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Wednesday, 30 March 2011

WE NO DOES MODESTY AT LOLGREECE!


A couple of days ago I logged onto LOLGreece's Twitter account to an unusual comment:


Now my first instinct was to ignore Dimitris' question. I wrote back to say that I wasn't aware this was a comply-or-explain issue; a needlessly dismissive response which I regret. I am if anything grateful that he brought this to my attention.

The true answer would have been: I'm way behind on the day job; I'm helping my ex move house; I've got to help put a microfinance conference together in Nairobi. And I can't figure out who this Varoufakis fellow is supposed to be. He doesn't sound like the kind of high-profile MUPPET I would spend time ridiculing on this blog.

However, on the DLR to Stratford that is part of my new daily commute I got a brief chance to look Yanis Varoufakis (that's Professor Varoufakis of Athens Uni) and his Modest Proposal up and it turned out I of course did know the man and some of his thinking; though to my regret I can't honestly say I'd heard of this idea of his before and could not put a name to the face without help from Google. This is my omission; not only am I out of touch with Athens' admittedly small Policy circle but as I said I mostly focus on stupid things that are worth ridiculing.

For those of you with the appetite for a little light Eurodrama reading, the most up-to-date version of the Modest Proposal can be found here. It is in reality far from modest, a fairly technical proposal for simultaneously addressing the banking and sovereign crises (in the understanding that one sector will drag the other down perpetually if we don't), by establishing a surplus redistribution mechanism within the Eurosystem, courtesy of the ECB and EFSF. It is meant to be fiscally neutral and hinges on robust stress tests and haircuts for Europe's banks.

Prof. Varoufakis himself is a cool guy, with a brilliant recording voice and a calm discursive manner. The last time I had heard him mentioned by name was while chasing up on the Weisbrot hoax, during which time I was directed by one blog to this Greek TV show excerpt which explained, in a vulgar manner for the most part, the collapse of the Greek economy.  His was one of the few coherent, well-argued and instructive contributions (though I suspected at the time that our politics don't quite match, which they don't). It's worth watching this show for.

I don't agree with a lot of the Modest Proposal (though not the 90% I hastily told Dimitris over Twitter), and I'll explain why. Most of this is due to my politics; the arguments I offer are as good as I can come up with but as with most argumentation they are only a front for my gut reaction. I am happy to be proven wrong though so comments are welcome. Please make sure you've read the Proposal first.

First of all, here's what we can agree on.

I agree with the MP that the Sovereign crisis in Europe requires a comprehensive solution that includes dealing with the undercapitalised banks. I hint at this here, noting also that European leaders will put this off until sovereign jitters reach a hardcore Eurozone member such as France. France is to the sovereign debt crisis what iron is to solar death; the point past which the shit can't be packed any tighter and the whole thing goes supernova. Hopefully I'll be proven wrong and a solution will be given much sooner than that but stupidity is endemic in the corridors of power.

I agree that any solution that does not involve a) serious stress tests (see here) and b) serious haircuts is untenable, even in the fairly short term. Serious stress tests involve the banking book as well as the trading book and in fact I'd like a stress test that simply takes Greek default for granted. How will the markets argue with that?

I agree that netting off bank-sovereign exposures is particularly important as the endless bank-sovereign loop creates incredible potential for contagion. (Trading probably exacerbates this; just think: you can approximate a portfolio of German bank shares with one of Greek bank shares and Greek sovereign CDS and vice versa). I would support netting off even if no other part of the MP is considered.

I agree that Eurozone members should not be asked to provide further bailouts out of taxpayer funds because this will strain whatever goodwill is left towards deficit countries, and that bond buybacks by the ECB will not work. [For some reason this post was deleted; I don't know what happened there but I've now got it back on the blog with the right time and date, too. What would I do without Google Cache?]

I also agree that any good solution must ultimately destroy money. And if it must, then it's best to destroy the original impaired assets than to spare them and transfer the losses to some poor bastard who is not systemically important, i.e. the taxpayer. The MP proposes that, in return for tapping the ECB for liquidity without eligible collateral (under the old rules I take it?) the banks should be required to tear up some of the bonds that they hold. This means that the money supply is reduced, but not by very much since the bonds are heavily discounted by the market already. The only difference is that the bank needs to show a loss, which it might as well.

Now for the bits where I disagree with the Modest Proposal.

First, I think it overlooks just how easy it is for the banks to force the ECB to shelf the idea of bond-tearups or 'haircuts-for-liquidity'. Banks don't want to recognise losses; their optimal endgame is a massive global guarantee that keeps the nominal value of their assets constant for the 7 or so years it will take for the world economy to grow into its balance sheet. It is the easiest thing in the world for them to collude together and decide to resist the ECB's charms just long enough to get it to change its rules - the equivalent of a child holding her breath after being refused a treat. The precedent of the ECB refraining from a scheduled tightening of its collateral rules in the wake of the Greek debt crisis will no doubt reinforce their intentions.

Worse, governments would be powerless to prevent this because a decrease in ECB funding tends to be seen as a victory for their banking systems and thus for themselves. Thus the politicians would not be able to rally public opinion quickly enough and would simply have to hammer out yet another seedy deal with the banks behind closed doors.

Second, I think it overlooks the damage it will do to the ECB's credibility and the damage that will in turn do to the European economy, even before we examine its effects on the ECB balance sheet. Central banks can MAKE MONEY OUT OF THIN AIR. This is the kind of power that needs to be held in check by chains and manacles of steel and probably a magical pentagram or force field of some sort. Why? Because the moment investors suspect that the central bank is pursuing an agenda other than the one prescribed by its charter, inflation expectations go through the roof. And inflation, my friends, causes riots. If the ECB comes under the kind of fire that the Fed is getting in the States the European member states will not back it up or take the blame; they will bury it and dance the Zimbabwean rain dance on its grave.

[LOL. Zimbabwean rain dance? That's racist. And ignorant.]

Third, the proposal that the ECB buy all Maastricht compliant debt off member states overlooks the damage this will do to the ECB's balance sheet, which is already bloated with, frankly, junk. The ECB has already had to tap member state central banks for capital since the crisis, and will have to do so again if its balance sheet expands further or if it is forced to recognise losses on all of this worthless paper. Current assets run to an amazing EUR1,940bn, nearly EUR2tn. The MP furthermore exposes the ECB to enormous interest rate risk as interest rates are bound to go up and thus its holdings of periphery debt at ultra-long maturities are going to take a serious pounding.

Similar arguments for the EFSF. The markets aren't stupid; they know who underwrites the EFSF and will therefore simply do a calculation of the entire Eurozone's solvency and proceed accordingly. The MP should really face up to the fact that the entire bloc may collectively be insolvent. Why won't anyone at least consider this?

Fourth, the MP overlooks the fact that most of the liabilities of member states are not actually captured by securities. Some contingent and implied liabilities can I suppose become explicit but not without all member states tapping the capital markets at once, which will cause chaos, but what of the liabilities implied by pensions or national insurance systems? What of the liabilities that have yet to arise, but which are nonetheless weighing on investor sentiment? If these are factored in, as this study shows, much of the Old Continent is insolvent even if the ECB and EFSF make the debt on its books disappear.

Incidentally, the MP makes no mention of what will happen to creditors that also *happen* to be crucially important pension funds. If this is not dealt with, the implications for social unrest could be substantial.

Fifth, the MP overlooks the fact that its solution will simply make investors wary of the EFSF's own bonds. If the member states don't mind this extreme alchemy to make their own debt go away, will they even think twice before doing the same ot the EFSF's creditors?

