Hi Joschka,



Why would Angela Merkel want to put an end to austerity, now that it is beginning to work?



It has certainly worked in the case of Greece, where due to the combined pressure of Greece's lenders, the country is now running a slight surplus (What? Greece running a surplus?) also, the government is now beginning to crack down on the 50% of the population who do not bother to file their income tax returns (and consequently, never pay income tax) a practice that has been going on for decades now, and Greek leaders are (first time, ever) looking at ways to run their economy in a fiscally responsible way.



I call that progress.



I'm not much of an austerian, but if it works, it works. That is the measure of success.



Here are some recent quotes from a recent PS article by Daniel Gros:



"Greek government’s demands are based on a misunderstanding. For starters, Syriza and others argue that Greece’s public debt, at a massive 170% of GDP, is unsustainable and must be cut. Given that the country’s official debt constitutes the bulk of its overall public debt, the government wants it reduced.



In fact, Greece’s official creditors have granted it long enough grace periods and low enough interest rates that the burden is bearable. Greece actually spends less on debt service than Italy or Ireland, both of which have much lower (gross) debt-to-GDP ratios. With payments on Greece’s official foreign debt amounting to only 1.5% of GDP, debt service is not the country’s problem.



The relatively low debt-service cost also removes the justification for Syriza’s demands for an end to austerity.



The last bailout program from the “troika” (the International Monetary Fund, the ECB, and the European Commission), initiated in 2010, foresees a primary budget surplus (which excludes interest payments) of 4% of GDP this year. That would be slightly more than is needed to cover interest payments, and would thus allow Greece finally to begin to reduce its debt."



Read more at http://www.project-syndicate.org/commentary/syriza-greece-austerity-myth-by-daniel-gros-2015-02#XaBK6cD08LQS1ghr.99



Also this by Daniel Gros:



"For the same reason, it is disingenuous to claim that the troika forced Greece into excessive austerity. Had Greece not received financial support in 2010, it would have had to cut its fiscal deficit from more than 10% of GDP to zero immediately. By financing continued deficits until 2013, the troika actually enabled Greece to delay austerity."

...



"The practical problem for Greece now is not the sustainability of a debt that matures in 20-30 years and carries very low interest rates; the real issue is the few payments to the IMF and the ECB that fall due this year – payments that the new government has promised to make."



Read more at http://www.project-syndicate.org/commentary/syriza-greece-austerity-myth-by-daniel-gros-2015-02#XaBK6cD08LQS1ghr.99



Therefore, the conditions set by the troika, led the Greek government to put special emphasis into running a fiscally responsible budget and constraining Greek's to file and then pay their overdue income tax.



Which, even at this early stage, has led to running a budgetary surplus, the beginnings of debt paydown, more government revenues (all that unpaid income tax is beginning to trickle in) and the Greek economy is beginning to stabilize.



Considering how out of balance the Greek economy was, that is miraculous progress in less than five years.



Angela Merkel should get some serious respect for leading the way and the other members of the Troika should get honourable mention for showing leadership during difficult times.



Greek leaders who have contributed to these early successes should be feted by their people.



Leadership is not for the timid, nor is it for 'The sky is falling, the sky is falling!' types, who panic easily.



The Troika and some Greek leaders knew what they were doing, they knew it would be unpopular, and they still accomplished their mission. That's leadership.



And now, Greeks and the people of other EU nations will be the better for that vision and leadership.



It's early days yet, so we should not indulge in any sort of triumphalism, but in Greece at least, the corner has been turned.



Best regards, JBS