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146

The Reverse Alchemists

7
terms
3
notes

Varoufakis, Y. (2017). The Reverse Alchemists. In Varoufakis, Y. And the Weak Suffer What They Must?. Vintage, pp. 146-195

156

The result was that German workers, as their share of their employers' profits fell, could not afford the goods they produced. Deprived of domestic demand, surplus German products thus flowed to places like Ireland, Greece and Spain, where demand for them was supported by the loans Franz and his Frankfurt banker colleagues, dipping into the German corporate profit glut, had shifted to Europe's periphery. The export of German goods and German profits to the rest of the eurozone created debt-fuelled annual growth of 5 per cent in Greece and Ireland [...]

result of the Hartz reforms. German banks were loaning money to consumers in the periphery (interest rate arbitrage basically)

—p.156 by Yanis Varoufakis 2 years, 10 months ago

The result was that German workers, as their share of their employers' profits fell, could not afford the goods they produced. Deprived of domestic demand, surplus German products thus flowed to places like Ireland, Greece and Spain, where demand for them was supported by the loans Franz and his Frankfurt banker colleagues, dipping into the German corporate profit glut, had shifted to Europe's periphery. The export of German goods and German profits to the rest of the eurozone created debt-fuelled annual growth of 5 per cent in Greece and Ireland [...]

result of the Hartz reforms. German banks were loaning money to consumers in the periphery (interest rate arbitrage basically)

—p.156 by Yanis Varoufakis 2 years, 10 months ago

a set of recommendations submitted by a committee on reforms to the German labour market in 2002; named after Peter Hartz (head of the committee); goal: to reduce unemployment

156

the labour market measures--known as the Hartz reforms--that the German Federal Republic enacted as soon as euro notes began to circulate. Implemented at a time of US-led growth, these reforms aimed at enhancing German exports and their competitiveness by making them cheaper through reducing German workers' average take-home pay significantly, both by cutting hourly wage rates and pushing large numbers of workers into so-called mini-jobs.

—p.156 by Yanis Varoufakis
notable
2 years, 10 months ago

the labour market measures--known as the Hartz reforms--that the German Federal Republic enacted as soon as euro notes began to circulate. Implemented at a time of US-led growth, these reforms aimed at enhancing German exports and their competitiveness by making them cheaper through reducing German workers' average take-home pay significantly, both by cutting hourly wage rates and pushing large numbers of workers into so-called mini-jobs.

—p.156 by Yanis Varoufakis
notable
2 years, 10 months ago
158

But this was not a bailout. Greece was never bailed out. [...] Greece's bailout, then Ireland's, then Portugal's, then Spain's primarily rescue packages for French and German banks.

—p.158 by Yanis Varoufakis 2 years, 10 months ago

But this was not a bailout. Greece was never bailed out. [...] Greece's bailout, then Ireland's, then Portugal's, then Spain's primarily rescue packages for French and German banks.

—p.158 by Yanis Varoufakis 2 years, 10 months ago

(noun) a Russian vehicle drawn by three horses abreast / (noun) a team for such a vehicle / (noun) a group of three / (noun) an administrative or ruling body of three

160

with every visitation by the troika, the dream of shared European prosperity was dealt another blow

—p.160 by Yanis Varoufakis
notable
2 years, 10 months ago

with every visitation by the troika, the dream of shared European prosperity was dealt another blow

—p.160 by Yanis Varoufakis
notable
2 years, 10 months ago

(adjective) full of danger or uncertainty; precarious

170

given the bank's parlous state

—p.170 by Yanis Varoufakis
confirm
2 years, 10 months ago

given the bank's parlous state

—p.170 by Yanis Varoufakis
confirm
2 years, 10 months ago

a program of the European Central Bank under which the bank makes purchases ("outright transactions") in secondary, sovereign bond markets, under certain conditions, of bonds issued by Eurozone member-states; differs from QE in that the goal is not to inject liquidity but rather to fix interest rate differences across the EU

179

the Outright Monetary Transactions programme. [...] the ECB would step into the money markets to buy unlimited numbers of Italian and Spanish bonds in order to stabilise their value--and with them the interest rates that the Italian and Spanish governments paid to refinance their public debt.

it worked, because bond dealers took the ECB at its word and started buying Italian/Spanish bonds and so the ECB never had to actually step in during the first year

—p.179 by Yanis Varoufakis
notable
2 years, 10 months ago

the Outright Monetary Transactions programme. [...] the ECB would step into the money markets to buy unlimited numbers of Italian and Spanish bonds in order to stabilise their value--and with them the interest rates that the Italian and Spanish governments paid to refinance their public debt.

