not him, but the United States of America. And the budget deficit of the United States is growing. It's 6% now of GDP at the time of full employment, more or less. And so, what the U.S. government does is it prints more bonds, it borrows more money, and the Fed is actually buying it, has been buying it for many, many, many years. So, but Greece couldn't do that because it did not have its own monetary authorities or an independent government, for that matter. This is why it went bankrupt. But bankrupt it went.

And like the private sector knows, when you have a loan that you cannot repay, it needs to be restructured. But instead of that, what the European oligarchy and the Greek oligarchy agreed to do was to pretend that Greece was not bankrupt. And to do what rogue bankers do when they want to hide the fact that the loan needs to be restructured. What they do is they do what in the parlance of the sector is referred to as extending and pretending. You may recall the savings and loan scandal in the United States back in the 1990s, where bankers had given money away, they had lent money to businesses that they would never get back because the businesses had failed or quasi-failed. And what they did was extend and prevent.

They gave them a second loan so that the businesses would pretend to be repaying the first loan, and then a third loan, and so on and so forth. But that is not a way out of bankruptcy. You cannot escape bankruptcy through more lending or borrowing. But this is exactly what they did to Greece in 2010. They gave the largest loan in history to the most bankrupt state in the world. And they did this in a way which is even more criminal than the savings and loans scandal in the United States. Because those huge loans came with austerity conditions attached that guaranteed,

for the reasons we explained earlier, what happens when you really shrink public expenditure and increase the recession and it guaranteed that we here in Greece lost 28 percent 28 percent of GDP so the income which was not enough to pay off their own loans would have to after shrinking by 28 percent pay off the old loans and the new loans given that the new loans was where the largest loans in the history of humanity. How old do you need to be to understand that this is going to be a catastrophe? Eight years, nine years, ten years of age?

You don't need to be an economist to know that this is not going to end well. Wow. So they effectively would have impoverished the Greek people for generations and were happy. Two or three generations. Yeah, give or take. And would have been happy to have a failed state on their doorstep.

Yeah, but there is a reason for that, Joseph. There is a reason for that. Yeah, please tell me. There is a reason for that. They were not just being dumb. The real motive behind this was this. The French and the German banks, during the period prior to 2008, like all banks around the world, were doing really stupid things. They were placing gigantic bets on the toxic derivatives, the CDOs and the CDSs and so on, that American banking institutions were generating,

as if there was no tomorrow. So Deutsche Bank had effectively a betting book. It had an exposure to these derivatives, the size 50 times of German GDP got it 50 5 0 times the size of the German economy one bank well had all those bets on his boots so it was well it's really gone and the only thing that kept kept it alive and wasn't just torture bank it was all and truly gone. And the only thing that kept it alive, and it wasn't just Deutsche Bank, it was all the German banks and all the French banks. And they had lent countries like Greece as well, Spain, Ireland, Portugal. So, they had taken out lots of bets, some in the form of lending to states that didn't have their own central bank to repay them if need be in the midst of a crisis, or to exposure to

those toxic derivatives of Lehman Brothers and AIG and J.P. Morgan and Goldman Sachs and so on and so forth. So when the crisis hit in 2008, very soon after that, while, of course, Obama was saving the Wall Street bankers and the Labour Party was saving the City of London, the European Union had to save the German and the French bankers. But the problem is that the European Central Bank was not allowed to print money to save the bankers, unlike the Fed in united states and the bank of england in britain or the bank of japan in japan so they had to actually take the money from the taxpayers and mrs merkel the chancellor of germany in 2009 took 600 billion euros this is something like 1 trillion australian dollars right the mind boggles about 1 trillion australian dollars from tax base so that was political poison for angela merkel to do this and then after she had done that six months later the

greek state went bankrupt and she received another phone call from one of her aides saying we have to give the same german french banks another 500 billion euros and she said what we just gave them a huge quantity of money oh well now it is is the states of Europe, of the periphery of Europe that are failing following the 2008 events, the great financial crisis or catastrophe. And she said, no, I can't do this. I can't go back to the parliament and take more money on behalf of the banks. So instead of doing that, she went to the German parliament, just like President Sarkozy of France went to the French National Assembly, and said, we need to help the Greeks.

