All of a sudden Greece is being told it is, if not doing well, that it is at least “on track”. Everybody is very happy with the results of this toxic troika imposed programme. They are very happy because the deficits have indeed shrunk. Well, yes but…

The current account deficit has shrunk not because of a powerful export drive at all. In fact nothing at all has been done to help the economy get back on its feet and start producing and exporting. No. None of that. The Germans wont have it. The only reason the current account has shrunk is because domestic demand had collapsed. Through the horrific taxation and continual brutal cuts, there is hardly any disposable income left.

So the “success” is not due to increased exports at all and therefore not a sign of the economy getting back on track at all. As to the budget deficits, this is no success either.

The decrease in the deficit is due to the horrendous, unsustainable taxation, to the savage cuts in everything from healthcare, to education , to defence… The only thing that has not been savaged is the expenses of political personnel. Not to mention that the state owes some 8 billion to the private sector which it simply does not pay. So not much success in that either.

Yet here we are, words of praise, delight that Greece’s new government has assumed full “ownership” of the programme… and what the hell does that mean? Never mind. It sounds good to them. So not only words of praise from the troika, a release of two instalments… which will only put us further into debt, but will at least pay back the ECB. Who lends us to do this… hmmmm.

And as if that were not enough, to make our heads go really dizzy, the Fitch ratings agency upgraded Greece from CCC to B-! Success! What wonderful success! And the spread on our borrowing costs has actually gone down to 7.5 – 8% levels!

Now, if you actually read the report on why this magnificent upgrade was effected you begin to wonder. Well, the risk of Greece leaving the Euro has been greatly reduced. Perhaps. Perhaps it never was as close as all that, judging from Schauble’s admission AFTER the Greek elections that it would cost far too much. But in any case, the risk of Grexit, though diminished, is still there. However, apart from all this nonsense about assuming ownership and stuff, the main reason is that through reforms of the labour market Greece has regained her competitiveness!

Which makes you wonder at their sanity. If Greece has in fact regained competitiveness, why is unemployment 27% and growing? Why is Greece in the sixth year of recession with forecasts that recession will continue way into 2014 and beyond? Where’s the catch?

Well, the catch is that all this is not based on sound economics but simply on ideology. All they really wanted was to destroy the labour market by abolishing all and any rights and slashing wages, which in a climate of 27% unemployment you didn’t really need to legislate to achieve this. But no. Yet what kind of capitalism is this when the Minister of Labour sets minimum wages with a remit to keep lowering them? Sounds more like a Soviet Union that a European Union.

Furthermore, when they say Greece has regained her competitiveness it is utter nonsense and based only on the ideological obsession with “flexible labour markets”. Otherwise, costs have gone up steeply. Firstly, the cost of financing your business (if you do even find financing) has shot up and is grossly over priced compared to say, German costs of financing. But that does not matter, now does it? It’s just the workforce we have to stick it to.

Secondly, through all the extra taxation on fuel, the rise in highway tolls, have made transport costs shoot up as well. Not to mention the exorbitant extra taxation on everyone and everything that lives and breathes in Greece, grossly encumbering every business trying to remain afloat. But that doesn’t matter either. Labour costs have been slashed. Welfare and healthcare have just about been destroyed. So we are just dandy and can give you an upgrade on the strength of that alone.

Mind you, those compiling the Fitch upgrade report are not completely daft. They have a lot of caveats. They do not rule out the possibility of a Grexit. They do see that this business of having regained “competitiveness” is nonsense, since although they say that internal devaluation has finally kicked in and greatly diminished the cost of labour, they don’t say that it has produced results but that it is “expected” to. By whom? Them? When? Aha! That is all left very vague.

In fact since this is dogmatic ideology and not economics at all, it remains in the realm of belief. Since wages have been slashed, they “believe” this will show positive results, totally regardless of all the other parameters. They also make no mention of how prices have shot up, not least through the exorbitant indirect taxation imposed on everything. Since they were so pleased that internal devaluation had succeeded, they could hardly mention that little detail, now could they? It would mean they would have to admit that internal devaluation had not worked.

Now, why this rush to buy Greek bonds, the fall in spreads and so on? So the Fitch rating made a difference? Maybe. Or maybe all those hedge funds who can smell a rat a mile off thought it was wizard to buy up these bonds at rock bottom prices, engineer a rise and make another killing? Just a thought. After all, there are no solid economic fundamentals behind it.

Anyway, though Olli Rehn and all that troika rat pack may be delighted at their great success with Greece (a failed state with a collapsed economy and even greater debt/GDP ratios… but never mind all that) Stephen Lewis, chief economist at Monument Securities, had the following to say:

“What seems incontrovertible, on this evidence, is that the member-states of the euro zone are on the wrong track.

The costs of the zone?s one-size-fits-all strategy are becoming brutally apparent.”

And I really don’t think he’s wrong. Next time you hear ecstatic noises of Greece being “on track”, remember that.