Source: FOX Business
ATHENS -- Whatever happens in Greece over the weekend, Monday is shaping up as one of the more interesting days for global stock markets in recent years.
Investors the world over are waiting anxiously for the results of Greek elections that could determine whether the debt-addled nation remains in the 17-member eurozone.
A win for the status quo New Democracy party would likely offer hope that a Greek bailout approved by European fiscal leaders earlier this year will move ahead as planned with as little disruption as possible. Investors are expected to seize on that scenario as a sign that there's light at the end of the long European debt crisis tunnel. That optimism could fuel a surge in global markets.
Investors have been bracing for a much more ominous outcome, however. Polls ahead of Sunday's ballot, made necessary by inconclusive national elections held in May, show rising support for the far-left-leaning coalition party Syriza, whose leaders have renounced the austerity measures required under the terms of the Greek bailout.
"Next week will see market direction steered initially by the results of the Greek election, in which there is a strong risk that the anti-austerity Syriza coalition could win power," said Chris Williamson, chief economist at research firm Markit.
Should Syriza leader Alexis Tsipras stand by his campaign pledges and reject existing bailout terms it's widely assumed that Europe would cut off funding to Athens, leading to a messy default by Greece on its debts and ultimately forcing the country out of the eurozone.
Given that chaotic economic forecast, fears have emerged of a run on Greek banks Monday should the anti-austerity party win over the weekend.
A default and expulsion from the eurozone would have a catastrophic domino effect on other fragile southern European economies such as Italy, Spain and Portugal, the thinking goes. Consequently, a win by the anti-austerity Syriza party in on Sunday is widely expected to have a devastating impact on global markets on Monday.
Greece's economy is in a shambles and it's dragging down the rest of Europe with it. Data released on Thursday shows that Greek unemployment soared to a record high of 22.6 percent in the first quarter of 2012, about twice the rate across the rest of Europe.
Austerity measures already implemented under the terms of an earlier Greek bailout forced large cutbacks in public employee payrolls and left thousands out of work. In addition, public employees still on the job have seen their wages cut and retirees have seen their pensions scaled back.