Pain-Inflicting Troika Members

«Back in 2011 and again in the summer of 2012, a number of economists pleaded with the European Central Bank to intervene in sovereign bond markets, buying troubled nations’ debt to stop the “doom loop” of plunging bond prices and financial distress that was pushing the euro to the brink.The objection from austerians was always that this would create moral hazard: it would let countries off the hook, and lead them to slack off on their belt-tightening.

(...) the ECB did intervene (...)

(...) the people who ended up being left (temporarily) off the hook were the austerians themselves, who took the narrowing of spreads — which was the result of the ECB’s new activism — and took it as proof that austerity was working.

(...) 

The point is that this narrowing of spreads has nothing to do with austerity.  

(...)

Yet the Commission has chosen to claim credit for this narrowing of spreads — it is, after all, the only good news they have to show for three years of austerity — and claim that it would go away if there was any relaxation of the pain.

So as I said, there is some clear moral hazard here; the ECB’s intervention has let some people off the hook, and encouraged them to continue with bad policies. But the people in question aren’t spendthrift governments, they’re pain-inflicting troika members, who have been given license to keep on inflicting pain.»

Paul Krugman (Nobel Prize)