Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe

by James K. Galbraith

Overview

A world-renowned economist offers cogent and powerful reflections on one of the great avoidable economic catastrophes of the modern era

The economic crisis in Greece is a potential international disaster and one of the most extraordinary monetary and political dramas of our time. The financial woes of this relatively small European nation threaten the long-term viability of the Euro while exposing the flaws in the ideal of continental unity. "Solutions" proposed by Europe's combined leadership have sparked a war of prideful words and stubborn one-upmanship, and they are certain to fail, according to renowned economist James K. Galbraith, because they are designed for failure. It is this hypocrisy that prompted former finance minister Yanis Varoufakis, when Galbraith arrived in Athens as an adviser, to greet him with the words "Welcome to the poisoned chalice."

In this fascinating, insightful, and thought-provoking collection of essays--which includes letters and private memos to both American and Greek officials, as well as other previously unpublished material--Galbraith examines the crisis, its causes, its course, and its meaning, as well as the viability of the austerity program imposed on the Greek citizenry. It is a trenchant, deeply felt commentary on what the author calls "economic policy as moral abomination," and an eye-opening analysis of a contemporary Greek tragedy much greater than the tiny economy of the nation itself.

Product Details

ISBN-13:	9780300220445
Publisher:	Yale University Press
Publication date:	06/21/2016
Pages:	232
Product dimensions:	5.60(w) x 8.30(h) x 1.00(d)

About the Author

James K. Galbraith holds the Lloyd M. Bentsen, Jr., Chair in Government/Business Relations at the LBJ School of Public Affairs, University of Texas at Austin. He is the author of eight books and hundreds of articles for both scholarly and general-interest journals.

Table of Contents

1 Welcome to the Poisoned Chalice 1

Part I 2010-2014

2 Europe's Crisis: Thinking It Through to the End 23

3 Greece and the European Project 28

4 A Question of Moral Responsibility 31

5 Neither Austerity nor Growth: Solidarity Is Europe's Only Hope 36

6 The Victory of syriza is Not Against American Interests with Yanis Varoufakis 39

7 The United States and Europe: What Is Going On? 42

Part II 2015

8 The Greek Hope 49

9 A Message to Sarah Raskin 52

10 A Comment on the Way Forward 56

11 America Must Rally to Greece 58

12 Reading the Greek Deal Correctly 61

13 A Great German Greek Grexit Game? 66

14 The Political Level 70

15 A Report from Athens 73

16 Does Europe Need Debt Relief? 81

17 Long-Term Strategy Through a Realistic Lens 83

18 Strategic Options 91

19 A Further Message to Sarah Raskin 94

20 The Greek Drama and Democracy in Europe 97

21 Notes on the Meeting, Varoufakis-Schäuble, June 8, 2015 119

22 What Is Reform? The Strange Case of Greece and Europe 122

23 What Can Happen in the Next Days? 127

24 Bad Faith: The IMF and Europe on Greece 130

25 Only the "No" Can Save the Euro 134

26 Nine Myths About the Greek Referendum 138

27 What Is the Matter with Europe? 142

28 Exit Made Easy 145

29 Greece, Europe, and the United States 151

30 Plan B 155

31 Statement on the Ministry of Finance Working Group 159

32 A Note to the Editors at the Guardian 161

33 Death Spiral Ahead? 163

34 The Future of Europe 168

35 What the Greek Memorandum Means with Daniel Munevar 174

36 Back to Square Zero 181

37 A Final Word: Madrid, October 21, 2015 185

Appendix: A Summary of Plan X 189

Acknowledgments 199

Notes 201

Editorial Reviews

04/18/2016
This insider’s account gives a step-by-step narration of Greece in crisis from 2010 through October 2015 as the country rebelled against, then finally capitulated to, European Union dictates to repay the national debt. Galbraith, a University of Texas economist, served as advisor to Greece’s finance minister, Yanis Varoufakis, during the crisis. He even helped draft the secret “Plan X” in case Greece needed to exit the Euro. Galbraith argues that the EU’s austerity measures will not only cripple Greece economically—ensuring eventual default or defection from the Euro—but destabilize European unity and encourage right-wing extremism. Galbraith unveils what the European Central Bank’s euphemistic terms really mean for Greece: an increase in the value-added tax rate to 23% (driving tourism, Greece’s largest industry, elsewhere), depressed wages and pensions, loan defaults, and liquidity crises. Moreover, this economic death spiral could spread to other EU countries. Whatever the outcome, this is an eloquent and informed chronicle of the Greek debt crisis for current readers and future historians. Agent: Wendy Strothman, Strothman Agency. (June)

