GREEK ex-finance minister Yanis Varoufakis brought some rock star glamour to the opening of the TUC Congress on Sunday in Brighton. He smiled for selfie shots with delegates at a 1,000-plus meeting. Delegates were high on the back of Jeremy Corbyn’s stunning victory in the Labour leadership battle the day before.

Varoufakis gave an inside account of the madness of the bailout talks with the EU troika and the way the Greeks withstood intimidation from outside and within to vote down the new austerity loan this summer. However, he noted with sadness that while the people were up for a showdown with euro finance ministers, some in the Syriza party were not. He also warned the Corbyn camp of the challenges it will face in the coming months.

“Throughout this campaign which began yesterday and will end with the general election, it will be a focal point for progressive people throughout the world. You will be facing a wall-to-wall campaign of vilification, a campaign to discredit Jeremy, to discredit the labour movement.

“You will be told that if Jeremy wins, the UK will become another Greece.”

On the 2008-9 financial crisis he said it proved that austerity was a non-starter and that the ruling elites were fully aware of this, but used it as a weapon to redistribute wealth — and to punish Greece and its left-wing Syriza government for the temerity of putting EU diktats to Greek voters.

After the bankers broke the economy “the state ended up holding the baby. The same people who served the interests of the bankers during the era of Ponzi growth turned to what I call Ponzi austerity — fake austerity — to ensure the costs of the crisis were passed on to those who never benefited from the Ponzi growth in the first place.

“The British economy began to recover after 2009, then George Osborne put his foot on the brake. What did he do immediately after that? He removed his foot, he stopped doing austerity; austerity was very light in Britain. It was used as an instrument to affect a savage redistribution of income.

“From a macroeconomic perspective it was very very light. Greece’s austerity was eight times as harsh. What was effect on Greece? We lost 28 per cent of national income, we lost one third of the jobs. We had a spectacular increase in poverty.

“Austerity doesn’t work. George Osborne knows that.

“Another element that will be very important for the Jeremy Corbyn team to understand: the practice of quantitative easing (QE) has been exemplary in maintaining some equilibrium in the macroeconomy of Britain while at the same time using austerity as a narrative to justify the transfer of income from the have-nots to the haves.

“This QE was quite remarkable even by the standards of Europe and the United States. Where did that money go? It went to purchasing mortgages, purchasing derivatives, purchasing bonds. Purchasing those pieces of paper that elevate the value of asset prices, but have nothing to do with industry, like house prices in London, like share prices in companies.

“The Bank of England extended liquidity to banks, banks extended liquidity to companies. And what did companies do with that liquidity when people of Britain did not have enough money to buy more stuff? They bought back their own shares. They did not invest in productive activity, in jobs.”

He continued: “There has been no surge in investment in the sectors which are essential for the future of Britain. That was a spectacular failure by David Cameron and Osborne. And why did they not get challenged? They did not get challenged because the Labour Party lobotomised itself some time ago.

“Now in Greece we had contractionary contraction — the greatest austerity ever.

“What should you do? You are embarking on a long path which is going to excite all of us. Firstly, the Labour Party needs to stiffen its lip. For 30 years now we have had a one-sided class war. The only party in Britain that disowned the class war was the Labour Party. Mrs Thatcher, Mr Major, Mr Blair, were exemplary class warriors, fighting for the interests of the class they represented. There was socialism for the bankers and the spivs, and unfettered markets for everyone else.”

Since the 1980s capital itself was diminished, fragmented, and financialised, added Varoufakis. But he warned the British labour movement against looking backward as they look for economic strategies in the coming period.

“We should not rush to the past for solutions. We have to be critical. [In the 1980s] we in the labour movement were defending tooth and nail towers that were crumbling because of the disruptive technologies of the time. From the Greek perspective, having coal-fired electricity stations is a no-no.

“We have to revive the spirit of Harold Wilson in the 1960s and the white heat of technology, except this time it shouldn’t be the white heat of technology — it should be the cool breeze of green technologies.

“The emerging markets have cottoned on to the importance of having a publicly owned development banks. Brazil has one, China has one, the US doesn’t need one because it has the military-industrial complex, which operates as their magnificently efficient development bank. In Britain we need one.”

He supported the idea of people’s QE as advocated by Corbyn’s economic team, pointing out its right-wing origins: “People’s QE was a right-wing idea — helicopter money — created by Milton Friedman.

“Why can’t a development bank issue bonds to the City of London to fund a green new deal? This will not push up house prices in London. You are not pushing up the share value of media companies — you are supporting the development of real productive green technologies directly.

“There are lessons from Greece. They will use fear against progress. You must return the favour by showering them with reason, with compassion, and with even a degree of self-deprecation.

“You must be steadfast when the character assassination escalates beyond belief. I’ve experienced that. Alexis Tsipras experieced that.

“Beyond that, you must always believe as Roosevelt said, that the only thing to fear is fear itself, and the people who are there can be made not to fear fear.

“It is important that we believe that because the saddest piece of news I bring you is that we the leaders didn’t believe.

The magnificent people of Greece responded to a terroristic act — they [the ECB and troika] shut down the banking system.

“Draghi and the eurogroup said the Greek banks were solvent but warned me to keep my mouth shut or he might change his mind. He told me: ‘You have to protect their solvency by keeping your mouth shut.’

“On June 27 the eurogroup said they had no choice but to shut the Greek banks down — because we [Syriza] dared to put [the new loan agreement] to the Greek people in a referendum. I could not responsibly sign this agreement because I knew we could not repay it.

“That was considered an act of irresponsibility that deserved the reaction on their part of shutting down the banks. And I can’t look at the Latvian, Slovenian or German finance minister in the eye and say I am going to sign this loan agreement and we’re going to pay the money back, because I knew we couldn’t — and they knew we couldn’t.

“The Greek media was beaming into their homes that if they vote No they will be destroying their land, they will be destroying their country — and they responded to this with a 62 per cent No vote.”

Varoufakis went on to say that the “magnificent Greek people” had shown that they could not be bullied, and were not prepared to surrender, but sadly that could not be said of the Syriza government.

“This was the first time in history that creditors have offered a loan to a sovereign nation that the creditors know will ensure that the old loan and the new loan cannot be repaid.

“We were elected with 36 per cent and 62 per cent said No [to the bailout]. That No was a No to the fearmongers. The message I took from this 62 per cent was: we don’t want to be taken out of the eurozone, we want an hourable agreement within the eurozone. We want compromise, not to be compromised. If they push us through the mud and humiliation, then let them do their worst.

“But comrades, to finish on a slightly pessimistic note and a word of caution to what is happening here [in Britain]: the enemy is always within. The enemy is always the Ramsay MacDonalds, the enemy is the fear in our ranks. Try to excise it from your hearts and the hearts of your leaders.”