Finally, the MP does not address moral hazard. There is nothing in this proposal that will force Europe to consider the sustainability of its debt. In fact, we'll all pat each other on the back for outsmarting "the markets" and go on as before. Already in Greece the expectation (as I argue here) is forming that once we get rid of the Troika straitjacket all of the measures we've had to adopt so far to correct our structural government and current account deficits will just be revoked. I will concede to Prof. Varoufakis that individual public deficits will not matter with a deficit recycling mechanism in place. But it's worth noting that the aggregate deficit of the 'deficit countries' is not cancelled out by the aggregate surplus of the 'surplus countries'. The entire bloc is in (fiscal) deficit, and with record-low interest rates (if the MP succeeds) the bloc's collective debt will continue to grow, until the next crisis blows the whole sorry mess right back to the stone age.

People often grow tired of me as I explain this point, but perhaps I can interest you in another way. The following graph (source) shows that in the US indicators of man-made climate change are more closely correlated to total leverage in the economy (public and private) than they are to greenhouse gas concentrations. Debt is not just a financial obligation; it's indicative of our willingness to waste, to live beyond our (and the planet's) means; our willingness to kick the can down the road, to live large and send our grandkids the bill. Climate change is one consequence of this attitude; the fiscal crisis is another; ultimately until we learn better than this we will run into ever-bigger crises of one sort or another. Don't tempt fate by trying to invent free lunches. They tend to explode in your face like a Smurfs prank cake.


A solution that would get my vote would rely on bail-ins, not bailouts. In a bail-in, creditors who have lent to an insolvent borrower are forced to accept an equity stake in return for their debt holdings - they become part-owners, which means they now share the risk the earstwhile debtors have taken on. This too destroys money but does not force creditors to immediately recognise any losses as the nominal value of the equity is equal to that of the debt they gave up. Here's the catch for me: the sovereigns come into this as well, temporarily; in the great big roundtable of the great European Final Solution, it will briefly be possible for a bank to take an equity stake in a sovereign nation. Having converted all debt to creditors' equity, the netting off begins until there's only two types of stakes left: sovereigns' stakes in creditors and creditors' stakes in sovereigns.

The catch is that creditors cannot be allowed actual equity stakes in sovereigns at the end of the reshuffle. (Since people are asking, the reason is simple: the sovereign -the power of the state- can only be owned by the people. It's legally impossible for somebody, for instance, to buy the right to pass laws, levy tax and sanction the use of force in Greece). The EFSF comes in, swapping sovereigns' claims on itself against the banks' claims on sovereigns, so that it ends up being partly owned by those banks that were net creditors of sovereigns. The sovereigns are once again free of private sector ownership but do end up owning some banks (the ones that, after all debt has been netted and written off, are still undercapitalised), alongside the banks' erstwhile net creditors.

This doesn't provide a surplus recycling mechanism but then I don't actually want one. The member states never wanted one in past treaties, which is why they famously forbade the taking on of one member state's debt by another. We've now got around this but what could the intention of this proscription have been apart from the banning of bailouts?

Now the Federalists among us (don't know whether Varoufakis is one, to be fair, but many people encouraged by his views probably are) want to take advantage of the member states' desperation for cash in order to remake Europe as the superpower they were once promised they would be part of - a no-brainer if one grew up watching too much Voltron but otherwise one that deserves some scepticism and at the very least a referendum.

Don't worry; like Ireland you can ask us again and again, until we give you the 'right' answer, which will then of course be considered binding forever.

IF I WAZ A SAFE BET... PART TWO

I think the IMF is trying to give Ireland a hint. Or perhaps Greece. Or maybe their staff have too much time on their hands.

Remember about a month ago when I wrote about the effects of the 'investment-grade' premium on our spreads? The idea back then was that regaining the investment-grade glamour would push our spreads back down to barely-viable levels, although of course this was never going to happen.

More dedicated readers might also remember this analysis which I did a propos the Stiglitz "Leave Britney Greece alone!" article in the Guardian. (Readers less up to date with the cultural reference will probably have to read this).

As these readers will recall, I believe that the Stiglitz intervention marked the end of our sovereign period by rallying Greek pundits around the idea of a 'mild adjustment' and thus convincing the rest of the world that we were never going to get serious about the debt situation. Thanks MUPPET. I'll send you the bill in spilt guts.

Well this argument has now been made far more formally by the IMF's researchers, in a recently published analysis of what is called 'debt dilution'. Debt dilution basically works like this: if Greece owes say 100% of GDP and is running a huge deficit, a new creditor knows that the chances of being paid, let alone being paid out first, are diluted by the fact that there's going to be a long, growing queue of people waiting to be paid too, some of them our own citizens, and some nominally senior creditors like the IMF and the EU.

The authors simulate what would happen if we were to throw in a guarantee to compensate bondholders for any losses they suffer as a result of our bonds losing value due to dilution. This will of course never happen but it helps isolate the effects of dilution.

It turns out that, for the average sovereign, dilution accounts for 36% of the amount of nominal debt issued (because undilutable debt would be issued at better prices/lower yields) and an amazing 92% of the average spread. Let me put this another way. This would mean that Greece would pay an amazing 4.21% on its debt based on these spread figures. Btw the implied 74bp spread is not entirely fictitious; it is actually more than what we used to pay between 2002 and 2007 (although note these are spreads v. bunds, not T-bills as in the calculation above).

This should really serve to remind people of how stupid investors were back in those days. But it should also explain just why the balance in favour of default can tip so quickly. In our present state, where investors know not only that their chances of getting paid decrease with each penny we borrow but also that we would be genuinely better off defaulting, is it any surprise that the only people buying Greek debt are the ones who have no choice?

Wednesday, 23 March 2011

AND NOW, IT'S MY TURN TO APOLOGISE! ΚΑΙ ΤΩΡΑ, ΣΕΙΡΑ ΜΟΥ ΝΑ ΖΗΤΗΣΩ ΣΥΓΓΝΩΜΗ

Time to practice what I preach dear readers. Here's an apology from myself to a fellow blogger, unsolicited but richly deserved, and in the manner in which I think it ought to be done.


In my ongoing search for the source of the Weisbrot hoax I have written to a number of Greek bloggers. I have asked everyone posting the fake 'interview' to make the necessary corrections and persisted where necessary. I've also been in touch with Weisbrot's associates to ensure the quotes were not authentic and have on occasion pointed out persistent offenders to them. They have done likewise on occasion

Over the course of this work I came upon this post by Olympia, dated Feb 2010, which I thought to be the source of the hoax. It certainly contains the oldest reference to part of the hoax' text so I felt the evidence was compelling. As it turns out, Olympia never directly attributed the subsequently misused quotes to Mark Weisbrot. These were originally attributed to an anonymous interviewee, refered to by the salutation 'Professor'. Olympia explains in this post that the interviewee was an ex-VP of the IMF who wished to remain anonymous for obvious reasons. Ιt is clear there has been no misattribution.

I think at this point I owe an apology to Olympia as my email clearly accused them of misattributing statements to Mark Weisbrot. They did not. While my accusations were made in good faith they were nonetheless false.

In fact, Olympia attributed to Weisbrot a document he did write and which can be found here. While parts of this are obliquely referenced in the hoax, it was largely ignored by the subsequent hoaxers.

The problem is that, when read in sequence as they appear on this summary post entitled "The IMF and how to 'crush' it", Olympia's posts of a) the IMF ex-VP interview and b) the Weisbrot document appear to be a single post accentuated by a bold heading (Olympia has since rectified this). The original text flowed from the statements of an anonymous man addressed as 'Professor' to the writings of a named academic, with no explanation that there are two different people being cited. This has now been clarified. The references to the 'Professor', and an except from the ex-IMF VP interview are cited again directly below the Weisbrot article, which adds to the confusion.

