Long-term solutions to European debt crisis at political impasse

June 14, 2012

Associated Press and Worldview

Download Story

The future of the European common currency is more uncertain than ever: This weekend Greeks will vote in an election that could determine whether the debt-crippled country retains its cherished position in the Eurozone.  

Athens' main stock index was up nearly 8 percent in mid-afternoon trading Thursday, suggesting investors hope the result of the election will yield a government that can keep the country in the Eurozone.

Sunday's election is seen as a close race between the conservative, pro-bailout New Democracy party and the radical left Syriza party, which wants to scrap Greece's austerity commitments.

Greece is surviving on international rescue loans, received in exchange for painful austerity measures. Billions of euros have been wiped off the market since Greece's financial crisis broke in late 2009, and the stock index has dropped over 60 percent in the past year.

But Greece isn't the only country posing a threat to the future of the euro. Last week Spain agreed to a bailout of its banking sector. It's the largest country in the European Union to agree to a bailout thus far. Still, the bailout seemed to do little to assuage the markets. They took a tumble just a couple days after the agreement was announced. Political scientist Stephen Nelson says he's "pessimistic" about the future of the common currency.

It's become too costly for Spain to roll over its debt and it's unclear whether member nations will be able to agree to a long term solution.

Thursday on Worldview, Stephen Nelson explains the latest bailout and lays out the policy options that Europe will need to consider if it wants to go beyond temporary solutions to the debt crisis.