Today, the Greece election results may determine the fate of the Euro Zone crisis. The outcome of the Greek elections will decide whether or not the troubled nation remains as part of the European Union, or breaks off and ends it participation in using the Euro as its currency? Whether Greece will abide by the multi-national agreements to set its fiscal house in order, or just bail out itself printing drachmas? The best polling data for now seems to be a toss-up, with Europe, and the World, awaiting the results. The debt crisis in the Euro Zone is complicated enough, as Spain and Italy teeter on the edge of financial disaster. With the G-20 Summit coming up at the end of June, the battle over austerity and stimulus is reaching a critical mass.
Despite billions of Euros already spent bailing out Greece, the country continues to slide into disarray. The unemployment rate is 22%. Efforts to reign in spending and refinance their debt have been bitter pills which have led to numerous labor strikes and general unrest. Greece epitomizes the problem with European-style Democratic-Socialism. Too much government control, too generous of public employee pensions and benefits. Too small a private sector economic base to tax and draw revenue from.
Greek citizens have been busy of late stocking up on Euros, squeezing as many as they can get out from ATMs. There is little doubt that should Greece revert back to the drachma, inflation will skyrocket. As painful as austerity may seem, a Greek economic free-fall due to hyper-inflation is no real solution. The poor and middle classes will be slammed by the brunt of either. At least with austerity, there is some pathway to a resolution and stability. Wildly printing drachmas would only lengthen the hardships for years, if not generations, to come.
So all eyes are on Greece and its election results today. The Greek elections are the second in two months in 2012. The fate of the Euro Zone debt crisis hangs in the balance at the ballot box. Should a new government be formed that favors rejecting the Euro and returning to using their own currency, the drachma, to pay off their debts, the rest of the European Union could begin breaking up. Spain and Italy are not far behind Greece in facing their moment of truth. Even France may falter, ending the EU once and for all. The G-20 Summit scheduled for starting on June 28 could be the most important meeting of world leaders in our generation, as the outcome will affect the United States and the rest of the world.