Nonsense remains nonsense even if it is pronounced by a high-falutin personality such as Mr Paul Krugman, Nobel Prize winner in economics and columnist of the New York Times.
In his column "What Greece Won" (27/02/15) he congratulated the Syriza government in Athens for its success in obtaining better conditions in its negotiations with its creditors, and for stopping the austerity policies. By achieving this, "Greece has done the rest of Europe a favor," he wrote.
Europe, seen from the vantage point of New York, is a small peninsula jutting into the Atlantic, populated by friendly weirdos living in Disneyland countries, playing a game called "austerity" which resembles the self-inflicted punishments of primitive religious rituals.
Mr Krugman happily ignores the basics of the Greek economy. By 2009, an arguable forty percent of Greek GDP resulted from years of debt-financed over-consumption made possible by the high credit rating the country enjoyed after it had joined the euro zone in 2000. This enormous bubble had mainly taken the shape of an inflated state sector.
When the crisis broke in late 2009, Greece faced default. Since it was impossible to deflate "cold turkey" the inflated state sector, the Hellenic government needed still more credit to keep the administration running while trying to reduce spending and boost revenue.
Two successive bailout efforts by the Troika creditors helped Greece to avoid a moratorium. By mid-2014 spending by the public administration had considerably shrunk. In combination with higher taxation, a positive primary surplus briefly appeared, only to disappear again in the last quarter of 2014.
This ephemeral primary surplus was greeted by the former government and, more reluctantly, by the creditors as heralding a breakthrough. Even Mr Krugman considers it a remarkable achievement. Under current conditions, however, another primary surplus is likely to remain a distant dream.
In reality, Greece's main problem is neither the public indebtedness nor its ability to resume debt servicing and preventing the debt burden from continuing to grow.
The real problem is lack of competitiveness. During the posh years of the euro bonanza, Greek wages, salaries and prices exploded. Athens, where a cup of coffee or a brandy had once cost 1 drachma, equivalent of about ten dollar cent of today, had become one of the more expensive capitals of Europe.
Consequently, Greece had become a net importer of a wide array of goods, even those it once exported, like sheep cheese. Greek products disappeared from world markets and those which remained, such as olive oil, were fraught with severe quality problems.
With the gradual reduction in state overspending during the crisis years, private incomes shrunk and with it the demand for imported goods. German export insurers noted that German exports to greece had fallen since 2009 by a stunning 80 percent.
As the warm drizzle of government overspending gradually dried up, Greek business had to make efforts to maintain income and secure alternative sources. Consequently. prices were slashed and services improved. Greek products started to reappear in world markets, trying to compete with cheaper Turkish exports by offering better quality and design. Most noticeable is the recent Greek success in tourism which would not have been possible without years of the austerity drive so much maligned by Mr Krugman and most of the Anglo-Saxon media.
In the midst of a painfully slow but still visible progress toward more competitiveness of the Greek economy and better stability of its public finances, the disaster of the Syriza government happened. Within a few days, the new administration succeeded in throwing into disarray the fragile structure of a new Greece oriented toward self-sufficiency, not depending on a constant stream of subsidies.
Had the old government been a considerable part of the problem, the new one managed to wreck everything. Greeks stopped paying taxes, suppliers stopped deliveries, the economy went into tailspin. Banks are tottering on the brink of illiquidity, so is the government which already fell behind in paying some salaries, not to speak of settling overdue bills.
With people hoarding their precious euros -- which they managed to extract from the banks -- under the mattress, the depression attributed by Mr Krugman to past austerity policies has instead become reality under the ham-fisted Syriza government which had promised to stop austerity.
The coming weeks will show if the creditors will accept whatever proposals and actions Athens will offer, once Syriza realizes the mess it has created and starts to do work instead of waffling, to mend fences instead of irritating and even insulting creditors.
Heinrich von Loesch