Five years ago economists would have laughed at the notion that the whole world would be waiting with bated breath to hear the results of the Greek election. Fast-forward a few years and that’s exactly what happened this weekend. Greece’s economy is crucial to the European Union’s survival and for that reason the election was watched closely worldwide and by leaders at the G-20 summit in Los Cabos, Mexico.
Tensions were running so high that Greeks were withdrawing 800 million euros a day from major banks before Sunday’s vote on fears a leftist victory would mean a return to the drachma. In the end, the conservative New Democracy party came first and pro-bailout parties won enough seats to form a joint government.
Canada Not Bailing Out
Leaders meeting at the G20 Summit have been keeping a close eye on the developments in Greece. Canada has taken a hard stance against the Eurozone crisis. Prime Minister Stephen Harper has indicated he is not keen on pitching into a bailout that would help the EU nations. It’s an announcement that has annoyed some world leaders, who say the survival of the European economy is crucial to the world’s financial future.
Greece’s Domino Effect
The concerns surrounding the nation of Greece and its economy are really extended to other, more prominent E.U economies – and the catastrophic implications a Greek economic failure would mean for them. The problems of Italy and Spain, two counties dealing with severe debt crisis, would only be exaggerated by a failure of one of their E.U. partners. The E.U.’s financial sectors are very closely tied and the collapse of one would mean the topping of many others.
What The Greek Results Mean
World markets have settled after hearing the government voted in by the people of Greece is not only pro-bailout but also pro-austerity. The party that will now rule Greece wants to work with the world to make its economy better. For that reason markets have been rallying since and Greeks, buoyed by new confidence, have started making deposits back into their bank accounts.
Greece Will Remain In The E.U.
The winning party’s leader says Greeks made the right decision. “The Greek people today voted for Greece to remain on its European path and in the Eurozone,” New Democracy Leader Antonis Samaras said. “Voters chose policies that will bring jobs, growth, justice and security.” For now Greece is safe in the E.U.
E.U. Risks Remain
The Eurozone crisis, despite the Greek election results, still remains on the minds of leaders around the world. This was evident at the G20 summit, as the debt crisis remained a hot topic. With the elections over and a new crisis averted the concern remains that there is more insecurity in the Euro zone that could topple several large economies and its only a matter of time until that happens.
How could these changes overseas cause rumblings on the home front? For one, we’ve seen Canadian Bond Yields take a plunge as a result – and that can impact mortgage rates. Want to learn more about the factors impacting Canadian mortgage rates? Click here.