It all began with a strange email (2012)

http://blogs.valvesoftware.com/economics/it-all-began-with-a-strange-email/

by siddg • 11 years ago

181 61 11 years ago

blogs.valvesoftware.com

pimlottc• 11 years ago

Should be tagged (2012)

thebrettd• 11 years ago

Yep - this name jumped out at me because I heard it on the radio this morning (synchronicity!). He is now the Finance Minister of Greece, so he's got some bigger fish to fry than how much that virtual hat should cost.

PS Hook em.

mbesto• 11 years ago

Should be tagged....when it was submitted 3 years ago: https://news.ycombinator.com/item?id=4114295

notfoss• 11 years ago

Holy cows, I got a very strong sense of Deja Vu, just after reading the first few paragraphs. I immediately jumped to the "posted" field and realized that I had already read it earlier, most likely through the same link that you have posted.

nailer2• 11 years ago

For anyone unaware, this man is now the Greek finance minister, and will attempt to get Greece out of bankruptcy.

tomp• 11 years ago

More precisely, he will attempt to get Greece into bankruptcy - the situation before the elections was relatively sustainable (AFAIK), as far as the debtors are concerned, but the problem was that Greece and its people were being sucked dry - taxes increased, spending cut, public companies firesold, widespread unemployment (25%, youth 50%), GDP collapse (20%). Greeks didn't want to live like this (would you), especially since only they were suffering, not the institutions that were lending them the money in the first place ("every addict has a drug dealer").

The new party, Syriza, which Yanis is a part of, is trying to reduce the debt burden in a way that would be acceptable to the rest of EU, e.g. by shaving off part of the debt / delaying the repayment / restructuring it so that it's only paid when the economy grows (as German debt after WWII) - which technically is a bankruptcy.

nailer2• 11 years ago

Well exactly, he's acknowledging that Greece is bankrupt rather than cash-poor.

huhtenberg3• 11 years ago

Currently the Finance Minister of Greece.

It was in the news that he (or possibly the prime minister) said that they are planning to employ an "unorthodox" strategy that "have never been tried before" to pull the country from the mess it is in. One one hand it's interesting to see what comes out of it, but on the other it sounds quite a bit like gambling. Except this time it's with the real economy.

meric4• 11 years ago

It's a game of chicken and Yanis is an expert in the field.

He is an author of multiple books on game theory.

http://www.amazon.com/Game-Theory-A-Critical-Introduction/dp... http://yanisvaroufakis.eu/books/game-theory-a-critical-text/

Greece is in trouble. There is no way they could repay the debt if they tried, unless they confiscate everyone's savings. The only sensible thing is to default on the debt, as had happened many times before when investors made the imprudent choice bought government bonds that were never going to be paid back. It is only then the toxic assets can be cleansed out of the economy so it can continue to grow, rather than being stuck in some sort of bad zombie bank equilibrium like Japan had been for the past 20 years.

huhtenberg3• 11 years ago

It's a game of chicken

It's a game of Germany getting fed up with paying for the rest of the EU. I think it's a safe bet that if Greece is going to show a middle finger to the EU, the EU will have no choice but to reciprocate. Spain and Portugal were in a similar situation as Greece, but if you are to believe Frau Merkel, the austerity policy is working for them and they are recovering well.

mathattack2• 11 years ago

* as had happened many times before when investors made the imprudent choice bought government bonds that were never going to be paid back*

I would just argue that it's not imprudent. They get higher than "risk free" yields, and many times get bailed out. On average they still outperform the risk-free rates.

wslh• 11 years ago

And his freely available book on Amazon "Europe after the Minotaur: Greece and the Future of the Global Economy" [1]

[1] http://www.amazon.com/Europe-after-Minotaur-Greece-Economy-e...

bobcostas55• 11 years ago

They did default. It was the biggest default in history. But it happened 3 whole years ago so I get why people forget about it.

The interest rate on their current debt is extremely low (2.6% of GDP, with a debt/gdp ratio of 175%), and if they ever decide to make some serious structural reforms and start growing again, the debt/gdp ratio can be brought down to very manageable levels. If they reach their pre-cris GDP high their debt/gdp would be ~120%, which is high but reasonable and easily repayable given continued growth.

mcv2• 11 years ago

There's already been a lot of gambling with the economy, and that has brought us here. If there was ever a time for unorthodox economic strategies in Greece, it's got to be now.

asdkl234890• 11 years ago

A TEDx talk he gave: https://www.youtube.com/watch?v=CRRWaEPRlb4

winslow2• 11 years ago

Side note: Yanis Varoufakis is now the Greek Finance Minister. http://yanisvaroufakis.eu/

I'm disappointed Valve employees don't blog anymore. Abrash is now at Oculus and I doubt Yanis works with Valve anymore. The linux team seems to have gone silet on blog post.

