Yanis Varoufakis interviewed on Australian radio

In this seminal interview with Philip Adams of the ABC Yanis Varoufakis speaks out for the first time publicly since resigning as Minister of Finance.

I have to a 'mea culpa' and admit that I was wrong in criticising Zero Hedge and the Telegraph for saying that Tsipras was despressed at the result of the referendum. Varoufakis' account makes it clear that this was the case.

"Damned if he did and damned if he didn't" - Tsipras was simply not up to the demands of the time and now Greece (and he) have been thoroughly humiliated and the country has ceded its sovereignty to a eurocratic tyranny.

This interview confirms all that I have felt all along about Varoufakis since I first heard him about 4 years ago - his intellect, honesty and - yes - integrity.

Please take the time to listen carefully to this interview

Yanis Varoufakis interviewed on the ABC

Yanis Varoufakis interviewed by the wonderful Philip Adams of the ABC

For podcast GO HERE

Yanis Varoufaskis: Schэauble wants to put the fear of God into the French

The Guardian published an op-ed from Yanis Varoufakis today

"Based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone."

Germany won’t spare Greek pain – it has an interest in breaking us

Debt restructuring has always been our aim in negotiations – but for some eurozone leaders Grexit is the goal

Yanis Varoufakis, former Greek finance minister

the Guardian

10 July, 2015,

Greece’s financial drama has dominated the headlines for five years for one reason: the stubborn refusal of our creditors to offer essential debt relief. Why, against common sense, against the IMF’s verdict and against the everyday practices of bankers facing stressed debtors, do they resist a debt restructure? The answer cannot be found in economics because it resides deep in Europe’s labyrinthine politics.

In 2010, the Greek state became insolvent. Two options consistent with continuing membership of the eurozone presented themselves: the sensible one, that any decent banker would recommend – restructuring the debt and reforming the economy; and the toxic option – extending new loans to a bankrupt entity while pretending that it remains solvent.

Official Europe chose the second option, putting the bailing out of French and German banks exposed to Greek public debt above Greece’s socioeconomic viability. A debt restructure would have implied losses for the bankers on their Greek debt holdings.Keen to avoid confessing to parliaments that taxpayers would have to pay again for the banks by means of unsustainable new loans, EU officials presented the Greek state’s insolvency as a problem of illiquidity, and justified the “bailout” as a case of “solidarity” with the Greeks.

To frame the cynical transfer of irretrievable private losses on to the shoulders of taxpayers as an exercise in “tough love”, record austerity was imposed on Greece, whose national income, in turn – from which new and old debts had to be repaid – diminished by more than a quarter. It takes the mathematical expertise of a smart eight-year-old to know that this process could not end well.

Once the sordid operation was complete, Europe had automatically acquired another reason for refusing to discuss debt restructuring: it would now hit the pockets of European citizens! And so increasing doses of austerity were administered while the debt grew larger, forcing creditors to extend more loans in exchange for even more austerity.

Our government was elected on a mandate to end this doom loop; to demand debt restructuring and an end to crippling austerity. Negotiations have reached their much publicised impasse for a simple reason: our creditors continue to rule out any tangible debt restructuring while insisting that our unpayable debt be repaid “parametrically” by the weakest of Greeks, their children and their grandchildren.

In my first week as minister for finance I was visited by Jeroen Dijsselbloem, president of the Eurogroup (the eurozone finance ministers), who put a stark choice to me: accept the bailout’s “logic” and drop any demands for debt restructuring or your loan agreement will “crash” – the unsaid repercussion being that Greece’s banks would be boarded up.

Five months of negotiations ensued under conditions of monetary asphyxiation and an induced bank-run supervised and administered by the European Central Bank. The writing was on the wall: unless we capitulated, we would soon be facing capital controls, quasi-functioning cash machines, a prolonged bank holiday and, ultimately, Grexit.

The threat of Grexit has had a brief rollercoaster of a history. In 2010 it put the fear of God in financiers’ hearts and minds as their banks were replete with Greek debt. Even in 2012, when Germany’s finance minister, Wolfgang Schäuble, decided that Grexit’s costs were a worthwhile “investment” as a way of disciplining France et al, the prospect continued to scare the living daylights out of almost everyone else.

