Death Star Economics



Greek elections – lather, rinse, repeat

So much has happened over the weekend.

First up: Greece – obviously.

Center-right New Democracy secured the most votes, putting Antonis Samaras in the diver’s seat, who is currently (like, right now) busy trying to form a coalition. Leftist Syriza came in second, followed by center-left Pasok. Last night, Samaras said it was a victory for all of Europe and that Greece would honor its commitments to the EU. I suppose we’ll leave the latter up for discussion, there might be some definitional disagreements…

Now, if New Democracy forms a coalition with Pasok, that would give them 162 seats in the 300-seat parliamentBUT. Word got out that Pasok refuses to agree to a coalition unless Syriza is a part of it as well. That would lead us to a center-right-center-left-radical-left (by deduction: center-left) government. Both New Democracy and Pasok have been dubbed ‘pro-bailout’ parties, while Syriza got the opposite predicate. Greece’ track record with coalition governments is not the best and until recently, most of Lucas Papademos’ job was to mediate between Pasok and New Democracy. This won’t be easy. Mostly, because their main topic of discussion will be the possible renegotiation of terms of the European bailout package [the actual possibility of which is a whole different topic], which were agreed on in March when Greece was on the brink of default the last time. read article or Open Europe’s summary (or open any newspaper)

Oh, wait a minute, breaking newsSyriza will NOT join the coalition! This might have killed everything that looked promising (see above) and may or may not mean that there needs to be a third round of elections. Lather, rinse, repeat, but let’s not jump ahead…

Having said that, it doesn’t really look like yesterday’s result have diminished the fears or hopes of Greece leaving the euro, it just postponed the pain of actually planning it.

But while we’re at it, think about THIS: Germany vs Greece in the quarterfinal of the European championship – the most politically-loaded football match in history. Will the Greek team wear German shirts? If Greece wins, does that mean that Germany wins as well? Or, if Greece wins, does Germany get the points as collateral and a general ‘thank you’ and moves on? So many questions…

In France, Hollande’s party won the parliamentary majority, which is giving him more support at home (they already have a majority in the senate) to fight the fiscal policy-fight with [mainly] Germany. Also, big news, Hollande said to hold back on pushing eurobonds, if European politicians agree to his proposal for a growth pact worth €120bn. This would include project bonds (i.e. fake eurobonds), structural funds to stimulate growth and the introduction of a financial transaction tax (Hello, Mr. Cameron!). Much like the QE-without-QE in the UK last week, this looks like eurobonds-without-eurobonds to me.

And then there is Mexico. The G20 are meeting to discuss the eurozone outside the box that is the continent. Much to the displeasure of, for example, Brazil, which wants more power to be allocated to BRICs&Co in exchange for financial support of cleaning up Europe.

Besides all that, Spain continues to do badly in all sorts of ways (bond yields, refinancing of banking system, amount of bad loans on books) but there is no way that I can make this post any longer.

So long.


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