Mahn• 11 years ago

How did he go from economist at Valve to finance minister in Greece?

woodchuck64• 11 years ago

Gabe knows greatness.

bananaoomarang• 11 years ago

He was a leading Greek economist before being employed at Valve, I think.

mcv2• 11 years ago

As the article points out, Valve hired him because of how he described the Germany-Greece relationship, and Valve had a very similar problem with virtual economies.

Apparently he was going to experiment with those virtual economies and learn some useful lessons about real economies. I'd love to know what exactly he did at Valve, but if he learned something useful there, that might help with the Greek-German problem.

fnordfnordfnord• 11 years ago

A cynical answer is: I bet the Greeks would take anyone they could get; because who the hell would want the job? It was either going to be someone from Goldman Sachs or a crazy person. Since the Greek people would probably tar and feather anyone sent by Goldman, it had to be a crazy person. I hope he does well. It's a lot easier to write papers and give talks than it is to assume a job like "Finance Minister of Greece in 2015".

Torgo• 11 years ago

Experience managing virtual economies.

hurin• 11 years ago

(2012) label please.

stingraycharles• 11 years ago

Needs [2012] in the title, especially because this man is now the Finance Minister of Greece, as pointed out by many others.

inflatablenerd• 11 years ago

If anyone is interested, Yanis also guested on the EconTalk podcast in 2013, talking about Valve's corporate structure and plans for solving Greece's financial woes.

http://www.econtalk.org/archives/2013/02/varoufakis_on_v.htm...

drabiega• 11 years ago

The bit about Econometrics seems a bit out of place and wrongheaded. I know this is a popular criticism of Economics in general, but I've always thought it rather non-nonsensical.

SapphireSun• 11 years ago

What's wrong with it? If you can't run a controlled trial, then it's hard to finger causality. You can consider parallel natural experiments as occur in different polities, but there are so often many confounding factors.

You can grow more confident in a strategy as the stats pile up, but it's not nearly as cut and dried as a physics experiment.

kindofanger• 11 years ago

The last reported Gross World Product was 74.31 trillion dollars.

http://www.indexmundi.com/world/gdp_%28official_exchange_rat...

Current global debt is in excess of 100 trillion dollars.

http://www.bloomberg.com/news/articles/2014-03-09/global-deb...

That alone is enough to illustrate the situation. If you must have a cherry on top, worldwide derivatives are likely in excess of 1 quadrillion dollars.

http://business.time.com/2013/03/27/why-derivatives-may-be-t...

Regulation is a nice thought.

CyberPants• 11 years ago

Entire world economy visualization:

https://xkcd.com/980/huge/#x=-6432&y=-8368&z=2

jrochkind1• 11 years ago

To illustrate what situation?

poikniok• 11 years ago

Can you tell me what "notational" means with regards to derivatives?

eru4• 11 years ago

That alone is enough to illustrate the situation. If you must have a cherry on top, worldwide derivatives are likely in excess of 1 quadrillion dollars.

That's the `notional' of the derivatives. That's more or less a made up number, and has not much to do with how much money actually changes hands.

The way the notional derivatives are defined, you'd actually want to see huge numbers there. It means that exploitable price differences are so small, that you need lots of gearing to make money off of them. Small price difference === other market participants get a fair price on buying and selling.

camperman• 11 years ago

OK, the penny just dropped for me. This is the same Yanis who wrote a masterful analysis of destruction and the Eve economy. The same guy who's an expert in game theory. The guy who is now finance minister of Greece.

MikeTV• 11 years ago

Link to the referenced analysis, for those interested like me: http://yanisvaroufakis.eu/2014/01/30/war-spikes-in-the-eve-o...

lectrick• 11 years ago

A career path of a high interestingness caliber. We should all strive for the same.

Aissen• 11 years ago

So what did they learn ? It was a very promising blog, but for all we know, nothing came out of his time at Valve. Even a failure to learn anything new would be an interesting report with regards to what they did (or didn't do) with the games' economies.

It all began with a strange email (2012)

Related Stories