Pinterest




class="Apple-converted-space" ‘By the time Syriza won power last January, a majority within the Eurogroup had adopted Grexit either as their preferred outcome or weapon of choice against our government’.

By the time Syriza won power last January, and as if to confirm our claim that the “bailouts” had nothing to do with rescuing Greece (and everything to do with ringfencing northern Europe), a large majority within the Eurogroup – under the tutelage of Schäuble – had adopted Grexit either as their preferred outcome or weapon of choice against our government.

Greeks, rightly, shiver at the thought of amputation from monetary union. Exiting a common currency is nothing like severing a peg, as Britain did in 1992, when Norman Lamont famously sang in the shower the morning sterling quit the European exchange rate mechanism (ERM). Alas, Greece does not have a currency whose peg with the euro can be cut. It has the euro – a foreign currency fully administered by a creditor inimical to restructuring our nation’s unsustainable debt.

To exit, we would have to create a new currency from scratch. In occupied Iraq, the introduction of new paper money took almost a year, 20 or so Boeing 747s, the mobilisation of the US military’s might, three printing firms and hundreds of trucks. In the absence of such support, Grexit would be the equivalent of announcing a large devaluation more than 18 months in advance: a recipe for liquidating all Greek capital stock and transferring it abroad by any means available.

With Grexit reinforcing the ECB-induced bank run, our attempts to put debt restructuring back on the negotiating table fell on deaf ears. Time and again we were told that this was a matter for an unspecified future that would follow the “programme’s successful completion” – a stupendous Catch-22 since the “programme” could never succeed without a debt restructure.

This weekend brings the climax of the talks as Euclid Tsakalotos, my successor, strives, again, to put the horse before the cart – to convince a hostile Eurogroup that debt restructuring is a prerequisite of success for reforming Greece, not an ex-post reward for it. Why is this so hard to get across? I see three reasons.

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Europe did not know how to respond to the financial crisis. Should it prepare for an expulsion (Grexit) or a federation?

One is that institutional inertia is hard to beat. A second, that unsustainable debt gives creditors immense power over debtors – and power, as we know, corrupts even the finest. But it is the third which seems to me more pertinent and, indeed, more interesting.

The euro is a hybrid of a fixed exchange-rate regime, like the 1980s ERM, or the 1930s gold standard, and a state currency. The former relies on the fear of expulsion to hold together, while state money involves mechanisms for recycling surpluses between member states (for instance, a federal budget, common bonds). The eurozone falls between these stools – it is more than an exchange-rate regime and less than a state.

And there’s the rub. After the crisis of 2008/9, Europe didn’t know how to respond. Should it prepare the ground for at least one expulsion (that is, Grexit) to strengthen discipline? Or move to a federation? So far it has done neither, its existentialist angst forever rising. Schäuble is convinced that as things stand, he needs a Grexit to clear the air, one way or another. Suddenly, a permanently unsustainable Greek public debt, without which the risk of Grexit would fade, has acquired a new usefulness for Schэauble.

What do I mean by that? Based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone.

I was alerted to Varoufakis' article by this from Zero Hedge.

I prefer to read the original, rather than the ZH version. For God's sake, why do I need to know that Varoufakis was seen heading off to the Greek islands?!

Varoufakis' Stunning Accusation: Schauble Wants A Grexit "To Put The Fear Of God" Into The French

Moving away from the dollar

“From today, the USD is no longer needed for trading between CNY and EUR. The two currencies can be traded direct against each other."

Analysts hail yuan-euro direct trading announcement

Analysts have given the thumbs up to the Chinese central bank’s announcement on Monday that the Chinese currency can now be traded directly against the euro in its interbank currency market.

The Bricspost,

30 September, 2014

This would be a major boost to trade between China and the Eurozone, says Nordea. China stepped up plans to increase the international use of its currency last October with an agreement between the European Central Bank and the PBOC to swap euros and yuan.

