Euro Crisis still a Domiciles Sword – A warning by stock Analysts

The Greece elections that marked a slim victory for the main conservative party in the Sunday elections may create an impression that the fears are over about Greece and that it will stop using Euro resulting in a global financial turmoil. However, the euro crisis risk is not yet over, as one cannot exactly predict the outcome of the Greek politics and the European economic policy. Therefore, there are still clouds of dilemma that are hovering over the global financial markets.

The conservative New Democratic Party that supported the bailout agreement for Greece earlier this year appeared to win enough votes to form a ruling coalition with another pro-bailout party. This electoral success of the New Democratic Party has at least for the time being has averted the possible and sudden exist of Greece from the euro currency had the leftist party Syriza won.

The coalition lead by the New Democratic Party in power may help Greece in receiving the international aid that is needed to pay off its debts and to keep its economy afloat. The outcome of the election results were positively received by Dow Jones with the industrial average futures up by 34 points early on Monday morning. Nevertheless, stock analysts warned that any upsurge in the stock markets is for short term only.   In Asia, the stock markets were up with Japan’s Nikkei 225 stock average up by 1.89%. The euro rose to $1.2686 from $1.2637 in New York last Friday.

The economists are still concerned about the banking and debt crisis that are still prevalent in some of the bigger European economies like Italy and Spain. The chief economist at Wells Fargo – Mr. John Silvia opine that the euro crisis is not yet over but its’ intensity will increase and decrease for years to come and for the time being it has just decreased.  The polls do indicate that the people of Greece would like to stay in the euro zone and would not like to return to the Greece’s old currency drachma.

Nevertheless, staying in euro zone for the people of Greece will result in rising inflation and the living standards will shrink further as Greece is heavily dependent upon imports. Meanwhile, the people of Greece are outraged by the demand of its European neighbors especially Germany to cut the public spending in exchange for a total of $300 billion in bailout loans.

Leave a Reply


Switch to our mobile site