France and Greece elections - Austerity fails?

[kandrathe]

As much as I dislike George Soros... A recent speech he gave does shed some light on the European crisis and possible outcomes.

I'm currently weighing the odds that Spain's banks will get capitalization relief. By whom?

"In my judgment the authorities have a three months’ window during which they could still correct their mistakes and reverse the current trends. By the authorities I mean mainly the German government and the Bundesbank because in a crisis the creditors are in the driver’s seat and nothing can be done without German support.

I expect that the Greek public will be sufficiently frightened by the prospect of expulsion from the European Union that it will give a narrow majority of seats to a coalition that is ready to abide by the current agreement. But no government can meet the conditions so that the Greek crisis is liable to come to a climax in the fall. By that time the German economy will also be weakening so that Chancellor Merkel will find it even more difficult than today to persuade the German public to accept any additional European responsibilities. That is what creates a three months’ window."

I'm not as optimistic about Greek elections becoming less polarized. I still think there is a very strong group opposed to reform and fiscal austerity sufficient to appease the creditors, and an equally strong group who see it as the only way forward. From what I read, the middle ground is diminishing.