“From today, the USD is no longer needed for trading between CNY and EUR. The two currencies can be traded direct against each other. This would lower transaction cost in EURCNY trading and push for yuan internationalization,’ said Amy Yuan Zhuang, senior Asia analyst at Noredea Research.

The yuan is now the second most-used currency in international trade after the US dollar.

“Implications for European companies are beneficial in terms of lower transaction costs in exchange and trading. Generally it will increase convenience in trade and investment between China and the Euro area. Implications for China are more important. It is a cornerstone in CNY internationalisation and it becoming a global reserve currency,” said Zhuang in an emailed statement.

Beijing is keen on substituting the US dollar with the yuan in all of China’s trade with other countries. The Chinese currency now trades directly with the Japanese yen, the Australian dollar, the Brazilian real, the EU’s euro, the New Zealand dollar and many other currencies.

“This is an important step in strengthening bilateral economic and trade connections between China and Eurozone member states. This will help lower currency conversion cost for economic entities, facilitate the use of RMB and Euro in bilateral trade and investment, promote the financial cooperation and enhance economic and financial ties between China and Eurozone member states,” said the People’s Bank of China in a statement on its website.

Earlier this month, China’s central bank said that it had authorized the Bank of China (BOC) as a clearing bank for RMB business in Paris.

BOC has so far opened more than 1,200 inter-bank RMB clearing accounts and 1.7 million RMB accounts for corporate and individual clients overseas.

Competition is fierce among Europe’s major financial centres, Frankfurt, London and Luxembourg to trade in China’s currency.

In a major highlight of an investment meet earlier this month, Moscow and Beijing have entered into a pact to boost use of the rouble and yuan for trade transactions

The Cyprus heist

'It's robbery!' New Cyprus bombshell as Britons are told they may lose EVERYTHING over £85k

• Bank of Cyprus will see 37.5% of deposits over £85k converted into shares
• Laiki Bank customers are also reported to be facing the loss of 80%
• Experts say there is a good chance that shares will be worthless

By DAN ATKINSON AND IAN GALLAGHER




This is money,

31 March, 2013

British expats in Cyprus face a near-total wipe-out of any deposits over £85,000 as the full nightmare  of the stricken island’s EU bailout became clear yesterday.

Although it was known that the wealthiest savers would take a  large hit from last week’s €10 billion (£8.5 billion) EU rescue deal, the loss is far greater than feared.

The blow will fall on customers of the country two biggest banks – Bank of Cyprus and Laiki Bank.

Bank of Cyprus savers will see 37.5 per cent of any deposits over €100,000 (£85,000) converted into shares in the bank, with a strong possibility that these will prove worthless. Another 40 per cent will be repaid only if the bank does well in future, while 22.5 per cent will go into a contingency fund that could be subject to further write-offs.

Laiki Bank customers are also reported to be facing the loss of 80 per cent of their deposits above the £85,000 limit.

An early bailout plan – highlighted by The Mail on Sunday two weeks ago – would have seen the losses shared across all bank customers, regardless of their balance.

However, that plan was voted down by the Cypriot parliament, leaving the country in urgent need of a new solution to raise its €5.8 billion contribution towards the bailout.

Thousands of Cypriots demonstrate to protest against the harsh treatment imposed on Cyprus by the Eurogroup earlier this week

The deal – which was clinched last Monday between Cyprus, the European Union and the International Monetary Fund – made clear that richer bank customers would shoulder a much larger bill.

Although it is not known how many of the 60,000 British expats living  on the island have deposits of  more than £85,000, it is likely that a considerable number will be caught in the net.

Neil Hodgson, 48, who moved to Paphos, on the south-west coast of the island, six years ago, said he has lost nearly £200,000. The former farmer, who has two accounts with Bank of Cyprus, added: ‘I had more than €300,000 in my deposit account and €20,000 in my current account. When I went to the bank the other day I was told the total balance for both is €100,000.

‘They were unable to explain how this had been worked out but indicated I might get some back at a later stage. 

‘I checked online and it confirmed that the €20,000 in my current account remains, but that I only have €80,000 in my savings account. It’s robbery, plain and simple.’

