Greek Elections-June 17 2012

[General Mung Beans]

http://www.nytimes.com/2012/06/18/world ... tions.html

Greek Election Favors Pro-Bailout Party
John Kolesidis/Reuters



ATHENS — Greek voters narrowly favored a pro-bailout party in parliamentary elections on Sunday, a result that is likely to calm world markets and ease fears that the country will leave the euro zone.


Official projections showed the conservative New Democracy party as coming in first, giving it the chance to collect enough support to form a pro-bailout coalition and keep Greece in the euro zone.

Late Sunday night, Alexis Tsipras, the leader of the leftist Syriza party, conceded the election and congratulated the conservative leader of New Democracy, Antonis Samaras. Syriza had called for a rejection of the loan deal that Greece had made with foreign creditors.

Though no party is expected to earn enough seats in the 300-member Parliament to form a government, official projections show that the two traditional parties — New Democracy and the socialist Pasok — would get enough seats to form a coalition.

Projections gave New Democracy 29.5 percent and 128 seats. Syriza, which had vowed to reject the international conditions for the Greek bailout, was second with 27.1 percent and 72 seats. Pasok trailed with 12.3 percent and 33 seats. A coalition would need at least 151 seats to form a majority government.

New Democracy and Pasok have called for renegotiating the terms of their agreement with the country’s foreign creditors, known as the troika — the European Commission, the European Central Bank and the International Monetary Fund

New Democracy also placed first in the elections on May 6, but failed to form a government with its former rivals, the Socialists. This time around, the parties do not have the luxury of squabbling over their differences and must form a coalition, however short-lived, because without foreign financing, Greece is expected to run out of money to meet expenses as soon as next month.

Any new leader will face an uphill battle to inject confidence into a paralyzed Greek economy that depends heavily on the continued infusion of money from the European Central Bank. The bank has become the last lifeline for a financial system that has all but seized up and a deficit-ridden government that has little ability to raise new revenues or borrow money to continue its operations.

Late Sunday night in Brussels, euro zone finance ministers said in a statement that they would help Greece transform its economy and that continued fiscal and structural reforms were the best way for Athens to cope with its economic challenges.

“The Eurogroup reiterates its commitment to assist Greece in its adjustment effort in order to address the many challenges the economy is facing,” the statement said.

It added that representatives of Greece’s creditors would return to Athens to discuss emergency loans and changes as soon as there was a government in place.

In an early sign that the outcome could provide at least a temporary lift to global financial markets, the euro gained in value against the dollar on Sunday.

“It looks like we’ve avoided the worst-case scenario,” said Darren Williams, a European economist for Alliance Bernstein in London. “I think that’s important, because we could have gone to a very bad place very quickly.”

While most financial markets are closed during the weekend, foreign currency trading is always open. Market watchers cautioned about drawing broad conclusions from the trading because of the light volume. But the euro’s tick upward was consistent with the relief expressed by strategists and investors watching the election results.

For a fuller picture of how markets will respond to the elections, strategists will be carefully watching the Asian stock exchanges when they open, which will be Sunday night in the United States.

Previous rallies in response to developments in Europe have been short-lived. A few weeks ago, markets initially responded positively to a bailout plan for Spanish banks, but that optimism quickly gave out when the American stock markets opened on Monday.

Mr. Williams said attention will now turn to meetings of international political leaders at which the terms of Greece’s bailout plan could be revised.

On Monday, leaders of the Group of 20 developed and emerging economies, meeting in Mexico, are expected to debate ways to keep the Greek crisis and the weakness of the bigger economies of Spain and Italy from undermining the euro and dragging the global economy into a new recession.

Central bankers from Tokyo to Washington have pledged to intervene in financial markets if necessary, but the Greek drama could keep investors on edge for weeks.

In Greece, Syriza had billed itself as a kind of “Greek Spring,” capturing the momentum of those hungry for change at almost any cost from a political system that is widely seen as corrupt and ineffective. It also had support from voters who felt betrayed by the Socialists, whose party was in power in 2010 when Greece signed the first of its two loan deals with foreign creditors.

