The Greeks, unhappiest of all, have apparently chosen a government of parties slightly less unenthusiastic about the agreed program than the others. Antonis Samaras was an opportunistic opponent of austerity in opposition, while his party, New Democracy, bears a full share of responsibility for the pre-crisis mismanagement. Much trouble lies ahead: Alexis Tsipras of Syriza, the far-left party, has 27 percent of the vote already. He will be only too happy to exploit rising public anger.
Spain is hoping for a 100 billion euros ($127 billion) bailout of its banks but, alas, one that benefits the creditors of banks at the expense of the creditworthiness of the government. At current rates of interest, it is only a matter of time before Spain requires a fiscal rescue. That would exhaust the available resources of the euro zone. It also risks turning a proud country into a dependency, with frightening results for stability.
Italy’s fiscal deficits are far smaller than Spain’s, but its rollover problem is bigger. According to the International Monetary Fund’s Fiscal Monitor, Italy needs new financing equal to 28.7 percent of gross domestic product this year, far above Spain’s 20.9 percent (see chart). Moreover, what follows the government of Mario Monti, due to leave office next year, is an enigma.
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