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Sunday, May 06, 2012 8:20 PM


Voters Punish New Democracy and Pasok; New Election, Euro Exit Coming Up? Best thing For Greece is Tell the Troika "Go to Hell"


Assuming no defects in Pasok or the New Democracy parties, the pro-austerity may just scrape together enough votes to barely piece together a ruling coalition.

How long the coalition lasts is another matter as Pasok was humiliated with a third place showing.

Reuters reports Angry Greeks reject bailout, risk euro exit

The latest official results, with over 61 percent of the vote counted, showed the only two major parties supporting an EU/IMF program that keeps Greece from bankruptcy would be hard pressed to form a lasting coalition.

New Democracy was polling just under 20 percent and PASOK a humiliating 13.6 percent with the Left Coalition on 16.2.

In the last election in 2009, PASOK won a landslide victory with 44 percent and the Left Coalition had just 5 percent.

Left Coalition leader Alexis Tsipras, at 37 Greece's youngest political leader, hailed a peaceful revolution and said German Chancellor Angela Merkel should understand that austerity policies had been defeated.

In another indication of the extent of public anger, the extreme right Golden Dawn party was poised to take nearly 7 percent of the vote. This would allow such a party to enter parliament for the first time since the fall of a military dictatorship in 1974.

Several analysts said the unprecedented fragmentation of the vote could bode weeks of instability and force another election. But a New Democracy source said the party would not ask for repeat elections if it finished up as the largest party. Samaras is likely to be invited to try to form a government on Monday.

Greece faces an acid test as soon as next month when it must give parliamentary approval for over 11 billion euros in extra spending cuts for 2013 and 2014 in exchange for more EU/IMF aid.

That looks like a tough task even if a new government can be formed in time, given the success of anti-bailout parties.

Under the constitution, Greek President Karolos Papoulias will give the biggest party after the election three days to form a government. If it fails, the next largest group gets a chance and so on down the line. If they all fail, new polls would be called about three weeks later.
Best thing For Greece is Tell the Troika "Go to Hell"

Short-term Greece is likely to face strong inflation, perhaps even hyperinflation if it returns to the Drachma. However, long-term Greece faces a 10 year or longer permanent recession with austerity upon austerity upon austerity if the eurozone stays intact and Greece stays in the eurozone.

Had Greece left the eurozone two years ago it would be far better off today, and the sooner it tells the Troika where to go, the sooner Greece has a chance to recover.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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