Can Greece stand on its own feet?

By Yanis Varoufakis

Greece is being made over as a Potemkin village prior to the forthcoming General Election. In future posts I shall show that the reality on the ground continues to be one of a depressed economy, with an unsustainable public debt, a banking system that only functions courtesy of the ECB’s willingness to turn a blind eye, a private sector in which everyone owes to everyone and no one can pay and investment that is utterly non-existent. For the time being, here is a short interview with an Italian journal – click here. For the original English text read on…

Troika experts left Athens without an agreement, but Greece seems confident that it can exit from the bailout program at the end of the year and Greek Finance minister Gikas Hardouvelis said yesterday that Greece is closer to stand up again on his feet. Do you think that end of the crise is really near? Do you think that greek people will began to feel the difference in their everyday life ? Are there other things that greek government could do?

Greece cannot stand up on its feet as long as its debt remains un-payable, its banks insolvent and its private sector incapable of repaying its taxes, debts and wages. The ‘exit’ from the bailout program is another propaganda tactic, this time as a smokescreen that the government will use in order to convince voters to return it to power in the election that will be triggered off by this Parliament’s failure to elect a President. The government, instead of negotiating a new package that will dissolve this triple crisis of debt, banks and private sector asphyxiation, is begging the troika to allow it to declare an exit from the current ‘package’. In conclusion, the crisis is deepening and the Greek people cannot see any light at the end of this long tunnel. This is why the opposition is leading in the opinion polls.

Unemployment, specially for young people, is still a big problem. This is the argument of today EU meeting in Milan and Mr Samaras will be there. In which way can the EU and Italy’s Presidency help to solve the problem?

To tackle the unemployment issue, Europe-wide, our leaders must at last admit that this is a systemic crisis which requires a systematically redesigned Eurozone. That the deficits and the debts are not the cause of the problem but only the symptom of the deeper malaise. And the problem is twofold: First, the continuing death embrace between ‘national’ banks, whose asset books are full of black holes, and governments whose debt is unsustainable without growth, which is made impossible when they are forced into austerity. Secondly, there is no mechanism for recycling the idle savings of the surplus countries into investments that will increase productivity and demand in the deficit countries. As long as our leaders avoid talking about these issues, and focus instead on the Maastricht-SGP limits (and whether Italy or France should or should not be allowed to exceed the 3% of deficit to GDP limits) employment will continue to languish at pathetically low levels, and unemployment will only shrink as workers are discouraged and drop out of the statistics, out of sight and out of mind.

Editor's note: This post continues TPPi's series of Yanis Varoufakis guest op-eds, originally published on his blog, yanisvaroufakis.eu.