So, we need to give them a huge loan out of solidarity for the Greeks. It was not solidarity for the Greeks. The money didn't go to the Greeks. The money went to the Greek treasury, and from the Greek treasury went to Deutsche Bank, Pepe Barbar, Societe Generale. So, this was the reason behind the Greek bailout. It was not a bailout for Greece, it was not a bailout for the Greek state.

Instead of restructuring our debt towards Deutsche Bank, Societe Generale, and so on and so forth, they gave a huge wad of money to the Greek state to give it to the bankers, so the bankers would not have to suffer any haircut, knowing that that would condemn Greece to a state of debt slavery and shrinking for two or three generations. It was very cynical what they did.

Got it. And you can rest assured that they didn't like it when I used to say this to them in their face. Yeah, I'm sure. What is Angela Merkel like? I mean, she doesn't come across as particularly charismatic on TV. I know she has a reputation for being ruthlessly effective, but I've heard you describe people falling under Merkel's spell. Oh, she's very charming.

Right. On a personal basis. She's a very charming woman. Actually, I think she's a nice woman. Yeah. As a human being. Not very exciting. But she wins you over,

firstly because of how hard she works. I've seen her, actually, work for hours on end, nonstop. And she comes to meetings fully prepared. She's done her homework. It was astonishing in the first meeting with my prime minister at the time that she knew almost off by heart 15 pages of the conditionalities for the Greek loan

in a way that no Greek prime minister, I'm sure, ever knew. So this is her preparation and the capacity to convince you that she has your best interests in mind. This is a great asset for any politician. And don't worry, I will find a solution for you. Just leave it to me. Just do as I'm telling you, and I'll find a solution that you'll be able to sell to your people. That is how, this is the Merkel spell.

So it's lots of carrots, lots of sticks, but also a general aura of a person who is competent and who in the end will find a solution that is her great merit her great disadvantage a great demerit of failure she has no vision she doesn't give a damn about the future uh she has a planning horizon of two three months uh and she has the the view that why make a change a radical reform now why why why why find a solution now if you can find it if i can leave it for you know next year so you know for 10 years she's been procrastinating for 10 years she has been papering over cracks and now the chickens have come home to roost and

today is as we speak she's the most weakened chancellor of Germany since 1945. And she's at the end of her tether. Right. Is she a technocrat? Is that how you describe it? No. She's a true blue politician. She's not a technocrat. Yeah.

She's clever enough and she's intelligent enough. She's a scientist, so she understands technicalities. Yeah. She's very smart, very quick, but she's not a technocrat. She's a politician. Got it. If you want epitome of a politician. Yeah, sure.

I want to ask you another story, Giannis. In November 2011, your stepson was on a night out with friends. He comes home late, and you receive a phone call on the landline. Tell me what happens and then how it led to a big move for your family. Well, in a sense, it was a time when I was active in exposing the shenanigans of the Greek bankers, criminal activities of the Greek bankers that criminal activities of Greek bankers that they were employing in order to stay in control of their banks, things for which in other countries they would have been imprisoned. And the point of the telephone conversation that you mentioned,

not the telephone, the telephone call was to threaten me and to threaten our family so as to somehow bully me into ending my campaign. And well, I didn't succumb to this, but on the other hand, he's not my son, he's my stepson. And my wife at some point said to me when I explained to her what had happened, look, either you get elected in parliament to give us a modicum of security or we leave the country. And I said at the time I had no intention of going into dirty politics. So I said, let's leave the country. And a month or two later um our move to the united states was in train yes and you you first i maintained my campaign of course of course yeah from from distance because you you worked during the day first for a company in seattle and then

as a professor at the university of texas austin and then during the night you were able to write about what was happening back in Greece, field interviews and questions during the Greek daytime. How do you look back on that period? Was it like a period of exile, so to speak? Actually, no. I enjoyed it very much because the internet allows us to be in more than one place at once. It felt as if I was in Greece and actually gave me what I call an Archimedean perspective. By not living in Greece at the time, by being in Austin, Texas, but at the same time being completely plugged into the economic and political and social reality of Greece through my contacts, my constant being on the phone,

being on television every day via Skype or via satellite. So I managed to maintain this combination of being present in Greece and at the same time of having the perspective of somebody living very far away from it. I remember it was a very intense period. I worked very, very much. It was also very funny, you know, taking the lift from my building in downtown Austin and coming outside. And, you know, after a very intense debate on television or something, you know, in Greece, and realizing that I was in Texas, having forgotten I was there. It was interesting. It was fun.