Understandably Olympia wrote two separate blog posts and therefore did not see a need to offer any clarification or point out that the 'Professor' and Weisbrot are not the same person. Readers were not originally meant to see the two in sequence. Readers, however, including myself, actually saw them as one post in the summary and in that sense the blog seemed to imply that Weisbrot was the 'Professor' cited in the 'interview'. This discrepancy, which has now been repaired, also explains the subsequent hoax' bizarre shift from interview to article which should have pointed it out to bloggers as an obvious forgery.

Olympia did not help their case much when they posted a strongly worded message denouncing those who had sought to "slander, question and demonise" their original post, which they now also referred to as the Weisbrot "interview". Since Olympia is adamant that they have reproduced an article rather than an interview, I suspect this was a kind of electronic slip of the tongue, as by this time the hoax was generally referred to as the Weisbrot 'interview'. However to a casual reader it would again appear as though Olympia had claimed to be reproducing an interview with Weisbrot. Now that is unhelpful.

I know from the work of Diagoras and from the perpetrators' own admission that Olympia's text was then lifted by i-reporter.gr (who have apologised in a satisfactory fashion here) and merged with another article by a Greek journalist, then published as one text. I am agnostic as to why and how this occured. While the article has now been removed at my insistence, a cached version can be read here. The combined text then went underground and was processed further before circulating via email over the summer of 2010. I date the final version of the hoax to May 2010 here. What was added during this time were mostly exhortations to paralysing strikes, violence, political trials and bizarre misinterpretations of Swiss monetary interventions. It is the former that make the hoax so incredibly offensive. So even if misattribution had taken place earlier, it would be of only minor importance.

I must make it clear that while Olympia's posts do describe violent protests in Argentina, and speak of the protesters in sympathetic terms, they do not include any exhortations to violence or strikes or suspension of the rule of law whatsoever. In the summary blog's title, "The IMF and how to 'crush' it" is written in a way that implies only metaphorical use of force.

Again, I feel the need to apologise to Olympia for my accusations. I have also corrected my original 'Lies, damn lies' post to reflect the real course of events more accurately. Olympia deduces from this same course of events that some agents provocateurs, allied perhaps to the Government, are trying to discredit the Greek blogosphere. I cannot know this for sure but it is not unlikely. Certainly, there is enough in this instance to make one suspicious, including the interventions of i-reporter.gr and of course the anonymous emailers of the summer of 2010. In the absence of hard evidence I can only resort to Hanlon's Razor (H/T Zirzirikos): never attribute to malice that which is adequately explained by stupidity.

'Olympia' have made it clear in our conversations that they do not consider me to be an agent provocateur, and have had other kind words for me besides, which I truly appreciate.

However, I also believe that the Greek blogosphere is mainly discredited by the substantial numbers of people in it that a) create forged documents and hoaxes b) report things they know to be false or c) report things without caring whether they are false. These need not be agents provocateurs, simply MUPPETS. Some responsibility also lies with those of the blogosphere's readers who do not take the time to critically appraise what they read. These attitudes need to be tackled.

Finally, I believe that debunking the hoax in its final version is extremely important. These are difficult times for Greece and exhortations to violence that might once have fallen on deaf ears might now find an eager audience. Some people I have come across on the blogosphere see this as collaborating with an occupation government; I wish these people a happy civil war but cannot discuss much else with them. I believe instead that it is possible to change things for the better without violence; one such example can be found here.



Αγαπητοί αναγνώστες, ήρθε η ώρα να κάνω κι εγώ ο ίδιος αυτά που απαιτώ από τους άλλους. Στο ακόλουθο μήνυμα ζητώ συγγνώμη από έναν/μία συνάδελφο blogger, την οποία δεν απαίτησε αλλά αξίζει και με το παραπάνω. Το κάνω δε με τον τρόπο που νομίζω ότι πρέπει να γίνεται.

Στη συνεχιζόμενη προσπάθειά μου να ανακαλύψω την πηγή της πλαστής «συνέντευξης» Weisbrot έχω έρθει σε επαφή με πολλούς Έλληνες bloggers. Από κάθε έναν που είχε αναρτήσει την πλαστή «συνέντευξη» ζήτησα να κάνει τις απαραίτητες διορθώσεις και επέμεινα όπου ήταν αναγκαίο. Ήρθα επίσης σε επαφή με τους συνεργάτες του Weisbrot για να βεβαιωθώ ότι οι φράσεις που του αποδίδονταν δεν ήταν αυθεντικές και τους υπέδειξα κατά καιρούς τους πιο επίμονους πλαστογράφους. Κι αυτοί με τη σειρά τους έκαναν ορισμένες φορές το ίδιο με εμένα.

Κατά τη διάρκεια αυτής της προσπάθειας οδηγήθηκα σε αυτή την καταχώριση από τον ιστότοπο Ολυμπία, η οποία έγινε το Φεβρουάριο του 2010, και την οποία εξέλαβα ως την πηγή της πλαστής είδησης. Περιέχει εν πάσει περιπτώσει τις παλαιότερες αναφορές σε κάποια μέρη του πλαστού κειμένου και γι’ αυτό το λόγο έκρινα ότι είχα στα χέρια μου επαρκείς αποδείξεις. Καθώς προέκυψε όμως, η "Ολυμπία" ουδέποτε απέδωσε απευθείας στον Weisbrot τις δηλώσεις που έκτοτε έχουν (κακώς) ανακυκλωθεί από πολλούς. Τις απέδωσε, όπως εξηγεί εδώ, σε έναν ανώνυμο συνεντευξιαζόμενο, ο οποίος ισχυρίζεται ότι είναι πρώην αντιπρόεδρος του ΔΝΤ και ο οποίος επιθυμούσε να παραμείνει ανώνυμος για προφανείς λόγους. Όπως κι αν έχει το πράγμα είναι σαφές ότι οι δηλώσεις δεν αποδόθηκαν στον Weisbrot ούτε σε κανένα άλλο συγκεκριμένο επώνυμο πρόσωπο.

Σε αυτό το σημείο κρίνω ότι χρωστώ μια συγγνώμη στην "Ολυμπία" καθώς το email μου περιείχε σαφώς την κατηγορία της πλαστοπροσωπίας. Δεν στοιχειοθετείται τέτοια με κανέναν τρόπο, και μολονότι διατύπωσα την κατηγορία αυτή καλή τη πίστη, εντούτοις δεν αληθεύει.

Μάλιστα, η "Ολυμπία" απέδωσε στον Weisbrot ένα άρθρο το οποίο όντως έγραψε και το οποίο μπορείτε να βρείτε εδώ. Μολονότι ψήγματα αυτού του κειμένου αναφέρονται πλαγίως στο πλαστό κείμενο που ακολούθησε, οι πλαστογράφοι αγνόησαν το μεγαλύτερό του μέρος.

