Eurozone Rally Takes The Pressure Off Greece, But Not For Long

Now that the European Central Bank has begun its large scale bond buying program, the region's political squabbles have moved out of the spotlight.

With the region's share markets trading higher due to the influx of cash and exporters cheering the devalued euro, it seems the EU's hard-fought battle with Greece has been all but forgotten.

However, worries that the rally can't last are beginning to refocus investors' attention on the bloc's fundamental problem— a fractured financial system.

Greek Fire Still Burning

Although the EU agreed to extend a financial lifeline to Greece back in February, the two sides are still at odds over the nation's bailout program.

EU finance ministers say that Athens needs to suffer through some tough austerity measures in order to complete the necessary economic reforms and fix the nation's financial system.

Greek policymakers claim that cut backs are stifling economic growth and essentially put the nation under oppressive EU control.

Both sides are having some difficulty meeting in the middle despite the fact that February's agreement appeared to be a step toward compromise.

Grexit A Domino Effect

The negotiations between Greece and the EU have bubbled over into a very public dispute between Berlin and Athens, with both sides slating each other in the press.

Their strained relationship has created the perception that Germany would be unfazed by a Greek exit, but over the weekend Greek Defense Minister Panos Kammenos cautioned that Grexit would be the first of many.

Kammenos said that Spain and Italy would follow Greece's lead if it left the eurozone, and that Germany would also eventually bow out of the currency union.

Related Link: Is QE The Answer To Europe's Problems?

Overdone

Though reports depict Germany's relationship with Greece as strained Klaus Regling, the head of the European Stability Mechanism said on Monday that all eurozone nations have a common goal— preserving the eurozone.

Regling said that despite differing opinions, all of the region's policymakers are working to keep Greece in the eurozone. Since a Grexit would be bad for everyone involved, most expect that the region's lawmakers will eventually come to an agreement.