Greece in political chaos
Greece edged closer to exiting the euro after sparring political parties failed to form a new government.
Greece moved a step closer to exiting the euro this week after sparring political parties failed to form a new government, rattling European markets and triggering another round of elections next month. No viable coalition emerged from the welter of far-left and far-right parties elected earlier this month amid widespread anti-austerity fervor. With the country stuck in political limbo, investors worried that Athens would be unable to make the $14 billion in further budget cuts required by the European Union/International Monetary Fund bailout deal. That failure would halt the flow of financial aid to Greece, forcing it to withdraw from the euro zone and return to the drachma. The uncertainty pushed the euro to a four-month low against the dollar, and led depositors to withdraw at least $898 million from Greek banks.
Europe is about to experience “the mother of all bank runs,” said Matthew O’Brien in TheAtlantic.com. If Greece exits the euro, depositors in Ireland, Portugal, Spain, and Italy will transfer their cash to “safe” countries like Germany. That capital flight will encourage international investors to start betting on a breakup, causing borrowing costs to soar and making the euro’s collapse even more likely.
That pain would soon cross the Atlantic, said Bradley Klapper in the Associated Press. Wall Street has trillions of dollars tied up in European banks, and if the euro implodes, cash-strapped U.S. financial firms will start limiting their lending. Thanks to Greece, Americans will find it harder to “secure loans for business expansion and home mortgages.”
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
There’s only one way to stop this cataclysm, said Bloomberg.com in an editorial. The EU and the IMF must push back their austerity deadlines and let Greece form a government that can recommit to economic reform. Voters will only back centrist parties if European leaders stop demanding self-defeating budget cuts and instead support growth measures in Greece and other ailing economies. Failing that, Europe and the world “will have no choice but to prepare for the worst.”
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Create an account with the same email registered to your subscription to unlock access.
-
Aid to Ukraine: too little, too late?
Talking Point House of Representatives finally 'met the moment' but some say it came too late
By The Week UK Published
-
5 generously funny cartoons on the $60 billion foreign aid package
Cartoons Artists take on Republican opposition, aid to Ukraine, and more
By The Week US Published
-
Knife: Salman Rushdie's 'mesmeric memoir' of brutal attack
The Week Recommends The author's account of ordeal which cost him his eye is both 'scary and heartwarming'
By The Week Staff Published
-
Arizona court reinstates 1864 abortion ban
Speed Read The law makes all abortions illegal in the state except to save the mother's life
By Rafi Schwartz, The Week US Published
-
Trump, billions richer, is selling Bibles
Speed Read The former president is hawking a $60 "God Bless the USA Bible"
By Peter Weber, The Week US Published
-
The debate about Biden's age and mental fitness
In Depth Some critics argue Biden is too old to run again. Does the argument have merit?
By Grayson Quay Published
-
How would a second Trump presidency affect Britain?
Today's Big Question Re-election of Republican frontrunner could threaten UK security, warns former head of secret service
By Harriet Marsden, The Week UK Published
-
'Rwanda plan is less a deterrent and more a bluff'
Instant Opinion Opinion, comment and editorials of the day
By The Week UK Published
-
Henry Kissinger dies aged 100: a complicated legacy?
Talking Point Top US diplomat and Nobel Peace Prize winner remembered as both foreign policy genius and war criminal
By Harriet Marsden, The Week UK Last updated
-
Trump’s rhetoric: a shift to 'straight-up Nazi talk'
Why everyone's talking about Would-be president's sinister language is backed by an incendiary policy agenda, say commentators
By The Week UK Published
-
More covfefe: is the world ready for a second Donald Trump presidency?
Today's Big Question Republican's re-election would be a 'nightmare' scenario for Europe, Ukraine and the West
By Sorcha Bradley, The Week UK Published