It was fun. I have fond memories of that period. Yeah, it's a beautiful city as well. So then in January 2015, you begin as the finance minister of Greece. You get pulled back in. You're now working for the government that is being led by the Syriza party, which is the left-wing party in Greece. And Alexis Tsipras is your prime minister and friend. I want to ask you about some of the struggles that you had to face in persuading the euro not to enforce that program that you outlined earlier on Greece and impoverishing the Greek people.

And, you know, it's like you cut quite a heroic figure and the stories are quite extraordinary. Some of the things that happened to you from phone tappings to being accosted by fake businessmen and being set up on TV. But one story in particular struck me, well, two stories. The first was in February of 2015 in Brussels, Christine Lagarde actually admitted to you that the policies that they were seeking to impose on Greece didn't even have a chance of working. That was the first thing that I found shocking. But the second story that was really interesting was the infamous Eurogroup meeting in Riga, in Latvia. And this was when the whole machine was brought in to effectively separate you from your prime minister. Just tell us what happened there. What was that all about? The essence here is simple.

For the very first time, they encountered the finance minister of a European country and a Eurozone member state, for that matter, who walked into the Eurogroup and said, no, I'm not going to sign on the dotted line. What you're doing in Greece is a crime against logic. It's not good for Europe. It's not good forreece it's not just that it's not good for greece it's not good for you either because it's like you know a banker who's refusing to restructure the debt of a stressed company in the end you end up getting nothing back uh but of course you know the difficulty i had during that period was that I was negotiating with creditors who didn't really care to get their money back.

And you know, Joseph, this is a very difficult negotiation when you're negotiating with a creditor who doesn't care about his money. Because what they cared about was the preservation of their own authority. And having a finance minister from a country like Greece saying, no, this doesn't make logical sense. Here is what is the foundation for any potential agreement between us and you. And if you want to chuck us out of the Eurozone, do it. Suddenly, I was a huge problem. And they had to get rid of me from the very very beginning and they went about it

magnificently with methods with ruthlessness and with brutality i knew they would i was not surprising to me and i was prepared for it what i was not prepared for was the manner in which they managed to split our government up and effectively to take my prime minister on their side. So what you are describing from day one, it was very good. The reason why the finance ministry is so crucial is because this is a technicality and a legalism that our audience probably don't know about.

Any loan agreement between a country like greece and the european union the international monetary fund creditors around the world and so on has to be signed by the finance minister so there is a finance minister not by the prime minister not the president of the republic not the parliament the finance minister and the moment they realized that i was not going to sign up to a deal that made no financial sense for Greece or for Europe, for that matter, suddenly they thought, oh, my God, what are we going to do with him? We have to get rid of him. Now, the problem was twofold. On one hand, they had to convince Tsipras, my prime minister, to get rid of me, to split us up.

So they drove a wedge between us, and they did this magnificently, as I said. But there was a second problem as well, and that was Tsipras' problem. Once he was convinced by the creditors to get rid of me and to sign up on the dotted line, which he did in the end, the problem was that I was too popular in Greece. I had won the election as a member of parliament

with the largest majority in the country, and by the time we had reached that crescendo of the clash between our government, myself, and the creditors, my approval rating was 87% in the country. So getting rid of me would not have been easy. So we went through a six-month period of a character assassination process involving the international media. It's amazing to watch this happen. Riga, that Eurogroup meeting, was the culmination of that.

Interestingly, I was warned a week in advance in Washington, D.C., by a member of the U.S. Treasury that a character assassination attempt against your minister, that's what he said to me, is going to reach its climax a week from today and it happened exactly a week from that day. So this was a coordinated campaign to bring you down? Oh, I even know the journalists

that were involved and who they were speaking to and one of them even apologised to me privately. And did the orders... Did the orders... Sorry to interrupt. Did the orders for this... I mean, I assume they would have come all the way from the top, like from the cabinets of the

German and maybe some of the other European nations. Oh, yeah. Look, Angela Merkel explicitly asked that Cyprus to fire me. And so did others. The German ambassador in Greece contacted the Greek government and demanded my removal.

