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Greece Votes for Stability -- for Now -- and Markets Rally

Motley Fool Staff
June 17, 2012

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 b