Greece is in turmoil. Austerity demands and debt have ravaged the nation. In spite of this, the pro bail-out and corresponding austerity political party just won the election:
The pro-bailout New Democracy party came in first Sunday in Greece's national election and could gather enough support to form a pro-bailout coalition to keep the country in the eurozone.
The world's eyes have been on Greece and their elections. The reason is one party wanted to default and leave the Eurozone. The two main parties are the New Democracy and the Syriza. The New Democracy party are the conservatives and support the European bail outs, austerity demands and want to stick with the EU and the Euro. The left Syriza wants to default, get out of those austerity demands and leave the Eurozone.
Most are reporting the New Democratic Party of Greece can form a parliamentary coalition.
The euro strengthened as official projections showed Greece’s two largest pro-bailout parties winning enough seats to forge a parliamentary majority, easing concern the country would be forced from the currency bloc.
The advance against the dollar extended last week’s 1 percent jump. New Democracy won 29.5 percent of the vote and got 128 seats in the 300-seat legislature, according to initial projections from the Interior Ministry based on partially counted returns. Socialist Pasok, with 12.3 percent, gained 33 seats. On the basis of the figures, the parties would win a majority of 161 in parliament if they chose to form a coalition. Anti-bailout party Syriza received 27.1 percent and 72 seats, the results showed.
Yet there are other reports the Pasok party will throw a monkey wrench into a pro bail out and austerity parliamentary coalition being formed:
The Greek PASOK party of former PM G-Pap may have thrown a grenade into coalition discussion, following an announcement by Katerina Diamantopoulou that Pasok will not join into a coalition government with ND unless Syriza also joins said coalition. Which Syriza stated moments ago it would not do. The question then comes whether ND can form a government (150+ seats) with any of the other remaining parties.
The Financial Times reports most of Greece voted to stay with the Euro as their currency and not leave the Eurozone.
Under Greece’s electoral law, each of the top three party leaders has a three-day mandate to form a coalition, although party officials say the deadlines may be unofficially shortened this time as the country’s international lenders are impatient to see the bailout programme get back on track.
The inconclusive election on May 6 resulted in two weeks of fruitless talks before a frustrated Karolos Papoulias, the country’s president, announced for a second ballot.
In spite of these election results many believe no one will really win in Greece for they face a lose-lose economic situation.
Greece still faces weeks or months of negotiations with European lenders over the terms of its austerity program, which all parties agree are too onerous to enforce on its rapidly shrinking economy.
Greece has a paralyzed economy, more austerity demands, never mind the problem of creating consensus within their own political fractions. When a country is in chaos, it's fairly difficult to find a clear way out. For more details on the Greece economy and how they got into such a mess, by the technicals, read how did this happen?
Many are projecting Greece will be out of the Eurozone in a matter of months and all these election results mean is Greece choose an amicable divorce versus a sudden outright fiscal war with the EU.
The return to the drachma is inevitable because Greece cannot adjust,” Mr. Kyrtsos says.
“It’s just a matter of time. Rejection of the loan agreement will push the country out of the euro in a matter of 3-4 months. Otherwise it could take between eight to 12 months before there’s an amicable divorce, initiated by Greece’s partners.”
That said, big, bad Germany hinted as loosening bail out payback terms. It's clear austerity has crushed Greece's economy.
France's Socialist Party just won their elections and it implies more austerity for France is coming as well:
Mr. Hollande's government has hinted that tough measures would be necessary but has stopped short of detailing how it would achieve its goal of reducing France's budget deficit to 3% in 2013 from an expected gap of 4.5% this year.
Hollande is also in favor of Euro bonds, something Germany outright rejected. Euro bonds imply a European Fiscal Union, where tax and spending policies are under the control of the Eurozone financial ministers, not sovereign member states. Spain is already begging for a fiscal union yet such a model surrenders sovereignty of EU member nations.
The endgame may be approaching. Troubled countries are facing an increasingly clear choice. They can stay in the euro zone, and face years of endless recession. They can abandon the euro, perhaps bringing catastrophe but giving them the freedom to devalue their new currencies. Or they can accept the German offer: Surrender sovereignty. Accept German leadership and domination of a unified Europe. Then we will bail you out.
If Europe does not accept the offer, and the euro disintegrates, it is hard to know how it will play out. There are, by design, no rules about how the euro zone could be untangled. But after the dust settled, Germany would be among the losers. A new German mark would no doubt be much stronger than the euro is now, making life a lot harder for German exporters. That reality has led some in Europe to think that Germany is bluffing, and that it will continue to pay the bill even if it cannot get what it wants.
That has angered Germans. “A Game of Euro Chicken” was the headline on a commentary by Jan Fleischhauer in last week’s edition of Der Spiegel, the German magazine. “For Germany, being part of the European Union has always included an element of blackmail,” he wrote. “France has been playing this card from the beginning, but now the Spanish and the Greeks have mastered the game. They’re banking on Berlin losing its nerve.”
The first step towards a fiscal union, the fiscal pact treaty was agree to by 25 of the 27 European Union member countries. Yet it is Germany who has not ratified the treaty. After all, when one is doing well, who wants to give up their fiscal sovereignty? So, the European brawl continues, in spite of these election results. As this never ending crisis unfolds, it's yet to be seen if the game of Euro Chicken, will result in their hen being done.
We're sorry to interrupt your broadcast of the never ending global economic collapse with Greece election results. We now return to our regularly scheduled program, the Spanish economic implosion, after which Italy on the Brink will air.