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Greece Could Implode the Second Bailout and the EU by Mid-June

Phoenix Capital Research's picture





 

The following is an excerpt from my latest client letter

While most of my analysis so far has concerned France’s elections, it was in fact Greece’s May election which proved more significant for the future of the EU.

I do not want to delve too much into Greek history and political parties. So I’ll simply show the results along with the names and brief descriptions of each party:

Party Beliefs Number of Seats
New Democracy (ND) Old school center right, one of two major parties 108
Coalition of Radical Left- Unitary Social Movement (SYRIZA) Progressive, socially liberal, popular with youth 52
Panhellenic Socialist Movement (PASOK The other one of the two major parties, socialists. 41
Independent Greeks (ANEL) Right wing, anti-austerity 33
Communist Party of Greece (KKE) Communist left 26
Golden Dawn (XA) Neo-Nazis, expel immigrants and set land mines on Turkey border 21
Democratic Left (DIMAR) Leftist, pro-democracy 19

Here’s the current Greek parliament in graph form:

The take home point here is that there is NO majority in the parliament. And by the look of things, there won’t be until run-off elections in June.

Syriza, the second largest group, refuses to take part in any coalition that will demand more austerity measures (it also wants to reject the terms of the second bailout entirely). The Democratic Left, which could form a majority if it teamed up with New Democracy, says it won’t join any coalition that excludes Syriza (knowing that Syriza is popular with Greek youth who are the ones that tend to riot and burn buildings down).

I realize this is getting complicated. The take-away item that is most important is the rapid rise in popularity of the Syriza, group, which is completely anti-austerity and anti-bailout (the party tripled its vote in the last election).

Indeed, Syriza’s leader, Alexis Tsipras, (the former mayor of Athens) didn’t even attend Monday’s coalition talks and says he will take no part in any discussions of bailouts. Young and completely fed up with calls for more austerity, Tsipras is seen by many Greeks to represent real change from the more established (and corrupt) Greek bureaucrats who continue to fall for the “austerity in exchange for more debt” trap pushed on them by the EU.

Tsipras holds the key to any potential majority in his hands. And he has every reason not to allow one to form right now: if a coalition cannot be formed, then Greece will hold run-off elections in mid-June (possibly the 17th). Current polls show Syriza could take as much as 27% of votes in a run-off. To put this in context, New Democracy, which took the most votes during the first round of the elections, only accumulated 17% of votes.

Greek parliament rules hold that the winning party receives an additional 50 seats. So if Syriza takes 27% of the vote it’ll get up to 128 seats in parliament. Throw in an alliance with the New Democratic Left and Syriza is essentially the majority party.

In plain terms, by mid-June, Greece could very well be controlled by an anti-austerity, anti-bailout party that wants to completely do away with the second Greek bailout (which means a potential disorderly default).

This actually is the best possible outcome for Greece as the alternative is outright anarchy. Remember, Greece has gone through two Governments since its Crisis began: one was the long-standing President, the other was an EU-appointed bureaucrat.

Put another way, Greece first rejected its own Government, then it rejected its EU replacement. And now it cannot even form a majority in its parliament. This is extremely bad news as Greece is only a few steps away from total anarchy and chaos.

After all, if Greece cannot form a government… who will be negotiating on its debt/ bailout agreements/ etc. with the rest of the EU?

On that note, we likely have a few weeks and at most a few months before the EU collapses. So if you are not preparing for this, YOU NEED TO DO SO NOW.

 

So if you’re not already taking steps to prepare for the coming collapse, you need to do so now. I recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.

 

This report is 100% FREE. You can pick up a copy today at: http://www.gainspainscapital.com

 

Good Investing!

 

Graham Summers

 

PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.

 

 

 


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Thu, 05/24/2012 - 14:10 | Link to Comment silverserfer
silverserfer's picture

Graham predicted I would take a crap this morning and his prediction just came to true! He is an oracle!

KNEEL BEFORE HIM NOW!

and subscribe to his newsletter.

Thu, 05/24/2012 - 13:58 | Link to Comment pupton
Thu, 05/24/2012 - 13:57 | Link to Comment SILVERGEDDON
SILVERGEDDON's picture

Graham Summers, and Reggie Middleton. Thunderdome. Two men in, one man out, for the WWF title of Fresh Prince of Chart Porn, and excessive verbiage redux.

If Graham wins, he has to do some Jersey Shores heavy tanning to look the part.

Thu, 05/24/2012 - 13:53 | Link to Comment mutty
mutty's picture

The June Elections don't mean didly crap. It's going to be the same 'no outcome' as the may elections. It's not a runoff, it's the same clown parties, all of them. Which means no coalition, no government, no new austerity. So unless the rest of europe proactively pulls the plug, taint nothing going to happen.  Do you think eurochickens will pull the plug based on an indecisive election? Me either. Welcome to the new normal.

Thu, 05/24/2012 - 13:26 | Link to Comment bardot63
bardot63's picture

I kinda like the planks in the Golden Dawn platform.  Not fond of their nazi

moniker, but hey, depends on what Is is.

Neo-Nazis, expel immigrants and set land mines on Turkey border
Thu, 05/24/2012 - 13:36 | Link to Comment JeffB
JeffB's picture

But who's going to pay for those landmines? They're already struggling with a bloated budget.

