Yanis Varoufakis, author of The Global Minotaur – America, Europe and the Future of the Global Economy, has a claim to having held possibly the toughest job in the world this year.
Until only a few weeks ago, he was still in position as Greek finance minister.
For those among us who have lived under a rock for the past 18 months, Greece’s burgeoning debt has brought the country to its knees and this summer Varoufakis finally stepped down from his role – despite a Greek vote showing the majority of citizens supported their finance minister’s stance.
In a nutshell, Varoufakis had been unflinching as he told any and all who would listen that Greece could not – and would not – pay back its debts.
With the freedoms afforded him having left public office, Varoufakis has laid bare his view not only on the Greek tragedy still taking place in his home country but on the wider ills that helped bring it all to the fore.
The Global Minotaur – as the author calls it in reference to the mythical Cretan monster to which tribute was forcibly paid – is in fact the US.
In the aftermath of the Second World War, America set in play a series of motions to ensure its position as the world’s banker – including the Bretton Woods agreement after which the US dollar emerged as the world’s reserve currency and the creation of the International Monetary Fund.
Wall Street bankers have spent decades creating more complex financial instruments backed with promises of fortunes to be made and designed to attract as many capital inflows as possible. The US has, in Varoufakis’s estimation, rather gluttonously been banking most of the world’s activities in one form or another for the past 70 years.
At the same time, America’s trade deficit has spiralled out of control (currently well over $1tn and counting) and, as a result, its dependency on those capital inflows has rocketed. It is this dichotomy that Varoufakis says has left the world in a precarious position.
He makes a second point that, following the global markets meltdown in 2008, policymakers missed an opportunity to correct the mistakes of the past.
Instead, billions of dollars-worth of toxic debt were made public through bailout schemes while only minimal attempts were made to regulate the excesses of a rampant banking system.
Varoufakis points out that most of the bailout money offered to Greece went immediately to repay French and German banks, rather than pay Greek nurses and policemen.
There is a flawed architecture behind the structured debt and, sadly, this book offers little hope for resolution. The author has a fatalistic view of what is to come – the US, he says, is teetering on the edge of financial collapse and the once-fabled spectre of a Chinese-led recovery also seems beyond reach now. Commodities markets have slumped and basic food costs are rising.
The Global Minotaur is a sombre read. While the author’s passion for the subject is tangible and his views are logical, this book leaves a grim aftertaste.
At best, readers will hope that Varoufakis may inspire a solution to what seems like the most vicious cycle of all.