it worked, because bond dealers took the ECB at its word and started buying Italian/Spanish bonds and so the ECB never had to actually step in during the first year

—p.179 by Yanis Varoufakis
notable
2 years, 10 months ago

a person who renounces a religious or political belief or principle; the general form is "apostasy"

180

the Bundesbank waiting in the wings to denounce Mario Draghi as an apostate

—p.180 by Yanis Varoufakis
notable
2 years, 10 months ago

the Bundesbank waiting in the wings to denounce Mario Draghi as an apostate

—p.180 by Yanis Varoufakis
notable
2 years, 10 months ago

a security that entitles the holder to buy the underlying stock of the issuing company at a fixed price called exercise price until the expiry date; similar to options (not sure of the difference)

184

Warrants are essentially options to buy more shares at the original low share price.

context: private buyers of bank shares got to buy in at a low low price

—p.184 by Yanis Varoufakis
notable
2 years, 10 months ago

Warrants are essentially options to buy more shares at the original low share price.

context: private buyers of bank shares got to buy in at a low low price

—p.184 by Yanis Varoufakis
notable
2 years, 10 months ago
187

The idea is simple: the central bank buys from commercial banks other people's debts. Who are these 'other people'? They can be families that owe mortgages to the bank, corporations, or even a government that has sold bonds to the bank. In exchange for these debts and the stream of income they produce, the central bank deposits dollars or euros in an account the commercial bank keeps at the central bank. Where does the central bank find the money? From thin air, is the answer: they are just numbers that the central bank conjures up and adds to the commercial bank's account. Why do this? In the hopes that the commercial bank will use this money by lending it to businesses wishing to invest and to families wanting to buy houses, cars, gadgets and so on. If this happens, economic activity will rise again as liquidity sets in. [...]

[...]

To cut a long story short, a great deal of believing must occur before QE delivers on its promise to boost the real economy. [...] banks tend to lend the money conjured up by the central bank not to other banks or to Jack and Jill but to companies. Except that these companies do not invest the borrowed money in machinery and workers, fearful that the demand will not be there for extra output produced. What they do is to buy back their own shares in the stock market in order to increase their price and collect a nice bonus for having 'added value to the company'. While this process does boost, to some extent, upmarket house prices and demand for luxuries, the only genuine beneficiary is gross inequality.

—p.187 by Yanis Varoufakis 2 years, 10 months ago

The idea is simple: the central bank buys from commercial banks other people's debts. Who are these 'other people'? They can be families that owe mortgages to the bank, corporations, or even a government that has sold bonds to the bank. In exchange for these debts and the stream of income they produce, the central bank deposits dollars or euros in an account the commercial bank keeps at the central bank. Where does the central bank find the money? From thin air, is the answer: they are just numbers that the central bank conjures up and adds to the commercial bank's account. Why do this? In the hopes that the commercial bank will use this money by lending it to businesses wishing to invest and to families wanting to buy houses, cars, gadgets and so on. If this happens, economic activity will rise again as liquidity sets in. [...]

[...]

To cut a long story short, a great deal of believing must occur before QE delivers on its promise to boost the real economy. [...] banks tend to lend the money conjured up by the central bank not to other banks or to Jack and Jill but to companies. Except that these companies do not invest the borrowed money in machinery and workers, fearful that the demand will not be there for extra output produced. What they do is to buy back their own shares in the stock market in order to increase their price and collect a nice bonus for having 'added value to the company'. While this process does boost, to some extent, upmarket house prices and demand for luxuries, the only genuine beneficiary is gross inequality.

—p.187 by Yanis Varoufakis 2 years, 10 months ago

(noun plural) a spell of listlessness or despondency / (noun plural) a part of the ocean near the equator abounding in calms, squalls, and light shifting winds / (noun plural) a state or period of inactivity, stagnation, or slump

187

John Maynard Keynyes, back in 1936, had to quote Ibsen's Wild Duck in order to convey to his reader the problem that a central bank faces when interest rates fall to zero but the economy is still in the doldrums

—p.187 by Yanis Varoufakis
confirm
2 years, 10 months ago

John Maynard Keynyes, back in 1936, had to quote Ibsen's Wild Duck in order to convey to his reader the problem that a central bank faces when interest rates fall to zero but the economy is still in the doldrums

—p.187 by Yanis Varoufakis
confirm
2 years, 10 months ago