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Ditch the euro, return to drachma? Varoufakis attacks The Times

As Greece leaves the three-year bailout program, former financial minister Yanis Varoufakis came up with a radical solution. He reportedly urged Athens to ditch the euro and return to drachma.

In an article with the title “Ditch the euro and bring back the drachma” the Times quoted Varoufakis as saying that the Greek government should make contingency plans for bringing back the drachma.

The left-wing economist and former finance minister said plans for bringing back drachma should be prepared by the Greek government after emerging from the multibillion-bailout.

Yanis Varoufakis, the radical economist who once described the strictures of three loan programmes imposed on Greece as “fiscal waterboarding”, said on Sunday that the government should make contingency plans for bringing back the drachma.

>Discussing the end of the last bailout program Varoufakis was quoted saying: “For the most part of this decade, Greece has lived through the biggest peacetime economic catastrophe since the Great Depression. “It is therefore absolutely necessary that the country be prepared to return to its national currency.”

However, the radical economist immediately reacted to the article and said:

The former finance minister is an outspoken critic of the EU-enforced austerity package.

He once described the strictures of three loan programmes imposed on Greece as “fiscal waterboarding

Before he was sacked on the Referendum he operated a top secret task force to begin planning for a breakdown of negotiations with creditors, the famous Plan X.

In an interview with German newspaper BILD, Varoufakis said among others on the occasion of Greece’s exit from the bailout program:

Varoufakis: “What has really changed? Greece’s state debts have not become lower, but higher. We just have more time now to pay back even more debts. Despite two debt cuts over several billion euros, the debts have grown: the state is still broke, private citizens have become poorer, companies still go bankrupt, and our gross national product has decreased by 25 percent. The cutback demands limit consumption and investments. Companies owe money to each other and to the state. The state owes enormous sums in refunds to companies. Everybody owes money to everybody – but nobody has money to pay back their debts. Since 2010 young people have been leaving the country, in recent years at the rate of 15000 every month. If this continues, we’ll soon only have old people here who either stayed or came back from abroad when they retired. Plus there are the people who work for them, or in tourism. I call this desertification. The Roman Tacitus used the expression ‘They made a desert and called it peace’. In Greece they call it ‘fixed’.”

Stressing that “It was not the Greek banks that were saved, but the Deutsche Bank and the rest of France’s and Germany’s banks,” Varoufakis said that Greece should have been allowed to go bankrupt, suffer the consequences but then be allowed to pick ourselves up and move on – something that these bailouts prohibited.”

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2 comments

  1. Is mr Varoufakis wrong ? I don’t think so . Greece needs the drachma like we need oxygen to breathe. Right now greek economy is choking with all the restrictions they enforce on them . To payback a loan you have to make money , do really greece now is able to pay , when unemployed is sky high? Go back to drachma will be painful for short time , exports will get lot better cheaper price more costumers . What will suffer is the imports pay more for a Mercedes Benz, can be fix , import Hyundai’s or make your own as they did 70 years ago , but that’s bad for Germany .

  2. Varoufakis is right on the money, pardon the pun. The way to deal with Greece’s economic crisis is beyond traditional left wing / right wing politics, at least in the short term, when discussing leaving the Euro. No country can have a monetary policy independent of its economic makeup or fiscal policy, yet that is exactly what the Euro is.

    This farce of a Greek recovery and successful loan program exit is destroying Greece. Whatever young people aren’t leaving Greece are actively avoiding raising children at a population replacement rate of more than 2 per family. Greece should actively be encouraging its younger people to have children by creating tax breaks for individuals and businesses. Instead, Greece has 85% tax rates as some compensatory mechanism for inconsistent taxation compliance/enforcement and past debt misdeeds, and still lacks the means for people to even dream of starting a family without being in poverty. The cultural change required to root out corruption, cronyism and overspending that was ultimately about buying votes for post-metapolitefsi political parties would have finally been catalyzed with Grexit. Getting rid of the educational extortion scheme that is the frontistirio, reducing reliance on government services that are horrendously slow and inefficient, and privatizing (in Greek hands) inefficient non-essential state-run enterprises would be a great start.

    That opportunity is gone for now. When Greece ceases to have its own cultural identity due to economic decimation of its population and foreign purchases of everything, Greece will be but a sad footnote in world history.