For its part, New Democracy has been tapping into different fears — of the unknown, of illegal immigration, of an exit from the euro zone hastened by a Syriza victory. New Democracy’s main campaign advertisement showed an elementary school teacher telling his students which countries use the euro. When one asks, “And what about Greece?” the teacher stares back in stony silence. “Why, teacher, why?” the student asks.

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Niki Kitsantonis contributed reporting from Athens, and Nathaniel Popper from New York.

Rather surprised Syriza lost ground.

[Narkis]

Unfortunately the people lapped up the lies and the propaganda, and fear won out in the end. Samaras finally got his wish and became the prime minister. I doubt his government will last for long, but for the next few months, at least, he's free to do as he pleases. I only hope that he doesn't screw things up too much, and that it's not too late when he does fall.

Meanwhile, Golden Dawn stayed even at 7%, when every other small party lost power. (The communists got slaughered, for instance.) Last time there was the excuse that the voters didn't really know. But now they consciously supported a party that openly kills immigrants and beats up rivals. We have given birth to a wave of neonazism, and that's not a good sign for the future.

Final results

[Bernkastel]

Hmm, I was hoping that Syriza would win. Not that I'm Greek, but I simply feel that they would be a better option for the Greek people. I've seen chatter that says it is likely that Samaras will likely seek some easing of austerity. I wish him success in that, but doubt he'll be able to get much relief.

[bobalot]

Hmm, I was hoping that Syriza would win. Not that I'm Greek, but I simply feel that they would be a better option for the Greek people. I've seen chatter that says it is likely that Samaras will likely seek some easing of austerity. I wish him success in that, but doubt he'll be able to get much relief.

I'm not really sure what the EU sees in the strategy of austerity. Every country in which it has been practiced has seen growth collapse.

Even holding up places like Latvia as an example of austerity working is amazingly dishonest. 5% of the labor force has literally left the country and they still have an unemployment rate of 14.3% in January. Keep in mind the participation rate is still well below pre-GFC norms as well.

If the plan of the major players in the EU is to force countries like Greece to emulate Latvia, the EU is in big trouble.

[SirNitram]

Hmm, I was hoping that Syriza would win. Not that I'm Greek, but I simply feel that they would be a better option for the Greek people. I've seen chatter that says it is likely that Samaras will likely seek some easing of austerity. I wish him success in that, but doubt he'll be able to get much relief.

I'm not really sure what the EU sees in the strategy of austerity. Every country in which it has been practiced has seen growth collapse.

Even holding up places like Latvia as an example of austerity working is amazingly dishonest. 5% of the labor force has literally left the country and they still have an unemployment rate of 14.3% in January. Keep in mind the participation rate is still well below pre-GFC norms as well.

If the plan of the major players in the EU is to force countries like Greece to emulate Latvia, the EU is in big trouble.

The only answer I can come up with is the morality-play idea that the non-rich are somehow bad(For not becoming rich, who are automatically morally superior), and thus must be punished. Nothing else explains austerity to this point. Well, I correct myself. I can add more causes. The idea that the markets lust for a debt-low country which will gain their confidence. The concept that keeping banks propped up will eventually result in them making everything better. And refusing to change either because to change is to admit you were wrong.

Some of this may sound familiar!

[mr friendly guy]

I thought the austerity was simply living within your means. To elaborate further, since these Eurozone countries can no longer print money whenever required, they have to spend less than they earn and then use the excess to start paying off debt.

[madd0ct0r]

I thought the austerity was simply living within your means. To elaborate further, since these Eurozone countries can no longer print money whenever required, they have to spend less than they earn and then use the excess to start paying off debt.

it is - but applied to a country that hasn't been living within it's means and you get a massive withdrawal of cash from the economy.
If everyone was good little robots and kept spending, then it'd be fine - but a bunch of people just lost their goverment jobs, a bunch more just lost some/all of their benefits and the rest will be trying to save 'just in case'.
So the economy contracts massively, hurting everyone, making the country look worse and thus increasing the size of the debt.

A country's economy isn't zero-sum. Theoretically, a well managed government project will return a net profit to the economy (a huge net profit over the years). Austerity prevents this kind of solution.

[mr friendly guy]

Oh I am sure there are weaknesses to austerity without growth strategies. I was just replying to Nitram that I found it strange that austerity would be viewed as a morality play idea where the non rich are bad for not being rich. To my mind the morality play goes along the lines of - the people with economic problems are that way because they did not live within their means.

