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Varoufakis´ Game Theory Mistake, and Why he was Wrong

Politics / Eurozone Debt Crisis Jul 02, 2015 - 05:22 PM GMT

By: Atlantic_Perspective


The Greek finance minister is supposed to be a master in the Game Theory. But like all other theories, the Game Theory is based on assumptions. And Varoufakis got his assumptions wrong. In this short article we explain why.

The whole Greek strategy has been based on the assumption that “if we default, Europe is screwed”. Is it? No.

There are several reasons why Europe could easily let go of Greece unharmed. We will delve on this in more detail next week.

Varoufakis and Co., watched in horror as markets didn´t collapse before, during and after the Greek default. Life everywhere in Europe is still good. Well, everywhere in Europe except Greece. Banks are closed and people can only withdraw 120 Eur PER WEEK. That´s not good at all.

Varoufakis had envisioned a scenario where the world´s financial markets would crash and interest rates would spike everywhere, from Europe to the Moon. That would be a strong motivation for Europe to give in. But that didn´t happen. Where did Varoufakis fail? The answer is EGO!

Varoufakis´s ego is huge. He walks, talks and behaves likes a superstar. He sees himself as superior to just about everyone else. And why is this important? Well, because he also sees his country the same way. Varoufakis looks at Greece, much the same way as he looks at himself: giving both too much importance. Analysts, politicians and investors are advised to take a good personal look at the people making the decisions.

Greece is a tiny grain of sand in the European economy, much less in the world. Ego can blind people in their decisions, and we believe that´s just what happened in Greece - currently being steered by an egomaniac finance minister, who probably sees himself as a reincarnation of Apollo with Einstein´s brain.

The Tsipras – Varoufakis government is delusional. This duo truly believes that the Europe can only give in. They fail to comprehend that Greece is the weakest link, as they fail to understand their own personal insignificance in a sea infested by much more powerful sharks.

With the Allied Troops already inside Berlin during WWII, Hitler was still busy making attack plans to conquer Russian and French territory. That´s what delusional people do: Plans that only work in their delusional minds.

We don´t want to compare Tsipras or Varoufakis to Adolf Hitler in any way, this example merely explains how a delusional mind “thinks”.  

The Tsipras-Varoufakis duet is unable to realize the predicament Greece is in. They fail to conceive that Greece can indeed leave the Euro and become a Third World Country again. In their delusional minds, Europe can only give in. Europe must. Europe will. Why is it taking so long?

Hitler killed himself when the Russian troops were just a stone´s throw away from his bunker. We expect Tsipras and Varoufakis to resign when, to their amazement, Europe doesn´t give in. That will probably happen next week. And speaking of next week, our next article will explain why Europe can let Greece go.

Greece is by far the weakest link and Europe has an easy, but yet unheard of tool to fix the situation. That´s the Atlantic Perspective.

Copyright © 2015 by The Atlantic Perspective.

The Atlantic Perspective is an opinion blog, aimed at explaining and providing solutions to some of the world´s most relevant issues.

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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