(Bloomberg) -- It’s no
secret what Yanis Varoufakis thinks Greece should do with its debt. 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.
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.”
Game On
Greek stocks and bonds
extended declines after the cabinet was officially named on Tuesday. Alpha Bank
SA fell as much as 20 percent, while the yield on three-year government bonds
surged two percentage points to exceed 14 percent.
Also a visiting
professor at the University of Texas in Austin, where Prime Minister Alexis
Tsipras pledged allegiance to the euro in a November 2013 speech, Varoufakis is
a career academic. He started as a teaching and research assistant at the
University of Essex in England, where he earned his doctorate.
One of his research
interests is game theory, and he later worked as a consultant for a video game
company.
When it comes to
politics, Varoufakis was an adviser to former Prime Minister George Papandreou
before the Pasok leader assumed power and took Greece into its bailout in 2010.
A staunch opponent of
spending cuts and tax increases and an advocate of a “haircut” on Greek public
debt, he is a relative newcomer to Syriza. In 2012, he urged readers of his
blog to vote for the party, while also telling them its manifesto was “not
worth the paper it is written on.”
Promises, Promises
“Just ignore it,” he
wrote on June 3, between the two elections in six weeks that propelled Syriza
into the international spotlight that year. “While replete with good
intentions, it is short on detail, full of promises that cannot, and will not
be fulfilled,” he continued, adding that “the greatest one is that austerity
will be canceled.”
Spin forward two and a
half years and he ended up getting more votes than any other candidate in last
Sunday’s election.
Like Tsipras,
Varoufakis also says that Syriza’s opposition to austerity and vows for debt
relief won’t lead Greece out of the euro, known as “Grexit,” because the cost
for region would be too much to bear. Greece already executed the largest write
down of debt in history.
“It takes a degree of
silliness, which is unprecedented to believe that you can talk about Grexit and
then contain the after effects, as if this is something which can be done in an
orderly way,” Varoufakis told Bloomberg in a Jan. 13 interview.
As well as his blog,
Varoufakis has Twitter followers including economist Nouriel Roubini and David Blanch
flower, a former member of the Bank of England’s monetary policy committee now
in the U.S. In a post dated Jan. 27, Varoufakis said he would continue to air
his views, albeit less frequently. “The time to put up or shut up has, I have
been told, arrived,” he wrote. “My plan is to defy such advice.”
