by Calculated Risk on 5/17/2012 07:17:00 PM

The election is a month away and Europe will support Greece financially through the next election, but no one knows what will happen at the end of June.

Until the election, the campaign rhetoric will be global front page news. Syriza leader Alexis Tsipras seems to think that Greece can stay in the euro and also break the bailout agreement. His opponents say a vote for Syriza is a vote to exit the euro.

From the AthensNews: Judge to lead Greece to critical eurozone vote

A senior judge was put in charge of an emergency government on Wednesday to lead Greece to new elections on June 17 and bankers sought to calm public fears after the president said political chaos risked causing panic and a run on deposits.

European leaders who once denied vociferously that they were fretting over Greece leaving their currency union have given up pretence. Asked if he was concerned about a Greek exit, European Central Bank chief Mario Draghi said simply: "No comment".

Citizens have been withdrawing hundreds of millions of euros from Greek banks in recent days, as the prospect of the country being forced out of the European Union's common currency zone seems ever more real ...

The "run" on Greek deposits started in 2010, and deposits were already down about one-third before the recent run started. There won't be much left on June 17th.

Right now Syriza is leading in the polls, but the election outcome is uncertain. From the WSJ: Greek Leftist Leader Throws Down Gauntlet on Debt

The head of Greece's radical left party says there is little chance Europe will cut off funding to the country and if it does, Greece will repudiate its debts ...

A financial collapse in Greece would drag down the rest of the euro zone, says Alexis Tsipras, the 37-year-old head of ... Syriza ... Instead, he says, Europe must consider a more growth-oriented policy to arrest Greece's spiraling recession and address what he calls a growing "humanitarian crisis" facing the country.

"Our first choice is to convince our European partners that, in their own interest, financing must not be stopped," Mr. Tsipras said in an interview with The Wall Street Journal. "If we can't convince them—because we don't have the intention to take unilateral action—but if they proceed with unilateral action on their side, in other words they cut off our funding, then we will be forced to stop paying our creditors, to go to a suspension in payments to our creditors."

I think Tsipras is both right and wrong. He is correct about the need for growth policies, but he might be misjudging the European policymakers who seem more and more willing to stop financing Greece.

Many people are asking: Will this be a Lehman moment? US policymakers had many months to prepare for the collapse of Lehman, and the Bush administration was still unprepared when it happened. Are the policymakers in Europe ready for Greece leaving the euro? They sure haven't inspired confidence so far ...