The latest news reports that we have seen this morning indicate the conservative party that backs keeping Greece in the eurozone has won the country's election and immediately proposed forming a pro-euro coalition government.
The development eases, at least briefly, deep fears that the election would unleash an economic tsunami.
AS problems mount in the euro zone, it’s increasingly evident that we’ve been witnessing an institutional failure of monumental proportions.
What is to be done about Greece? Simply keeping it in the euro zone won’t help much, even if it’s possible. The continuing crisis has sapped confidence in banks not only in Greece, but also in Spain, Italy, Portugal and Ireland, though to varying degrees. Unless there are explicit guarantees to these banks soon, the market will likely take a further turn for the worse.
An absence of guarantees could prompt a broader chain reaction of capital flight and bank collapses across several countries.