New Greek FinMin Favours a Debt Default but to Remain in Euro

The economics professor at the University of Athens, who announced his appointment as the country’s finance minister in a posting on his personal blog on Tuesday, has been arguing since the beginning of the crisis that Greece should default while staying a member of the euro area. As well as on his website, Varoufakis shares his opinions with 128,000 Twitter followers.

Greece should have never joined the euro area, but now that it’s in, a departure would be like falling from a cliff, he said. “The last line in Hotel California explains where we are: you can check out any time, but you can never leave,” he told Bloomberg Radio in May 2012.

Now he gets to take demands for a radically different approach to Greece to European capitals as the new government in Athens tries to implement its pre-election pledges.

At the core of them is to rewrite the agreements with the euro area and the International Monetary Fund for the country’s 240 billion-euro ($271 billion) financial rescue program, though Syriza’s official party line is not to default.

“The problem with the bailout is that it wasn’t really a bailout,” Varoufakis, 53, said in a Bloomberg Television interview on Jan 26. “It was an extend and pretend, it was a vicious cycle, a debt-deflationary trap, which not only destroyed our social economy but also showed that the cost of our so-called bailout for the average German, the average Italian, the average Slovak was maximized.”

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza