Elliott comments that the rest of the eurozone was really hoping that Greece would stay out of the spotlight for at least a few more months, as they had been hoping to buy time for the rest of the eurozone to become stable enough to handle the problems that could arise if Greece explodes.
Eurozone leaders recognise the great difficulties in solving Greece's terrible problems, worsened by serious deficiencies in Greek administrative capabilities and even worse problems with its political culture. To their credit, they have been willing to provide large amounts of financial and administrative assistance to help things along. But they have also been fervently hoping to buy time for the rest of the eurozone to become stable enough to handle the problems that could arise if Greece explodes. For this reason, they were strongly rooting for the traditional mainstream parties to win a majority in parliament, since those parties have each promised to honor their previous commitments to European and global institutions.
The one thing that seems fairly clear is that another election will have to be held shortly, since there does not appear to be any combination of the parties that can command a stable majority.
My continued cautious optimism is based on the strong desire of all key European leaders to avoid a recession severe enough to get them fired, combined with long commitments by those leaders to the "European Project", the kind of commitments that carry major political costs when they are broken. In other words, the economics make a compelling case for sticking together, and the broader political structure pushes the leaders in the same direction, despite less euro-enthusiasm among the public in some countries.
The risk, though, is that many things need to go right to work through the Greek mess without knocking the eurozone economy over and to avoid the problems that lurk in many other eurozone countries. Will Greece pull back from the brink of a confrontation with its key financial supporters?
Don't count Europe out; they have been proving doubters wrong for several decades and my money is on them to do it again. But don't bet too heavily on success either, there are simply too many risks. Cautious optimism should be the watchwords.
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