What are the results of last week's elections? Both Pasok (Center Socialist) and New Democracy (Center Right), the country's two traditionally dominant parties, suffered a humiliating defeat in the May 6 election. They lost votes to the small parties campaigning against austerity measures.
Not a single party won a majority of seats in the 300-member parliament. Pasok secured only 41 seats with a mere 13.18 percent of the vote. New Democracy got 18.85 percent of the vote and 108 seats.
The results are a death blow to the country's decades-long two-party system, leaving both Pasok and New Democracy in a lurch. But this should not come as a surprise considering the widespread popular discontent largely due to how the Greek crisis and how has been handled.
What the economy needs now is a coalition government -- one that will push for structural reforms and one that can convince the Greek people that all the harsh austerity measures will not be in vain. But above all we need political stability. Top vote-getter, New Democracy's Antonis Samaras, failed to form a new coalition government. The second most popular party, Left Coalition Syriza, was also unsuccessful.
Syriza won 16.78 percent of the vote and got 52 seats in parliament. But its leader Alexis Tsipras failed to capitalize on his party's success at the ballot box. No other left-wing party in Greece has ever come in second at the polls.
It is now up to Pasok to form a coalition government. If Evangelos Venizelos, the former finance minister and newly-elected leader of Pasok, doesn't succeed, a second snap election will be held in June.
With no government to govern, Greece is stuck in limbo. Without political stability, the country will continue to teeter on the edge of the debt cliff unable to avert an imminent default and lift the economy. Greece has very few degrees of freedom and cannot afford to make any mistakes or to waste any time.
Was it a protest vote? Greeks are showing signs of fatigue. They are tired of all the political rhetoric and the continuous pressure put on them to make more and more sacrifices -- if they ever want to see better days. But there is no light at the end of the tunnel, at least not yet.
Greeks have been the unhappy recipients of a constant barrage of criticism coming from their Euro partners. Greek voters are becoming angry; they are exhausted and feel humiliated. There is a growing sentiment among Greeks that their representatives are doing a rather poor job representing them.
Last week's election was most certainly a de-facto referendum. It was a chance for Greeks to express their opposition to the "medicine" being administered to fix the economic crisis.
Over the past several months Greeks have experienced horizontal cuts of austerity that have resulted to sometimes over a 50 percent reduction in wages and state pensions. Tax rates and special levies have been raised close to 10 times.
With growing fears of a vanishing middle class, more and more people are beginning to question how the crisis was diagnosed and whether the right medicine is being given.
All the while, the previous austerity-supporting, pro-European coalition government ruled by Pasok and New Democracy has promised the Troika (the European Union, the European Central Bank and the International Monetary Fund) more public spending cuts to raise another 11.4 billion euros by 2014. Next week Greece is scheduled to buy back 436 million euros' worth of debt held by private creditors who turned down a swap last month.
It is definitely not going to be easy for Greece or its people. There's a long and winding road ahead with much distance still to be traveled.
The irony of the situation is that Greece could have probably traveled more if the government had correctly diagnosed the crisis as one of solvency, rather than liquidity. What's worse though is that no one had the guts to change course when this became clear.
In the beginning, the crisis was treated as a short-term one that required traditional austerity measures to be fixed -- while growth rates would kick in later.
A severe structural crisis though like ours requires patience by all, and deep regulatory and institutional reforms that will be able to spur productivity. This is the only way to solve the structural problems and to put an end to informality -- a black hole that is causing great damage to productivity levels and the GDP.
There is no quick-fix solution. Any sustainable solution to the problem will require serious political leadership, long-term reforms and a sea change in the political rhetoric.