Adults In The Room takes a look at the Greek financial crisis through the eyes of Yanis Varoufakis, who was the Greek Finance Minister from January to July 2015.
The book is a riveting account of his time as a minister and his dealings with the European Union, as he negotiated a new bailout package.
The book reads like a memoir of sorts from Varoufakis experiences with the troika (the International Monetary Fund, European Central Bank and the Europan Commission) and his own government back in Greece.
It’s an intriguing look inside the political machine and the various goings-on that happen. It also shines a light on the inner workings of the EU and doesn’t cast it in the most favourable of lights.
Varoufakis has no affiliation with the political elite and was very much an outsider when he was elected to office. An economist by trade, his musings offer an alternative perspective on politics in Europe.
As such, Adults In The Room should be essential reading for anyone connected with Europe and those interested in the inner workings of the EU.
Adults In The Room summary
Takeaway 1- Greece was forced to take on more debt despite the Euro crisis
Following the financial crash of 2008, one of the worst affected areas was Europe. This was despite the crash originating in Europe.
Joseph Stiglitz’s excellent book, The Euro and Its Threat To Europe goes a long way to explaining why the crisis-affected Europe in particular.
One of the countries that were hardest hit by the crisis was Greece. Rampant tax evasion and government corruption prior to 2008 had left the economy vulnerable to a shock.
When The Black Swan event came, it devastated Greece. As the country spent more than it earned, it was in dire straits. As they were part of the Euro, the option to devalue the country to make it more attractive to investors was off the table.
Greece was left with no option but to borrow money from France. But this left a problem. Borrowing more money meant more debt and more debt made it harder to bring down their deficit.
In 2009 and 2010 Greece was bankrupt and struggling to pay its debts. This is when the bailout packages were introduced along with strict austerity measures.
The first bailout wasn’t for Greece, but to bail out the French and German who had subsidised the initial loan. A second one did go to Greece, but it came with a restructuring of the debt, which entailed harsh austerity measures.
Varoufakis contends that the crisis was poorly managed and it’s hard to argue with him. An austerity package was not a good idea when the country was already on its knees.
Takeaway 2- Grexit was a serious option to mitigate the crisis
One of the interesting parts of the book is where Varoufakis describes how close Greece was to leave the eurozone, and potentially, the European Union.
The third bailout package offered in 2015 meant another round of cuts and tax increases that would deepen Greece’s recession and delay any possibility of recovery.
The Syriza government, which Varoufakis was a part of, was elected with a mandate to negotiate a different deal and end austerity in Greece.
One of their bargaining chips to get the EU to come around to their way of thinking was the threat of Grexit.
They believed that the EU would rather keep them in the union than see them walk away, which would threaten the integrity of the union as a whole.
Varoufakis believed he could get concessions from the EU, but Grexit was the backup plan and was seriously considered. Proposals were drawn up over what would happen in the event of Greece’s exit.
Some members of the troika were keen for Greece to leave and return to the drachma. The German finance minister, Wolfgang Schauble offered Varoufakis €11 billion to leave the eurozone.
While Greece eventually accepted the bailout programme, against the wishes of Varoufakis, it’s incredible to see how close to the edge Greece did come in terms of leaving the eurozone.
It just shows the scale of the crisis and the mess Greece was in, and still is, that was even considered a possibility.
Takeaway 3 – The will of the people didn’t matter
A phrase that was common after the result of the Brexit referendum was that the result was the will of the people.
Whether you think a referendum ending in a 52 to 48 split is the will od the people is another matter, but the phrase was bandied about regardless.
It’s hard to determine what the will of the people, especially on such wafer-thin majorities, and this played out in Greece during the course of the crisis.
Firstly, Varoufakis and his Syriza party were voted into government on the basis of their left-wing anti-austerity policies.
It was a clear signal that the Greek people were not happy with the previous government and the terms of the bailout that had been agreed.
It was expected that Syriza would follow through on their election promises and seek to renegotiate the terms of the bailout.
This was difficult to the nature of negotiating with the troika, but they persisted regardless.
However, German prime minister, Angela Markel, decided to bypass the troika and talk to the Greek Prime Minister, Alexis Tsipras directly in an effort to convince him to agree to the bailout.
The question of whether to accept the bailout or not was put to the Greek people in a referendum on 5 July 2015. 61% of people voted to reject the bailout.
However, despite the vote, Tsipras decided to go ahead with the bailout anyway. This caused Varoufakis to hand i his resignation as he opposed to the terms of the bailout.
He explicitly ignored the vote and succumbed to Merkel’s advances. This raises fundamental questions for democracy when a vote is ignored, especially when it returns a clear majority.
The will of the people is a loose and misleading phrase, but it’s not hard to state that most Greeks were opposed to the bailout package given the vote.
It’s a dangerous game to ignore the wishes of the voters and calls into question the motives of the EU as well as Tsipras’s ethics.
Adults In The Room review
This Adults In The Room summary looks at one of the biggest political stories of the 2010s, the Greek debt crisis.
It’s no exaggeration to say that the crisis was the biggest one the European Union faced before the Coronavirus pandemic. The risk of Greece falling out of the Eurozone was very real.
I’m a big fan of the European Union, but I’m under no illusions that’s it far from perfect. Varoufakis is of a similar ilk and, although supportive of the idea, believes the institution needs reform.
His book is an enlightening firsthand account of his negotiations with the EU, as they sought to negotiate a financial package to save the Greek economy.
In the end, the package Greece received fell far short of the one that Varoufakis advocated for. This episode showed some of the flaws of the EU, which need to be fixed.
The move towards the mutualisation of debt in the Coronavirus recovery packages is a step in the right direction. But as Varoufakis states, the EU needs to work for the citizens of Europe, otherwise, disenchantment will continue to grow.
Varoufakis is an enlightening, thought-provoking and essential read if you’re a European citizen or someone with a keen interest in European politics.
Who should read Adults In The Room?
Adults In The Room is a book about specific political discussions, if you’re not interested in politics then it won’t interest you.
If you do like politics, then you’ll find the book enjoyable. The fact it comes from a man who negotiated with the EU makes it an essential read if you want to understand more of how the institution operates.
Anyone looking for a quick look at the Greek financial crisis will also find the book interesting and enlightening.