The Greeks have deactivated the nuclear switch that threatened to blow Europe sky high -- taking along with it the monetary union, and, therefore, the most ambitious democracy deepening project of the European Union. The victory of Antonis Samaras's New Democracy party does not in and of itself solve Athens' problems, nor those plaguing the rest of Europe's capitals; the boxer is still on the ropes, but the bell has been rung -- and that gives Europe time to recover, though it will have to keep fighting.
In addition, if seen as part and parcel of what happened in Greece, the result of France's legislative elections and the majority that President Hollande now boasts both act as a serious warning to Angela Merkel. The message is clear: we are willing to go forward, but the pernicious austerity strategy that is pushing us into the abyss must be reconsidered.
For Spain, the result of both of these turns at the ballot box is good. First, because a victory in Greece of SYRIZA's left-wing, and its increasingly unrealistic calls to exit the eurozone, would have put us next on the list, intensifying pressure on markets that are already becoming more and more irrational each day. Second, because, ideological differences aside, the absolute majority that the Socialists and their allies achieved in France has turned Hollande into an unprecedented partner for Spain, one now strong enough that Rajoy's government should be able to make Chancellor Merkel understand that a different policy is possible.
As soon as the final tallies were counted in Greece, Germany, via the foreign minister Guido Westerwelle, hastened to confirm that discussing flexibility in loan terms was a possibility -- as long as Greece fulfilled its austerity obligations; it's a message that Greek conservatives well deserve after committing themselves to the Memorandum of Understanding imposed by the troika. On top of all this, there's Mario Draghi's announcement on Friday that, as of Monday, the Central Bank of Europe over which he presides would have filled its coffers with euros destined for injection into banks needing liquidity. And so the echo we're now hearing is that of an orchestra beginning to play in tune, rather than the bedlam of recent weeks.
Let us hope that the G-20 countries, which have been meeting in Mexico since Monday -- and whose help and support are now more necessary than ever -- see it like this. As for Spain, it can look forward to another week of vertigo, during which we will finally hear the verdict of the consultants who have been evaluating the capital needs of Spanish banks. Whether that amount turns out to be 40 billion euros, as the IMF anticipated, or 60 billion euros, as the sector itself calculates, its impact will be tempered if the bailout brings an end to the mood of collective hysteria that was beginning to spread across the Old Continent.
Europe has always had a great dramatic sensibility, possibly a product of our Greek roots. Let us trust that, once again, skirting tragedy will give us the impulse necessary to get out of this marasmus.
This post was published in Spanish on El Huffington Post.
Follow Montserrat Domínguez on Twitter: www.twitter.com/montseHuffPost
Alexander Goerlach: The Next Reserve Currency
Making Chancellor Merkel the heavy in this drama doesn't negate the fact that Greece cannot go back to the easy street and its wealthy shipping tycoons should pay their fair shares. Squeezing the ones who can least afford to pay is stupid. Mindless austerity. Growth, real growth, is needed. Crawl back is necessary. When the inhabitants of the rest of the world have to work well into the 60s and even 70s (and did you hear two of the richest men wanted the working stiffs to work into their 80s?) Greece (and France) has to accept the simple truth. By evading taxes, you are hurting your fellow country folks. By running the bank, you are telling the world you don't treat your own country. And how can the rest of the world trust you if you don't trust yourself
It is not us-vs-them. Greece has chosen the middle, so govern with the middle way in mind and leave the self-congratulating rhetoric at the door
Those individuals are delusional.
And even IF Greece by some stroke of luck, skill, and perseverance does manage to stabilize and move forward given time,....
That doesn't fix the underlying debt problems in Spain, Italy and Portugal with a similar set of problems, but in bigger economies.
Read more: http://www.businessinsider.com/citi-willem-buiter-spain-italy-need-sovereign-bailouts-2012-6#ixzz1yLxaT0Bi
Probably more accurate an assessment.
A slowdown or worse a European or world recession will hit Greeks second largest economy, shipping.
The can has been kicked down the road once again. Only this time you'll be lucky to get even a few months.
Greece is in a full on depression. 36,000 Greek business are expected to close in the next year. You can't get credit. The Greek government isn't paying its bills. ( All its money is going to debt interest payments ) And that is before applying austerity.
Greece is rapidly approaching what many have called a "social explosion". Crushing debt has already put the nation on life support. The riots and protests to come will finish it off.
We can't be sure what Greek government will rise from the ashes. But its a good bet it won't be EU-friendly and will probably be so socialist it makes the current Greek socialists look like conservatives.
And - this respite from Greece doesn't change the fact that Spain, Portugal and Italy are also in a similar pickle AND have larger and more expensive economies to guide through bailouts, austerity programs, or their exit from the Euro,
Germany should not seek advantage on the backs of human suffering or impose an authoritarian boot--after all, their more than generous safety net is still intact and they must not ever be allowed to forget how the US insisting on forgiving their debt after the war for the stablility it insured.
Germany had it's debt forgiven.
The math is easy: no country can get out of debt when its refinancing costs are 17% and the country is in Frankfurt-induced deflation. No matter how austere the Greeks are, no matter how many public employees they fire and no matter how many retirees commit suicide, the debt/GDB ratio will climb.
Neither Merkel nor the ECB want to do anything that will bring borrowing costs down, or that will halt deflation. And the elections in Greece, far from waking them up, are comforting them in their destructive stance.
Someone has to pound a fist on the table, fast. Tsipras might have done that. Samaras won't. Nor will Hollande, I'm afraid.
The switch that will blow Europe sky high has been REactivated because the right wing party that now rules Greece will use money that does not exist to fill holes created by the ones who borrow that same money. THAT and not political chaos is what ruins every single economy on planet earth. - The ones who stole the money now lending it back to the people with interest and stacking it in tax haven while bleeding the people dry like vampires.
Neither Hollande, nor Merkel, and sure as heck not the "new" greek government wil do ANYTHING to stop that because governments are waht they are in the US: wholly owned subsidiaries of the financial vampires.