Το πρόβλημα είναι ότι, αν διάβαζε κανείς τα δύο κείμενα στη σειρά και με τον τρόπο που εμφανίζονταν στην περιληπτική καταχώρηση με τίτλο «Το ΔΝΤ και πώς να το «τσακίσουμε»» τα δύο κείμενα με α) τη συνέντευξη του πρώην Αντιπροέδρου του ΔΝΤ και β) το άρθρο Weisbrot φαίνονταν να είναι ένα ενιαίο κείμενο που χάριν έμφασης διακόπτεται από μια επικεφαλίδα (στο μεταξύ η Ολυμπία έχει αποκαταστήσει αυτό το πρόβλημα). Το πρωτότυπο κείμενο περνά από τις δηλώσεις ενός ανώνυμου άνδρα που προσφωνείται ως ‘Καθηγητής’ στο γραπτό ενός επώνυμου ακαδημαϊκού χωρίς να εξηγείται ότι αυτοί οι δύο είναι ξεχωριστά πρόσωπα, πράγμα το οποίο έχει πλέον διορθωθεί. Οι αναφορές στον κ. ‘Καθηγητή’ δε επανέρχονται αμέσως μετά το τέλος του κειμένου του Weisbrot με αποτέλεσμα να εντείνεται η σύγχηση.

Προφανώς η "Ολυμπία" συνέταξε δύο ξεχωριστά κείμενα και ως εκ τούτου δεν είχε λόγο να κάνει καμμία διευκρίνηση ούτε να εξηγήσει ότι ο ‘Καθηγητής’ και ο Weisbrot ήταν δυο διαφορετικά πρόσωπα. Σκοπός της δεν ήταν οι αναγνώστες να δουν τα δυο κείμενα στη σειρά. Εντούτοις αναγνώστες όπως εγώ τις είδαν ως μία καταχώρηση στην περίληψη, και υπό αυτή την έννοια το ιστολόγιο φάνηκε να υπαινίσσεται ότι ο Weisbrot ήταν ο ‘Καθηγητής’ που έδωσε τη συνέντευξη. Αυτή η παραφωνία, που έχει πλέον διορθωθεί, εξηγεί και το γιατί το πλαστό κείμενο περνά χωρίς λόγο από τη μορφή της συνέντευξης σε αυτή ενός άρθρου. Αυτή η ιδιαιτερότητα θα έπρεπε να είχε βάλει σε σοβαρές υποψίες τους διάφορους bloggers σχετικά με την αυθεντικότητα του κειμένου.

Η "Ολυμπία" με τη σειρά της ενέτεινε επιπλέον τη σύγχυση δημοσιεύοντας ένα μήνυμα στο οποίο καταφέρεται με αυστηρούς χαρακτηρισμούς κατά όσων προσπαθούσαν να "συκοφαντήσουν, αμφισβητήσουν και δαιμονοποιήσουν" τη "συνέντευξη" που πρώτη αυτή δημοσίευσε. Εφόσον η "Ολυμπία", όπως διευκρίνισε, δημοσίευσε μόνο ένα άρθρο και όχι μια συνέντευξη, φαντάζομαι ότι πρόκειται για σφάλμα εκ παραδρομής, καθώς στο πλαστό κείμενο είχε ήδη αποδοθεί ευρέως η ονομασία "συνέντευξη Weisbrot". Ένας περαστικός αναγνώστης όμως δεν θα μπορούσε παρά να συμπεράνει ότι η "Ολυμπία" ισχυρίζεται ότι έχει αναδημοσιεύσει μια συνέντευξη. Αυτό κι αν προκαλεί σύγχυση.

Γνωρίζω πλέον χάρη στην εξαιρετική δουλειά του Διαγόρα αλλά και χάρη στην ομολογία των υπευθύνων ότι το κείμενο της Ολυμπίας το ξεσήκωσε το i-reporter.gr (το οποίο και ζήτησε συγγνώμη με ικανοποιητικό τρόπο εδώ) και αφού το συνένωσε με ένα άλλο άρθρο Έλληνα δημοσιογράφου, τα εξέδωσε ως ένα ενιαίο κείμενο. Μολονότι το πρωτότυπο κατέβηκε μετά από αίτημά μου, μια εκδοχή του αποθηκευμένη από τη Google βρίσκεται εδώ. Το ενιαίο κείμενο έπειτα πέρασε στην ιδιωτική σφαίρα όπου και υπέστη περαιτέρω επεξεργασία προτού κυκλοφορήσει μέσω email το καλοκαίρι του 2010. Χρονολογώ την τελική εκδοχή του κειμένου-απάτη προς τον Μάιο του 2010 (και εξηγώ γιατί εδώ). Σε αυτό το διάστημα προσετέθησαν αρκετά στοιχεία, κυρίως προτροπές σε παραλυτικές απεργίες, χρήση βίας, δίκες πολιτικών με συνοπτικές διαδικασίες και παράξενες εικασίες που προέκυπταν από την παρεξήγηση των επεμβάσεων της Ελβετικής Κεντρικής Τράπεζας στις χρηματαγορές. Τα πρώτα από τα παραπάνω είναι που καθιστούν τόσο οχληρό το κείμενο-απάτη. Έτσι, ακόμη και αν πριν από αυτές τις αλλαγές είχε όντως υπάρξει πλαστοπροσωπία, θα ήταν μικρής σημασίας.

Οφείλω να επισημάνω ότι μολονότι οι καταχωρήσεις της "Ολυμπίας" αναφέρονται όντως σε βίαιες διαμαρτυρίες στην Αργεντινή, και μιλούν με συμπάθεια για τους διαδηλωτές, εντούτοις δεν περιέχουν καμμία προτροπή στη χρήση βίας, σε απεργίες, ή στην κατάλυση του κράτους δικαίου. Στον τίτλο της περίληψη , η φράση «Το ΔΝΤ και πώς να το «τσακίσουμε» είναι γραμμένη με τρόπο τέτοιο ώστε να υπαινίσσεται μόνο μεταφορικά τη χρήση βίας.

Και πάλι νοιώθω την ανάγκη να ζητήσω συγγνώμη από την "Ολυμπία για τις κατηγορίες που της απήγγειλα. Διόρθωσα επίσης το αρχικό μου κείμενο με τίτλο «Lies, Damn Lies» ώστε να αντικατοπτρίζει ακριβέστερα την πραγματική ροή των γεγονότων. Η "Ολυμπία" συμπεραίνει από αυτήν ότι κάποιοι προβοκάτορες, ίσως προσκείμενοι στην Κυβέρνηση, προσπαθούν να πλήξουν την αξιοπιστία της Ελληνικής μπλογκόσφαιρας. Αυτό δεν μπορώ να το επιβεβαιώσω αλλά δεν είναι απίθανο. Εν προκειμένω υπάρχουν αρκετά στοιχεία που θα μπορούσαν να εγείρουν υποψίες, μεταξύ των οποίων και οι επεμβάσεις του i-reporter.gr αλλά βέβαια και η δράση των ανώνυμων αποστολέων email το καλοκαίρι του 2010. Χωρίς απτές αποδείξεις δυστυχώς δεν μπορώ παρά να βασιστώ στον κανόνα, γνωστό και ως το «Ξυράφι του Hanlon» (του οποίου την ύπαρξη γνωρίζω χάρη στον Zirzirikos) και ο οποίος λέει: ποτέ μην αποδίδεις σε κακία ό,τι μπορεί να εξηγηθεί επαρκώς από τη βλακεία.

Η "Ολυμπία" έχει καταστήσει σαφές στις μεταξύ μας συνομιλίες ότι δεν με θεωρεί προβοκάτορα, και είχε επιπλέον αρκετά καλά λόγια να πει για μένα, για τα οποία είμαι ευγνώμων. Ωστόσο, πιστεύω ότι η αξιοπιστία της Ελληνικής μπλογκόσφαιρας πλήττεται κατά κύριο λόγο από το μεγάλο πλήθως των μελών της που α) πλαστογραφούν κείμενα και διαδίδουν απάτες β) δημοσιεύουν εν γνώσει τους ψεύδη ή γ) δημοσιεύουν πράγματα χωρίς να τους ενδιαφέρει αν αληθεύουν ή όχι. 