Laiki Bank customers are also reported to be facing the loss of 80 per cent of their deposits above the £85,000 limit

Banks in Cyprus are open for normal business but with strict restrictions on how much money their clients can access, after being shut for nearly two weeks

Mr Hodgson, from Newcastle upon Tyne, whose wife died two years ago, said he moved to Cyprus believing he was destined for a ‘happy life of semi-retirement’.

‘Our farm in Ayrshire was bought by a mining company and I came into a lot of money,’ he added. ‘We moved to Cyprus for the sunshine and easy life but it has turned into  a nightmare.

‘My big mistake was to move all my money here, but at the time things were very stable. Most of  the Brits here had the foresight to move their money in the last few months, but I genuinely thought it would be OK. I’m not sure what the future holds now.’

The Treasury has said it will  compensate any of the 3,000 British Service personnel facing losses.
Those hit hardest include thousands of wealthy Russians who  have deposited millions of euros on the stricken island. Peter Dixon, strategist at European bank Commerzbank, said: ‘These suggested new sacrifices being demanded of better-off depositors sound even worse than we assumed.

‘The problems in Cyprus are twofold. First, the central bank ignored the huge build-up of debt. There was a problem of mismanagement.

‘Secondly, the Cypriots essentially imposed these tough solutions on themselves and the eurozone rubber-stamped them.’

Ordinary Cypriots step in the streets to protest against the massive "haircuts" imposed by The European Union, the European Central Bank and the International Monetary Fund

Last week markets took fright at suggestions that the Cyprus model could be a blueprint for future  bailouts elsewhere in Europe.

Those with less than £85,000 in the bank have also seen themselves hit by the bailout. Temporary capital controls have been imposed to stop residents taking cash off the island, including capping cash machine withdrawals at €300 a day.

At the same time, businesses have been told they will be unable to transfer more than €5,000 abroad without approval, while no one, including tourists, can leave the island with over €1,000 in cash.

Meanwhile, the spotlight has now swung to Slovenia, another small member of the single currency in which investors are losing faith.

Last week, the price it had to pay to borrow money jumped sharply as markets began to take account of the risk that the country may default on its debts. 

However, on Friday, finance minister Uros Cufer insisted: ‘We will need no bailout this year. I am calm.’

Dan Atkinson: How the euro turned into the biggest theft in history

For a currency that promised to provide a sure bet on a glorious future, the euro is turning into the biggest theft of people’s savings in Western Europe since the war.

Greece, Ireland, Portugal  and Spain were among the first  to be crushed by the fallacy of  a one-size-fits-all currency.  Now it is Cyprus’s turn, and the scale of losses for some savers  is eye-watering.

Last week, the latest Cypriot bailout proposals hinted at a 40 per cent levy on all deposits of more than €100,000, or £85,000. This weekend, it emerged that the true cost for those better-off depositors could be much closer  to 80 per cent. 

British expats feature prominently among those who will suffer from an effective confiscation of their assets.

The euro is setting out to be the biggest theft of people's savings since the war

Claims that the victims are shady Russian oligarchs have a nasty whiff to them, and even  if some of the cash that will be taken is of doubtful provenance, that cannot justify the burden now being placed on the tiny island economy.

Smaller savers may not have been hit by a levy on their bank accounts, but they will be swept up in the economic storm that is sure to descend  on Cyprus as a result of such draconian measures.

It’s tempting to wonder why any troubled eurozone country like Cyprus was ever let into what was obviously a rich man’s club.

But that is unfair – the poorer members were welcomed with open arms, with the assurance that the euro would turn them into German-style economic titans. It was like persuading  a pauper to join a casino.

Yes, Cyprus let its banking sector balloon wildly and, yes, it is the Cypriot government that has dreamt up some of the more masochistic features of the various bailout plans.

But all this human sacrifice in the eurozone – austerity, mass unemployment, arbitrary bank account levies – is about saving the euro. You wonder how much pain there has to be before someone realises that what must be sacrificed is the euro itself.

Britain and the EU

I don't know enough about British politics but I would say the coalition is just holding together, for now. 

