A broad crisis has enveloped the Eurozone. States such as Spain, France, and Ireland have seen their borrowing costs skyrocket, making it difficult to pay their debt obligations. However, the Greek situation is by far the worst, with Greece’s acceptance of 170 billion dollars in bailout funds from the European Central Bank, largely funded by Germany. The fear is that if Greece has a messy full scale default, Europe will go from a broad recession into an all out depression.
And yet on May 6, Greece will hold parliamentary elections which will be critical to survival of the bailout. Basically, the austerity measures which Greece accepted as part of the bailout are required to keep the funds. However, with over twenty percent unemployment, austerity is not popular and a fear exists that Greeks will elect a government which will roll back the austerity measures. If the parliament does that, Greece will lose the bailout funds and the messy default scenario could occur.
It appears unlikely that New Democracy, the political party most likely to seek to maintain austerity measures, will have a large enough percentage of the votes in parliament to maintain austerity measures. New political parties have sprung up which have vowed to stand against austerity. As such, the future of the Eurozone and the global economy are hazy.