European Debt Crisis

Greece hurls Europe back into crisis mode

Stephen Beard May 14, 2012
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European Debt Crisis

Greece hurls Europe back into crisis mode

Stephen Beard May 14, 2012
HTML EMBED:
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Kai Ryssdal: All right, you want to know the word of the day in global economy-land? It’s a little geeky and I don’t much care for it myself, but here you go — Grexit. The odds that someday soon Greece is gonna exit the euro. Grexit, get it? Lame perhaps, but it is what passes for humor in the European debt crisis nowadays. After last week’s inconclusive elections, there is still no government in Athens. And it’s entirely possible there’s going to be another election next month.

From the European Desk in London, Marketplace’s Stephen Beard catches us up on it all.


Stephen Beard: Blame Greek voters for today’s turmoil. In last week’s election, most of them supported parties that want to scrap the budget cuts. Tired of austerity measures, they want to turn their backs on the terms of their latest bailout. Many voters are confused and deluded, says John Psarapoulos of the New Athenian Magazine.

John Psarapoulos: They almost sound as though they believe that they would automatically cast off this terrible burden of the Greek debt and start from a clean slate.

But the political stalemate followed by another election could mean that Greece fails to qualify for its next chunk of bailout money. The country could run out of cash within six weeks.

Tobias Blattner of Daiwa Capital in London says the risk of Greece being pushed out of the eurozone is rising.

Tobias Blattner: The elections have an impact on the markets and now I think it’s actually up to investors. They’re now preparing themselves to what does it mean if Greece leaves the euro area. I think this is now the stage where we are.

No one can say for sure what it will mean if Greece crashes out of the euro. John Cridland, a spokesman for British industry, says it won’t be pretty.

John Cridland: Undoubtedly, a Greek exit from the eurozone would be very messy. And a messy exit is going to hit confidence across Europe.

Tomorrow, the two most important leaders in the eurozone meet for the first time. The newly elected French president will go to see the German chancellor. They disagree over the need for more belt tightening in Europe. Any signs of a rift between the two, say analysts, could spark more market jitters.

In London, I’m Stephen Beard for Marketplace.

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