Publishers Weekly

"This book . . . written in the heat of the moment, serves as a running commentary on the [Greek financial] crisis. . . . Gives Syriza’s take on a story often seen in the Anglophone press through the eyes of Brussels officials. . . . Always a critic of economic orthodoxy, Galbraith is even more savage in his indictment of the political calculations that shaped the creditor’s position."—Delphine Strauss, Financial Times

"Accessible prose flush with strong argument."—Paul Hockenos, New York Times Book Review

"An eloquent and informed chronicle of the Greek debt crisis for current readers and future historians."—Publishers Weekly

"How did Europe fall into this trap of low growth, high inequality, and political discontent? Galbraith offers the most succinct explanation of why the system has benefited Germany at the expense of weaker economies."—Andrew Moravcsik, Foreign Affairs

"To have had Jamie Galbraith as my adviser in the Ministry of Finance, during our epic struggle against wholesale economic irrationality at the height of its vengefulness, was a blessing. To be able to count on Jamie Galbraith as a close friend borders on outrageously good fortune."—Yanis Varoufakis

"One can only agree with James Galbraith when he observes that 'The economic crisis in Greece is one of the great economic and political dramas of our time . . . and a test case for the long-term viability of the Euro.' I greatly admire Professor Galbraith not only for his contributions to economic theory but also for his ability to free himself from the shackles of ideology and deal with reality as it effectively is. I fully concur with his conclusions."—Giuseppe Guarino, Former Finance Minister of Italy

"To read James K. Galbraith is to think afresh, and at the same time to reconcile oneself with reality. Welcome to the Poisoned Chalice is a true story: there was hemlock in the cup. It is a comfort, at least, to know the truth."—Michel Rocard, former Prime Minister of France

"In Welcome to the Poisoned Chalice, James Galbraith gives us an extraordinary inside account of Greece’s courageous and ultimately ill-fated challenge to a European power structure whose policies have left much of the continent in economic tatters. It is a tale of practical idealism coming face to face with brute political and financial power—a saga that is likely to be the opening chapter in the unfolding battle for Europe’s future."—Phil Angelides, Chairman, U.S Financial Crisis Inquiry Commission (2009-2011)

"The imposition of austerity economics in Greece, following on the 2008-09 global financial collapse and Great Recession, has been an unmitigated human disaster. Welcome to the Poisoned Chalice is the very best account available as to how powerful policymakers, and the economists they listen to, got everything wrong. Galbraith is a masterful writer; his story is accessible and compelling."—Robert Pollin, Distinguished Professor of Economics, University of Massachusetts-Amherst

From the Publisher

"How did Europe fall into this trap of low growth, high inequality, and political discontent? Galbraith offers the most succinct explanation of why the system has benefited Germany at the expense of weaker economies."—Andrew Moravcsik, Foreign Affairs

Foreign Affairs - Andrew Moravcsik

"Accessible prose flush with strong argument."—Paul Hockenos, New York Times Book Review

New York Times Book Review - Paul Hockenos

This book ... written in the heat of the moment, serves as a running commentary on the [Greek financial] crisis…Gives Syriza’s take on a story often seen in the Anglophone press through the eyes of Brussels officials… Always a critic of economic orthodoxy, Galbraith is even more savage in his indictment of the political calculations that shaped the creditor’s position.”—Delphine Strauss, Financial Times

Financial Times - Delphine Strauss

2016-04-11
A series of essays, letters, and other documents examining the latest Greek tragedy.Is it possible to save the eurozone? Given the events that have settled on Greece, suggests acclaimed economist Galbraith (Chair, Government/Business Relations/Univ. of Texas; Inequality: What Everyone Needs to Know, 2016, etc.), the odds weigh against it; it seems likelier "that the euro will, at some point, in some country, crack." In one view, the drama of Greece, beset by creditors and pushed into unwonted and unwanted austerity, is merely a "side effect of the global banking and financial disaster" that began to steamroll its way across the world in 2007—a disaster that had its origins in sloppy American fiscal practices and that took down many other economies with it. In another view, it is a continuation of indifferent, occasionally hostile relations between Greece and other European nations, which treat it as an unwelcome guest at the banquet. Galbraith writes sometimes as a journalist, sometimes as a policy analyst, sometimes as an outright advocate for Yanis Varoufakis, the Greek economist and liberal politician who has been leading a resistance movement against European Union-imposed austerity programs that disregard certain Greek realities—e.g., the facts that it has an aging population with a poor system of unemployment insurance as well as "one of Europe's most militant working classes," not likely to be compliant with the directives of German banks and Belgian bureaucrats. The breakup of the eurozone, writes the author, might not be an altogether bad thing. And in the place of the euro? It's anyone's guess, but Galbraith reminds us that after the gold standard collapsed, Bretton Woods came along, and the world did not end. A book best read by policy wonks of a numerate bent but accessible to noneconomists as well.

Kirkus Reviews