With Greek elections done for now, what's next?

A general view at Athens stock exchange on June 18, 2012.

Jeff Horwich: The victory of the New Democracy party in Greece is the morning's top story -- but the implications are increasingly hazy. For Greeks, a vote for New Democracy was considered a vote to remain in the eurozone and endure some more painful austerity as a result.

It's a rough road for the Greeks but supposedly the outcome the rest of the world was hoping for. Marketplace's Heidi Moore is live with me from New York.

Heidi Moore: Hi Jeff.

Horwich: So we avoided the big meltdown here, but investors around the world seem to have had a pretty short party. What happened? Why did things deflate so quickly this morning?

Moore: Sure. Well watching a European bailout is kind of like watching a Hollywood action thriller -- you have to suspend disbelief to believe that the good guys are going to win. And in this case, the markets couldn't suspend disbelief anymore. They saw Greece taking care of and then as soon as that was over, all of the other problems of the eurozone started to come to the forefront. And we're looking at four or five other countries that are waiting for bailouts behind even Greece.

Horwich: So Heidi, hang on for a minute. I want to bring in Marketplace's Stephen Beard, who's with us from London. Hello Stephen.

Stephen Beard: Hello Jeff.

Horwich: So if we can press pause on the Greek issue for the moment, is it Spain that just rises the top of the heap of European worries now?

Beard: Yes, absolutely. I mean, as Heidi's pointed out there, Greece has a bit of a breathing space. It's not immediately going to fall off a cliff and crash out of the euro, so investors are now focusing on the next and potentially much bigger problem -- Spain. Of course, Spain's banks were bailed out last week, but investors are increasingly thinking that the Spanish government itself may need a bailout soon. And Spain is more than four times bigger than Greece. Spain is going to be a lot more difficult for the European Union and the IMF to bail out, and that's worrying for the euro as a whole.

Horwich: Let's continue our tour of Europe, Stephen. We also have election results from France this morning. What's the implication there?

Beard: The new Socialist French president Francois Hollande has won control over his national parliament, and that means politically, he's going to be able to press ahead with these tax and spend policies. This strengthens his hand as he pushes for less emphasis on austerity and more on growth in the eurozone. But that sets up potentially the most serious and destabilizing conflict between the two most important eurozone countries: France and Germany. And Germany, again this morning, made it clear while they're prepared to talk about promoting growth, they still believe that austerity is all; the heavily indebted countries like Greece, Spain and Italy must pursue austerity if they want help from Germany.

Horwich: And Heidi, back to you quickly. Leaders of the G20 are in Mexico today for a summit; of course, they're talking about Greece. But what do you think President Obama and the American delegation would most hope to get out of this gathering?

Moore: They'd probably like an end to the European crisis, but they're not going to get that. What they want is to know that all of the finance leaders will support a bailout for all the countries that are in trouble before it has to become a unified global action. And they probably also want to see some growth from those European countries, which is hard right now, because as Stephen said, they are too busy cutting spending to really work on growing their economies.

Horwich: Well thanks to you both. Heidi Moore in New York and Stephen Beard in London.

Moore: Thank you.

Beard: Thank you Jeff.

About the author

Heidi N. Moore is The Guardian's U.S. finance and economics editor. She was formerly the New York bureau chief and Wall Street correspondent for Marketplace.

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