The austerity that was forced on Greece has resulted in a backlash from Greek voters. The two ruling parties in Greece, which had traded power back and forth for 50 years, only received 33% of the vote between them. And now, no coalition can be cobbled together so the Greeks are going back to the voting booths.

Based on the early polls, it is probable that a coalition will form that will reject the enforced austerity. Which means that Greece will not get the funds it needs which will be the likely catalyst for an exit from the eurozone.

A few years ago the concern in Europe was that there would be “contagion” risk resulting from a Greek default. On a regular basis European politicians were pronouncing that Greece would “not be allowed to default”. As you know, Greece first defaulted in March, 2012. For the MiningFeeds related article: Did Greece Just Default? – CLICK HERE.

Now that Greece has defaulted, the politicians are now saying that “no other country will need to default” and “we prefer if Greece stays in the euro area”.

But there are bigger problems. Today, economic data confirmed that Spain is back in recession and reports of an outflow of deposits from recently nationalized Bankia. Spain’s El Mundo newspaper reported that customers at troubled Bankia had taken out more than 1 billion euros over the past week.

What’s Next?

Mario Draghi, the Italian president of the European Central Bank (ECB), created €1 trillion euros to help fund European banks. Through the LTROs (long-term refinancing operations) European banks in turn bought their respective country’s sovereign debt. The “relief” lasted about a month.

The last few weeks have presented yet another crisis, at least as large as the last one, as Greece’s exit from the euro seems imminent while Spanish and Italian bonds rates are on the rise.

John Mauldin writes, “It is the world’s worst-kept secret: Germany does not want inflation but wants to abandon the European Union even less. And as we will see, the eurozone simply does not have enough money to keep itself together without massive ECB intervention.”

For an excellent interview whereby Mauldin looks at what’s next for Europe, and also the United States, watch the embedded video below.