Another great post from Jill of nakedtrader.com.
Greece 1 Russia 0. Against all the odds, Greece go through to the final eight in Euro 2012, at the expense of the mighty Russians and the home team Poland. Could this remarkable result affect the equally important event taking place today a little further south, as the Greek electorate makes its second attempt this year to produce a national government? These words are being written as the votes are being counted, and will most likely be read after the result is known, so represent something of a hostage to fortune, but we shall keep going, as it seems an interesting line of argument.
To set the scene, the outcome desired in Brussels, Berlin and Washington is that the centre-right ( whatever that means in these circumstances ) New Democracy party will gain the most votes, thereby winning the crucial bonus of 50 seats in the 300 strong parliament. They will then, it is hoped, be able to form a ruling coalition with the utterly discredited PASOK party, which brought the country to its current parlous state but mysteriously still commands the loyalty of around 10 per cent of the population. The advantage of this solution is that these two parties have between them controlled all Greek governments since the fall of the colonels in 1974, and have shown themselves to be infinitely corruptible – ie, people with whom today’s leaders of the major Western powers can feel comfortable doing business. By contrast, Syriza, the party which has this year come into prominence under its youthful leader Alexis Tsipras, has no such form, and therefore cannot be trusted.
The thinking of the Greek people may have been summed up by a lady whose interview on leaving the polling booth was reported in the British press. She said that she had entered intending to cast her vote for Syriza, but at the last moment was gripped by fear and went with the establishment. This is easy to understand. The lady herself was presumably not one of the dwindling generation who can still remember the last time German stormtroopers were in Greece, but that episode is carved deep into the national psyche, and when Angela Merkel warned of retribution if they had the nerve to vote the wrong way they knew that her words could not be treated lightly. It’s easy for foreign observers to point out that there will most likely be a lot of blood shed before this is over, and today’s election can at most affect the timing, but parents whose children may be tempted into demonstrations of resistance towards foreign domination can be forgiven if they fear for their immediate safety.
Which brings us back to the football. Is it possible that their team’s heroics in Warsaw could encourage the nation to shake off its chains, whatever the risk, and tell its paymasters that there is a limit to the depradations they can accept? It’s a lot to ask, particularly as the international press seems to have been quite successful in painting Tsipras as the candidate who would get his nation instant expulsion from the eurozone. He argues that he wants to stay in, just on terms less self-defeating than those currently on offer, and appeared to receive a boost last weekend when Spain was offered a ( superficially ) much sweeter bailout. However, the constant propaganda to the effect that an administration of his would bring savage punishment down on the heads of his people has certainly had an impact.
But there is an update. According to preliminary numbers, New Democracy has won with about 30 per cent of the vote, ahead of Syriza with 26. This is a good deal less close than early exit polls suggested, and there is no reason to rule out subterfuge in the counting, but this result is clearly going to stand, and coalition discussions will now commence. The German Foreign Minister, Guido Westerwelle, has suggested that, with a pliant administration in Athens, some delay in full enforcement of the austerity programme might be possible. Given that the Greek economy is currently hanging upside down with its throat cut, you can see why he would regard leaving matters as they are for a little while as a sumptuous prospect.
What happens next? The G20 has prepared the ground for using a Syriza win as an excuse to flood the banking system with further billions of all currencies, and are unlikely to waste that opportunity even though that event has not occurred. Meanwhile, the Spanish bailout seems to have unravelled even more quickly than we would have dared to predict. We shall learn more on Monday.
Category: Market Commentary