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Varoufakis left England in 1988 to teach at the University of Sydney, where he began a series of conversations about the global economy with the economist Joseph Halevi, the two of them among academics in their field who contested the notion then popular that the world had entered a new phase of “perpetual growth,” what the former Federal Reserve chairman Ben Bernanke called the “great moderation.” After the crash, Varoufakis decided to put those ideas into a book for a popular audience titled, “The Global Minotaur,” which presented the world, and Europe, as perilously yoked to the fluctuations of the American economy. When the crisis finally reached Greece, Varoufakis began working with the British economist Stuart Holland and, later, the American economist James Galbraith, on a pamphlet titled, “A Modest Proposal,” which identified four major crises in Europe — in banking, public debt, underinvestment and social welfare — and proposed solutions to each. “Europe is fragmenting,” they wrote. “As this happens, human costs mount, and disintegration becomes an increasing threat. . . . The fallout from a eurozone breakup would destroy the European Union, except perhaps in name. And Europe’s fragmentation poses a global danger.”

He told me that he still felt that way. The crisis that began in 2007 was just as bad as the Great Depression that started in 1929, and it was far from over. “We need a New Deal for the globe,” he said, “at least for Europe.” But when he sought to make his case in interviews and speeches across Europe these past months as finance minister, while also mounting a moral argument for easing the suffering of Greece as well as other southern European countries, his European counterparts were exasperated. They were frightened, too, by the prospect of Varoufakis serving as inspiration for leftist movements elsewhere — especially in Spain, where Podemos, a leftist party led by activists who also oppose austerity policies, has made significant inroads. At the February meetings, the European financial leaders pushed back by insisting on austerity. Aristides Hatzis, a professor of philosophy in Athens, says that Varoufakis found himself “where no one was interested in life in the eurozone in the long term — they were only interested in specific details about the way Greece was going to pay its debt.” Because Varou­fakis is clever, Hatzis says, he adjusted to this reality and changed course. He was also forced to make many concessions.

The American economist Joseph Stiglitz, a Nobel Prize winner, describes Varoufakis’s situation as “absolutely impossible.” “There is an obsession among policy-making economists in Germany about fiscal balance,” he says, “compared to unemployment, inequality, economic growth, financial stability.” When Greece received its first bailout in 2010, the Europeans insisted on severe austerity while predicting that Greece’s gross domestic product would shrink by only 4 percent. Over five years it shrank 25 percent. (Stiglitz says that he tells his students that if their economic models and forecasts were that bad, he would give them an F.)

A Finance Minister Fit for a Greek Tragedy? - NYTimes.com

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