 

Cable warns of war in Europe if euro collapses

The Business Secretary, Vince Cable, warned yesterday Europe could be plunged into war if the euro collapsed.

The Independent,

15 October, 2012

The senior Liberal Democrat said the consequences would be “incalculable” and added there was “no automatic guarantee” that Europe would not disintegrate into conflict.

“I think we need to take stock that if the eurozone were to unravel in a way that destroyed the European project – and there is a risk that could happen – the consequences would be absolutely incalculable. We tend to forget, until we were reminded last week of that Nobel Prize, the European project was constructed to rescue Europe from extreme nationalism and conflict. There is no guarantee that won’t return.”

Mr Cable spoke during an event at the Cheltenham Lit-erature Festival called “Austerity, the euro and us”.

The minister described the euro as “very valuable” and had to be maintained – otherwise Britain would suffer.

“We are not in the eurozone so we cannot directly influence it. We will be heard very loudly if it does unravel,” Mr Cable told the audience. “My sense is that the Germans in particular realise how much is at stake. A series of sensible measures have been taken in recent months.

“Deep down there is enough common sense and a sense of survival to prevent this getting out of control. If it does, I’m afraid the consequences for us will be awful.”

The Business Secretary said the challenge for the Government over the next year was how to balance the need to stimulate growth while at the same time maintaining confidence on the money markets.

Two senior Conservative cabinet ministers call for Britain to threaten to leave the European Union

Britain should threaten to leave the European Union altogether unless significant powers are returned to the UK, two senior Conservative cabinet ministers have suggested.

The Independent,

15 October, 2012

Today the Home Office is expected to announce it is "minded" to exercise a block opt-out from new European Union powers including the controversial European Arrest Warrant.

But several senior Tory Cabinet ministers have indicated that they want the Government to much further and threaten to pull of the EU entirely - unless significant existing powers are repatriated.

Philip Hammond, the Defence Secretary, said the "mood had changed" among senior ranks in the Government.

"The point…many of us feel is that we are not satisfied with the current relationship," he told the BBC.

"The mood has changed...because for the first time in a decade, those of us who are uncomfortable with the way that relationship has developed see an opportunity to renegotiate it.

"It makes sense for Britain to be in the single market but to reset the relationship so we have a balance of competences which works for Britain and the British people."

His comments came after Michael Gove, the Education Secretary told friends he would vote to quit the EU if there was an immediate in/out referendum.

"Michael thinks it is about time we spelled it out, in simple words that even Brussels bureaucrats can understand, that we won't tolerate this any longer," they were quoted as saying.

"We have to tell them if they don't return some of the important powers they have snaffled from us, we will leave."

William Hague is currently leading a cross Whitehall audit of EU powers which could be clawed back by the Government including areas such as immigration, working hours and human rights.

However the Tories are very unlikely to get agreement from the Liberal Democrats on a joint negotiating position with other EU leaders ahead of the next election.

Mr Cameron is opposed to an in/out referendum and backs continued membership but has hinted his party could go into the next election with a promise of a referendum on a new-look relationship.

Today's announcement by Theresa May will confirm Britain intends to take up its rights under the Lisbon Treaty to opt of new justice and home affairs powers by 2014.

The Government will then decide which specific powers to opt into which are feels are in the national interest.

A Liberal Democrat source said this had still to be agreed between the Coalition partners.

UK trade deficit was second-biggest ever

A further plunge in exports saw the UK rack up its second-biggest trade deficit on record, official figures show.

the Independent,

9 October, 2012

The deficit in goods and services, the gap between exports and imports, grew to £4.2 billion in August from £1.7 billion in July, the largest since April, the Office for National Statistics (ONS) said.

The deficit in goods alone widened to £9.8 billion from £7.3 billion the previous month as exports to EU countries and non-EU countries fell 0.5% and 7.2% respectively.

Coupled with downbeat manufacturing statistics, the figures cast further gloom over the economy's growth prospects in the third quarter and beyond as analysts warned that any recovery is unlikely to be sustained.

