Audacity of Yanis Varoufakis - Understanding Global Macroeconomic Stability and the Greek Financial Crisis

Rough Contents Overview:

• Varoufakis, a quick profile.
• Global Minotaur book/concept.
• Exchange rates, trade surplus issues and history.
• China, 'Chimerica' & Niall Ferguson, currency wars.
• Greece - historical context, specific precipitating factors.
• IMF's ills.
• Bitcoin and Max Keiser.
• Piketty, inequality and Gates.
• Referendum result and Resignation.

[2015-06-18] The ongoing Greek financial crisis dedlock has been continually misreported as if it is a simple, political tug of war: little Greece trying to barter an arbitrarily better deal from big EU lending countries. But this narrative excludes essential dimensions which have massive implications for the entire world! The bulk of this can, I think, be covered by talking about this chap's writings and hopeful approach...

He's the finance minister for Greece's latest Government, Syriza - a rainbow coalition of small, 'radical left' leaning parties. I almost wish this political agglomeration would inspire something similar in the UK, to tackle the insurmountable FPTP electoral system. Syriza united behind a popular mandate to begin rolling back half a decade of failed austerity measures, privatisations and restructuring forced upon Greece by the 'Troika'. This triumvirate comprising the IMF, EU and ECB, imposed these conditions in exchange for further, massive, unpayable debts.

Varoufakis is no career politician. Brought in by Prime Minister Alexis Tsipras, he's not even a party member, persay, more like a passionate consultant. A globetrotting, professional economist, no less, who has continued his blogging despite his new post. We should be so lucky! After graduate and masters studies in the UK, he fled Thatcher's 3rd term for 12 years tenure in an Australian university and a year in Texas. He recently advised Valve on growing their Steam platform globally before being drawn back to Athens and his home land. [Wikipedia-1]

With looks that wouldn't be out of place in a Bond villain, and a mellifluous cadence, he meticulously and gracefully answers any and all questions with carefully selected metaphors and examples. He is a formidable speaker in English, and someone to whom Joseph Stiglitz (Nobel economist and ex World Bank chief) pretty much defers to [New Economic Thinking Video]. In fact, Varoufakis' government position has been described as analogous to Obama appointing the well known Keynesian, Paul Krugman, or the aforementioned, world famous inequality expert, Stigltz [NYtimes via twitter].

With a father who fought on the communist side of Greece's civil war (1946–49) and having set up local (PASOK) youth movement, Yanis describes himself as an 'erratic Marxist' and preaches 'pragmatic egalitarianism'. A term I much like. With contributions to the field of game theory research, and the build of a rugby player, he must truly be an intimidating prospect for the European bureaucrats with whom he has been tasked to negotiate. So its of little surprise that he's had to, cooly and calmly as always, belay the repeated claims from 'leaks' and attacks on him via the (dodgy Greek) press, and distorting, confrontational lens of the international coverage.

Rumours of my impending resignation are (for the umpteenth time) grossly premature...

— Yanis Varoufakis (@yanisvaroufakis) [Twitter May 31, 2015]

The audacious part is that he appears to be out to apply his key macro-economic insights directly to where they could have the biggest, widest reaching beneficial effects on the composition of the entire Eurozone (and beyond)! A step up from the radical academics in fiction: Indiana jones or Tom Mason. I'd go as far as to hold him up besides world super-hero Elon Musk, if he succeeds at all.

Physicists - Yanis' initial interest in this degree subject, before switching to an economics degree (the lingua franca of political discourse) [1], leads me to feel an affinity with him and his approach. It was my first degree, which I chose because it seemed seem to contain the most fundamental factors for understanding everything (and for engineering the biggest changes to the universe). Elon Musk was also a physicists, dropping out days into a PhD to make his millions on the dot com boom. He's famously talked about the subject's necessary thinking style of "first principles reasoning", "a framework of thinking that would allow understanding counterintuitive elements of reality" [BuinessInsider], that seems obvious to us scientist/engineer types, but seems regarded as a magical secret sauce by standard business types. I've already sung Musk's praises in my hyperloop post.

I hope(d against hope) that the Eurocrats can bring themselves to pay him serious attention, because he's not out to win as much ground for team-Greece as possible. The repayment postponements have been aimed at creating time for constructive dialogue. He's consistently projected far more hopefulness than the prevailing media narrative of political conflict we've heard, which has a perversely myopic focus, seemingly intent on self-fulfilling a doomsday scenario.

He's been penning, and repeatedly revising since 2010, a pragmatic "modest proposal" (with expert co-authors) that would quickly resolve the situation. It uses only existing institutions, without call for fanciful systemic overhaul. Yanis understands the hope and expectations riding on Syriza (and himself), and talk about the opportunity for Europe to "reboot". But has also stated that "we are not interested in imposing our views monolithically on the rest of Europe [Greece] is too tiny and too bankrupt to do that" [at 12:18 in this radio interview].