Αυτοί δεν είναι αναγκαίο να είναι προβοκάτορες, απλά ΜΠΕΤΟΒΛΑΚΕΣ . Δεν είναι άμοιροι ευθυνών και οι αναγνώστες εκείνοι της μπλογκόσφαιρας που δεν φροντίζουν να αφιερώσουν λίγο χρόνο ώστε να αξιολογίσουν με κριτική διάθεση τα όσα διαβάζουν. Τέτοιοες νοοτροπίες πρέπει να αμβισβητούνται.

Τέλος, πιστεύω ότι το να διαψεύδει κανείς το κείμενο-απάτη στην τελική του μορφή εξακολουθεί να είναι πολύ σημαντικό. Διανύουμε δύσκολους καιρούς για την Ελλάδα και προτροπές στη χρήση βίας που άλλοτε δεν θα τους έδινε κανείς σημασία μπορεί τώρα να βρούν ένα πρόθυμο ακροατήριο. Ορισμένα άτομα που έχω γνωρίσει στη μπλογκόσφαιρα βλέπουν τέτοιου είδους διαψεύσεις ούτε λίγο ούτε πολύ ως συνεργασία με μια κατοχική κυβέρνηση. Σε αυτούς τους ανθρώπους εύχομαι καλό εμφύλιο, αλλά δεν έχω τίποτε παραπάνω να συζητήσω μαζί τους. Αντ’ αυτού πιστεύω ότι είναι δυνατόν η κατάσταση να βελτιωθεί χωρίς τη χρήση βίας. Ένα παράδειγμα τέτοιων μέσων παρατίθεται εδώ.

UPDATE: I'm making so many typos these days - must be from reading Tromaktiko. 

Tuesday, 22 March 2011

KILL... ME... KILL... MEEEEE...


The latest review of our stand-by arrangement by the IMF staff has come out and it is apocalyptically hilarious. The IMF still refuses to publicly accept its mission for what it is: to act as administrator as we negotiate our default. The suits introduce the show with the following remark:

“The economy has been evolving broadly as projected.”

Translation: Our original GDP forecast was only off by about one eighth. The Greek economy contracted by 4.5% in 2010 or 6.6% minus seasonal adjustments, against initial expectations of a 4% drop.  And we’ve reached our 2011 unemployment ‘target’ already, a year early.  

In their headline figures, the IMF have somehow managed to maintain the fiction of Greek debt/GDP stabilising by 2012. Riiiight. As always the background figures tell the unmassaged truth. Expressed as a percentage of government revenues (a more accurate measure of sustainability), debt will now peak at 392% in 2014, not at 343% in 2012 as previously believed.

With no additional measures put in place, the IMF expect our debt to simply never come down, exceeding 211% of GDP in their forecast scenario. Even better, with key variables at their long-term averages, debt will stick to 141% of GDP and pretty much stay there.

Not bad enough for you? Even with the current measures in place, the IMF concedes that if we consistently miss its growth targets by 1 percentage point, as shown below, Greece’s debt will never return to a downward trajectory. Last year, the IMF overestimated growth by .6 percentage points so things are on a knife’s edge; a statistically insignificant misstep away from oblivion, even with a perpetual IMF loan facility. Weisbrot reports that the IMF typically gets it wrong by much more than that. Almost half of all adjustment programme reports make adjustments of 3% or more. 



Another way of looking at this is to consider that 2010 GDP growth (-4.5%) came in at the very end of the range of estimates. This year’s lowest estimate is -4.1% (courtesy of the Economist Intelligence Unit, although Pireaus comes close at -4%, for those of you who don’t trust foreigners). The IMF’s projection is [drumroll] -3%. Checkmate.



Appropriately, the IMF makes some allowances for error in its scenarios. Under one of these, our debt will have exploded to 250% of GDP by 2019. Importantly, these downside risks (recognition of implicit liabilities, bank recapitalisation, lower growth, failure of reform, low inflation) are strongly correlated, so the combined adverse shock scenario is hardly an outlier. 



Even more amazing: the interest cost projections of the IMF assume a spread of 500bp against German bunds. This may be twice what the original plan projected but it’s almost half the actual figure. [Ed: ZOMFG this is the most PWNED figure in the history of IMF and Greek Gov’t muppetry. WTF?????] That such a crucial figure is so far wrong in black and white can only mean one thing – the IMF have given up and are just cooking the books.

Now I must concede that even with moderate success the Memorandum should bring spreads down somewhat. How far down though? As I explain here, we've lost the glamour of a safe bet, so our spreads can't go back to where they were before the crisis. With the same fundamentals they should be about one third higher at the very least. And we're insolvent, so unless we can perpetually find investors willing to flip our short-term debt to others and pray the musical chairs don't stop while they're still in the game, insolvency will at some point mean illiquidity.  

Actually I’ve got a theory about this stupid number. It’s the average of two states. State 1 is Greece as an independent but mostly bankrupt country, with spreads of 1000bps. State 2 is Greece as a German protectorate, without debt of its own, and therefore a spread of 0. Like one of the twisted souvlaki vendors of old, the IMF is serving us Schrödinger’s cat on a skewer. More to the point, it's entirely likely that with EFSF intervention our spreads could fall because German bonds will start to become junkier. The IMF will get their wish but we won't get cheaper debt. 

[Cue trivia point: everyone please look at the title of this paper]

But incredibly this LOLfest gets better.

‘In the banking system, deposit outflows have continued at a modest pace, and credit has begun to contract, but financial system stability has been preserved with the assistance of exceptional liquidity support from the ECB’

Translation: None of our banks would survive one day without the ECB, which provides 19.5% of the system’s funding. In fact in net terms the system can’t even lend any money. It only takes one badly written note allegedly forwarded by 10 nobodies to get deposits out of the system at the ‘modest pace’ of EUR200m in a couple of hours. Things are so bad that even the merger of two of our major banks cannot produce one creditworthy institution. And here’s the belly laugh : the IMF’s new projections anticipate EUR4bn less in bank recapitalisations over the next three years than the original plan! F*ck knows why, perhaps more wonder mergers like the Alpha NBG deal are meant to materialise somehow.

So when do we get to default? Under the IMF’s projections, our primary deficit is still on track to reach zero in 2012. Better start working on that debt audit.

All of this hot stuff comes hot on the heels of our latest Labour Force Survey (LFS) data, revealing that unemployment has rocketed to 14.2%. My favourite LFS metric is actually the % of the unemployed who received a job offer but turned it down. Because it’s not a headline unemployment figure there is very little incentive to game it and it’s indicative of much more than just labour supply and demand – including growth expectations and public sector jobs growth, as I explain here.



This figure is now 7.4%, less than half what it used to be in the good days of 2006 but still some way to go from zero. The closer it gets there, the more desperate the people will become. Other highlights include 17.4% unemployment in our worst-performing border region, and near-record differences in unemployment rates between graduates and school leavers as well as Greeks and foreigners. This kind of bifurcation bodes ill for everyone concerned.


Happy end of the world everyone!!!

Wednesday, 9 March 2011

THINGZ FALLZ APART, TEH CENTRE NO CAN HOLDZ

Breaking news: The Greek Treasury Minister in charge of revenue has just quit, citing personal reasons.

ITTY BITTY HAIRCUT COMMITTEE - THE REAL END OF THE LOL

This is the final call for holders of Greek debt. I am tempted to wake my folks up and tell them but I'm sure we have one more day. I won't hold out for much longer though. I am happy now to call the Greek default, which will at the very least have been structured by the end of this year; probably much earlier. I am already thinking of folding LOLGreece (or passing it on to willing readers) and writing a nice little book instead.

