G20 Summit: Different day, same euro crisis

By Geoff Meade
Published on 19/06/2012 01:06

QAnother eurozone crisis has arisen: what was it this time?

AIt was in fact a knife-edge election in Greece designed to give a workable government. The victors, the centre-right New Democracy party, were last night trying to put together a “government of national unity”.

QBut there isn’t any national unity is there?

AThe election showed the country deeply divided on whether to accept enforced public sector jobs and pay cuts coupled with tax rises in return for continued bail-out cash from the EU and IMF.

QSo what happens now?

ANew Democracy, which basically accepts the austerity terms but wants concessions on bail-out repayment and debt reduction deadlines, will put together a governing coalition to do battle with Syriza, which will be the main opposition party.

QAnd that helps us how?

AThose backing the eurozone say it helps because if Syriza had won the election Greece would have rejected the current bail-out conditions. That would risk Greece leaving the euro, and heaven knows what the consequences would then be for the rest of the eurozone and for the political as well as economic stability and credibility of the EU.

QIs that why markets rose yesterday?

AYes, but they are likely fall again today when the excitement dies down. This Greek election doesn’t take things forward, it just restore a bit of sanity after the last Greek election failed to produce a workable result.

QSo the euro crisis isn’t over than?

ATe euro crisis, which was already very bad, became potentially disastrous when Greece looked set to elect an anti-austerity government.

QSo can we all relax?

AThis crisis is like keeping plates spinning on the tops of poles. For the moment the Greek plate is rotating fairly steadily again, but the Spanish plate is wobbling crazily.

QSo where do we go from here?

AEurozone leaders have long-term plans for shoring up the euro but not the quick-fix that will convince fickle markets that the euro is stable and will not become economically and politically unmanageable.