Greek politicians have failed to come up with a compromise government after having elections on May 6th. The Greek people elected a mix of far right and far left political blocs opposed to austerity measures and bailouts from the European Union. Despite the new found power, these differing parties have failed to reach a consensus about the governments' composition and how to integrate with the mainstream parties that supported the bailouts. New elections are scheduled for June 17th and an interim prime minister was put in place on Wednesday.
Failure to ratify the bailout agreement would send Greece to bankruptcy and effectively remove it from the single European currency, the Euro. The full effects of this move remain unknown until that line is crossed. However, the Euro has been devalued from $1.2842 to $1.2771 with the news, and shares have been lowered worldwide with the news. A possible Greek pullout from the Euro is unfathomable, both locally and globally alike. Due to the interconnectedness of global markets, any action taken will hit the United States and elsewhere. It has the potential to pull the legs out from staggering economic climate here in the United States, making it effectively worse for everyone, particularly President Obama.
The Greek situation is an incredibly tricky situation. On one hand, austerity itself doesn't work at reviving economic woes within a country or territory (see Spain, the UK and the US immediately after the Great Depression, for examples). However, particularly in the Greek's situation, they so overspent and so under-taxed as a country that "austerity" cuts would make the most logical sense to relieve the problems of the state, not to mention the debts that they owe the world. The Devil is in the details as to who the Greeks choose to represent them at this crucial time, and how these elected leaders chose to act in light of the situation they are currently facing. In the aftermath of this election, seen widely as a rejection of their current path, things are not looking good for Greece--or the European community as a whole.
One light that could be seen in this situation is that, so far, only money has been lost (and likely will be lost if the Greeks continue to back anti-austerity measures). Say what you will about the costs that are going to be realized if they should negate their predetermined obligations, the bottom line is that only money has been lost. Currency is not technically what everyone really needs in order to survive and be well. We should hold on to that notion. Try telling that to the bankers and elites of the world who base their entire lives on the stuff, even when there is no need for it and the price of having it comes at a tremendous cost to the environment, economy and society in which they're living inseparably apart of.
How did the Greeks go from being the forebears of our civilization to their current state of affairs in 4,000 years and less? We'll all be waiting to see how this election and its effects shape the rest of the world's linked economies. To every crisis, there is an opportunity. We'll just have to wait and see what happens. For better, and for worse.