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SYDNEY -- As has been widely reported, the pro-bailout parties appear to have won Sunday's Greek election, with the New Democracy party gaining the majority of votes, to potentially govern in an uneasy coalition with the socialist PASOK party.
Markets have breathed a huge sigh of relief -- for now. In morning trading, Asia-Pacific markets are rallying, with the Australian S&P / ASX 200 (INDEX: ^AXJO ) showing gains of 1.5% in the first minutes of trading.
Japan's Nikkei 225 (INDEX: ^N225) has opened up 2.1%, while the KOSPI (INDEX: ^KS11) from South Korea showed gains of 1.9% in the opening half-hour of Monday trading activity. New Zealand's NZX 50 (INDEX: ^NZ50) was up 0.3% in the first couple of hours on Monday.
Dow futures also rose, adding another 47 points and suggesting a positive open for the Dow Jones Industrial Average (INDEX: ^DJI ) in Monday trading.
Crisis delayed, not averted
The election result might remove, at least temporarily, the worst-case outcomes that many in the market had feared -- that the anti-bailout Syriza party would recklessly pull Greece out of the eurozone.
Of course, it doesn't go anywhere near dealing with the basic issues confronting Europe -- and from which there seems no quick or simple solution. Years of lax tax collection, unsustainable social welfare spending, and entrenched corruption won't be resolved after a single election.
The Greek people are still deeply unhappy about having to make such deep cuts, as a result of what they see as government mismanagement and investment bank profiteering. They are contributing factors, but the Greek economy is still structurally unsustainable.
The jury is still well and truly out regarding what actions can be taken to extract much of southern Europe from recession -- Greece is in its fifth year of economic contraction. Austerity makes instinctive sense -- spending less should mean a reduced deficit and help to pay off excessive government debt.
Finding the right answers
The problem with what seems like an obvious solution is that lower government spending also depresses demand, which means lower taxation revenue, fewer jobs, and therefore higher welfare spending. It also carries echoes of the Great Depression, during which cuts in government spending exacerbated rather than moderated the crisis.
It may well be that the "obvious" solution is the least helpful.
There is still a lot of water to go under the bridge. The proposed Greek coalition will be tested in the coming weeks and months, and the opposition parties will continue to snipe from the sidelines. The Greek people are happy -- for now -- but their patience will continue to be tested.
The Greek people will also continue to see the austerity measures as unfair and undeserved, while the taxpayers of Germany will see their contribution to the Greek bailout as undeserved charity.
While economists and European bureaucrats and government officials argue about the best way to rescue Greece and the eurozone, the basic problems continue, largely unabated.
They will probably take years to resolve, and this crisis has a long way to play out.
Despite the uncertainty, investors should be wary of worrying too much about Greece. As other Western economies continue to recover, consumers will resume spending, companies will continue to innovate, and capitalism will continue to find new solutions to problems, new and old.
You don't need to take a position on Greece -- there is plenty of opportunity elsewhere, and sitting on the sidelines could be the least profitable decision of all.
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