Victoria Clarke, economist at brokers Investec, said: "UK exporters continue to face challenging market conditions, particularly in exporting to EU destinations but globally too."

The figures are a further blow to Chancellor George Osborne who is relying on the economy shifting towards the private sector, particularly in manufacturing and exports, to withstand his far-reaching public sector spending cuts.

Imports of goods increased by £1.5 billion, or 4.5%, from £33 billion in July to £34.5 billion in August, the ONS said.

But the increase in the import of goods reflects higher imports of fuel which was up £1 billion, specifically of oil which rose by £900 million.

Alan Clarke, economist at Scotiabank, said: "With the UK's main trading partner, the eurozone, hardly hoovering up our exports, there is precious little reason why our exports should be flying out of ports.

"If the UK is going to recover in a meaningful way over the coming year, it is going to rely to some extent on firmer demand from abroad. We have our doubts."

The gloomy figures follow a downbeat assessment of the economic outlook from the International Monetary Fund, predicting that the economy would shrink 0.4% this year and only grow by a tepid 1.1% over next year.

Gold

Euro And Swiss Franc Fall To New Record Lows Against Gold

Zero Hedge

28 September, 2012

Today’s AM fix was USD 1,781.00, EUR 1,374.65, and GBP 1,098.77 per ounce.

Yesterday’s AM fix was USD 1,755.25, EUR 1,365.32and GBP 1,084.16 per ounce.

Silver is trading at $1,670.75/oz, €26.96/oz and £21.52/oz. Platinum is trading at $1,670.75/oz, palladium at $637.90/oz and rhodium at $1,075/oz.

Gold climbed $26.00 or 1.48% in New York yesterday and closed at $1,777.30. Silver surged to hit a high of $34.74 and finished with a gain of 2.15%. Euro gold rose to a new record high at €1377. 

Gold prices are up on Friday, as the new austerity budget from Spain was received favourably and it increased the appetite for higher risk assets, sending bullion, commodities – brent crude oil at $112, the euro and equities to rise.  

Gold prices in euros held near the prior session's all time record high of EUR 1,380/oz, hit after rising spot prices coincided with a weaker euro on Thursday.  Euro-priced gold was up 1.1% at EUR 1,375.48/oz.  

US gold futures for December delivery were up $2.50/oz at $1,783.00 this morning. 

Quarterly performance for, gold, silver and platinum were all up.  Gold is on the way for an 11.4% gain. Silver racked up the largest gain and rose over 25%.  Spot platinum and palladium were up 15.4% and 9.8% for the 3rd quarter. US gold American Eagle coins was improved from last quarter (138,000 ounces vs. 133,000 ounces) however still the lowest quarterly figures in over 2 years.

Gold reached highs in euros and Swiss francs yesterday, in London trading it hit EUR 1,379.60/oz compared to EUR 1,375/oz last September.  In Swiss Francs gold traded at CHF 1,666/oz.

Europeans have been viewing scenes of violence and riots from protestors in Madrid and Athens over the past few days. 

Barclays Plc. announced yesterday it was opening its own London vault to store gold and other precious metals due to demand from their clients.

Investment banks have readjusted price targets upward in the past few days with some calling for gold at $2,000 and higher in the next few months.

 

This signals that the recent rally of the euro against the dollar was largely due to the poor US monetary and fiscal situation and the greenback’s weakness and not due to any great confidence in the single currency per se.

Protests and violence clearly show that the eurozone debt crisis is far from over and there remains the risk of a currency crisis in the European Monetary Union (EMU).

Finally, we are confident that the new record euro and Swiss franc highs will soon be followed by new highs in gold.

For breaking news and commentary on financial markets and gold, follow us on Twitter.
NEWS

Gold Sets Records in Euros and Francs on Currency Concern – Business Week

Gold rises to record in euros, swiss francs MarketWatch (blog) – Market Watch

Barclays Opens Precious Metals Vault in London as Demand Climbs – Business Week

COMMENTARY

Spain Must Leave The Euro – The Telegraph

Barclays Opens Massive Brand New Precious Metals Vault In London – Zero Hedge