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Two votes this summer will make all the difference in the world and one of passed in Greece on Wednesday. With a backdrop of severe austerity measures already taken and unions conducting a two-day general strike complete with protesters clashing with police, a slim majority of the Socialist party agreed to a new round of budget cuts and tax hikes worth $40 billion that will secure the European Union's support for continued bailout lending.
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It is a short-term fix that will settle markets and may even provide a solid boost, as uncertainty in Europe has dragged on the market for months -- it might even be said for the past year.
Some economists, however, are warning that it's a trap. Worse, it's a trap within a trap, as membership in the eurozone has for the past 10 years favored the exporting powers of Germany and France, giving them a ready market for their goods while not giving the peripheral nations of Greece, Portugal and Ireland a chance.
The same countries that have been riding high for the past 10 years are now dictating the terms to the countries that are floundering.
The metaphors are easy: The eurozone is a 17-member organization in which some of the economic powers in Europe are carpooling with a couple of slacker countries that are not the most financially disciplined of nations -- overpaying benefits, finding it difficult to collect taxes and concealing their financial failings from the rest of the gang. It turns out it was unfair to ask rich and poor nations to share the same itinerary. One of the hopes behind the euro in the first place, that Greece, for example, would share German technologies and their prosperous market and become a successful industrial nation in its own right, did not anticipate that 10 years down the road a financial meltdown would vigorously test any progress made.
Clearly, the euro as the great equalizer did not work or it needed more than 10 years to turn Greece into Germany Junior.
The second trap is the bailout itself. This is slightly different than bailing out General Motors Co., mostly because a slimmer, trimmer Greek government is not a lesson in how to create a moneymaker. In effect, Greece is not GM; it's Saab, the brand GM sold, which is currently under-financed and suffering prolonged shutdowns.
Before the vote, HSBC Pantelakis Securities in a research note said the vote would pass "barring last-minute surprises" but the surprises might be expected down the road, when the next national election in Greece either turns out Prime Minister George Papandreou's Socialist party or does not.
The second critical vote of the summer will take place in Washington when legislators are asked to raise the U.S. debt ceiling so the government can continue to pay its bills.
That headline can wait for another day.
In international markets Wednesday, the Nikkei 225 index in Japan rose 1.54 percent while the Shanghai composite index in China shed 1.11 percent. The Hang Seng index in Hong Kong was off less than 0.01 percent while the Sensex in India added 1.09 percent.
In Australia, the S&P/ASX 200 index gained 1.23 percent.
In midday trading in Europe, the FTSE 100 index in Britain gained 1.15 percent while the DAX 30 in Germany rose 1.66 percent. The CAC 40 in France gained 1.8 percent while the Stoxx Europe 600 added 1.5 percent.
