Adults in The Room - Book Summary

Uncover the truth behind political decisions and the real impact on ordinary citizens.

Do you remember the Greek debt crisis of 2010? The one that led to Greece needing a monumental financial rescue and the European taxpayers having to foot the bill? What about the subsequent bailouts required in 2012 and 2015?

It may not be common knowledge but the leading EU powers leveraged Greece's crisis as a golden opportunity to line their own pockets, showing little to no genuine interest in helping Greece recover.

In our exploration of "Adults in the Room", you'll be guided through these revelations and more, under the experienced guidance of Yanis Varoufakis — the man who was the Greek Minister of Finance during the height of this crisis. You'll gain a first-hand account of what it means to go toe-to-toe with the political establishment, the cutthroat tactics employed by its members, and, crucially, how their actions reverberate into the lives of ordinary people like us.

As we journey through this narrative, we'll shed light on:

how Greece's financial woes weren't a new development, but predated the euro;

the prominence of intimidation tactics and clandestine dealings in the world of politics; and

the surprising reason why Donald Trump might owe a debt of gratitude to the Greek debt crisis.

As Greece faced the brink of bankruptcy in 2010, the European Union compelled it to take on more debt.

Back in 2010, Greece made news headlines worldwide as it commenced receiving multiple bailouts from the European Union. But what led Greece down such a perilous path? And what was the rationale behind these bailouts?

It might be tempting to point fingers at the global financial crisis of 2008 as the main culprit. However, the truth of the matter is that the Greek economy was in a precarious state even before this crisis. The economic meltdown merely pushed an already teetering structure over the edge.

Before the economic calamity of 2008 took center stage, Greece's economy had been undermined by widespread tax evasion and systemic government corruption. Additionally, the mismanagement of government funds had led to reckless overspending, putting a huge strain on the country's budget.

This problem of budget mismanagement was not a recent development in Greece's history. The country had a long-standing habit of spending beyond its means, a problem that was typically addressed by devaluing its national currency. But this tactic was only effective when Greece used the drachma as its currency. With the adoption of the euro, currency devaluation was off the table.

Left with limited alternatives, Greece turned to a new deficit-reduction strategy: borrowing significant amounts of money from Germany and France. However, this solution was a double-edged sword. While it provided immediate relief, it also plunged Greece deeper into the abyss of debt. This was the precarious position Greece found itself in when the 2008 financial crisis hit.

On the other side of the equation, Germany and France had their own set of challenges. German Chancellor Angela Merkel and French President Francois Hollande had already dipped into government coffers to bail out their respective banks, which had extended substantial loans to Greece.

With Greece teetering on the edge of bankruptcy, Germany and France found themselves caught in a dilemma, fearing their loans might never be repaid, and thereby causing further instability in their own banking sectors.

So, the question remained — how could they ensure Greece remained solvent in order to repay its loans?

Given that the European Central Bank is prohibited from lending money to insolvent or bankrupt countries, Merkel and Hollande had to look elsewhere for the funds. Thus, they resorted to misleading Europe's taxpayers. The narrative they presented was that Greece wasn't insolvent but merely needed an additional loan to recover. It was the unsuspecting taxpayers across Europe who ended up shouldering this burden.

In an echo of its previous actions, Greece obtained another loan to clear its prior ones, and the financial chasm widened further.

Greece was entrapped in a continuous debt cycle by prominent financial institutions.

Heading into 2009 and 2010, Greece was essentially bankrupt, but it was put in a position where it had to maintain a façade of solvency — continuously borrowing and piling on an ever-increasing debt load.

To say the outlook for Greece was grim would be an understatement, and the situation was set to deteriorate further, courtesy of the entities collectively known as the troika.

The troika refers to three institutions responsible for enforcing economic regulations: the European Commission (EC), the European Central Bank (ECB), and the International Monetary Fund (IMF). These organizations come to the fore particularly in situations akin to the one Greece was embroiled in.

Jean-Claude Juncker, the president of the EC, represents the Eurogroup — a consortium of finance ministers from the nineteen nations that utilize the euro.

Mario Draghi leads the ECB, whose chief task is to manage the euro and ensure its value remains stable.

The IMF, led by Christine Lagarde, aims to guarantee that nations borrowing funds remain compliant and that issues such as poverty and economic instability are mitigated to the greatest extent possible.

The first bailout Greece received in 2010, colloquially known as the "rescue deal," was worth €110 billion, making it the largest loan in history. However, Greece didn't benefit from it directly, as all the funds were used to repay previous loans it had obtained from Germany and France.

Therefore, by 2012, Greece was still in a dire predicament, compelling the troika to cobble together a second bailout package. This loan was valued at €100 billion. In order to justify this second loan and secure its approval, the bailout package came with certain stipulations. It demanded a major restructuring of Greece's outstanding debt.

