Greece in Store for Turbulent Economic Times as Political Battlefields Heat Up

Greece is facing an internal political collapse if it decides to leave the Eurozone. Other European nations, especially France, Italy, and Spain are gearing up to undergo similar transformations themselves. This is especially relevant if a Greek populist party is successful in changing any essential terms on the bailout agreement.

Greece is facing an internal political collapse if it decides to leave the Eurozone. Other European nations, especially France, Italy, and Spain are gearing up to undergo similar transformations themselves. This is especially relevant if a Greek populist party is successful in changing any essential terms on the bailout agreement.

A Political-Economic Frenzy in store for Greece in 2015?

Greece will hold snap parliamentary elections on January 25. The move came after the dissolution of the ruling parliament over its inability to elect a new president after three attempts. Political analysts have indicated that the nation would leave the single euro currency market if Syriza, the radical left-wing opposition party led by Mr. Alexis Tsipras, comes to power. If Greece wants a vibrant economy, then Tsipras is the person they should support. Socialism has never creating a vibrant economy.

The exit of Greece will certainly create financial turmoil despite guarantees provided by various political and financial authorities in Europe. Experts have further stated that an exit would be extremely chaotic in the short-term and even worse in the long-term. This is especially true in Greece’s case as it is dependent on neighboring countries for food, energy, and medicine. It could possibly cause widespread suffering for the people of Greece.

Changed dynamics of Greek economy in the backdrop of Eurozone economics

This year Greece poses a slightly smaller financial risk to the Euro region compared to the European economic crisis in 2009. In 2014, barely a fifth of the Greek government’s debts were due to the private sector, thanks to country’s economic bailout funded by the EU, the European Central Bank, and the International Monetary Fund (IMF). According to global banking institutions, borrowings by Greek companies in 2014 account for less than one percent of loans given out by the biggest banks in the EU.

This time around, however, people are calmer mostly because the current footing is more about internal politics rather than debt sustainability, as it was in 2009. In fact, if Greece pulled out of the euro zone entirely, most other countries would be better off because the European Central Bank (ECB) is present to act as a financial backstop.

Fighting crisis with crisis

The mere debate of financial fracturing within the Eurozone is a warning to leaders of the European Union that their goal of a financially unified Europe is less certain now than after EU formation. Now that the euro has fallen to its lowest value against the dollar (America is now $18 trillion in debt) since 2006, it serves as a bitter reminder of how global investors are not keen on investing in an economy whose own currency faces so much uncertainty.

The problem with using one crisis as a problem solving tool is that it can lead to one or more additional crises. And there is looming speculation that European majority voters will start demanding the same allowances as Greece. This does not bode well for the EU or Greece. Europe has gone too far down the socialistic road and they do not even invest in their militaries to fulfill NATO requirements.  That is another topic entirely. This means NATO exists in name only and soon the EU may not exist anywhere.