Greek Government Collapses - Snap General Election Called

Sierra Oscar · 29-12-2014 6:38pm #1

It looks like more political instability is on the horizon in Greece. The failure of parliament to agree on a presidential candidate has collapsed the government. A snap general election will be held at the end of January.

BBC News - Greek MPs' vote triggers snap poll

Greek MPs have rejected the presidential candidate nominated by Prime Minister Antonis Samaras, triggering a snap general election.

Stavros Dimas failed to reach the necessary 180 votes, which means that parliament will have to be dissolved.

The news could not come at a worse time for the Greek economy. It has been recovering somewhat over the last few months, but stocks markets have already tanked following the news of an early election. The Greek stock exchange was down 10% today and the 10 year bond yields reached 10%.

Syriza (Coalition of the Radical Left) is currently leading the polls and should lead the Greek government by the end of January if the opinion polls are to be believed. The party wants to substantially renegotiated the EU/IMF bailout, burn its bondholders and to immediately reverse austerity policies and hike spending.

Greece currently has a secure credit line until next March with the backing of the Eurozone. However if the new government cannot reach an agreement with its Eurozone partners then there is the very real prospect that it might have to go it alone and rely on the bond markets.

Eitherway political analysts in Ireland will be following the Greek elections and coalition negotiations very very closely indeed. Afterall certain parties and groups in Ireland, who could be in government after the next election, advocate a similar line when it comes to the EU / IMF deal and the bondholders. Events in Greece over the next six months will undoubtedly shape the narrative of our own upcoming General Election.

BoJack Horseman · 29-12-2014 6:42pm

An election to see if the failure of previous Greek government book keeping should be returned to.

Baffling.

kenmccarthy · 29-12-2014 6:45pm

Far Left will definitely get elected....but what can they (anybody) do?????
The Greek Budget has been a house of cards for many years---- long before lehman brothers. I guess the danger is that any 'green shoots' of recovery in EU land could be trampled on??

BoJack Horseman · 29-12-2014 6:51pm

kenmccarthy wrote: »

Far Left will definitely get elected....but what can they (anybody) do?????
The Greek Budget has been a house of cards for many years---- long before lehman brothers.

Exactly.

Decades of laissez-faire attitude to government expenditure & tax collection caused their inevitable downfall.

Why they see a return to that as desirable I don't know.

Sierra Oscar · 29-12-2014 6:59pm

BoJack Horseman wrote: »

An election to see if the failure of previous Greek government book keeping should be returned to.

Baffling.

It is a major conundrum for the Eurozone leaders - well the entire European Union to be honest.

If Syriza do lead the next government and Eurozone leaders refuse to give in to their demands then it will be viewed as undemocratic domestically in Greece and there will be serious resentment. If they do give in to their demands then the Eurozone leaders will undoubtedly face mounting domestic pressure of their own as people cry foul of the continued transfer of wealth at a time when their own economies are stagnant and at risk of falling back into recession.

The biggest issue of all of course is the fact that if a new Greek deal is done then a precedent will be set for other countries - including Ireland. However the Eurozone itself could implode if a new deal has to be done for each country that received financial assistance during the crash.

Those with a more cynical outlook on things will call for Greece to be cast adrift from the Eurozone entirely if Syriza come to power and continue with their demands. This has the potential to spark extreme economic turmoil in Greece that could lead to major civil conflict, but you can be sure that many people would jump on this and say that this is the outcome when you elect 'extremists' into government.

It is going to be a fascinating few months.

kenmccarthy · 29-12-2014 7:03pm

I watched a programme on BBC3 late one night about the greek economy re paying income tax.........this big time solicitor with massive offices in centre of athens.......turnover of the firm was appx 12million per annum, hes driving a new audi A8.......got a huge summer house in crete etc etc

his TOTAL tax ( they dont do sneaky things like usc or prsi there).....................LESS than 1K!!!!!!!!!!!!!

BoJack Horseman · 29-12-2014 7:05pm

Certainly internal politics tries to brand the EU as being the big nasty bully.

In Greece's case, the only fault on the EUs part is that they have enabled & perpetuated their failed civil service through easy credit.

Like an addict, the Greek state struggles to control itself.

The best thing Europe can do for Greece would be to cut its bailouts, let her sink or swim.

kenmccarthy · 29-12-2014 7:17pm

In Greece's case, the only fault on the EUs part is that they have enabled & perpetuated their failed civil service through easy credit.

That's it in a nutshell!!!!!!!!!!!!!
If my memory serves me right...wasn't Greece's whole application to join the EU a big three-card-trick?

Inquitus · 29-12-2014 8:48pm

Surely at this stage Greece could just be cut adrift with minimal impact on the rest of the EU.

kenmccarthy · 29-12-2014 9:30pm

Inquitus wrote: »

Surely at this stage Greece could just be cut adrift with minimal impact on the rest of the EU.