In essence, these restructuring requirements translated into severe austerity measures, ensuring Greece would remain in a state of economic distress for the foreseeable future.

Greece elected fresh leadership in 2015, aiming for a route to economic recovery.

As 2015 dawned, the Greek populace was drained from the fallout of the two previous multibillion-euro loans. Discontented with the burden of austerity, they chose a new prime minister from the left-leaning Syriza party.

Joining the freshly elected government was Yanis Varoufakis, the author of this book, as the new finance minister. He arrived armed with a bundle of strategies geared towards rehabilitating the Greek economy.

Varoufakis's principal strategy was to modify the debt structure, breaking it down into a series of manageable payments spread over a protracted time frame. Furthermore, he aimed to confront the persistent issue of tax evasion by enabling citizens to settle their tax liabilities in reasonable monthly installments.

These steps marked a departure from the status quo, and when combined, they would have paved the way for Greece to generate crucial revenue while repaying its creditors without further incapacitating its economy.

However, selling the Eurogroup on this revamped payment scheme was an entirely different challenge. Varoufakis reached out directly to influential figures like Michel Sapin, France's finance minister, and Paul Thomsen, who headed the IMF’s European department. While these key players voiced their agreement with Varoufakis behind closed doors, their public stance was starkly different.

Varoufakis also voiced his belief that a Greek exit — or Grexit — from the European Union would be a preferable alternative to enduring a third bailout. Undeniably, this course of action would entail substantial risks, but if the only alternative was a further accumulation of debt and unbearable austerity, Greece was willing to take the gamble.

Varoufakis recognized that the potential destabilization of the European Union due to a Grexit was one of the few bargaining chips he possessed to make the troika consider his proposals. Nevertheless, this wasn't an idle threat. To demonstrate their seriousness, Varoufakis and his team devised economic measures that could be initiated in the event of a Grexit.

Despite Varoufakis's relentless efforts and his presentation of viable alternatives that could provide Greece a shot at a brighter future, the troika remained unresponsive to his propositions.

The troika's intervention in Greece had self-serving motives and worsened the situation.

The troika asserted that it was working in Greece's best interest. But their actions told a different story. They released a memorandum of understanding, or MoU, a supposed blueprint designed to rebuild the Greek economy. But all this document succeeded in doing was convincing the author of their apathy towards a healthy Greece capable of settling its debts.

In fact, their lack of concern for Greece's predicament was explicitly voiced by several members of the troika.

IMF director, Christine Lagarde, candidly admitted to Varoufakis that the program they had outlined for Greece in the MoU was set up for failure. But they had invested so much time and effort into drafting the MoU that they were reluctant to abandon it.

Germany's finance minister, Wolfgang Schäuble, also laid his cards on the table by admitting his desire to see Greece ousted from the eurozone. He even proposed a staggering €11 billion to facilitate Greece's transition back to its own currency, the drachma.

In reality, the troika's primary goal was to maintain its dominance over Greece.

With Greece in the throes of debt, the troika held the nation's fate in its hands, and any alternative plans that could potentially reduce their control were not entertained. They went to lengths to perpetuate the instability of the Greek economy.

For instance, in early 2015, the ECB repeatedly insinuated the potential need to close down Greek banks. This tactic incited widespread panic among citizens, prompting them to withdraw their money and making a banking collapse even more likely.

The troika's eagerness to enforce austerity measures on Greece is perhaps the most glaring indication of their intent to maintain control.

Austerity, in essence, refers to the slashing of expenditures and the imposition of increased taxes. In the Greek context, this translated into a 15-percent cut in government spending between 2010 and 2012, coupled with a universal tax hike, making commodities more expensive for everyone. Such an economic environment is hardly conducive to growth and prosperity.

This enforced austerity is the reason why Greece is languishing in its sixth consecutive year of recession, and why its national income has plummeted by 28 percent, with youth unemployment soaring past 65 percent.

The Greek prime minister went against public sentiment to appease EU leaders.

As Varoufakis was tenaciously negotiating with the troika, other leaders of the Greek government were being worn down, manipulated, and turned against each other.

Angela Merkel, a figure wielding significant power within the European Union, started directly engaging with Greek Prime Minister Alexis Tsipras in March 2015. This move was a calculated attempt to sideline both Varoufakis and her own finance minister, Wolfgang Schäuble, from the conversation. Merkel wanted to persuade Tsipras that she alone would come to Greece's aid, albeit on her terms.

