While building a team of experts, I was also engaging friends and potential allies outside Greece. One of my missives for help went to Lord (Norman) Lamont. ‘Dear Norman,’ it read,

As you may have gathered from press reports, Greeks are going to the polls this coming Sunday. For better or for worse I am standing for a seat in the Greater Athens constituency and, according to pollsters, I seem ‘condemned’ to win it. Even worse, if my party forms the government (which is not unlikely) I stand to inherit the Ministry of Finance – replete with empty coffers and outrageous pressure from Brussels and Frankfurt. Might I count on you as a prospective counsel in the turbulent times ahead?

Trusting that you are well.

Yanis

Norman responded immediately. Yes, he was willing and ready to offer counsel. When I told him that the issue ran a lot deeper than debt and bonds, that it pertained to our parliament’s sovereignty and raised the question of whether democracy was a luxury to be denied citizens of an indebted state, he replied,

I entirely agree with what you say of course about democracy and the sovereignty of parliament. I keep trying to remind Cameron and Osborne that if they get the chance to renegotiate our relationship with the EU, as they hope, it should be about restoring sovereignty and not just economics and competitiveness. You and I are at one on that. I also agree with you there has been too much emphasis in the eurozone on austerity alone … Assuming you become finance minister I will be very happy to do what I can to help … I have some ideas. Good luck personally. Yours ever.

Norman

My friendship with true-blue Tory and Eurosceptic Lord Lamont of Lerwick, the chancellor who had ensured that Britain dropped out of the European Monetary System, thus guaranteeing that the UK would not join the euro, was at odds with my image as a loony-left extremist. It was also taken as further proof by some that, guided and prodded by Lamont, I was hell-bent on getting Greece out of the euro.

Of course, precisely the opposite was true. When a few months later things came to a head and Wolfgang Schäuble was pushing us towards Grexit, Norman’s advice to me was to think twice before even considering it, such were the costs and perils of returning to a national currency. Throughout my 162 days in office Norman proved a pillar of strength, advising me on the final draft of my reform, debt and fiscal proposals to the EU and the IMF. If only more left-leaning politicians had stood as firm, the outcome might have been altogether different.

Besides Norman, my overseas supporters included Columbia University economist Jeff Sachs, who played a central role as adviser and advocate, the aforementioned Thomas Mayer of Deutsche Bank fame, Larry Summers and Jamie Galbraith, who had worked for years with me on refining the Modest Proposal for Resolving the Euro Crisis, helping reduce the antipathy towards Alexis and Syriza in Washington, writing speeches for Alexis and organizing conferences to prepare the Anglosphere for the new Syriza administration.

On 20 November I dispatched a cheerful email to Jamie:

Jamie,

Yesterday Alexis told me that he had received a phone call from a prominent bank owner, who threatened that the bank’s ATMs will not function the day after our election if Alexis appoints me minister of finance. Alexis responded by asking him how old he is. The banker replied: sixty-five. Alexis then said: If you overthrow me, I am young enough to rise again. You are not!

It was one of those moments of sheer pride in my friends, old and new, and joy at having acquired vicious foes.

Wasteland

Without the skills of a T.S. Eliot or a John Steinbeck, it is difficult to convey the scale of Greece’s devastation in January 2015. A numerical comparison will have to suffice.

Britain in the early 1980s suffered a major convulsion when unemployment quadrupled. The damage was done by a recession lasting a single year, 1980–1, when national income fell by 1.26 per cent. The next recession to hit Britain came a decade later, lasting also a single year (1990–1), with national income shrinking by 1.78 per cent. More recently, following the Credit Crunch, another single-year recession (2008–9) left the country reeling, with a drop in national income of a substantial 5.15 per cent. Compare and contrast these three traumas with what befell the Greeks.

By 2010, the year of the first bailout, national income had fallen by a whopping 7.5 per cent since the previous year. Did things improve as a consequence of the bailout? On the contrary, during 2010–11 incomes fell by a further 8.9 per cent. By comparison, 2011–12 was a good year, the economy shrinking further by a trifling 1.1 per cent. To what did we owe the relative lull? Ironically, to the political crisis caused by the depression, which meant that we either had no government or too weak a government to legislate further austerity!

