The elections in Greece on Sunday brought a sense of relief to the world’s financial markets. The New Democracy Party, which is pledged to supporting the already negotiated bailouts and attendant austerity measures, won a plurality of the votes cast, although the painful process of forming a coalition government is still in progress. Nonetheless, the prospect of a new Greek government intent on spurning the agreements and possibly withdrawing from, or being forced out of, the Eurozone, was avoided. World markets breathed a sigh of relief. For about three hours. By noon, fears about the Spanish economy overwhelmed the morning’s gains.
Bad news always travels faster than good, and fear tends to exercise more effective control over human emotions than hope. But, I thought the market’s “invisible hand” was supposed to be rational and not prey to emotions? Globalization has now shown its uglier side.