Here's why:

A few days ago the call went up for a thorough investigation of why Greece came to be so indebted. It was signed by numerous notable economists and should not be dimissed as a pinko liberal pamphlet about freeing Palestine and ending hunger. Sh*t just got real.

Here is what I believe. The sole purpose of the debt audit people are demanding for Greece is to come up with an estimate of the debt Greeks should not have to pay back by estimating what share of Greek debt is down to graft, corruption, fraud etc. This is meant to be our bargaining chip in the great default haggling match and whoever came up with it is a genius. If it's Yorgo I'll offer him all of my bum hair for a transplant.

You see as I've explained before, Greece can't concede even the possibility of default until t-1s, when we're actually just about to default. We do however need to be able to signal to interested parties that it's haircut time so they can gather round the negotiating table and work out a deal that they can survive, capital-wise. We also need to still be able to control the timing of this process so as to ensure that reforms are well underway, our current account is balanced and our politics is stable. That way, when we're cast off into the cold, dark void that is unbankability, we can survive the 6-9 months it will take for some brave lenders to take a punt on our debt.

The Audit is our signal. It distinguishes between sophisticated lenders and retail investors as well as our own pension funds, as many will dimiss it as a call for justice; it isn't. We can tamper with procedures to slow it down or speed it up at will, depending on how reforms go. Then at the crucial moment we strike. We cannot be stopped (since it's not a government initiative) and no one will be paying attention until it's too late.

Keynesians and people naturally inclined to the default agenda (unlike myself) have of course instantly caught on to the Audit's use as a default mechanism.So have many populists on the Radical Left at home.

They are all silent, however, on what the day after our default will look like and thus fostering unrealistic expectations.

MAKE NO MISTAKE. The majority of the Greek people would expect the entire package of Memorandum measures to be rolled back in the aftermath of a default. There will be days of partying in the streets until the realisation hits that we're virtually out of cash. The defaultniks will become disappointed, then murderously angy; their pimps, the Naomi Kleins and Krugmans of this world, will call for temporary assistance and other such rubbish terms. More importantly, in the aftermath of a default austerity will redouble, to ensure that Greece can run a balanced budget. With spirits already running high, this could trigger unprecedented levels of civil unrest.

Sleep tight. Unless you are an ambitious man with a fierce admiration for Hugo Chavez, in which case you should start preparing for a shot at Government.

UPDATE: Still not convinced? Then read up on our latest efforts to set up a stall for 'diaspora bonds' in the States. I hope they come knocking on my door too here in London. I promise to buy and promote diaspora bonds if Greece's creditors first take a minimum 30% haircut.

FOR GOD'S SAKE STFU, EPISODE III: THE VASSAL STATE STRIKES BACK

Yup, you guessed it. This is the sequel to this post, a propos  the latest three-notch downgrade of Greek debt by Moody's.


This news initially moved Greek bond yield spreads wider, as some dumb money will react in a knee-jerk fashion to anything that sounds like bad news and some clever clogs make excellent returns on this idiocy, as well they should. If that's all there is to it, spreads should come back down very shortly as there is no incremental information in the Moody's assessment. Greece is too closely watched by now. In fact, today's debt auction returned yields only fractionally higher than the last one, well within reason if you ask me, and the Euro was up. The real fundamental reason for our bond yields going up is that we've missed our revenue targets again, despite twice adjusting them downward in the face of a steeper-than expected GDP fall..

Certainly the implications of a Moody's downgrade (our current credit rating implies that we have a 20% chance of defaulting in the next 5 years) are much more optimistic than the markets' implied probability of ca 59% (source is this CMA report, which is slightly dated, but I'm not paying for an update!). In fact, they are more optimistic than the market was in Feb 2010 - pre-bailout! If credit rating agencies had any credibility, the Moody's announcement would tighten, not widen our spreads. Cue trivia item: in Russian, "Moody's" sounds a bit like the word for "bollocks".

Mind you, on the basis of this statement by S&P, it appears to me that the credit rating agencies have the same probability-adjusted haircut in mind for our bondholders as the markets do, but tend to interpret the data in favour of bigger haircuts with smaller probability. I would expect credit rating agencies to be biased in this way, as an abundance of low-probability, high-impact default risks helps generate demand for their services. Or perhaps I'm giving them too much credit and they just don't know what they are doing.

Now I don't envy our Finance Minister. He has to lie, score cheap points for internal YOMAMA-nomic consumption and look macho while doing it. And that's assuming he's a straight guy and our Finance Ministry genuinely looks after the people's best interests. It's a bum deal (like the one I offered Yorgo here). If I were in his shoes and had to peddle the same bullshit as he does, here's what I would have said:
A: Moody's have lagged the market's implied default probability for Greece throughout the current turmoil and their two-notch downgrade only reflects their need to be taken seriously by the markets; I wish them well but am unconcerned by their latest guesswork on the chances of Greece defaulting. As things stand, I think markets have finally caught up with our fiscal situation in March 2010 and Moody's are about a year behind them.  Let me tell you what they will all be catching up with for the rest of the year...
And this is what he actually said (emphasis mine):


The rating downgrade announced by Moody’s today is completely unjustified as it does not reflect an objective and balanced assessment of the conditions Greece is presently facing. Furthermore, its timing and the multi-notch nature of the downgrade are incomprehensible and raise a number of questions. 
[…] The arguments made can in no way be justified by the additional information available since Moody’s last downgrade in June 2010 and the progress achieved since.   
[…] Ultimately, Moody’s downgrading of Greece’s debt reveals more about the misaligned incentives and the lack of accountability of credit rating agencies than the genuine state or prospects of the Greek economy. Having completely missed the build-up of risk that led to the global financial crisis in 2008, the rating agencies are now competing with each other to be the first to identify risks that will lead to the next crisis.  At a time when the global economy is fragile and market sentiment is sensitive, unbalanced and unjustified rating decisions such as Moody’s today can initiate damaging self-fulfilling prophecies and certainly strengthen the arguments for tighter regulation of the rating agencies themselves.
You see the man knows what we also know. But he reverts to the old mantra of evil specuLOLtoring and calling for regulation of the CRAs. Don't get me wrong, the CRAs have severe faults and getting their ratings the hell out of regulatory capital requirements is, for instance, a hugely important agenda. But threatening to tell our mum every time they downgrade us to WAY above where our credit rating should be makes Greece look ridiculous.

Why does he do that? Because he can get away with it. Dagong, the Chinese credit rating agency, has long held that Western CRAs are too soft on Greek debt and given us the same rating as Nigeria. Did he complain? Did he hell. He kissed the dainty toes of the Chinese. As well he should because they were buying our highly speculative bonds.

Please Mr. Papaconstantinou. We only have a few months to go now. Try not to tarnish the reputation of the Greek people any further with these tactices.



In the age of the internet, it takes literally seconds to find this old statement by the head of Greece's public debt management agency (the guy actually in charge of selling our debt), which welcomed a single-notch downgrade by Moody's in the face of market expectations of a double-notch downgrade. No agenda back then, no specuLOLtoring. Just good old Moody's refusing to follow the pack and giving us a break, despite people calling their rating 'ridiculously' high. Three months later we were of course bailed out, so Moody's had obviously missed a number of tricks. Strange, by the way, how statements are now made by the finance minister and not the head of the PDMA. It's politics, not trading.