[Edi]

One of the problems with Greece is that their taxation system and nearly everything else is simply so broken that it cannot work. Unless and until they actually fix the broken structures of the government, it doesn't matter at all how much money is given to them. It will all be wasted.

This entire fucking financial crisis is going to go on and on and on and on until people are finally willing to face reality. In the countries with the unsustainable debt loads ad deficits, that is going to mean fixing waste and fraud and taking less debt and in the institutions that were fucking stupid enough to lend them money it will mean taking a hit for those losses. If some banks are in enough trouble that they are causing problems for an entire country, then they must be seized, nationalized and either disbanded or rehabilitated (which again means creditors taking losses) and then sold off once they are purged of the toxic shit.

Is that going to be painful? Yes. Is it going to be unpopular? Yes. Is it necessary? Again, yes, because otehrwise it will be yar after year after year that tax payer money is going to be shovelled into those bottomless pits.

[bobalot]

One of the problems with Greece is that their taxation system and nearly everything else is simply so broken that it cannot work. Unless and until they actually fix the broken structures of the government, it doesn't matter at all how much money is given to them. It will all be wasted.

I suspect what Greece needs are taxes that are literally unavoidable. Something radical like abolishing all forms of current taxation and implementing a land value tax. Perhaps coupled with excise duties on power usage, water consumption and fuels.

This entire fucking financial crisis is going to go on and on and on and on until people are finally willing to face reality. In the countries with the unsustainable debt loads ad deficits, that is going to mean fixing waste and fraud and taking less debt and in the institutions that were fucking stupid enough to lend them money it will mean taking a hit for those losses. If some banks are in enough trouble that they are causing problems for an entire country, then they must be seized, nationalized and either disbanded or rehabilitated (which again means creditors taking losses) and then sold off once they are purged of the toxic shit.

What really shits me is that it is assumed by the powers that be that the irresponsible lenders who took on so much risk and crashed the economy have to be bailed out 100%. For every irresponsible borrower, there was an irresponsible lender who was going to socialize the losses if the shit hit the fan.

These banks should be nationalized, their debts written off and their balance sheets recapitalized just like Sweden did during it's own banking crisis.

[SirNitram]

I thought the austerity was simply living within your means. To elaborate further, since these Eurozone countries can no longer print money whenever required, they have to spend less than they earn and then use the excess to start paying off debt.

That's probably the tagline, and the slogan, but the simple reality we see in Greece and other parts of the Eurozone has nothing to do with that. When the 'bailouts' are little more of putting money in an escrow account which is wired to banks not in Greece, and Greece is forced to slash spending more(Resulting in more unemployment, resulting in less tax revenue), it simply cannot be 'living within your means'. The system is practically designed to kill Greece's economy off; for the priveledge of enriching banks, they suffer more. It's a tournique; the limb can be lost as long as the banks are OK. If they don't beleive the poor must be punished and the bankers rewarded, what the fuck compels this?

[MarshalPurnell]

Private lenders to Greece have already taken a "haircut" of up to 75% of their value in Greek debt.

The remaining Greek debt is owed to international institutions like the IMF and the EU, and through them to Germany. When Germany demands austerity it is demanding to be repaid in full, and repudiating that debt isn't a matter of screwing "reckless lenders" it is a massively political decision with major international fallout. And in any case Greece has both a debt crisis and an underlying economic structural crisis; the former is that no one will voluntarily lend to Greece at sane rates, which finds it impossible to maintain its budget without foreign lending. Austerity is necessary in that kind of case (or some other drastic action, like a national default followed by years of economic hardship that amount to austerity) so that people will lend money to Greece again. The structural crisis is the inevitable result of being in the Euro, since Greece needs a different fiscal policy than Germany does but has no influence over the ECB or ability to manage its own currency.

Greece's debt crisis is a consequence of its structural crisis, not a cause, like advocates of austerity have often argued. But there's no ready cure for either course, and austerity at least has the advantage of not blowing up the Eurozone. Leaving the Euro and reinstating the drachma will lead to massive hardship as the currency depreciates, won't do anything about the Euro-denominated institutional debt owed to the IMF and EU countries, and would have to be backed with major political and economic reforms to make Greece more competitive.

