After Greek elections, crisis wanes, but not over
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Jeremy Hobson: It looks like Greece will be staying in the eurozone, at least for the moment. The pro-austerity, pro-bailout New Democracy party won the election there yesterday, narrowly beating the anti-bailout party Syriza. New Democracy is now
trying to form a coalition government.
Marketplace New York bureau chief Heidi Moore is here with me now to explain what all this means for the global economy. Heidi, good morning.
Heidi Moore: Good morning.
Hobson: So, you know, there are some that wanted this party to win, some that didn’t. I guess from an American perspective — from the perspective of our economy — it does seem like the best thing that could have happened. Is that right?
Moore: Yeah, you might want to break out the balloons. I mean, the pro-bailout party won, right? Greece is going to stay in the eurozone. And that averts a lot of the trouble that we thought would happen if Greece was the next Lehman Brothers of Europe. So that didn’t happen; we didn’t have a big financial disaster — at least, not yesterday.
Hobson: Not yesterday — but this morning, there are some signs of trouble in the markets in Europe. What is going on? What are people worried about now?
Moore: There’s so much to watch. First, you have to find out if this Greek government is really going to pull it off, because they tried to do it before and they didn’t. And then there’s the rest of Europe — there are 17 countries in the eurozone and lot of them are still in trouble.
I talked to Anthony Peters. He advises investors at SwissInvest in London, and I asked him what he thought. He put the situation pretty concisely.
Anthony Peters: Well, what you’re really looking at is the penniless trying to bail out the bankrupt.
Hobson: And I guess that basically means Europe may not have enough money for all of these countries that need it?
Moore: That’s exactly right. The International Institute of Finance said today that Spain’s bailout last week is the last one that the EU can afford. And that’s really sobering if you look at who is next in line. Cyprus — which we didn’t even know was on the bailout map — needs a bailout. Denmark is having some trouble with its currency. And even the U.K. — their central bank is lending billions of dollars to the rest of the banks there to make sure that they’re protected. So it’s a really deep and wide issue.
Hobson: The crisis continues in Europe. Marketplace New York bureau chief Heidi Moore, thanks a lot.
Moore: Thank you.
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