The only sense in which the Greek election on Sunday matters is as a time marker. Whoever wins cannot possibly follow through on the austerity program and, regardless of the outcome, Greek is headed for a Euro exit. It's just numbers now. Greece is gone.
The real news is what is happening in Spain and Italy. Yields on sovereign debt are rising quickly in both countries. They are past the point at which either country has any real shot at making it through this. Germany does not have the resources to rescue the situation, nor does the US and/or Britain. It is over for the Eurozone.
The failure to permit workouts and bankruptcy, which is what should have happened here, as well as in the US in 2008, is going to exact a huge price on the Eurozone. Massive unemployment, surging inflation, and collapsing GDP represent Europe's near term future. It is really far too late now to avoid catastrophe.
Hopefully, other countries will learn something from Europe's coming agonies. States like California, Illinois, New Jersey and Maryland are heading down the path to insolvency and quickly. The US national fiscal situation probably has a two to three year window left within which to tackle it's enormous debt problems. We shall see if anyone learns or if we are simply destined to follow Europe down the road to disaster.
Honesty and transparency would solve these problems. Pretending that there is some other fix by politicians guarantees economic and political chaos.