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Did Germany adopt Varoufakis’ plan and prepares “Greek default within the eurozone”?

Do you remember Yanis Varoufakis‘ “doctrine” for a Greek default within the euro zone”? That was back in 2012, when Varoufakis who was just an economics professor and games theorist, was touring the media claiming that “Greece should default within the eurozone.”  Now, exactly today, Wednesday, a similar scenario appeared in the Hamburg-based newspaper DIE ZEIT.

According to the article the Christian-Social Democrats coalition government in Berlin prepares a Greek default plan without exit from the country.

“The government in Berlin is concerned that Athens will not be able to meet its payment obligations to the creditors in the coming weeks. In such a case, the ECB should stop providing Greece with euro.

But there is talk [in Berlin], a plan that Greece could default within the eurozone. The plan foresees further funding by the ECB provided that Greece will continue with the needed reforms.

If Greece does not comply with this demand, the German government could accept  Greece’s exit form the euro zone. But even then, the country will receive funds from Brussels until the transition to national currency is complete.” (rough translation, article DIE ZEIT in German here)

The scenario does not make much sense because if the Greek government had the intention to comply with the creditors’ “reforms-austerity-cuts” demands it could have done it already in February and it wouldn’t need to default first.

Anyway, according to Greek state NERIT TV, the German government dismissed the ZEIT claim as “untrue”. However short after the article was uploaded on DIE ZEIT website, the German Finance Ministry warned Athens that there would be no bailout tranche in April.

“We are negotiating with Greece at the moment. If there is a reform list, then the next step is a so-called Staff Level Agreement to make formal changes to the conditions of the aid program. This is a complex process and no one in the Eurogroup expects this to be concluded by April 24,” a finance ministry spokeswoman said.

“Once you have this Staff Level Agreement, then you have to have implementation. Greece would have to agree laws and at some point the institutions would conduct an implementation review and only on this basis could aid be paid out. If people are under the impression that aid could be paid out in April, I think this is wrong.” (Reuters)

No bailout trance, no money to pay the creditors? Therefore default within the eurozone in April? As the Germans say “Kommt Zeit, Kommt Rat” – in English “time will tell”.

For some weird reason, I keep having Varoufakis’ doctrine in my mind all the time, since beginning of March the latest. Of course, I miss Varoufakis’ point on Greece’s financing options during the default, but never mind. It’s just a scenartio, isn’t it?


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  1. There is much more to be explained than just copying Varoufakis’s ‘default’ idea. Germany has a finance minister, Mr Schauble who is first and foremost a politician, not an economist.He is supported by 140 economists who advise, inform and explain what goes on world-wide. he is an ambitious man and uses economic methods to achieve political ends, one of which is his declared intention to get Greece out of the Eurozone, and perhaps (my speculation) out of the EU.
    His recipe for aid to a stricken economy is to apply, in the short term a Keynsian remedy to maintain and increase that country’s employmennt, followed by mid and long term applications of policies of a more fiscal nature, plus reforms.
    It is clear that this was not the system for recovery used by the Troika in applying, courtesy of ND/PASOK, the dreadfully destructive austerity . The Keynsian short term was non-existent, so straight into the fiscal stage, whilst the money went to reimburse the lenders

    • I add the fact that Schauble appeared, on several occasions to be prompting the Eurogroup’s Mr Deisenbloem.

      • I would add that Mr Diesel-Boom is also not an economist, but a pure politician. I would bet he has hitched his political career to Wolfie’s wagon to benefit from what he sees as Wolfie’s “power”.

  2. It is very simple. Mr Schauble believes that what facilities Germany had after the 2nd world war ( Loans -plenty- to be re paid on condition that the country would pay only if development produced a surplus over the needs of Germany) to become what it became, and what Merkel did when she took over, namely, disobey all the rules of the EU fin. policies, Greece is not entitled to have. Greece, must be reduced to the usual slave countries, whose people work for €300 and a leftist Government cannot be allowed to change that. All this is clear to anyone who has read the terms of the Loan Agreement and its memorandum in Appendix which are against the basic Articles of The Greek or any other European Constitution, even against the the Treaties of the EU itself!

  3. Perhaps I need to explain what I mean by the terms of the Agreement:
    Most of the measures to safeguard the interest of the lenders disregard completely the survival of the country and the basic human rights of the people to house work food health education justice. They are against the are contrary to the provisions of international institutions UNO, ILO, EU treaties. and subject to English Law waver the provisions of sovereignty of Greece and its right to national property and/ or natural resources to serve the debt.!!!
    Perhaps if we … sell the Acropolis would cut it?? Or there may be other more important resources to hand over for peanuts.

  4. Definitely, It is not an unrealistic scenario especially if you take into account the Greek government’s necessity to cope with its electoral base.
    The Greek government is not able to deal with a complicated issue such as the introduction of a new currency without supporting by its European “allies”. At the same time, it is unable to run all its obligations regarding on memorandum because of the dramatic conditions in the Greek economy and society. I believe that Greece should not leave Euro by herself. In fact, an agreement between Greece and Germany for a velvet Grexit could be the best option for both sides, Greece and EU. Despite the current arguments I cannot imagine any particular reason for any side to deny a such opportunity. We would not forget that there are no alternatives apart from SYRIZA’s party at this moment in time in Greece.
    Everyone has to measure Greece’s geopolitic weight just before he makes his final decisions.Greece must not fall into anarchy and chaos.

    • I love the way you freely interchange Euro(zone) and Germany as if they are the very same. Sadly far too many, especially those at the top, seem to think they are.

      Greece must not fall into anarchy and chaos.

      It would however seem that that is precisely the game plan of those in Brussels and Frankfurt.By making it impossible for a government to govern, one does indeed create “anarchy and chaos”, or, alternatively of course, a “friendly” government which does as told, when told, and asks no questions…

      • Unfortunately, Germany and EU are the same thing because of Berlin’s relative strength and economic power. But, this is not my main point. Germany and EU cannot set up a “friendly” government in Athens due to the fact that all old centre-left and centre-right parties have already lost people’s trust. Greek people cannot also afford a new memorandum and another round of austerity measures. Therefore, the Greek government must be supported by all other EU members – including Germany – to re-introduce her national currency. This plan must also include a generous haircut of Greek public debt along with some reforms which are absolutely necessary for Greece. There are many dysfunctions in Greek bureaucracy and economic system. It doesn’t mean that the neoliberal policy is the only way to fix them. On the contrary, this policies brought extreme poverty and deep recession. For the first time in our longstanting history, we have to take the responsibitity of our fate and our future. That’s why we need our national currency. That’s why we need EU’s supporting. Nobody’s interest to fall Greece into anarchy and chaos.