Will Greek Election Spell The End Of The Euro?

Greek vows to end the “humiliation and pain” send shock waves through the eurozone.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

So the unthinkable has happened and the Greek people have chosen to tell their German euro-masters where they can stick their austerity measures!

But could this be the first domino to fall in a cascade that will bring down the euro? For the sake of the long-term future of Europe, I do hope so.

Europe good

Don’t get me wrong — I’m an ardent europhile. But my enthusiasm is for an association of sovereign states with open borders to goods, services and people; but with members able to work their own economic levers as they see fit and in accordance with their own economic needs, rather than having things dictated by Brussels for the benefit of Germany and France.

Had Greece left the euro in the first place, there would certainly have been some years of pain. But a New Drachma would have been free to devalue, making Greek exports look considerably more attractive — having goods priced in euros in an economy that can’t compete with the efficiencies of Germany and France was always going to be a recipe for years of stagnation.

Greece would have seen high inflation and corresponding high interest rates had it left, but there would have been light at the end of the tunnel. As it stands today, Greece is suffering the pain but is still in the dark.

Syriza victory

The anti-austerity Syriza party has won Sunday’s election and has formed a coalition with the right-wing Greek Independents party, giving the new government a comfortable majority. The country’s new leader, Alexis Tsipras, is now set to renegotiate Greece’s bailout with a view to ending the “humiliation and pain“.

Speaking to the BBC, the likely incoming finance minister Yanis Varoufakis described the terms of the German-led bailout as “fiscal waterboarding policies that have turned Greece into a debt colony“. Them’s fighting words.

Talking heads across the eurozone are already urging Greece to stick to the terms of its bailout, though many are conceding that there might be room for some flexibility. But Germany, the nation really calling the shots, has indicated that it will not countenance any renegotiation.

Confrontation

The incoming Greek government has said it wants to remain in the euro, but its stated policy is clearly contrary to the current rules of the union. And although Mr Tsipras has said that “There will neither be a catastrophic clash nor will continued kowtowing be accepted“, there’s clearly a confrontation coming, and it could be messy.

To the Greek electorate I say Bravo, for voting to regain your own sovereignty. And if your actions help hasten the end of the ill-conceived economic experiment that is the euro, then many more in years to come will surely be thanking you.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »

Investing Articles

3 ideas to help investors aim for a million-pound Stocks & Shares ISA

The UK has a growing number of Stocks and Shares ISA millionaires, and this plan may be one of the…

Read more »

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »