As reported in the previous post, 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 (up to and including neo-nazi New Dawn or the communists... why is there no Pirate party in Greece?). The answer is most likely not, but not before some serious horse trading shows that the second Greek elections has achieved nothing, and the world now has to look forward to a 3rd Greek election round, some time in August, and then another, and then another, until no more assets are left to be plundered from the state which will have no head for a long time. Incidentally, just as we predicted on May 3 in "Previewing The First Of Many Greek Elections"
While everyone is focusing on Greece, we have news from France:
- FRENCH SOCIALISTS WIN ABSOLUTE MAJORITY IN PARLIAMENT, CSA SAYS
- FRENCH SOCIALISTS WON 320 SEATS, CSA SAYS; MAJORITY IS 289
- FRENCH SOCIALISTS WON'T NEED TO RELY ON LEFT FRONT, GREENS: CSA
So... does that mean that the recently reduced minimum retirement age wil be cut again, thank you Germany?
Ignore the media spin of sampling error as definitive confirmation of this or that (because a 1% difference in exit poll terms is well within a 3% error sampling distribution, where a plurality lead incidentally gives the winner an automatic 50 seats), and follow the results for yourself as they come streaming in. Full visual real-time update below.
While the burning of a ballot box in Exharia, Athens remains the most unrest among the civilians we have seen so far (in which 2 policemen were injured), the second exit poll results are in and New Domcracy has a modest lead:
- *GREECE'S NEW DEMOCRACY GETS 28.6% - 30% IN EXIT POLL: NET
- *GREECE'S SYRIZA GETS 27.5% - 28.4% IN EXIT POLL, NET SAYS
- *GREECE'S PASOK PARTY HAS 11% - 12.4% IN EXIT POLL, NET SAYS
- *INDEPENDENT GREEKS GETS 6.8% TO 7.8% IN EXIT POLL, NET SAYS
- *GREECE'S GOLDEN DAWN GETS 6.5% TO 7.1% IN EXIT POLL, NET SAYS
- *GREEK COMMUNIST PARTY GETS 4.8% - 5.6% IN EXIT POLL, NET SAYS
As a reminder (here and here), "The outcome will be too close to call if the difference between the first two parties is less than 2%-3% with strong precedent of exit polls failing to predict the outcome when the race is tight."
In the meantime, a friendly reminder from the Germans:
- *GERMANY'S WESTERWELLE SAYS GREEK PACKAGE CAN'T BE NEGOTIATED
The long-anticipated first Greek exit poll is out. The results, per Greek Mega TV, are as follows:
- New Democracy 27.5-30.5,
- SYRIZA 27-30,
- PASOK 10-12,
- Ind Gr 6-7.5,
- Golden Dawn 6-7.5,
- Dem Left 5.5-6.5,
- KKE 5-6
In a word: very much indefinite, as the leader will get the bonus of 50 parliamentary seats, which makes any conclusive calculus impossible for now.
The battle fronts have been drawn out: it is literally the world against Germany.
With mere hours left until the first Greek exit polls are released, one group of the Greek population, perhaps the most important one if the country of 23% unemployment is to have any hope of not sinking into the Mediterranean, its business executives, has yet to express its opinion on the aftermath of today's election. And while we know that many local businesses have already transferred their money (whether or not taxed is a different question) abroad, it is after all they that will serve as the backbone of any possible future Greek renaissance, whether EUR or XGD denominated. So do they think? Recently Citigroup's European team met with executives from big Greek / Cyprus banks and several officials - independent parties. The key message is that the situation is critical but there is some optimism on the Day after the elections.
For Greece, this is an important election. Inside the euro, their heavily state-dependent economy will continue to suffer scathing austerity. Outside the euro, they can freely debase, and — as Nigel Farage has noted — enjoy the benefits of a cheaper currency like renewed tourism and more competitive industry. If Greeks want growth sooner rather than much later, they should choose life outside the euro (and by voting for Tsipras and trying tough negotiating tactics, they will be asking to be thrown out). But for the rest of the world, and the rest of Europe, this is all meaningless. As Ron Paul has noted, when the banking institutions need the money, central banks — whether it’s the ECB, or the Fed, or the BoE, or a new global central superbank — will print and print and print. Whether Greece is in or out, when the time comes to save the financial system the central bankers will print. That is the nature of fiat money, as much as the chickenhawks at the ECB might pretend to have hard-money credentials. Tsipras, though — as a young hard-leftist — would be a good scapegoat for throwing Greece out of the Eurozone (something that — in truth — the core seems to want).
As Greek Banks Run Out Of Safe Deposit Boxes, An Eerie Calm Takes Over The Country 24 Hours Before D-DaySubmitted by Tyler Durden on 06/16/2012 - 19:01
The most ironic moment in the Greek denouement will come when fractional reserve lending collapses onto itself:
"Stavropoulos and her friends have a new strategy to deal with their daily expenses. "We charge everything to our credit cards," she says. If the Greek banks fail, they won't be able to collect the outstanding debts, she argues. "If they want to mess me around, I will do the same to them."
In other words, Greece is now America, where the vast majority of people also live on credit alone, and have taken up the following motto when dealing with banks: "you pretend to be solvent, we pretend to have money." At the end of the day, it is all just one big global monetary circle jerk, only this time in reverse, as the snake of fractional reserve banking has finally started to eat its own tail. With people spending money they don't have, and in debt to their eyeballs to a banking system that itself is just as insolvent, is there any wonder that nobody really panics any more over daily threats the grand reset is finally coming?
So the Greek elections come and go and someone takes over or there is no government and new elections are called. In the meantime either Europe hands Greece more money or Greece defaults. It is at the point of default where consequences require central bank action and where even the best made plans may careen out of control because so much information has been hidden and not accounted for so that their consequences were not considered. Dealing with incorrect facts leads to incorrect conclusions and this is my greatest fear at present for all of the financial markets; that the pending default, it will most likely come, will not have been assessed in the manner that was needed because Europe did not allow all of the necessary data to be correctly appreciated.
When it comes to the future of Europe, one simply has to look at the foundations or the so called "euro-architecture" which as the past two years have shown us, are in dire need of strengthening lest everything topples over. Mere talk will no longer cut it. Simplifying things further, one can distribute the potential outcomes facing Europe along two axes: Impact, or an event's likelihood of actually doing something to change the current "sinking ship" status quo, and Probability, i.e., how much resistance, mostly political, will a given plan face, primarily from Germany which over the past year has fallen into its rightful place - that of Europe's fiscal, and monetary - because even the ECB will not move without German approval - paymaster. Obviously the two are inversely correlated. Whether or not the European crises ends, will depend on precisely which of the 9 listed outcomes below Europe decides upon (or all). However, as is well-noted on the chart, There are "No obvious game changers." Which is why anyone hoping for a Deus Ex, before much more pain is first experienced, as Deutsche Bank explained earlier, will be bitterly disappointed.
I’m not lying awake at night worrying about imminent peak oil. There’s plenty of extractable oil, and renewable energy will eventually supplement and replace it. But will politics get in the way of energy extraction? The United States has huge hydrocarbon reserves, yet regulation is preventing drilling and shipment, leaving America dependent on foreign oil. And the oil companies themselves are largely to blame — after Deepwater Horizon, should anyone be surprised that politicians and the public want to strangle the oil industry? If there’s an imminent energy crisis, it will be man-made. It will come out of the United States’ dependency on foreign oil. Or out of an environmental catastrophe caused by mismanagement and graft (protected cartels like the energy industry always lead to mismanagement). Or out of excessive red tape. Or war.
This weekend, everyone's attention will be on the Greek elections, however it is Spain that has now become the "fulcrum security" of Europe. As such, events in Greece are merely a catalyst that will set off a chain of events that will have an impact not only on Spain, but on all of Europe, and thus, the world. As we pointed out last week after the Spanish bailout announcement, based on a preliminary analysis which had been compiled by Deutsche Bank's europhiles hours before the formal announcement, and one which just happened to be a carbon-copy of what was proposed as the 'final (and failed) Spanish solution', it appears that the events in Europe are if not orchestrated by the largest German bank, then certainly receiving part-time advice. Which brings us to the present, where we find that even Deutsche Bank has given up hope for interim solutions, having realized that the market will no longer accept transitory, feeble arrangements. Instead DB is now formally calling for a big bang resolution, one coming from the ECB. Here is the punchline: "ECB has room for manoeuvre, but needs political cover for a ‘big’ policy" or said otherwise, "A shock is required to get a liquidity response." In other words: Europe's only real hope for even a stop gap solution... is a wholesale market crash, not surprisingly the very same conclusion that Citi reached on May 19 when they warned that only Crossover (XO) at 1000 bps or wider could push Europe into acting... Basically stated, anything less than a controlled market crash, one that finally gets the ECB involved with Germany's persmission of course, merely pushes the market higher on nothing but hope of an intervention that said market lift makes even more improbable, as now both Citi and DB admit, which can and will lead to an uncontrolled market collapse, one from which not even the ECB will be able to extricate Europe.
Coming into the weekend, most were focusing on key events coming out of Greece and France, possibly Egypt, but nobody expected that Saudi Arabia would be thrown into the fray. That just happened, however, following news that Saudi Arabia's Crown Prince Nayef bin Abdulaziz al-Saud has died in Geneva, according to Saudi state television, citing a royal court statement. The news has sent Saudi shares sliding, because now 89-year-old King Abdullah must nominate a new heir for the second time in nine months. And the last thing the middle-east region needs, not to mention the world's biggest oil producer, needs is more geopolitical uncertainty.