Greek Cabinet Reshuffle Summary

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In a completely irrelevant move, which will do nothing to help the government pass the much hated mid-term fiscal plan, or diffuse the social anger, this morning as expected George Papandreou picked outgoing Defence Minister Evangelos Venizelos as new finance minister, jettisoning George Papaconstantinou, architect of a belt-tightening programme that has stoked violent unrest and a revolt in his Socialist Party. Reuters correctly observes that the move seemed likely to buy time for the embattled prime minister but did little to dilute scepticism that Greece would be able to implement a new round of deeply painful reforms... Papaconstantinou becomes environment minister in
the reshuffle.The new cabinet is expected to be sworn in later on Friday
and a confidence vote is due by Tuesday night. Rather than giving new
impetus to the reforms, analysts said, the reshuffle was aimed primarily
at quelling dissent in the Socialist Party by moving the unpopular
Papaconstantinou and appointing the prime minister's main party rival
Venizelos." All this means is that instead of Sunday being the critical decision day when the vote of no confidence will be held, it will now be Tuesday, as Europe is now struggling to exist day to day, and push back the inevitable by 24 hours one day at a time. "
The move failed to impress markets and the cost of
insuring Greek debt against default hit a fresh record above 2,000
basis points on Friday.
"

As Zero Hedge reported, the original candiate for the job, former Fed and ECB member Lucas Papdemos, declined the offer to be scapegoated for G-Pap epic failure:

Papandreou originally wanted Lucas Papademos, an internationally respected former deputy head of the European Central Bank as finance minister, analysts said. He would have impressed markets more, but he turned down the job. Announcement of the reshuffle was delayed from Thursday to Friday indicating Papandreou's difficulty in getting a party figure to take on the Finance Ministry.

Bottom line is that this is just another ploy to buy some time:

"This buys Papandreou just a little time. By putting Oikonomou and Venizelos in government, he makes sure that the mid-term budget plan will pass. But this just delays his problems.... Those who are called to implement the mid-term budget plan believe less in it than Papaconstantinou," former Finance Minister Stefanos Manos told Reuters.

Papandreou originally wanted Lucas Papademos, an internationally respected former deputy head of the European Central Bank as finance minister, analysts said. He would have impressed markets more, but he turned down the job. Announcement of the reshuffle was delayed from Thursday to Friday indicating Papandreou's difficulty in getting a party figure to take on the Finance Ministry.

Venizelos, a ruling PASOK party heavyweight, has held several cabinet posts in the past including those of government spokesman, justice minister and development minister.

In 2007, he challenged Papandreou for the party leadership.

The government aims to pass the austerity package by the end of June and must then begin work on a new set of laws to implement it.

The protests against the reforms, which include plans to raise 50 billion euros through privatisations, have combined with political infighting and euro zone indecision to spook international markets.

And here, again courtesy of Reuters, is the immediate and very much skeptical Wall Street response:

Following are analysts' comments on the reshuffle:

STEFANOS MANOS, FORMER FINANCE MINISTER

"This buys Papandreou just a little time. By putting (outspoken backbencher Pantelis) Oikonomou and Venizelos in government, he makes sure that the mid-term budget plan will pass. But this just delays his problems for 15 days."

"Oikonomou, in particular, belongs to the populist wing of PASOK. Oikonomou and Venizelos are both less willing and able than Papaconstantinou to reduce the size of the state, which should be the main priority, in my view."

"Those who are called to implement the midterm budget plan believe in it less than Papaconstantinou."

YANNIS VAROUFAKIS, PROFESSOR OF ECONOMICS, UNIVERSITY OF ATHENS

"The reshuffle of the Greek government is going to be treated by history with the contempt it deserves."

"Given the fact that for 24 hours we've been told (former European Central Bank Vice President Lucas) Papademos was Papandreou's last resort, the announcement that Venizelos is getting the job discredits the finance minister before he even moves into the finance ministry."

"The whole government is breathing its last breath. This is a transitional government that will be ineffective and will resemble one of the six governments in Argentina during its pre-default era."

NIKOS CHRISTODOULOU, ANALYST, MERIT SECURITIES

"The reshuffle is being viewed positively by the market. It creates conditions of stability even though the situation is still critical."

"It will be a difficult summer because foreigners are still asking for political consensus and the new bailout might not come before September."

COSTAS PANAGOPOULOS, HEAD OF ALCO POLLSTERS

"It's not an impressive reshuffle. The prime minister is only using party officials. It is a reshuffle that smoothes out imbalances in the party."

"What is important is that the new scheme is smaller and more efficient, and for the first time we have a body -- a government committee -- which is positive as a lack of coordination was obvious in the former government."

"However, with this reshuffle he mainly just recycled faces."

"I also believe that there was a political agreement between the two -- Papandreou and Venizelos -- and the question is whether in this framework the economic policies will change, probably towards a more popular direction."

BEN MAY, EMEA ECONOMIST, CAPITAL ECONOMICS

"From an IMF/EU perspective what matters is that they stay on the right path, not who says it. I wouldn't have thought it (who holds the finance minister post) would make a huge difference either way."

ALEXANDER KYRTSIS, ANALYST, UBS

"Venizelos is politically powerful and that might bode well for the implementation of fiscal consolidation, even though he has no track record in financial matters. His appointment means that the government will likely get the vote of confidence."

Keep your popcorn for Tuesday early afternoon eastern time. It could be a doozy.