All eyes are on the new Greek finance minister, Yanis Varoufakis. He's the voice and face of the Greek debt crisis. However, his position on what to do about Greek's crushing debt seems to change daily, but that seems to be working to his advantage. Varoufakis, who describes himself as a libertarian Marxist, became the finance minister after the far-left party Syriza won a resounding victory in Greece in January. Before being elected to parliament, he was an economics professor. He teaches economic theory at the University of Athens, but for the past two years has spent time as a visiting professor at the University of Texas, Austin. He looks the part. In photos taken of him negotiating with various European leaders over the weekend, he appeared with an untucked shirt and no tie. It seemed to convey a message: I don't play by your rules. Varoufakis's academic specialty is game theory, the study of strategic decisionmaking. A fellow UT Austin professor, James Galbraith, told Bloomberg that Varoufakis is as knowledgeable "as anyone on the planet," and "he will be thinking more than a few steps ahead" in negotiations with Greece's creditors, known as the troika (the IMF, ECB, and European Commission). But if that's true, he doesn't come across as coldly calculating. He comes across as rash. Right out of the gate, Greece declared it wouldn't negotiate with the troika, and Varoufakis wrote a post on his personal blog blasting the media for getting his motives wrong. At that point, people started freaking out that Greece had gone off the rails. He seemed to be pursuing what is known in strategy as a mad man theory. Basically, if you act crazy enough, your enemy will fear you and give you more of what you want. And then, over the weekend, Varoufakis embarked on a trip around Europe, meeting with various leaders and seemed to start doing what he said he wouldn't: negotiating. Or at least pre-negotiating. In France, he gained some support for his cause. This morning, he proposed a swap instead of a haircut on the debt that is currently drowning Greece. From the FT: Attempting to sound an emollient note, Mr Varoufakis told the Financial Times the government would no longer call for a headline write-off of Greece’s €315bn foreign debt. Rather it would request a “menu of debt swaps” to ease the burden, including two types of new bonds. The first type, indexed to nominal economic growth, would replace European rescue loans, and the second, which he termed “perpetual bonds”, would replace European Central Bank-owned Greek bonds. This might be appealing to the Germans, who are opposed to a haircut. It seems like Varoufakis's strategy — bold, a little crazy, but willing to negotiate — might just get him somewhere. On the other hand, it could backfire spectacularly. Either way, the fate of the euro project seems to be at least partially in the hands of a tie-less radical economist who gives no fucks. Game on. SEE ALSO: Here's a 3-way roadmap for the situation in Greece Join the conversation about this story »
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