Another Greek Tradegy?

It would be difficult to write a blog this month without talking about the change of government in Greece and its impact on the European economic situation.

"Greek election result plunges Eurozone into new crisis" boomed the Daily Mail, and most of the anti EU papers weighed in with similar doom mongering.

However, the impact on markets was negligible in the days following the result as the work done to build a firewall around the Greek economy proved its worth.

In fact the only crisis that has been triggered is in Greece itself as Alexis Tsipras appointed a number of radical ministers to implement this Syriza party's pledge to end the austerity programme. The Greek stock market has slumped and Greek banks have seen significant outflows of deposits, yet elsewhere in the global economy there has been little adverse reaction.

Unfortunately Syriza appears to have made the schoolboy error of getting elected on a wave of public feeling against the austerity programme without having any sort of detailed plan for an alternative, although the demand for World War II reparations from Germany suggests that diplomacy doesn't figure too highly in its thinking.

In a nutshell Tsipras wants to write down Greece's debt, increase wages and halt spending cuts while keeping Greece in the Euro but that simply won't happen. In the previous crisis Greece had some leverage due to the fear of contagion to other economies if Greece defaulted. Now, however, particularly with the recent announcement of a quantative easing programme by the European Central Bank the threat of a Greek exit is pretty hollow.

Polls show the majority of Greeks want to stay in the Euro; hardly surprising given the sobering words of the German Vice-Chancellor Sigmar Gabriel "We want to keep Greece in the euro but it needs implementation of the agreed measures. If Greece wants to diverge from any of these measures then it must bear the economic consequences of this within its own borders."

So is this the end of Eurozone worries? Definitely not, with radical parties gaining ground in other indebted countries, but for the moment the only crisis is a domestic one for the Greek people.

Robin Sainty APFS M.A. (Cantab)