What it means: Greece will make no progress on any reforms it is required to do under the “troika” program. It's next review comes up in June, but there is no government to have a review with. Greece is supposed to find additional spending cuts to keep up with its agreements. That won't happen either.
1) Do even the Germans want austerity? Angela Merkel's Christian Democrats lost a regional election in North Rhine-Westphalia to the center-left Social Democrats by 38.9 percent to 26.3 percent. The Christian Democrats had received almost 35 percent during the last elections there in 2010. Merkel's party last week lost power in another regional election in Schleswig-Holstein.
Don't read too much into this: Rhine-Westphalia is a main area of support for the Social Democrats and the Greens. It's not at all clear that Germany is willing to abandon Merkel's focus on debt reduction.
But the election matters because Germany is scheduled to vote on both the new Fiscal Treaty and to create the European Stability Mechanism, the new European bailout program. The vote may be in the next several weeks. The Fiscal Treaty requires a super-majority and the Social Democrats are now in a position to force some kind of deal — support for the treaty in exchange for more measures to boost growth.
Things are now so unsettled, however, the vote may be delayed.
2) China reducing reserve requirements by 50 basis points is not eliciting applaud. That will add money, but that's not the problem. Banks already have enough funds on their balance sheets. They have to stimulate demand. Lower taxes, better regulation. Hard stuff.
3) Fitch says "disorderly default" in Greece would affect debt in euro periphery. So much for containment: Fitch this morning said that sovereign debt in Spain, Portugal, Ireland, and Italy would be under risk of a downgrade should Greece default. Fitch also noted that corporate debt would be downgraded, as well.
—By CNBC’s Bob Pisani
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