This is the talk I gave at the FT/Alphaville conference in London last week. A number of people asked me to send the PPT to them, and I got buried in other work and the emails are long lost in my Gmail queue. So if you’d like to download the presentation file, please click here. My apologies to those correspondents to whom I haven’t replied directly.
The Greek referendum has delivered a stunning victory for Syriza and its anti-austerity message. Despite the banks being closed as a result of the ECB limiting its provision of banknotes, and despite a united chorus of European leaders warning of dire consequences if the No vote succeeded, the Greeks have voted No in overwhelming numbers. The final result looks likely to be a 62% No to 38% Yes rejection of the Troika’s terms. Syriza now has overwhelming support from the Greek people to oppose the Troika (a result that opinion polls got completely wrong).
I was interviewed on the BBC News Channel on Tuesday about the Greek crisis (see below) and I will be part of a CNBC panel “Squawk Box Special – Greece Decides” discussing the referendum results live as they roll in, from 8.30-9pm London time on Sunday.
There is an adage in politics that you should never put anything to the vote unless you are sure of the outcome beforehand. On that front, the referendum Greeks will vote in this Sunday is a mistake, because the vote could go either way. If the majority votes No, as Syriza hopes, then it—hopefully—will strengthen its hand in future negotiations with the Troika. But if the majority votes Yes, then Syriza will have to capitulate to the Troika and accept its unbending policy of austerity.
The most recent of the almost daily “Greek Crises” has made one thing clear: the Troika of the IMF, the EU and the ECB is out to break the government of Greece. There is no other way to interpret their refusal to accept the Greek’s latest proposal, which accepted huge government surpluses of 1% of GDP in 2015 and 2% in 2016, imposed VAT increases, and further cut pensions which are already below the poverty line for almost half of Greece’s pensioners. Instead, though the Greeks offered cuts effectively worth €8 billion, they wanted different cuts worth €11 billion.
England’s Chancellor George Osborne took the Conservative Party’s claim to fiscal responsibility one step higher last week when he announced that they will enact a law which will require British governments to run surpluses “in normal times”:
In a (for me!) brief presentation with 7 slides, I explain why rising private debt necessarily causes increased inequality, and leads to an economic crisis when the rate of growth of debt exceeds the rate of decline of wages as a share of national income. Crucially, the actual breakdown is preceded by an apparent period of tranquility–a “Great Moderation”.
This was a short talk to a public audience at ESCP Europe in Paris, which was presented in English and also translated into French by Gael Giraud, Chief Economist of the French Development Agency and the translator of Debunking Economics (so the soundtrack is in both English and French).
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