But as soon as Prime Minister Samaras came to office in June 2012 with a small but solid parliamentary majority, the troika ensured he made up for lost time by cranking up the austerity machine with a vengeance. The result? The cruellest year yet, with national income plunging a further 14 per cent by the end of 2013 and another 3.3 per cent during 2014.

When British friends remark sympathetically that Greece is today where Britain was during the Great Depression, I thank them for their kindly intended comparison but am forced to correct them. Between 1929 and 1932 Britain’s economy shrank by 4.9 per cent and unemployment rose from 8 to 17 per cent. (At this point I imagine a Greek version of John Cleese’s character in Monty Python’s ‘Four Yorkshiremen’ sketch crying out, ‘You were lucky!’ ‘Luxury!’) By comparison, Greece has endured six consecutive years of recession, the loss of 28 per cent of its national income, more than one in five workers losing their job, and an unemployment rate propelled from 7 to 27 per cent, with youth unemployment at more than 65 per cent.

And yet today, as these lines are being written, there are still those who believe that by the end of 2014 Greece’s economy was returning to health and would have been out of the woods by the end of 2015 had it not been for the idiocy of those Greek voters who jeopardized the recovery by voting in people like me on 25 January 2015. Like unruly children screaming, ‘Are we nearly there yet?’ from the back seat and distracting the driver, the Greek electorate caused their country to swerve off the road to recovery just as it was entering the final straight. And had it not been for the actions of the insufferable finance minister of the populist government they elected, a third bailout would never have been necessary. Do they have a point?

The jagged grey line in Figure 1 shows Greece’s total income, undiluted by statistical tricks and given in raw euros. The black line superimposed upon it is a four-month average, providing a clearer sense of the overall trend. The shaded oval highlights the period in 2014 when the alleged recovery began. Can you spot it? The Greek voters could not.

Figure 1: Greece’s unadjusted national income (quarterly) 2007–14, with a four-month moving average superimposed.

Soon after it became clear that I might become Greece’s finance minister in this economic environment, I gave a speech attended by members of the European parliament, journalists and other so-called opinion makers. Asked whether a new government might jeopardize the ‘recent recovery’, I had no alternative but to expose them to the wretched facts that almost never appeared in the press.

There are 10 million Greeks living in Greece (falling fast due to emigration), organized in around 2.8 million households with a ‘relationship’ with the tax authorities.

Of those 2.8 million households, 2.3 million (and 3.5 million tax file numbers) have a debt to the tax authorities that they cannot service.

One million households cannot pay their electricity bill in full, forcing the electricity company to ‘extend and pretend’, thus ensuring that a million homes live in fear of darkness at night and the electricity company is insolvent. Indeed, the Public Power Corporation is disconnecting around 30,000 homes and businesses a month due to unpaid bills.

For 48.6 per cent of families, pensions are the main source of income. Meanwhile the troika demands that pensions be cut even further. What was the €700 old age pension has been reduced by about 25 per cent since 2010 and is due to be halved over the next few years.

The minimum wage has shrunk (on the troika’s orders) by 40 per cent.

Other benefits have been cut by more than 18 per cent.

Some 40 per cent of the population say they will not be able to meet their financial commitments this year.

Unemployment has risen 160 per cent so that 3.5 million employed people now support 4.7 million unemployed or inactive Greeks.

Of the 3 million people constituting Greece’s labour force, 1.4 million are jobless.

Of the 1.4 million jobless only 10 per cent receive unemployment benefit and only 15 per cent any benefits at all. The rest must fend for themselves.

Of those employed in the private sector 500,000 have not been paid for more than three months.

Contractors who work for the public sector are paid up to 24 months after they provide the service and pre-pay the sales tax to the tax office.

