An early risk asset rally has faltered as traders turn their attention away from Greece and to rising Spanish bond yields. – Financial Times
TOO CLOSE TO CALL ended with pro bailout, conservative New Democracy party winning the election in Greece. The elites did, too, as did the banks, but it was a close one that leaves a path for their take down if people aren’t satisfied, which you can bet they won’t be. Austerity isn’t working for the people, because it simply does not work.
With nearly 100 percent of ballots counted in the election, a re-run of a poll on May 6 that left no party able to form a government, New Democracy had won 29.7 percent of the vote, ahead of SYRIZA on 27 percent, and PASOK on 12.3 percent.
A 50-seat bonus automatically given to the party that comes first would give a theoretical New Democracy-PASOK alliance 162 seats in the 300-seat parliament, enough for a majority broadly committed to the 130-billion-euro ($164 billion) bailout.
“The result showed people want the euro, but society remains divided. SYRIZA will be a militant opposition, possibly complicating the new government’s efforts,” a senior New Democracy official said on condition of anonymity.
“The new government must deliver a positive development soon – an easing of the bailout terms or a positive sign in the economy – or people will lose trust in a week.”
As Sunday’s election neared, Antonis Samaras, leader of New Democracy, softened his pro bailout stance due to pressure from Alex Tsipras. Sampras saying he wanted to renegotiate the bailout deal and we’ll now see if it can be done. Tsipras is betting on a renegotiation, because if it’s not there will be another round that could be the tipping point.
According to Reuters, Germany’s foreign minister Guido Westerwelle said the substance of bailout terms are “not negotiable,” but did offer that timing could be adjusted due to campaigning time lost.
This is the outcome that markets have most wanted to see, as New Democracy and PASOK have generally signalled a willingness to go along with the current bailout path, and not buck the rest of Europe. The leftist leader Alex Tsipras, on the other hand, had threatened to tear up the bailout agreement (though he had always promised not to leave the Eurozone).
So at first it all seemed good… but then around 9:00 PM in Athens, word came that the leader of PASOK, Venizelos, was threatening to withhold support for a new government unless SYRIZA also joined as part of a broad coalition.
The politics are understandable. It’s very easy for SYRIZA to gain popularity will staying in the opposition, railing against the establishment parties and the bailout without having to take any responsibility for what happens. The meme in Athens is that SYRIZA leader Alexis Tsipras didn’t even want to win, and always wanted to come back and run again in 4 to 8 months after the establishment parties lost standing.
Alexis Tsipras is not taking the elections on Sunday as a loss, quite the opposite. Coming so close the first time to the establishment has given him credibility and he’s refusing to join an all-party unity government, vowing to fight the austerity bailout plan that brought the citizens of Greece out into the streets to back Tsipras. As the saying goes, he’ll be back.