FLASSBECK: Yeah, that's a wonderful example, because 20 percent is exactly something--what is needed, depending on your productivity. But let me take the example of France. You'll see France is much more important than Greece. Everybody is focusing on Greece, but the real problem is France. France did everything right. France had a productivity increase of 1.5 percent. French wages increase increased by 3.5 percent. So the difference was exactly the 2 percent inflation target. And so France was perfect. But France is in the same difficulties as Greece--in principle not has acute, but in principle they have a huge gap with Germany in terms of competitiveness. Why? Well, because German productivity was also 1.5 percent, but German nominal wages only increased by 1.5 percent and not by 3.5 percent like in France. So they did nothing, they did everything right, but they're in trouble anyway. And this is where the unfairness comes in and where it is absolutely clear that if you do not tackle this root problem of the currency union, it was not tackled in the first ten years. But if you don't tackle it now, then you will never find a solution for the Eurozone. Forget about Greece. If France and Italy have to do the same thing as Greece did, it goes through a Great Depression. Could you imagine what it means politically? It will be a disaster. It will not be a radical left-wing government that comes to power in France, but a right-wing, and in Italy also.

JAY: Now, you talk about the difference in the wage levels. But how did Germany keep wages down? Is not like it's a state-run economy. I mean, why couldn't the German workers fight for higher wages?

FLASSBECK: Well, this is easily explained. It was, first of all, in agreement. In Germany we have a long tradition of having tripartite negotiations or agreements between the government, the employers, and the unions on wages. So that was the first step, that it was an agreement where everybody agreed that now we have to, so to say, keep our wages low to reduce unemployment, and nobody thought about the currency union. It was only by chance that the currency union started exactly at that moment of time.

And then the second step was that indeed the right-wing government passed a lot of legislation that weakened the unions dramatically. And this package of legislations are not one measure, but ten, 20 measures that all weakened the negotiating power of the unions, all in the attempt to reduce unemployment in Germany. But what nobody thought about: that this is the classical begger thy neighbor policy for the rest of the European Union and for the rest of the world. Don't forget the United States. The United States have a permanent, huge deficit with Germany, because Germany is hidden, so to say, is protected by the low value of the euro. So if there would not be euro, then clearly the D mark would appreciate against the dollar. But with the low euro, the euro is, so to say, the average of weaker countries and stronger countries. Germany has a wonderful, wonderful goal to increase its surplus with United States and begger the neighbors, because it's absolutely clear that the country that is increasing its current account surplus all the time--and it did so for the last ten, 15 years--this country has huge absolute advantage from international trade, where all its trading partners have negative effect. It's not trade as something that helps everyone; if there is absolute advantages through rising current account surpluses in one country, the other countries have negative contribution from trade. And then the whole idea of free trade is useless and the whole negotiations about TTIP, this agreement between Europe and Germany, is absolutely useless. And I saw it was now discussed in the United States and Congress, and rightly so, if there is no clear idea about the exchange rates.

JAY: So, I mean, does this mean the Eurozone really doesn't make any sense, that as long as you've got these different nation-states and at heart they really are competitive--how can they exist within the same monetary union?

FLASSBECK: It could have made sense. You see, if everybody would have obeyed to this rule that I mentioned, wages in line with national productivity, plus commonly agreed inflation target, well, it would have been a nice idea. But if one country goes for a totally mercantilist approach, then there is no chance to make sense of it. Then there is no way to bring it back, or it's very difficult to bring it back, because the other countries would need absolute cuts in wages. But absolute cuts in wages lead to deflation. So if Germany is not moving, nothing will happen. And that is why the book Against the Troika, the German title of it is Only Germany Can Save the Euro--nobody else.

JAY: And doesn't seem like they're--at least when it comes to Greece--are so intended. In fact, they have this counsel of what they call wise men, these group of economists who issued a statement--I think it was today--apparently saying, let Greece go, we'll be better off, the better defense of the Eurozone is actually to let Greece go.

FLASSBECK: Yeah. Well, these people are stupid. You know, I do not not even think about them. This is a club of extremely radical conservative economists with no clue about the world and all the important relationships in this world. So don't even--ignore it.

But what is really dramatic is the collective denial of Germany's position in the currency union from the very beginning. In Germany we have--in the mass media and the important media, everybody's trying to defend the German position along the lines--all the others are wrong, only Germany got it right from the very beginning. And this is a disaster. You know, if a society that is now living in a--has a democracy for more than 50 years and understands itself as an open society, as an open society where everybody can discuss freely everything, and then you see that you have such a collective denial of a very simple fact, then really it's getting critical, and then many people are really frustrated about this.

In this remarkable and provocative book, Yanis Varoufakis explodes the myth that financialization, ineffectual regulation of banks, greed and globalisation were the root causes of the global economic crisis. Rather, they are symptoms of a much deeper malaise which can be traced all the way back to the Great Crash of 1929, then on through the 1970s: the time when a 'Global Minotaur' was born. Just as the Athenians maintained a steady flow of tributes to the Cretan beast, so the 'rest of the world' began sending incredible amounts of capital to America and Wall Street. Thus, the Global Minotaur became the 'engine' that pulled the world economy from the early 1980s to 2008.

So it from the very beginning--understandably, from one perspective, because it is in a very difficult position in terms of the financing needs of the state, but it took off the table its most powerful weapons. And furthermore, it's negotiating with people who are, down to their very bones, committed to a radical neoliberal agenda, and furthermore, who quite apart from what their ideology may be, are heavily politically invested in the disaster of austerity. You know, if there were to be an implicit or explicit recognition by the government of Angela Merkel, for example, that austerity has gone too far, it hasn't worked, or has actually undermined the ability of countries like Greece to service their debts, which it clearly has, these people would go down in infamy as having been the architects of a European disaster. So they're politically invested, they're ideologically hostile to SYRIZA, and SYRIZA has taken off the table its most powerful weapons.

So, ultimately, what can it do in the current circumstances? Very little. However, if it were to reconsider its commitment to the euro, which is precisely what it should do, and if it were to put on the table in a responsible and intelligent manner the option of a Grexit, which precisely what it would do, I suspect that it would be able to achieve a much better outcome in this.

PERIES: And those options are really not off the table, even though they have stated that that's not the preferred option. Those options still remain.

LASCARIS: Well, clearly they could embrace that option. And there are clearly people within SYRIZA who, at least in the past, have embraced that option. One such person, a very able and eloquent economist who's been on The Real News several times, Costas Lapavitsas, he's embraced that option, although he's begun to moderate his tone since becoming an MP for SYRIZA in the most recent election. There clearly is within SYRIZA a significant constituency that favors a Grexit. Within the party now they have the economic sophistication to navigate through the very difficult project of exiting the Eurozone. What remains to be seen is whether the political will to do this is there.