When Varoufakis discovered this development, he sought to convince Tsipras that Merkel was advancing her own agenda that would further erode the chances of Greek economic reform. He urged Tsipras to remember that the threat of a Grexit was their most potent negotiation tool, and that playing into Merkel's scheme would only undermine their cause.

Unfortunately, Tsipras chose to turn a deaf ear to both Varoufakis and the Greek populace.

Tsipras resisted the idea of implementing any measures in preparation for a potential Grexit. Instead, influenced by Merkel, he was gravitating towards the course of action outlined in the MoU, regardless of the devastating impact it promised to inflict on the Greek people.

Finally, on July 5, 2015, the decision to implement the MoU was put to a public referendum. To tip the scales in favor of the MoU, the ECB shut down Greek banks in a move to instill fear. Nonetheless, the majority of Greeks rejected the prospect of plunging deeper into debt, with 61 percent voting against the MoU.

This overwhelming rejection should have been a promising sign. But the public sentiment was summarily disregarded. Prime Minister Tsipras capitulated to a third bailout and enforced the MoU, effectively sentencing Greece to a future marred by humiliation and destitution.

The leader chosen by the people of Greece had turned against their expressed will. In the wake of this betrayal, Varoufakis submitted his resignation.

Tsipras's actions, although deeply disheartening, were not entirely unforeseen. He was under the intense pressure of the troika, and ultimately, he surrendered.

The Greek prime minister prioritized his political career over his citizens, thereby undermining democracy.

To truly grasp the actions of the leaders of the European Union, one must resist viewing them as malevolent actors participating in a grand conspiracy. In reality, they are all individuals striving for survival and climbing up the career ladder.

Larry Summers, a former US treasury secretary, once candidly explained to Varoufakis the existence of two types of politicians in the world: insiders and outsiders.

The distinguishing factor is that insiders will never turn against one of their own, even if it conflicts with their personal values. The urge to nurture relationships and preserve alliances outweighs any moral considerations. As such, they tend to support aspiring politicians keen on becoming insiders, while sidelining the outsiders — those who place their ethical convictions above political ambitions.

When a group of politicians is solely motivated by retaining or expanding their power, it becomes inevitable that they lose sight of the real-world consequences of their actions on the people they serve.

And that is precisely how Prime Minister Tsipras ended up disregarding both the proposed reforms from Varoufakis and the will of the Greek electorate. In his quest to secure his position and gain acceptance into the ranks of EU insiders, he lost touch with the crippling and ethically dubious implications of his actions.

What's astonishing is that these political insiders still consider themselves liberals, despite blatantly contravening the foundational principles of democracy by ignoring the very people who entrusted them with power.

In the ensuing narrative, we will explore how the actions of these government insiders aren't merely detrimental to the electorate. In the long run, the damage they inflict is bound to rebound and harm them as well.

The rescue package for Greece sparked populist uprisings, unsettling the establishment.

The recurring bailouts for Greece incited feelings of discontent and populism among Europeans. They perceived it as "unfair" that their tax contributions were being used to aid "lazy" Greeks, particularly as their respective economies were yet to fully rebound from the financial crisis.

It's clear that this reaction to the Greek bailout significantly contributed to the rising dissent among Europeans, culminating in events like Britain's decision to exit the European Union.

Voters favouring Brexit were heard exclaiming, "We want our country back!" This unabashed nationalism resonated with Donald Trump's xenophobic rhetoric, and his election seemed to legitimize racists and segregationists.

Despite the fact that Europe's handling of the Greek economic debacle left a lot to be desired, the appropriate response is not to retreat into isolationism. What we need is to preserve our global community and act in the best interests of people, not just politicians.

Those in power within the European Union establishment need to accept their role in the populist uprising — or they risk losing their positions. The so-called liberal media too must acknowledge their part in fuelling the nationalist reactions to the Greek bailout, which was exacerbated by the media, and indirectly led to Trump's election.

People are frustrated with the raw deal they're getting from the troika. Therefore, it's hardly surprising that when the IMF director, Christine Lagarde, supports Remain, it only propels more people towards the Leave camp. Somehow, the political insiders are yet to understand why voters are skeptical of their motivations.

The ultimate irony is that, in trying to cling to power, the establishment has dramatically destabilized their own stronghold in Europe.

Now is the moment to acknowledge our personal accountability towards democracy. The responsibility of the voter is not to surrender to anger and frustration with the establishment. Instead, our role should be to work constructively towards establishing an international society that genuinely serves everyone's best interests.

In conclusion

Greece endured a severe mistreatment at the hands of the European establishment, whose leaders have proven themselves to be utterly self-interested, capable of making decisions that inflict harm on those they ought to protect. However, in their mistreatment of many, the European leadership has inadvertently weakened their own grasp on power, thereby paving the way for potentially harmful and destructive forces.