The screaming headline is 'Greece Elects Far Left Syriza (SIH-reez-ah) party to run Government', the reality is they're on par with other left leaning mainstream European governments, it's just that they aren't taking this austerity crap anymore. The Greeks have paid a cruel price to demonstrate how bad right-wing economics really is. 'Austerity driven growth' is right up there with Bernie Madoff fund management, sounds great until you see the actual results.
The Wall St and London bankers caused the Greek debt crisis by selling the Greek government risky financial instruments to replace sovereign debt and then created derivatives that bet against these same instruments. This drove the cost of servicing Greek debt through the roof. A modest cost to service debt doubled and redoubled driving up the operating deficit requiring more and more borrowing at ever higher interest.
The people of Greece weren't to blame for this and have suffered needlessly. Iceland found itself a similar position and instead of suffering for the actions of bankers, they put the bankers in jail and Iceland's economy is doing fine.
US Conservatives instead blame the Greeks for being lazy but in fact the average Greek citizen is more productive than some of those US Red states that are supposed to be Conservative models for the rest of us. You know, the ones that get $2 back from the Federal Government for every $1 they send to Washington. If the European Union operated on that basis Greece wouldn't be having a problem.
The problem with the Euro is that it's really a de facto German Mark as they control and benefit from the flow of euros. Germany did with currency what they couldn't do with Panzer tanks and now control most of Europe. So the Germans could try to buy Greece off with debt restructuring and such things. If the Greeks are smart they'll tell Germany where to stick its euros and start printing drachmas. Sure, in the short term there would be some considerable pain but Greece's primary industry is tourism, a weak drachma would make vacationing in Greece very attractive and the hard currency would pour in. Greece is also a big trading partner with China and you can bet a workable plan would appeal to The Peoples Republic to get a foothold in Europe's economy. Greece could probably borrow all the renminbi that they want for next to zero interest.
The ball is really in the the German's court, do they want to risk much larger Spain doing the same thing if they don't make a deal, or let Greece go and try to deal separately with Spain? Iceland proved that a really small country can make a go in the World economy, if you develop a reputation for jailing bankers.
Update: Germany has issued a statement late today that they "expect Greece to live up to its commitments". I don't know if Germany thought that through, Syriza (SIH-reez-ah) has made it clear they want Germany to eat a big chunk of debt, but they say they're committed to negotiation (before Greece dumps the euro). Oh well, they couldn't hold Europe with Panzers either.
Twitter @BruceEnberg - If you want a nice vacation from politics in 2016, I'll bet that a USD will buy a lot of drachma.