[mr friendly guy]

That's probably the tagline, and the slogan, but the simple reality we see in Greece and other parts of the Eurozone has nothing to do with that. When the 'bailouts' are little more of putting money in an escrow account which is wired to banks not in Greece, and Greece is forced to slash spending more(Resulting in more unemployment, resulting in less tax revenue), it simply cannot be 'living within your means'. The system is practically designed to kill Greece's economy off; for the priveledge of enriching banks, they suffer more. It's a tournique; the limb can be lost as long as the banks are OK. If they don't beleive the poor must be punished and the bankers rewarded, what the fuck compels this?

I am vaguely aware of the problem. If a person has lived beyond their means, they can stop spending so much and pay off their debt with the excess. This of course presumes they still have the same income. However for a country, if spending is reduced, their income (ie economy) takes a hit. They are presumably "gambling" that the economy won't contract so much that Greece will not be able to pay off the debt even after creditors have taken a hair cut.

[SirNitram]

That's probably the tagline, and the slogan, but the simple reality we see in Greece and other parts of the Eurozone has nothing to do with that. When the 'bailouts' are little more of putting money in an escrow account which is wired to banks not in Greece, and Greece is forced to slash spending more(Resulting in more unemployment, resulting in less tax revenue), it simply cannot be 'living within your means'. The system is practically designed to kill Greece's economy off; for the priveledge of enriching banks, they suffer more. It's a tournique; the limb can be lost as long as the banks are OK. If they don't beleive the poor must be punished and the bankers rewarded, what the fuck compels this?

I am vaguely aware of the problem. If a person has lived beyond their means, they can stop spending so much and pay off their debt with the excess. This of course presumes they still have the same income. However for a country, if spending is reduced, their income (ie economy) takes a hit. They are presumably "gambling" that the economy won't contract so much that Greece will not be able to pay off the debt even after creditors have taken a hair cut.

I think you're right with everything but using the present tense. This was probably the idea in the beginning. By now, everyone's got ego invested, and thus any change of course is an admission they were wrong.

[Dr. Trainwreck]

Narkis, we both know that's not true. No one was "scared"; they knew full well what they paid for, all of the voters. You know what the situation was five years ago: whatever you want, whenever you want, the others are not your problem. This has been pummeled into Greek minds for decades. We literally took "every man for himself" and elevated it into an art form. Who threw trash outside the bin? Who tosses his cigarette aside and blew all smoke in your face? Who parked his car on a disabled space, a sidewalk, or stopped in the middle of the street to chat to his mate?

Who do you think avoided paying taxes?

These people don't give a shit. They have learned to behave like animals for all their lives, and voted accordingly. "Homeless people will double in number, crime will increase, public services cut and a gang of Nazis will be spraying some Pakistani's blood on the sidewalk? Fuck I care, if I vote anti-austerity I'll lose my BMW." These are the unbelievable assholes who infest Greek society to the point that everybody who doesn't agree with 'I donna give a fuck' becomes weird and isolated. So no, I'm not optimistic. Because I'll be working twenty years for 350 euros. Δηλαδή σκατά.

[Narkis]

I'm not sure I buy that. I mean, yeah, ten, five, even two years ago you would be right. "Fuck everyone else, I got mine" really is the one, true faith here. But it's not an adequate explanation for electing the same idiots who drove the country off a cliff, who cannot finish a sentence without flip-flopping twice. After all, everyone's been hurt by this austerity. We wouldn't even be having this conversation otherwise.

Never attribute to malice that which can adequately be explained by simple stupidity. I think that the people, once again, chose to believe a politician's lies. Like "Λεφτά υπάρχουν", only crazier. No one thought they'd be keeping their BMWs with Samaras. We're talking about a whole new treshold for delusion if they did. But they're absolutely terrified of the unknown. Change is scary. And with the news blasting anti-SYRIZA propaganda 24/7 for a month, everyone of any importance scrambling to protect the status quo, with SYRIZA's voice distorted and drowned, well, it wasn't too hard to convince them that Tsipras was the devil and a vote for him would lead us straight to our doom.

Of course, no matter the reason, the result is still the same: We're fucked. We just don't know how bad yet.