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European Debt Crisis

Greece survives its election, but problems still lie ahead

Kai Ryssdal Jun 18, 2012
European Debt Crisis

Greece survives its election, but problems still lie ahead

Kai Ryssdal Jun 18, 2012

Kai Ryssdal: The results of the Greek election yesterday are mostly a roster of what didn’t happen. The eurozone didn’t collapse. Global markets didn’t implode. Riots in the streets of Athens didn’t happen.

Instead, the pro-bailout party won the most seats, it’ll make another stab at forming a government and all the rest of us will try to figure out what it means.

Joe Weisenthal covers Wall Street and the global economy for the Business Insider. He’s been in Athens for the past week, looking around. Joe, welcome to the program.

Joe Weisenthal: Thank you for having me.

Ryssdal: So what’s the vibe? What’s it like on the streets of Athens today?

Weisenthal: It’s pretty calm on the streets on the Athens. Actually, I think people have been wondering about this, about whether there’s any sort of sense of panic or whatever it is, but there really hasn’t been any. It’s quiet. I think if someone were just coming in here and didn’t know anything about the political situation, no one would actually think there was anything particularly special happening.

Ryssdal: It seems to me what we got yesterday was neither salvation nor the apocalypse — is that your sense?

Weisenthal: Yeah, that’s exactly right. But the current status quo is nothing to cheer about at all. It’s not clear whether the government — assuming it forms — will have any sort of power, which is to say whether they can maintain their coalition or whether they can convince the rest of Europe to renegotiate the bailout, give Greece some breathing room, inject some confidence and growth into the economy. So we’re stuck in a very unpleasant place, and I think we’re sort of in a crisis fatigue, and just this sort of endless nature is starting to weigh on people.

Ryssdal: I was reading your Twitter feed this morning. You said one of the things that surprised you was that you had sympathy for Angela Merkel, the chancellor of Germany, this morning.

Weisenthal: That is something I’ve been surprised about. Before I came to Greece, I was very critical of the Germans. I thought that basically that the main story was they’re intransigent about providing more money — that told a big part of the story. And I still largely feel that way. But when you talk to Greeks and you hear them talk about their corruption and incompetence of their own government and how thorough and pervasive that view is, it becomes understandable how an outsider would be much less comfortable about opening up a blank check in the form of eurobonds or bank deposit guarantees.

Ryssdal: There is a market question to ask you today, and that is why there hasn’t been all that much of a reaction, specifically here stateside. I mean, is that because fundamentally, nothing changed?

Weisenthal: I think that’s exactly right: Fundamentally nothing changed. This election outcome is kind of what was expected for the last couple of weeks. The buzz had been that probably New Democracy was going to pull out a narrow victory.

Ryssdal: New Democracy being the pro-bailout party.

Weisenthal: New Democracy is the pro-bailout conservative party. So the sense people had was that they were probably going to pull out a narrow victory. And so to some extent, this is just already expected. But then as you say, Greece is nowhere closer to resolving this crisis — Europe is nowhere closer to resolving this crisis — at the end of the election, and therefore, you can see why the markets aren’t particularly enthused.

Ryssdal: You know how people in business journalism the past couple of years have been saying, ‘Man, if Greece goes under, it’s going to be really, really bad for us’? I wonder whether people here in the States have just stopped paying attention because so far, there’s been nothing bad for us.

Weisenthal: Yeah, I think that the idea of the Greek exit or Greece going bankrupt or Greece exiting the eurozone — I don’t think too many people think that is the trigger that would be a situation for the United States. I think if a Greece exit had then led to a domino effect where we had Spanish banks failing and a run on Italy and so on. But I think people have a hard time grasping it all. I don’t think people have any sort of intuitive sense of that.

Ryssdal: What is the meaning then of Greece to the States? Because if it’s not them leaving the euro, what is then for us?

Weisenthal: I think the issue is Greece is not really about Greece leaving the euro, at least from the broader global perspective. However, Greece represents a political failure. If Greece leaves the euro, the big issue is that the eurozone itself becomes threatened, so not Greece exiting specifically being the issue, but I think people question whether the whole project can be saved.

Ryssdal: Joe Weisenthal is the deputy editor at the Business Insider. You can read his Twitter feed @TheStalwart, it’s a good one, check it out. Joe, thanks a lot.

Weisenthal: Thank you for having me.

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