Monday, January 26, 2015

The Greek Warning

Wall Street Journal
January 25, 2015

The exit polls Sunday night suggested that Greece’s far-left Syriza party will score a major victory in the weekend’s parliamentary election. The fallout for Europe will take time to sort out, but the warning should be clear enough about the political consequences of economic stagnation.

With Syriza poised to capture around 35% of the vote barely four years after it rose to national prominence, its leader, Alexis Tsipras, will have the first chance to form a new government. Mr. Tsipras is a former civil engineer who once favored Greece leaving the eurozone. He has tempered that demand as he sought power, but at a minimum he will try to renegotiate Greece’s bailouts with the troika of the European Commission, European Central Bank and International Monetary Fund.

A Greek euro exit isn’t likely, at least not immediately or intentionally. Some on the left favor the idea, but polls show most Greeks don’t. They know a return to the drachma would mean a crushing devaluation with catastrophic results for the average Greek’s standard of living.


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