His ambition is to lay matters bare. Obviously he's been seen by some as rude and too strident, and I'm not sure his core ideas have even been listened to, let alone seriously considered. It feels like it may be a case like a expert employee trying to get their boss, with only qualifications in business management, to understand a fundamental technical limitation or requirement in their business, but the one in charge is blind to any reality beyond their costings spreadsheet. Does not compute and they probably even resent the impudence of their lesser rank knowing more than them. And that's before considering any influence of powerful figures who stand to profit from disaster and failures, via whatever arcane financial mechanisms they've cooked up.

Since starting this piece (several weeks back) a deal has been seeming decreasingly likely [BBC]. It was always going be a last minute compromise, at best, but it does feel increasingly like that may have been unrealistic. Despite haing to work up the details of the exit plan, Yanis is still pushing hard to be heard and save the day (as of 2015-06-19). But with talk of an all out run on their banks this weekend it sounds pretty much like game over [ZeroHedge].

Edited book cover image (from Yanis' blog).

Anyway. Varoufakis' big insight is "The Global Minotaur" - a beastly financial aspect of the United States that has stabilized the world economically (and therefore politically) via its huge, brutal consumption. More specifically, the state of affairs that existed since 1971, when America's world dominating, post world war trade surplus inverted. Instead of re-balancing, Nixon's Government decided to actively feed the country's trade and budget deficits to the max, shooting the moon. They relied instead upon attracted their exported dollars for re-investment in the American pie, vacuuming them back up via the wonders of international investments in Wall Street!

This one-sided flow of capital (goods and investment) was so powerful a sink of capitals as to neutralise the effects of national trade surpluses all around the entire world. It maintained a somewhat grim, global stability. This is comparable to the ancient regional stability fostered by the tyranny of feeding King Minos's labyrinthine bound, hybrid monster of Greek legend; a probable mirror of a real historical situation of lavish (human and economic) tributes proffered to Crete, in subordination to its dominance.

Sense8 and Technological Empathy

This show has a decidedly slow, somewhat uncertain first episode or two. But stick with it for gradually evermore rewarding viewing. Part of it's virtue is in not having to justify its creation with a pilot episode and not feeling the need to simplifying it's backstory into a 18 second opening montage (iZombie, for example). Here, the viewer is asked to absorb the rich background texture as the plot is resolved, rather than marching straight into a clockwork orrery of comic book waypoints.

The international settings initially brought to mind "H+: The Digital Series", an insanely ambitious YouTube serialised sci-fi from 2012, which I really liked. I was then briefly worried by a reference to a drug "DMT", since this was (ab)used as the axiom for "Lucy" (2014).

Screen capture montage from title sequence.

But Sense8 settles down comfortably into more of a Cloud Atlas feel, with unlinked or loosely linked character narrative sections spread spatially around the world, instead of echoing through time (as in the 2012 movie). This parallel should be immediately obvious given the shared production personnel (Lana Wachowski, Tom Tykwer and Andy Wachowski) and signature acting talent (South Korean, Bae Doona). I think this series far more successful than that film, avoiding any 'yellowface makeup' [1] awkwardness and utilising a host of beautiful real-world settings from the actual cities involved (probably awesome in 4k video).

Sense8 is far more critically worthy than the silly sci-fi-action romp Jupiter Ascending, from earlier this year. Although this series similarly 'deviates from typical gender dynamics' [2], it also escapes the prerequisite blockbuster explosion festival, stilted script and cardboard acting. It achieves a distinct, waltzing poetry with punctuated by serendipitous plot alignments.

There is a heavy emphasis on exploring emotion, cultural identities and sexualities, family, close friendships and even religion. Showing the overwhelming interpersonal similarities despite great diversity. If ever a piece of fictional work aspired to present contemporary global humanity in it's entirety, this would be it.

I hope this sci-fi-lite framework will appeal more to a universal audience (i.e. feminine positive). It's great that it manages to totally drop CGI reliance. It's inspired in comparison to current typical superhero movies/series, copy-pasted comic book stylings. Far from the old sci-fi standard, white American dystopia/space-opera.

So don't expect a Heroes (2006) all action plot. This is far more reflective, mostly good for chilling out. But the threads do dance together for a triumphant peak about 2/3rds the way through, the like of which I've not experienced from the Wachowski's since the culmination of the original Matrix (1999). It is certainly watchable and gets increasingly compelling, perfect to semi-binge over a several days.

Discussion and spoilers below...