Minister of Finance,
Ministry of Finance of the Hellenic Republic,
Dear Mr. Varoufakis,
Congratulations on your referendum win as your nation enters one of the most difficult periods in its history. While you have a reputation as being a clever economist, and though you are rooted in Marxist theory, please accept this letter in the hope that you might inspire your people toward self-fulfilment, independence, and freedom. As you stare into tomorrow, . . . in point form — you’re busy.
• Greece was seduced into the EU with attractive interest rates — that’s understandable, but not much. A nation lured into giving up control over its currency is a nation beguiled into relinquishing the last vestiges of control over its own culture. Get out of the EU while the people are behind you to do it.
• Contrary to your own past perceptions, Keynesianism does not work. Greece is simply a small version of America — two political parties have controlled it for as long as most Greeks can remember, and those two parties have for decades done the bidding of senior bankers and plutocrats. Of all economists on the planet, YOU, Yanis, have the opportunity to break the historical trend, and make history.
• The EU leaders are going to now press the throttle on infusing the fear factor. Problem is, they are more worried than you are. If they give you any relief, led by Germany, the rest of the troubled nation members, starting with Spain, Italy, and Portugal, will demand equal treatment. Ignore them. They believed in Keynesianism and flooding banks with free money — let them knock on your door begging you to listen, and then ignore them. What are they going to do, repossess your car, or perhaps your art gallery?
• They believed in QE (Quantitative Easing), let them languish in qualitative socialist stagnation. Merkel blundered through this multiyear disintegration of the EU and its mismanagement by bankers and bureaucrats, but no one noticed since she was sitting atop Europe’s only real production engine. Now the EU’s socialist incompetence is forcing it to stare into its own abyss, along with its bankers. Let its crony capitalist central banking system crack under its own weight. They also all need to rebuild.
• The ESM (European Monetary Union) lent you about $160 billion. It has no loan reserves. You already know its liabilities are rigged triple-A rated bonds, you know, the fake ratings based on the notion that their loans to you, to Portugal and Ireland are such ‘safe’ assets. That’s the QE dreamland the central bankers want all of us to live in. But as you also know, the EU governments especially Germany, will get lead position at the front of the line to ‘cover’ or backstop the loses. And that’s just for a start. Let them sweat. Stand hard.
• Yes, their bonds will get expensive. European taxpayers may revolt against their inept leaders. The failure of the ‘Greek’ socio-economic structure, and its venture into the EU and with EU bankers is being magnified by its comparable similarity to the rest of the members. That’s not your problem. Although, German taxpayers will get a surprise when they find out what Merkel committed them to.
• Oh, and about the Trans-European Automated Real-time Gross Settlement Express Transfer system (TARGET2), you know, that EU clearing house to which your banks owe more than $110 billion? Let the EU, its heads of state and its central bankers worry about it. Your banks have a job to do, with you, that’s called rebuilding your country. If those 5 ugly ducks don’t co-operate, use the smaller banks to get the new currency into the system and into reconstruction. That is exactly what should have occurred in America, but instead, The Fed just fed it’s biggest friends with cheap cash that never made it to the street and into the hands of entrepreneurs. Oh sure, some lent money for homes and cars that they could repossess, but they did nothing to stimulate the most critical parts of the economy.
• World media, particularly the North American kind like the NYT, is doing its best to convince all that Greece will not leave the EU, or that if it does leave, the Greek economy (less than 2% of the EU) is insignificant. They are lying. You inherited a Greece with a bloated government, using cheap central bank money and a self-serving political class (2 parties who alternated in the seat of power) which has fed its financial benefactors, and misled the country into poverty. The media does not wish these facts to gain too much traction in America, where too many parallels might become evident. And, the EU is being equally mismanaged by bloated governments, which have become oxygen sucking blobs, stifling freedom of their own people.
• The EU knows and you know that you can never repay that total of $330 billion your country owes. Even term extensions out 40 years will make no difference to you or your grandchildren. So leave it alone. Greece has been a bankrupt nation for years. Embrace the inevitable fact that Greece is in for a 20 year rebuild and accept that this remake will be stressful. Get on with reprinting your own currency, and get back in control. Focus inward, not outward for now. Stimulate your industries, your agricultural and manufacturing sectors, and promote your natural resources, but most of all give entrepreneurs reason to form new companies, reversing the trend in Greece’s expanding unemployment lines.
• Get out in front of the story. Tell Greeks what you’re doing, what your plans are and don’t do what the other leaders are doing. Tell your people the truth. You’ve been given a mandate, and hold tremendous political capital. Use it. Re-organize your taxation system, your bureaucracy, your leeches, your assets, your laws, your liabilities, and particularly your pension system.
• Your nation must enter a new age of freedom. Freedom from bureaucratic overburden and inefficiency, freedom from graft, freedom of business, freedom of economy, freedom from political corruption and freedom of labour. Imposition of stifling regulations, particularly from a distant central and foreign politicos and bureaucrats, may satisfy grandiose schemes of global empires, but it irritates natural human tendencies toward self-actualization.
Your boss may not know what to do, he’s really just a political hack, but surely, you do. You’ve personally experienced what a relatively free society is capable of. Do the right thing. Make a break from your roots. Part ways with Keynesians and their ilk. Get creative.
Show the developed world that the cradle of democracy can surge to become a leader once again. Show the self-destructive socialists in Europe and America that their current path leads to nowhere, and that there is a new Greek Experiment on the make. Impose a positive stamp on history as your legacy to Greece’s grandchildren — freeing them from the serfdom of overwhelming debt. If you’re really the smartest guy in the room, give us a light that might just become a North Star.
We wish you all the best in your most difficult endeavour.