Between 2008 and 2014 small and medium-sized companies reduced their workforce by 29.3 per cent and their output (in value added terms) by 40.2 per cent.

Half the businesses still in operation throughout the country are seriously in arrears with their compulsory contributions to their employees’ pension and social security funds.

In 2013 36 per cent of the population officially lived at risk of poverty or social exclusion. That percentage is on the rise.

Household disposable income has contracted 30 per cent since 2010.

Healthcare expenditure was cut by 11.1 per cent between 2009 and 2011 alone, with significant rises in HIV infections, tuberculosis and stillbirths.

Could any of these bleak statistics, which documented our nation’s conversion into a wasteland, be seen as a sign of improvement? Or do they perhaps explain the Greek voters’ inability to spot their country’s supposed economic recovery?

Greek-covery?

Nonetheless, in December 2014 the government and the troika were adamant: their success story was true and the economy was showing clear signs of green shoots. They even coined a neologism: Greek-covery. But manufacturing output, which in 2011 had fallen by 4 per cent and in 2012 by another 15 per cent (equal to the entire loss of manufacturing output during Britain’s Great Depression), had registered a small upturn in 2013 but in 2014 had started shrinking again. Meanwhile, industrial production during 2014 was down by 3 per cent and net investment was negative.6 As for employment, although the minimum wage had fallen by a world-beating 40 per cent, making Greece the land of dreams for the world’s neoliberals, full-time employment continued to decline, precarious employment rose by a smidgeon and overall hours worked fell.7 So what evidence could there possibly have been to make this claim?

Partly, it relied on a peculiar set of statistics. Technically, real income – economists’ jargon for income adjusted to take into account the changing price of goods – was up. But this was a mirage created by a dramatic decline in prices, which made purchasing power appear much stronger but took no account of the countervailing and overriding costs of massive debt. Appendix 1 provides a full debunking of this nonsense.

Mainly, it relied on the fact that by 2013 Greece had become a surplus nation, meaning essentially that its exports exceeded its imports, suggesting an overall improvement. Since 2010 the troika had been promising the Greeks that the silver lining to the cloud of wage cuts would be a growth in exports, as the reduction in the costs to business within Greece would increase its competitiveness. By the end of 2014 the troika and the government were on an I-told-you-so spree, along with the foreign media, financial newspapers, government and EU economists. ‘Greece posts first current-account surplus for many decades,’ they trumpeted.

Had they considered the last time Greece posted a trade surplus, they might have understood that the situation was actually awful. This was in 1943, under the Nazi occupation, when Greeks could not afford to eat, let alone import goods from abroad, but still managed to export a few oranges, a few apples and the like. In 2014 the economic collapse had produced a similar state of affairs. The sorry reason for our current account surplus was that the deepening recession had crippled imports, while exports of goods were flat despite the massive reduction in labour costs.8 A cause for mourning had been spun as a reason to celebrate.

The reality was evident everywhere. Even when the government put Greece’s remaining family jewels up for sale, there were either no takers or only those of the shady variety. When, for example, the national lottery was put on the market, the highest bid came from a consortium whose ways I would come to know all too well after assuming the finance ministry: having paid a pittance for the state’s only cash cow, they then demonstrated its remarkable capacity to prey on hopelessness to the full. Even worse was the sale of the state gas monopoly, in which only Mr Putin’s favourite conglomerate, Russian giant Gazprom, showed an interest. Hours before the sale’s announcement, Gazprom decided not to meet the tiny asking price after all, with their spokesperson citing the deflationary spiral ravaging the Greek economy as the reason for withdrawal. How could they pay even today’s price when it might be worth only half that tomorrow? they asked.

Real estate, a fairly safe investment in normal times, fared just as badly. The site of the old Athens airport at Hellinikon is a prime plot: more than twice the area of London’s Hyde Park, it is located next to the most upmarket suburbs of Athens on the coast of the Saronic Gulf with its turquoise waters. And yet only one bidder appeared – and demanded as a condition of their bid that the state invest almost as much money in the site’s development as they were offering.