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Book Review

A call to interrogate bailouts in fixing debt crisis

 

As an African, it is an interesting time to be reading Yanis Varoufakis’ Adults in the Room. It really does dovetail with what is unravelling in the continent.

A decade-long debt binge in the Eurobond market now leaves the continent nursing worries of a potential debt crisis as countries such as Zambia are pushed down the path of austerity and belt-tightening in search of economic repair.

This is, somewhat, where Greece found itself in January 2015, as Yanis Varoufakis assumed office as finance minister of the country caught in the stranglehold of a debt crisis.

In sum, Adults in the Room is a book about three things. First, it is about efforts at debt restructuring and the renegotiation of terms of Greece’s debt. In this, it is essentially critique of the austerity as mainstream economics’ first line of defence in prescribing remedy for a debt crisis.

Varoufakis tables his front seat account of how the troika (the European Commission, the European Central Bank and the International Monetary Fund) not only kept throwing good money after bad through recurrent bailout loans to Greece, but also slow- pedalled the economy’s potential for recovery through demands for austerity policies. In fact, Varoufakis’ acceptance speech upon assumption of office as finance minister was hinged on the distinction between “austerity and ponzi austerity” with the latter characterised by huge slashes in public expenditure which left households with diminished incomes.

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Second, Adults in the Room highlights how dysfunction within a team can derail progress. It shows the critical importance of the central bank and the ministry of finance of an economy to realise it takes the two of them to tango. By Varoufakis’ account, discord between his office and that of the governor of the central bank was part of the reason efforts to renegotiate the terms of Greece’s debt were dead on arrival.

Third, when all is said and done, a lot rises and falls squarely on political will. Adults in the Room presents Alexis Tsipras, the Prime Minister of Greece from 2015 to date, as a man whose commitment to restructuring the country’s debt was limited to dithering and lip service. Despite recurrent assurances to Varoufakis, Tsipras went as far as failing to heed the voice of the people who, through the 2015 Greek Bailout Referendum, voted, through a 61.3 per cent majority, to unequivocally reject the terms of the Troika’s bailout.

On the whole, Adults in the Room is a call to interrogate what has long been deemed to be the standard panacea for economies grappling with a debt crisis.

It is a voice, amongst others such as Graham Hancock’s Lords of Poverty and Dambisa Moyo’s Dead Aid, which seeks to challenge what many have accepted as gospel truth in the economics of crisis response.

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