On Sunday, Greek voters put power in the hands of Alexis Tsipras and his left-wing party, Syriza. But with the EU threatening the collapse of Greek banks unless Tsipras agrees to tough economic constraints, the party may be forced to break its promises.
Repercussions for Greece
Forbes.com's Charles Calomiris considers what Tsipras's victory might mean for the Greek economy.
£12bn
The amount that UK banks have tied up in Greece
There's little chance that the International Monetary Fund, European Commission and European Central Bank (ECB) - collectively known as the 'troika' - will agree to wipe the slate clean by clearing Greece's debt, writes Calomiris, which means a Greek government default is a distinct possibility. "ECB refusal to roll over debt is also likely to produce a Greek banking crisis, as depositors recognise that the withdrawal of ECB assistance to Greece's banks will mean that Greek banks will be unable to continue to operate at their current debt levels," he adds.
As a result, Greece is likely to suffer "a chaotic future of bank runs, devaluation, capital flight, and even more worrying, new radical leftist policies to respond to the economic collapse produced by the crisis", says Calomiris.
Forbes.com opinion
Concern for UK banks
It is not just Greece that could suffer from the fallout from the election result. Investmentweek.co.uk's Anna Fedorova believes Tsipras's win could also spell trouble for British banks.
"UK banks have around £12bn tied up in Greece, sparking fears they may face losses if the nation's banks default following the latest election results," she explains.
Fedorova points to figures from the Bank for International Settlements, which show UK banks have lent £8.9bn to Greek banks, customers and businesses. She also notes another report from the Swiss-based financial watchdog, which claims that the UK may have a further £3.1bn "tied in with Greek lenders".
However, earlier this month, Bank of England Governor Mark Carney claimed the UK's major banks have actually had "very little direct exposure" to Greece, she adds, muting the impact of the election. Therefore, for now, the effect on the UK remains unclear.
Investmentweek.co.uk piece
Sound union
But while many are concerned that Sunday's election result will increase economic uncertainty across Europe, Investing.com's Cam Hui claims the EU should come out of negotiations unscathed.
"Despite the alarmist rhetoric, the union remains sound," writes Hui, who compares panic over Tsipras's win to children overhearing a fight between their parents and assuming they must be on the verge of a divorce.
In this instance, nothing could be further from the truth, he says. For Hui, it seems that Tsipras's platform is just "more of the usual European theatre that can be ignored".
Rather than jumping to conclusions, those looking to interpret the results of the Greek election need to read between the lines, he explains. "Despite the years of painful austerity, polls show that the vast majority of Greeks want to remain in the euro," he says. It seems that the new government "is holding a weak hand when bargaining with the troika," he adds.
Investing.com comment
Seen a blog, news story or discussion online that you think might interest CISI members? Email
lawrence.cohen@wardour.co.uk