Monday, 7 March 2011

LIES, DAMN LIES AND INTERVIEWS WITH LEADING ECONOMISTS


Σημείωση: Αν βρεθήκατε σε αυτή τη σελίδα στην προσπάθειά σας να βρείτε τις πηγές της φερόμενης ως συνέντευξης του Mark Weisbrot με τίτλο Η ΑΡΓΕΝΤΙΝΗ ΔΕΝ ΗΤΑΝ ΤΙΠΟΤΑ. ΕΣΑΣ ΘΑ ΣΑΣ ΕΞΑΦΑΝΙΣΟΥΜΕ, δείτε την αποστομωτική απάντηση του ίδιου του καθηγητή παρακάτω. Επίσης ρίξτε μια ματιά και σε αυτή τη σελίδα. Βοηθήστε κι εσείς να εξυγιανθεί η Ελληνική μπλογκόσφαιρα, όχι με λογοκρισία, αλλά με αντίλογο.




An endlessly copy+pasted passage has reappeared in Greece in the last few months, worthy of our blogosphere's great tradition of making stuff up and of LOLGreece’s smaller but proud tradition of calling Orange Blog writers out for the untalented amateurs that they are.


In summary, the piece, entitled ‘Argentina was nothing – you will BE wipeD out!’ cites an interview, supposedly with Mark Weisbrot, co-director of the Center for Economic Policy Research.


“Weisbrot” is quoted as saying that the IMF intervention in Greece will be cataclysmic in its consequences, uprooting the Greek welfare state and abandoning the Greek people to exploitation from all angles through the labour market, asset and resource sell-offs, and the drugs trade – unless, that is, we band together in violent resistance and demand the payment of reparations from Germany.


First things first. The document is a hoax. How do I know? Because Weisbrot himself says so. This is obvious even to a fairly casual Googler.


Clue no. 1 that this is a hoax originated by illiterate idiots:


“Weisbrot” writes:


“Indeed [I hear] simultaneously in many circles in Geneva where I live, that Switzerland will give as a gift to Greece, without [claim of] restitution, 100 billion, not to lead a European country, with such tragic consequences, [into] the mouth of the lion.”


No Greek post-bailout meme is complete without a miraculous 'no-strings money' theory. First we had the Russians and the Chinese, and now an even more incredible candidate. In this one, "Weisbrot" claims that he has heard rumours of a EUR100bn bailout of Greece, no strings as per usual (in fact in this case we would wouldn’t even pay the principal back), which would see Switzerland, a non-EU and non-Eurozone member, hand over 28% of its GDP to us, just to keep the Euro from collapsing. Quite how the Swiss would find this money, let alone justify the transaction to their people, is never made clear but I guess we are to assume that, since Switzerland is where every high-net-worth individual’s savings end up, the Swiss have access to endless amounts of cash. This Underpants Gnome logic would be dismissed out of hand in any rational discourse, but for some in Greece it represents pretty mainstream thinking.


My theory is that the Swiss have been dragged into this ridiculous hoax because of the Swiss Central Bank’s desperate attempts to keep its currency competitive and its lenders from recognising huge losses as the Euro and Eastern European currencies came under pressure and wrath-of-God money started flowing out of the rest of Europe and into Switzerland. The Swiss Central Bank did make purchases that are not orders of magnitude below EUR100bn, so perhaps a desperately confused mind could link their purchases to Greece’s IMF loan.


That a leading economist would ever need to cite Genevan gossip on an issue as big as this one is ridiculous. And the fact that no newspapers or other news outlets, let alone the bond markets, have picked up on this monumental aid offer is beyond belief. But even if one overlooks this, there’s the very small matter of Weisbrot’s residence. Mark Weisbrot doesn't actually live in Geneva. He just doesn't. He lives in the States, where he works, and although he spends a great deal of time in South America he most definitely doesn't do so in Switzerland.


Clue no. 2 that this is a hoax promoted by illiterate idiots:
[of] the IMF the impression [was] that the Argentines believe[d] [us to be their] saviors.”
“They all [felt] that we [had] saved the country [which] was corrupt and [had] incompetent governments. It was incredible what correspondents broadcast, when we saw the truth with our eyes on every street in every neighborhood. You need to wake up in Greece now before it's too late, must at all costs avoid the IMF.”


Amazingly, the article seems to imply that Weisbrot himself worked for the IMF, and earlier editions say this explicitly. This is of course also not true.


I believe this muppetry arises from a confusion of Weisbrot’s testimony, and his links to Oliver Stone’s South of the Border, with the similarly-themed but much less factual Confessions of an Economic Hitman by John Perkins, which was recently broadcast in documentary form in Greece, to a very positive reception by our chattering classes. In fact, it is probably this that reignited the “Weisbrod” interview meme.


Thanks to the excellent work of Diagoras and a public apology from ireporter to its readers, I now know that the hoax started when a real Weisbrot interview was posted in February 2010 here alongside an unattributed set of a comments which Olympia attributes elsewhere to an ex-IMF Vice President. Due to the two men sharing a salutation ("professor"), and the lack of a clarification to the effect that they are two separate sources, third parties including myself have deduced that all of the quotes in this article were attributed to Weisbrot. While I cannot know what the intention was, I note that Olympia also posted this, in which they claim to be the originators of the Weisbrot interview.

Whatever the case, one third party did believe the interview to be Weisbrot's and helped it go viral. Bits of the Olympia post were mixed with bits of another article by a well known Greek journo and then published, in April 2010, by ireporter (who, to their credit, have issued a full correction here). The hoax article then went briefly underground where it mutated around May and then circulated via email, probably until June 2010. I can trace the mutation to May 2010 because a reference to mass layoffs in the definitive version suggests it must be more recent than mid April but the reference to Swiss monetary intervention makes it earlier than June.

The first blog coverage of the 'definitive' version of the hoax was in that very month, and it appears to me to be this one.  But as with all things ill-researched and sensational, this story quickly made it onto Tro-ma-ktiko, our premier ‘Orange’ blog. In fact, it was published twice by the ever-astute Tro-ma-ktiko staff: once in Nov 2010, and once in March 2011, this time with a photo of Weisbrot in mid-press-conference, which would imply to the casual reader that his statements were official and on-the-record. Both instances were in fact published after Weisbrot himself had been interviewed by Epsilon and categorically stated that the ‘interview’ reported by Orange Blogs was a hoax. Even worse, it’s since been taken up by the Greek Union of Chemical, Pharmaceutical, Cosmetic and Related Company Employees (in Greek here and in Google-translated English here) and will no doubt be with us for ever more.
 

It is possible to trace the 2011 resurgence of this meme back to some of its origins, as Tro-ma-ktiko cites e-parembasis, which in turn cites Ramnousia. This only goes back to March 2011, and the trail ends here. But the article resurfaces in Nov. 2010 in sfrang2, and [bingo] in the widely read Athens Indymedia whose anarchist readers will have greatly sympathised with the following exhortations by “Weisbrot”:


[Believe me,] the only way [for you] to survive is to come out every day for one month, as one and united, 8 million people, adults I mean, onto the streets until all, I mean all, daily operations are suspended. Only in this way will the EU be coerced enough to give money, and interest-free at that, of which they have plenty.”
“In Argentina [in response to the] actions taken by the IMF, the [people] came [out into] the streets with axes, saws and scimitar[s] and burst into banks, media and government buildings and slaughtered, literally [decapitated] bank employees, managers, journalists, who [were] on top of corruption and fraud, and executives and members of industry, members of the Government, government [spokespersons] and certain members of the Government of the [Argentine] Ministry of Finance.”



In fact the meme resurfaced with no major alterations on Newstoday, on 29 May 2011.  
 