Similarly, Greek bankers, the very same rogue bankers that had threatened me in 2011, had threatened the Greek prime minister with all sorts of things if he didn't remove me. There was an international campaign. Even George Soros called the prime minister, or called the prime minister via me. That's an interesting twist, the ironic twist, to say that I should be removed because the Greek crisis must end in Europe because Ukraine was more important. So there was, they paid me a great deal of honor of respect in a sense by

having all those powerful individuals um conspire not to have you removed uh well i mean one could say that you were incompetent and you had to be removed but this is not i don't believe why i had to be removed i had to be removed because greece had to sign up to a new bailout loan that everybody understood was terrible for the country. But they wanted Greece to go into a corner, lie down and die quietly and not create problems for the powers that be. And I was simply not going to do this because this is not what I was elected to do. And what they really hated more than anything, Joseph, was that I didn't really care about being minister. For me, you mentioned the word heroic. Not true.

I was not being heroic. I just didn't care enough. I was elected. I never wanted to be a minister. I never wanted to be a member of parliament. I threw my hat in that particular political ring in order to get a job done, to restructure the Greek debt and to give a chance to the people of Greece and the private sector here in Greece and the public sector to breathe again.

And when they realized that they couldn't bribe me, I was a big problem. I had to be gotten rid of. And they did this through dragging the government into the mud until June, when in the end the ECB closed down the banks. The people of Greece, even though they had closed their banks down, still backed me with 62% of the vote saying no to the ultimatum that came from the lenders, even though the prime minister was hoping that people would say yes in order to get rid of me and to sign up. The people said no, and then the prime minister turned that no into a yes that very same night and that was when i resigned of course yes yes you were a you were a free man because you didn't you didn't care about what happened to your career you didn't want or need to be there you were you were doing it out of a sense of

duty but it gave them it meant that they had no leverage over you, which I suppose explains why their attempts to remove you escalated so viciously. But going back to our conversation about game theory earlier, why was there a bad Nash equilibrium between Greece and the other European nations? Well, look, I am very coy to apply game theory. I'm very coy to apply game theory. I'm very coy to apply game theory. I mean, I even wrote an article in the New York Times when I was minister saying it's a mistake to apply game theory to our situation. And that is because you mentioned my book on game theory. My textbook on game theory is a big fat warning against using game theory to explain actual social reality. It is based on assumptions which simply do not hold in practice.

There is no such thing as Greece, Joseph. Greece is not a player. Germany is not a player. There are many different players representing Greece. So, for instance, I was a player. I had my own aims. The prime minister obviously had different ones, as it turned out. Then there are other members of government. There is the oligarchy, the bankers, there are the workers, the trade unions. Everybody

has different, slightly different, often misaligned objectives. In the German government, the German Chancellor, Mrs. Merkel, and the German Finance Minister, Dr. Schäuble, they hated each other. They disagreed fiercely with one another about what should happen. So who is your opponent when the Finance Minister and the Chancellor are moving in different directions? Within the IMF, the International Monetary Fund, you had the leadership that agreed with me on the importance of debt restructuring, and you had the middle management that were

thoroughly opposed to it, and they were trying to topple me for wanting to restructure the debt. So, it's an ill-defined game. And to try to work out what the Nash Equilibrium is, anyway, my book on game theory spends many pages explaining why the Nash Equilibrium is behaviorally highly problematic. That you can have a unique national equilibrium, but that does not mean that rational people should behave according to it. So let's put game theory on the side when we talk about reality. Yeah, yeah.

So let's talk about the referendum then. The referendum that was held to decide whether Grace would accept the European program was the first uh held in grace since 1974 and the only one uh since grace was founded as a the only one the only referendum on a non-constitutional matter whose idea was it uh and why did you call it well it it was the idea of the prime minister. The prime minister was trying to surrender. The prime minister was trying to surrender to the lenders against my better judgment and in conflict with me.