Yes, therein lies the problem-you're forgetting that lovely word that became so popular around the time of the bank guarantee in sept08............CONTAGION!!!!!!!!!!!!

Nobody would cry if we said goodbye to ou Greek cousins but it would have huge ripple effect??

BoJack Horseman · 29-12-2014 9:30pm

Inquitus wrote: »

Surely at this stage Greece could just be cut adrift with minimal impact on the rest of the EU.

Well, its up to Greece whether it remains an EU member.

The far-left Syriza are pretty anti-EU.
If they form a government they may make moves to exit the EU.

I wouldn't like to see Greece leave the EU, but I wouldn't have any issue if it decided to leave the Eurozone.

BoJack Horseman · 29-12-2014 9:31pm

kenmccarthy wrote: »

Nobody would cry if we said goodbye to ou Greek cousins but it would have huge ripple effect??

I have a feeling that if, hypothetically, if Greece left the eurozone, the currency would strengthen.

The markets see her as dead weight on the currency.

kenmccarthy · 29-12-2014 9:38pm

Perhaps so.....but to use another expession from sept08......'uncharted waters'
I DO believe the euro would strengthen if the deadwood was cut adrift BUT it would be a very very slow burner............here I go again with yet another expression from sept08......but wouldn't the pain be front-loaded???

BoJack Horseman · 29-12-2014 9:51pm

kenmccarthy wrote: »

Perhaps so.....but to use another expession from sept08......'uncharted waters'
I DO believe the euro would strengthen if the deadwood was cut adrift BUT it would be a very very slow burner............here I go again with yet another expression from sept08......but wouldn't the pain be front-loaded???

What pain?

Currencies rise & fall.

The Euro has been relatively stable.
Minus Greece, it would probably strengthen slightly

I don't see what "pain" that involves?

kenmccarthy · 29-12-2014 10:07pm

Interest rates for government bonds would only go one-way.........there would definitely be contagion-effect........markets would look at the other 'PIGS' and say......."if el greeko jumped ship whats to stop the paddies and the Spanish looking for the exit door"......... markets operate with 'herd' mentality...........why lend to any country that was in a bailout regardless of that country's fundamentals and repayment record.I honestly think it'd be a bad days work for Ireland if the Greeks pour the 'parting glass' ---- thats ny view anyhow

AlekSmart · 30-12-2014 8:25pm

kenmccarthy wrote: »

Yes, therein lies the problem-you're forgetting that lovely word that became so popular around the time of the bank guarantee in sept08............CONTAGION!!!!!!!!!!!!

Nobody would cry if we said goodbye to ou Greek cousins but it would have huge ripple effect??

It might'nt be all bad though.

A Greek decision to go-it-alone,burn it's bondholders,tax it's Denis O'Brien's,boot out it's Joan Burtons etc might just make it a Nirvana for hundreds,if not thousands of disaffected Irish folks,each convinced they're being trodden into the ground by evil fascist dictators.

There may,of course,be some downsides to this potential salvation route,but hey,sure anywhere has to be better than this kip etc etc....?

http://www.athensinfoguide.com/history/t9-97-2junta.htm

The main reason why our situation remains stable,may be that we don't have enough Colonel's to form a Junta

Although even as recent as 2011,some of the rushes were blowing in the wind of possible revolt....

http://www.reuters.com/article/2011/11/02/us-greece-govt-military-idUSTRE7A17BZ20111102

Military sources said the move to replace the chiefs may have been hastened by a protest against austerity measures that halted a major national parade last week.

The annual military parade in the northern city of Thessaloniki is one of the most symbolic events in Greece's political calendar, honoring its fight against fascism in World War II, and it was the first time it had been canceled.

President Karolos Papoulias was forced to leave the parade abruptly after being called a traitor by angry crowds.

The previous day, Defense Minister Beglitis was booed by a crowd of students in Thesssaloniki. On Wednesday he described his reception as a "tragic experience."

Ye have to admit,there's a lot of it about these parts too....;)

Palmach · 30-12-2014 10:26pm

kenmccarthy wrote: »

Interest rates for government bonds would only go one-way.........there would definitely be contagion-effect........markets would look at the other 'PIGS' and say......."if el greeko jumped ship whats to stop the paddies and the Spanish looking for the exit door"......... markets operate with 'herd' mentality...........why lend to any country that was in a bailout regardless of that country's fundamentals and repayment record.I honestly think it'd be a bad days work for Ireland if the Greeks pour the 'parting glass' ---- thats ny view anyhow

The Markets aren't stupid is obvious Ireland and Greece are too different animals. Jettisoning Greece would be a benefit to the Eurozone. It would send out a singal that third world standards of governance will not be tolerated.

kenmccarthy · 30-12-2014 10:44pm

Good posts............looking at the bigger picture ...long term it would be best to give Greece the red card......but in the short term the 'knee jerk' reaction by the markets wouldn't be in Ireland's favour.......listening to the coverage today I don't think its a 'done deal' that far left will top the polls--this whole snap election could turn out to be a damp squib

Sierra Oscar · 03-01-2015 7:25pm

And so it begins. Der Spiegel are reporting that German officials have signaled that they are preparing for Greece to exit the Eurozone.

