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COMMENT: Much spec­u­la­tion has fol­lowed the Greek elec­tion, which saw the left-wing Syriza Par­ty gar­ner enough votes to put togeth­er a coali­tion gov­ern­ment.

Rav­aged by what we called “Clause­witz­ian eco­nom­ics,” Greece has been crushed by the Ger­man aus­ter­i­ty doc­trine, echoed by the so-called “troika”–the Euro­pean Com­mis­sion (a Ger­man pup­pet orga­ni­za­tion at present), the Euro­pean Cen­tral Bank (which has shown some signs of relent­ing) and the IMF (which has belat­ed­ly admit­ted the fun­da­men­tal error of its ways).

A recent arti­cle in Forbes under­scores the flawed account­ing under­ly­ing the lethal fis­cal pol­i­cy imposed on the cit­i­zens of the “cra­dle of democ­ra­cy.”

As dis­cussed in a recent New York Times arti­cle, the Greek debt has been cal­cu­lat­ed using an uncon­ven­tion­al account­ing par­a­digm to arrive at the con­clu­sion that Greek debt is “175%” of GDP. The Greeks are in need of adopt­ing the “Ipsas” account­ing stan­dard.

In fact, it is 18%, when cal­cu­lat­ed using the stan­dard “Ipsas” account­ing method. Ger­many’s on the oth­er hand, is 46%, when cal­cu­lat­ed under that stan­dard!

It is going to be more than a lit­tle inter­est­ing to see how Deutsch­land, major EU finan­cial insti­tu­tions and the Greek cit­i­zen­ry square off over this.

“Greece’s Net Debt is 18% of GDP, Not 175%. What’s Ger­many’s” by Panos Mour­douk­outas: Forbes; 1/22/2015.

Before impos­ing anoth­er round of aus­ter­i­ty on Greece, Ger­many should fix its own account­ing prob­lem — by cal­cu­lat­ing Greek debt, and its own, with accept­ed inter­na­tion­al stan­dards.

As Greek cit­i­zens head to the polls this Sun­day, Ger­man offi­cials have not missed the chance to remind Greece that it must ful­fill its debt oblig­a­tions. This means adher­ing to an unprece­dent­ed aus­ter­i­ty which has depressed the Greek econ­o­my.

The trou­ble is that Ger­many has been over­es­ti­mat­ing Greece’s debt by fail­ing to fol­low the Inter­na­tion­al Pub­lic Sec­tor Account­ing Stan­dards (Ipsas),which mea­sure lia­bil­i­ties and assets over time.

Ipsas stan­dards are sim­i­lar to those used by lead­ing gov­ern­ments, busi­ness­es, banks and investors at all lev­els, accord­ing to Pro­fes­sor Jacob Soll. “In fact, the debt has been cal­cu­lat­ed to be larg­er than it actu­al­ly is, or would be if one used Ipsas,”writes Soll in a recent New York Times op-ed.

Just how much is Greek debt over­es­ti­mat­ed?

The answer is to be found in www.freegreece.info. If you apply Ipsas to cal­cu­late Greek debt, the Net Debt is 18%, not 175% of GDP.

What about Germany’s Net Debt under Ipsas? 46% of GDP.

That means that Greece’s debt sit­u­a­tion is bet­ter than that of Germany’s!

So why doesn’t Ger­many use Ipsas to cal­cu­late the Greek debt? For two rea­sons, accord­ing Pro­fes­sor Soll. First, they don’t apply Ipsas in their own House.“A lit­tle-known fact is that the Ger­mans also do not use Ipsas and have notably opaque pub­lic finance stan­dards,” he writes.

Sec­ond, by steer­ing away from Ipsas, Ger­many can keep Greece on the leash while con­ve­nient­ly keep­ing Greek debt off its own books.

“One rea­son might be that the Ger­mans have refused to price the debt fair­ly, or prop­er­ly report its val­ue, which means in the short run that they extract more aus­ter­i­ty from the Greeks than they should, and that they also keep this loan off the bud­get bal­ance sheets because it would come up as a loss under any legit­i­mate account­ing stan­dard,” writes Soll.

In our opin­ion, there’s a third rea­son. Over­es­ti­mat­ing sov­er­eign debt for South­ern Euro­pean coun­tries stirs anx­i­ety in for­eign cur­ren­cy mar­kets, depress­ing the Euro, and fir­ing up Germany’s export engine.