He had a big problem, as I said, me, because I wouldn't surrender. And behind my back, he was making concessions that I thought were silly. And the only reason why I stayed on and didn't resign was because I knew that these concessions of his, even though they were gigantic, would not be enough because they didn't care about the concessions. They wanted to humiliate him and our government. And they wanted to drag us through the mud with closed banks. And they wanted us to go begging to them. And I felt that, you know, he's a young man. He's much younger than me. 11, 12 years younger than me.

He's not going to do that. I was thinking to myself, I was proven wrong. But nevertheless, I thought that there would come a moment when he would stop conceding to them and he would come to me and say, come on, let's fight now. Well, that didn't happen. But nevertheless, he could not also politically simply surrender, fire me and surrender. His own members of parliament and the people out there would have overthrown him. So he did the next best thing. He called a referendum when the Troikov lenders presented to us with their final ultimatum. And he said, well, this is what the creditors, the European Union, the International Monetary Fund are trying to impose upon us.

I will put this to the Greek people to decide yes or no. Do we concede? Do we surrender? Yes or no? We keep fighting. Now at that point, it was clear to me that he was holding that referendum in the belief that we were going to lose it, but yes, to the ultimatum of the creditors, would win. So in a sense, it was a decent mechanism for deciding. We would put it to the people.

Let the people decide. There's nothing wrong with that. It's called democracy. And my position was that I will fight for no to win. If yes wins, I resign. He never said that because he was always willing or wishing that yes wins so he can stay on and never let us win.

And then on the 5th of July 2015, the referendum resulted a magnificent 62%. No, I never expected that. Never. I mean, I was actually fearing that yes would win. Tsipras was hoping yes would win. I was fearing yes would win. In the end, no one but with 62%. And when I walked into his office, I was feeling absolutely jubilant and triumphant.

And he was there distraught, absolutely demolished by the result. And he said to me, but it is time to surrender. I said, no, it's exactly the opposite. We just have a mandate to fight on. He said, no, it's time to surrender. We had a three-hour discussion about this, which I describe in my book. In the end, I resigned, and the rest is history. Was Alexis an insider or an outsider?

Oh, he's a consummate insider now, isn't he? Look at him, parading around with Donald Trump in the White House with Angela Merkel and so on and so forth, being a paragon of stability of the deep establishment. He's become the insider. Have you two remained friends through that?

No. No, there's nothing to say. There will be absolutely nothing that... You see, in order to keep doing what he's doing, he needs to tell himself a big fib time and again. A fib that he doesn't really believe in, but he has to keep telling himself in order to wake up in the morning and do what he's doing.

But he knows that I know that he knows that it is a fib. So any kind of discussion between us would be very upsetting for him, and it would be pointless from my perspective. Sure. Do you think the discussion may have to wait until after he's left office? No, I don't think I'm going to honour him with any discussion ever. Right, right.

George, we had a major opportunity in 2015 to save Greece and change Europe in a democratic and rational manner. And we blew it because of his choice. I don't think I can ever forgive that. I'm very mild in my disappointment, but I have no intention of sitting around with him and sipping wine and discussing the past. How do you make sense of that choice he made? Was it physical fear of some sort of coup?

Was it just being the consummate insider and wanting to please the deep establishment in Europe? What motivated him? It's a combination of all those things. And I think the answer lies in Shakespeare and Sophocles, Euripides and the great tragedians, not in the sphere of political economy. If you ever see Macbeth, for instance, if you see Macbeth, Macbeth was not a bad man. He tried to stay in power. He killed someone, committed a crime, and then he committed a second crime to cover

up the first crime, and then a third crime to cover up the second crime. And then, you know, but at some point, he realized he had lost his soul. Shakespeare is very good at this. Yeah, stepped too far in blood already, so it was just as tedious to continue as to go back. What general lessons have you drawn from the Greek crisis? Well, nothing I didn't know before, I have to tell you, except one. Except one. Tell us.

How inadequate. I'll tell you, the one thing I learned during those months behind the scenes working with the technocrats. They're incompetent. The technocrats of the International Monetary Fund, of the European Central Bank, of the European Commission, you know, of the U.S. Treasury Department, people that I used to hold in high esteem, even though I disagreed with them. I thought that at least they must be competent,

technically speaking, you know, as technocrats. They're not. They're really bad. You know, as technocrats. They're not. They're really bad. You know, we have an establishment which is run by a technocracy whose technocrats are really very low-level people. If they were students of mine, I would fail them. No, no, they're technically not skilled. They're not very good at their job. I mean, they can't do a proper debt sustainability analysis.

