Greek Gamble
Greece has recently been in the headlines again, and you can immediately guess why when looking at its stock and bond markets:
Greece's stock market has reversed course this year, and recently it has had a few bad hair days that looked especially gut-wrenching
We outlined the basic problem in a post in September entitled “Greece Wants to Escape from Bailout”. As we noted on this occasion, the Greek government remains essentially bankrupt, but is eager to get the bailout (and the associated “troika” prescriptions and monitoring) out of its hair. So when Mr. Samaras started talking about wanting to rely solely on market funding, the markets balked. However, there is a potentially even bigger problem now.
In a nutshell, a presidential election is looming. While the post of president is largely ceremonial, the government needs to push through its candidate – if it fails to do so, a new parliamentary election must be held.
The problem is that recent opinion polls look as follows (this one is from late October):
A recent Greek poll on voting intentions. As you might guess, the guys with the biggest bar are not led by someone named “Samaras”. Instead they are led by Alexis Tsipras.
Antonis Samaras has now decided on what looks like a desperate (but probably calculated) gamble: he has pulled the presidential election forward, in the hope of scaring enough opposition parliamentarians into voting for his guy (when he announced the change in the election date, he didn't even have a candidate yet. In the meantime it has turned out it will be Stavros Dimas, a 73 year old former European environment commissioner).
Greek government bond yields look like this lately:
Greece's 10-year government bond yield, daily. Going the wrong way too.
In order to keep the acolyte of Karl Marx depicted further below at bay, Mr. Dimas will need to get 180 votes of out of 300 in the final round of voting (the parliament votes for the president). In short, about 25 votes from opposition MPs are required, as the coalition controls 155 seats directly. That could prove to be a tall order, considering the people who are in opposition. No SYRIZA MP is likely to vote for Mr. Samaras' candidate. We somehow doubt the Stalinists will vote for him, and surely the neo-fascist Golden Dawn MPs won't either. There are 24 independents who have left the ND (Samaras' party) and its coalition partner PASOK in protest in recent years. Of these Smaras is said to be able to rely on 12. In other words, it is definitely possible for Murphy's law to strike.
What to do?
SYRIZA leader Alexis Tsipras. The color of the background is no coincidence.
