Why Greece’s “No” is a larger threat to the EU than many think

Peter Kenny is the Chief Market Strategist for the Clearpool Group. This article originally appeared on his excellent Tumblr. You can follow Peter on Twitter.

Greece’s resounding denunciation of the debt referendum over the weekend was a blow to the European Union, the ECB and the IMF. There is no way around that. And though much of the handwringing and attention will correctly be focused on next steps for Greece and the EU over the next days and weeks, there is an increasingly more urgent concern making itself felt across the European Union.

In fact though Tsipras’s leftist party victory in Greece is viewed as a blow to the decades old dream of one Europe, there is a rising cast of European political figures welcoming the news. In Spain, leftist Pablo Iglesias went as far as to Tweet a congratulatory message to Prime Minister Tsipras. Britain’s Independence Party leader Nigel Farage commended Greek voters for their courage. French far rightist Marine Le Pen took the opportunity to call out the European Union as an oligarchy.

This is where the nexus of concern lies. It is not in Greece so much as it is in the balance of Europe – the future of the Union. Europe’s growth has been stagnant for well over a year. Even the engines of growth for the EU, like Germany, have stalled. The peripheral economies have struggled under negative economic performance and debt. The ECB has launched a stimulus campaign that is designed to head off any further economic contraction. Growth and economic opportunity are the glue that holds the EU together. Neither seems to be present in a meaningful way today. Without growth and clear signs of political fraying the EU is in trouble. The longer countries like Spain, Portugal and others languish and are perceived to be at the mercy of the ECB and Germany, the higher the odds that history will repeat itself.

Today it is Greece. Tomorrow? No one knows if a similar debt crisis does migrate to other member states. We do know there are prominent politicians across the continent that has long been eager to upend the EU and ECB. If, and that is a big if, a similar landscape emerges in larger economies within the fabric of the EU there will be repercussions that will force a continent wide examination of conscience, at a minimum. Those opposed to the EU will make certain of it.