That is, they would never, they should never, they could never get a job at Goldman Sachs. They're not good enough. And if they do get a job at Goldman Sachs, they will get it after they become prime minister or something, yeah, in order to legitimize, you know, as advisors

or special members of the board of directors, just in order to share their contacts within the insiders, but not as technocrats. As technocrats, they're pathetic. So it's not just that they are neoclassical economists or anything like that. They're actually just not that talented. They are bad neoclassical economists. They're bad econometrists. They're awful statisticians.

Look at the IMS projections, predictions of growth since 2010. Every single time they issue a forecast, it is pathetically wrong. So for you, is there such a thing as too much government debt? Of course. No government can sustain infinite debt. But I think it's a very big mistake to focus on government debt. Let me give you an example. In Ireland, before 2010, public debt was tiny.

It was 25% of GDP, very, very low. But private debt was gigantic. In Greece, at the very same time, before low but private debt was gigantic in greece at the very same time before 2008 private debt was tiny public debt was then was gigantic when the crisis hit both countries went bankrupt because the total sum of debt is what you must look at and private sector of debt is more toxic than public sector debt, especially for countries that have their own currency. But yes, of course, I do not agree with those who say that as long as you have your own currency, you can have as much debt as you want, because you can always

print money to finance it. It's not true. There will come a time when your debt is going to create a dynamic that is detrimental to any capacity of total debt to remain viable. Before I let you go, do you have any parting advice that you would give to the Australian treasurer? I'm not sure if you're aware of our situation here, but we're sort of in the middle or coming to the end of a housing bubble. My advice to the Australian Treasury has been constant over the last 80 years or so. The Australian economy is not sustainable, given the trade deficit, given the housing bubble, and given the over-reliance on a financial structure that encourages economic rent over economic surplus.

It is quite astonishing that Australia has managed to stay out of the clasp of recession for so long, but I very much fear that when it hits, it's going to create an existentialist crisis in Australia, similar to the one that the nation experienced after the collapse of the Bretton Woods system, and particularly in 1998. Yanis, it's been a privilege speaking with you. We managed to get through the conversation despite being on different continents and only being connected by Skype. Before I say goodbye, I know you've set up a new party. You're working across Europe now to encourage a new democratic movement. Do you want to just give a final kind of plug to that and tell people where they can find you or support the cause? Thank you so much.

A party political podcast embedded in our conversation. In May 2019, we're going to have in Europe the European Parliament elections, which is a magnificent election because it takes place throughout Europe at the same time on the same day our Democracy in Europe movement, DiEM25 Democracy in Europe movement and we use

DiEM as in Cup and DiEM sees the day is going to be competing across Europe it's the first pan-European unitary movement we have members from across Europe. We are not splitting it up on the basis of nations or nationalities. And we're going to compete with a single party, a single list of candidates, and a single

economic and social agenda across Europe. So the same agenda is going to be put to the Germans, to the Greeks, to the French, to the Portuguese, and so on and so forth. This has never happened before, has never been tried before. DM25.org for more information about this. And in Greece, DiEM's political party is called Mera25, M-E-R-A. If you want to have a look, our manifesto can be read in English on mera25.gr

take a look at what we are proposing for Greece and take a look at what we are proposing for Europe Europe is perfectly capable through its crisis of creating gigantic problems so let's end with some bath. Brilliant.

Which is my ringtone. Great. Well, we'll have links up to those in our show notes. But, Yanis, this has been great. Thanks for joining me. Thank you, Joseph. Thank you, everyone. Thank you very much for listening to that conversation.

I hope you enjoyed it as much as I did. You might be interested to know that Yanis announced in April of this year that he will be running for Greek Prime Minister in the next general elections, which will occur in autumn of 2019. For information on his new Greek political party, information on his Democracy in Europe movement, and everything else we discussed in the podcast, you can find those links on our website, thejollyswagman.com. And if you enjoyed

the episode, please tweet about it, share it with your friends and family, and rate and review us on iTunes. Until next time, I'm Joe Walker. Thanks for listening. Ciao.