By Marcus Leach
With the problems in the Eurozone mounting this week all eyes will be on Greece this weekend as they prepare for general elections.
Sunday’s elections have heightened fears of further instability on financial markets, let alone the future of the Eurozone.
“The currency markets are collectively holding their breath,” Glenn Uniacke, senior dealer at the currency specialists Moneycorp, commented.
“The very future of the Euro could be determined by the results of this weekend’s election in Greece.
“Opinion polls show that four out of five Greeks want to stay in the Euro, and if the pro-bailout parties get enough votes to cobble together a coalition, they should just be able to keep the status quo.
“If they do win, expect a “Europhoric” blip – with the Euro strengthening for a week or two. But don’t expect it to last.
“The real elephant in the room is Spain. We all know it’s there, but this week the markets have been too preoccupied with the Greek crisis to worry much about it.
“Should the Greek threat subside, the focus will return to Spain – a country where the government is slowly sinking in debt and its cost of borrowing has reached unsustainably high levels.
“So a victory for the pro-bailout parties in Greece will only bring temporary respite. But if the anti-bailout, radical left coalition Syriza wins the end of the Euro as we know it would surely be nigh.
“Syriza’s leader is playing a multi-billion Euro game of poker with the Eurozone’s paymasters.
“He has called Germany’s bluff – tacitly threatening to pull Greece out of the Euro if the painful terms of the country’s current bailout package are not eased.
“His bet is a clever one. Greeks don’t want to take the austerity pain demanded of them by the Eurozone. But the Eurozone can’t afford to kick them out either.
“If he wins, there’s a good chance of a full-blown run on Greek banks, with Greece crashing out of the Euro, and the single currency possibly imploding too.
“The Greeks gave the world the word democracy. On Sunday Greek voters may give it another one – Eurogeddon.”
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