Exit from the monetary union: Federal Government considers Greece's exit from the euro for manageable

dlouth15 · 04-01-2015 2:40pm

Most likely a deal will be done to cut Greece's debt burden rather than have them leave the Euro.

Celly Smunt · 04-01-2015 2:43pm

dlouth15 wrote: »

Most likely a deal will be done to cut Greece's debt burden rather than have them leave the Euro.

I'd say its more likely they'll cut the debt and chuck them out tbh.

SpaceTime · 04-01-2015 2:49pm

I don't think it'll impact Ireland at all. We're out of the headlines and our ratings are returning to respectability. Most Irish financial news stories have been very positive.

It's Spain that's got people nervous as there's no serious signs of recovery and it's looking like they'll be unable to recover in the Euro rules.

Celly Smunt · 04-01-2015 2:55pm

Does anybody know if there's any procedure for countries to take a hiatus if sorts from being tied with the euro?. In spains case it could be very beneficial for everybody if they could take a break from the euro zone and recover their economy with a domestic currency before re-entering. Its clear that Spain cannot compete with the other members while the euro is in use unlike Ireland.

dlouth15 · 04-01-2015 3:06pm

Celly Smunt wrote: »

I'd say its more likely they'll cut the debt and chuck them out tbh.

I don't think there's provision for that under EU law.

Sierra Oscar · 04-01-2015 5:28pm

BBC News - Greece must 'abide' by bailout terms - Germany

The German government expects Greece to uphold the terms of its international bailout agreement, a spokesman for Chancellor Angela Merkel has said.

But spokesman Georg Streiter declined to comment on reports that Berlin is now content that eurozone could withstand Greece's exit from the bloc.

More mutterings from German officials again today. Meanwhile Syriza's lead in the polls has narrowed but at the moment they are still on course to lead the next government.

Inquitus · 04-01-2015 6:01pm

Sierra Oscar wrote: »

BBC News - Greece must 'abide' by bailout terms - Germany

More mutterings from German officials again today. Meanwhile Syriza's lead in the polls has narrowed but at the moment they are still on course to lead the next government.

Echoes of the Scotland poll, fear of the unknown may well tip the balance against Syriza, if I was Greek and I was hearing Europe say they were willing to cut Greece adrift, I'd think long and hard about the future and the possible impacts of my vote, and the unknown is usually scarier than the known to people.

kenmccarthy · 04-01-2015 7:46pm

That's the way I see it too......loads of sabre rattling but election day will return the status quo

Zonda999 · 04-01-2015 9:27pm

Inquitus wrote: »

Echoes of the Scotland poll, fear of the unknown may well tip the balance against Syriza, if I was Greek and I was hearing Europe say they were willing to cut Greece adrift, I'd think long and hard about the future and the possible impacts of my vote, and the unknown is usually scarier than the known to people.

Indeed, and the meaning of this is to warn the Greeks off the idea of electing Syriza. If theres' a belief out there that Germany is willing to let Greece leave, then Syriza's negotiation leverage with the rest of the Eurozone is non-existent. The time for a potential Greek exit came and went 3 to 4 years ago IMHO. for now,i think its in their own best interests to stay.

SpaceTime · 04-01-2015 9:56pm

I really don't think the Germans are saber rattling at all. It's more like a message to the markets that a Greek exit isn't really that big a deal and might be better for everyone, especially the Eurozone.

What would happen to the New Drachma is another question. Greece could go into freefall but, that's up to them and they'd just have to sort it domestically.

It could be a massive boost to Greek tourism as it might drop the costs but on the other side of it Euro or Dollar denominated debts and imports would become a lot more expensive and Greece makes very few consumer goods.

Markcheese · 04-01-2015 10:00pm

So can the euro zone actually cut Greece adrift - what if they selectively default and refuse to leave the euro ? As well as stay in the eu - can't think why they'd want to leave the eu anyway -it's a cash cow for Greece !

Godge · 04-01-2015 11:05pm

SpaceTime wrote: »

I don't think it'll impact Ireland at all. We're out of the headlines and our ratings are returning to respectability. Most Irish financial news stories have been very positive.

It's Spain that's got people nervous as there's no serious signs of recovery and it's looking like they'll be unable to recover in the Euro rules.

It will make an interesting debate for the next general election. What happens Greece if they default is what the AAA and SF are offering the Irish people.

Greek Government Collapses - Snap General Election Called

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