In fairness to the man, I should say that the real Weisbrot is indeed a very vocal critic of the IMF, as his Guardian column quickly reveals to even the most casual reader. He has signed a petition for an investigation into the causes of Greek debt, which I would strongly subscribe to, but has never called for Germany to pay reparations, to the best of my Googling ability.  He is particularly critical of the process of ‘internal devaluation’ taking place in Greece and far from arguing for our allies to save the Euro, he in fact argues that we should leave the Eurozone, as should Spain and indeed everyone else. I can agree with him on this as well, although I can’t think that we will agree on much else. He very much resents suggestions, including from the Greek side, that we need Europe’s help in order to manage our affairs. I don’t. I regret that it is true but it is. At any rate, the man’s positions on Europe are strongly at odds with what “Weisbrot” writes in our original hoax article:

“What saddens me most of all is that Europe and the EU generally do[es] not seem interested in saving the euro because if [Greece] fold[s], the Euro will be completely useless in international markets and throughout Europe, the Euro will collapse in an Argentine [type] crisis not only in Greece but [in] all countries [that are] EU members.”


The real Weisbrot has authored, way before the Greek bailout, a very interesting review of how IMF bailouts tend to work out, one which chimes perfectly with the current situation and which I recommend without hesitation. Read it and your minds will be cleansed from the stench of the Orange Blogs.


All of the above makes the fraud committed by the Orange Bloggers even more insidious because a superficial web check would confirm Weisbrot as a critic of the IMF and thus appear to confirm the authenticity of their “story.” Far from acting as researchers, or even bog-standard journos, they are pandering to the worst in the Greek people’s mentality, at a time when social peace is extremely fragile, and call specifically for murder and crippling strikes whilst hijacking the name of a solid academic (with whom I disagree on a lot but who is at least sane and rigorous in his thinking) and using him as their mouthpiece.


Freedom of speech is sacred; I would go further even than the law and justify freedom to slander and incite to violence as long as it is done in public and is open to refutation. These people must not be silenced. But those of us with a single brain cell that is not baying for blood must confront them. I will write to as many of them as I can this week, making it clear how dangerous and irresponsible their reporting is, how deeply it misrepresents our people to the rest of the world, and how deeply ashamed they ought to be of themselves as citizen journalists. I note that, in the endless iterations of this fraudulent story, others have stood up to misinformation way before I did – it is to one of them that I owe the link to the Epsilon interview. I urge you: please do as these good people have.


And now for the full-on, hernia-defying belly-chuckle, which I never saw coming: the Centre for Economic Policy Research, of which Weisbrot is co-director, acknowledges as its generous supporters none other than the Rockefeller Brothers Fund and the Rockefeller Foundation. If you fail to see the irony, you may want to read back to this post. How will the Orange Bloggers and Indymedia live with themselves now?


UPDATE: Mark Weisbrot's colleagues have come back with a very comprehensive refutation, which you can read here. It appears they are willing to pursue this matter in the appropriate manner, so stay tuned. Their official line is as follows:
Από το Κέντρο Οικονομικών και Πολιτικών Ερευνών:
Ο Mark Weisbrot δεν είπε ούτε έγραψε αυτά που του αποδίδουν σε αυτήν την υποτιθέμενη «συνέντευξη», για την οποία δεν αναφέρεται ούτε συντάκτης ούτε πηγή.
Αυτή η δήθεν συνέντευξη είναι ένα ατυχές συμβάν καθώς δημιουργεί περαιτέρω σύγχυση στην αντιπαράθεση σχετικά με ένα ιδιαίτερα σημαντικό θέμα: τα προτεινόμενα μέτρα λιτότητας και τις εναλλακτικές λύσεις όσον αφορά στην οικονομική ύφεση που αντιμετωπίζει η Ελλάδα.
Οποιοσδήποτε ενδιαφέρεται για αυτά που πραγματικά είπε και έγραψε ο Mark Weisbrot σχετικά με αυτό το θέμα θα πρέπει να διαβάσει εδώ: http://www.skai.gr/news/finance/article/156255/mark-weisbrot-yparhei-kai-allos-dromos
και εδώ: http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/eurozone-crisis-is-self-inflicted
The list of blogs that have decided to flag reposts of this hoax as debunked continues to grow. If you have done so in your blog, or are aware of a blog that has done so, please send me a link so I can add those blogs to the list:

  • i-reporter have issued, as I said before, the best possible correction 
  • e-parembasis [e-intervention] 
  • Pyli Iasonos [Jason's Gate ]Despite the name of the editor this one has no relation to me at all.
  • Alithina Psemmata [True Lies] 
  • Arhaia Ithomi [Ancient Ithomi], which also cited much of our Dear Reader page on the matter. Many thanks! 
  • Greek Tastes also cites much of this blog post. Many thanks!
  • Aetos Halkidikis [Eagle of Chalkidike]
  • Top Secret 
  • Pentapostagma [Quintuple Distillation] put up a fight over this, initially responding that they couldn't know whether the story was true or not (which they forgot to mention in their post) but would need proof of the contrary. Upon receiving this they responded that they would put 'my view' across to readers for discussion if I sent a suggestion. I could probably have done that but there are no views to be discussed, as though equally valid. Only the truth of Weisbrot's refutation. 
  • stopcartel were a particularly nasty case; upon first contact with Weisbrot's associates they questioned the identity of the latter and argued that regardless of its authenticity the core narrative of the forged document was close enough to his views. Both the Centre staff and myself and finally Weisbrot himself wrote to them to explain that this is bullshit and they should not attribute a dangerous, forged statement to anyone regardless of how representative of their views they think it is. Eventually the post was taken down. Weisbrot's associate notes that they should really be ashamed of themselves. I concur.
  • the notorious tromaktiko originally made a goodwill gesture by posting one of Weisbrot's real interviews. I remained unsatisfied because any reader who has fallen for the original posts quoting the forged "interview" will only have his/her beliefs reinforced by this new post. I wrote to them again, on email, Facebook and Twitter, and expressed my confidence that they will find an acceptable solution to this. With none of their originally quoted sources still showing the story, they eventually backed down 'for the sake of my health' as they put it over email and have since pulled the story. [Actually a third copy is still up and I've asked for that to be corrected but for now I'm happy].
  • But the medal of muppetry goes to sfrang2, the personal blog of one Stelios G. Frangopoulos who I am assured by a trustworthy reader (see below) is normally a proper gent. Frangopoulos acknowledged that the document is a hoax, but posited like stopcartel that it is irrelevant who wrote the document. It is the ideas that matter. I responded with a set of questions he could have put to his readers on the basis of this document if he had really meant to provoke a discussion. His epic response was: 
    "Mano, you have developed an obsession with this blog post, as though I am meant to be some kind of Union of Journalists ethics board. I gave you the answers I needed to, and had I known from the start that the document was a hoax I would not have posted it. But neither am I going to go researching next time
    [I post something like this] to confirm the validity of the text. I will post whatever I take a shine to. If the blog fails to gush forth the level of rigor that you are looking for, don't read it. I am not going to do any more."
My regards, Stelio. I will put that response down to a bad day at the Uni.


While this is only a very small start, and not a campaign I can afford to repeat, it is a victory of sorts. if enough people sign up to this way of doing things we could start making a difference. One man can do this work in less than a week. What can 100 people do?

FINAL UPDATE: I've just found out there is a word for that kind of unthinking copy+paste syndication: It's called Churnalism. A brilliant piece of terminology courtesy of filmmaker Chris Atkins, which actually manages to sound like LOLspeak as well.