Washington Post
May 21, 2012
Recall the reasons for the current euro panic: Greece is getting bailed out and, in return, it’s supposed to cut spending and raise taxes even further. But Greek voters don’t enjoy this austerity and are rebelling against politicians who agree to the deal. So Germany’s now hinting that Greece might get booted from the euro. Disaster, right?
Well, perhaps not. Lately there have been signs that this situation won’t end in total apocalypse, after all. Kate McKenzie points to a new poll suggesting that Greek voters are slowly turning away from Syriza, the leading leftist party that’s threatening to rip up the bailout agreement (and hence risk a Greek exit from the euro). The Greek elections are on June 17. If voters turn away from Syriza and end up reelecting the two parties that support the bailout-for-austerity agreement, then Greece has a somewhat better chance of staying in the euro.
Okay, but what if this doesn’t happen? What if June 17 rolls around and the Greeks elect Syriza after all? Over at the Peterson Institute for International Economics, Jacob Funk Kirkegaard is skeptical that Greece would actually leave the euro even then. He thinks the country might, at worst, repudiate support from the rest of Europe and “suspend” its debt payments but still stay in the euro — the country wouldn’t default entirely.
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