Couldn't the landmines also possibly have a negative impact on tourism, and potentially medical expenses?

Or were they counting on an economic growth model whereby greater spending on landmines and a reduction in Turkish tourism revenue is more than offset by the employment gains for doctors, nurses and hospital staff, not to mention landmine hole diggers and installation technicians?

I'm sure the additional employment there would bring in some additional tax revenues and lower unemployment expenses, but I haven't seen any of their analysis showing how that would offset the additional landming manufacturing and installation expenses in conjunction with any lost tourist revenue. Maybe they've already done the analysis, but on the face of it, it looks like another risky government venture to me.

Thu, 05/24/2012 - 13:05 | Link to Comment hpro123
hpro123's picture

Graham seems indeed to be regurgitating published "facts" amidst actual facts. For example, Tsipras was NEVER the Mayor of Athens!!! I cannot even figure out where he came up with this!!!

SYRIZA has indeed rode the anti-austerity wave to 3x their previous percentage. As always, this was mainly for internal consumption... Their official Letter to the Troika was a mirror copy of what ND & now PASOK have been arguing for... And yet, both of those parties do not acknowledge that they have been preaching the exact same thesis with SYRIZA! They just scream that SYRIZA is not a reliable party because... The did not stick to their pre-election positions!!!

The truth is much simpler... All of the came to the same conclusion with a 4-6 year delay: that any party aspiring to govern Greece aid now doomed to oblivion.

ChrisInAthens

Thu, 05/24/2012 - 12:24 | Link to Comment JeffB
JeffB's picture

The table and graph are helpful. Thanks. It would have been nice to have another column showing how many seats were gained or lost in the last election by each of the parties, &/or a similar pie chart showing the number of seats they held formerly, though.

"The Democratic Left, which could form a majority if it teamed up with New Democracy..."

I think I'm missing something. Your chart lists 300 available seats, and the combined numbers for "New Democracy" (108) & Democratic Left (19) only come to 127 seats, less than half of the 300 total, obviously. How would that be considered a majority?

On another note, Bruce Krasting had an article on here on May 15th, indicating that a friend of his in Greece felt the election results were a bit of a shock to the Greeks in that many were voting primarily to "throw the bums out" rather than in favor of some of the new faces and many are now having buyer's remorse, as most Greeks wanted to remain in the Euro. Takeaway, the next vote might be quite different and more likely to result in a pro-bailout/austerity coalition than the current results seem to indicate.

Not sure how accurately that all reflects Greek feeling at the moment, or more importantly, at the time of the next election, but it would seem to indicate a little higher probability than one might currently suspect.

The beginning of his article:

If you read me on a regular basis you know that I speak with a fellow in Athens who is connected to the shipping industry and the government. I provide links below to some of those articles to establish this person’s credibility. He’s been pretty much right on things that have happened in his hometown.

I called him today to discuss the (now definitive) fact that there is no new government and elections will take place on June 16. What he said completely blew my mind.

He started with the well-documented fact that 70-80% of Greeks do not want to give up the Euro. They are afraid for their future, and their ability to survive if that link is broken.  The following are his words, not mine:

Athens - The results of the May election are in conflict with the people's desire to stay with the Euro.

The people voted in anger. They voted against those they had voted for in the past. Now they see whom they have elected.

Every day on TV the extreme right is interviewed. They are Nazi’s. People are frightened by this.

On the left you have Alexis Tsipras (Syriza). This man is an uneducated thug. The people understand that. They don’t want this man to be their leader.

When the next election comes, Greeks will not vote in anger and they will not vote for the idiots on the fringes. The centrist parties will rebound. A National Salvation Government will be formed.

BK - There are polls in the US press that say that Syriza will win a majority. (link)
Thu, 05/24/2012 - 12:11 | Link to Comment boogerbently
boogerbently's picture

I hope it doesn't take America THOUSANDS of years to achieve this sort of diversity in our congress/senate.

Thu, 05/24/2012 - 13:18 | Link to Comment Mountainview
Mountainview's picture

Not in this USA!!!

Thu, 05/24/2012 - 12:11 | Link to Comment RoadKill
RoadKill's picture

Seems like Graham's business model is to take things that have been discussed/analyzed in FAR more detail on ZH - and regurgitate them to his audience several days later (and generally AFTER the news would have been helpful).  But the annoying thing is he reposts it to ZH and has the audacity to pretend its his origional thought.

 

Seriously Graham, this was discussed in detail on ZH THE DAY OF THE ELECTION.  We have already moved on to talking about the Syrza surge post election and yesterday we even discussed how that has faded and ND is polling #1 again.

Thu, 05/24/2012 - 14:01 | Link to Comment itisthetimethis...
itisthetimethisistheplace's picture

That is exactly how Graham works. You can sound really smart when you have the right audience. To the person(s) that voted you down, shame on them. They must be a subscriber to his snake oil.

Thu, 05/24/2012 - 12:07 | Link to Comment RoadKill
RoadKill's picture

Seems like Graham's business model is to take things that have been discussed/analyzed in FAR more detail on ZH - and regurgitate them to his audience several days later (and generally AFTER the news would have been helpful).  But the annoying thing is he reposts it to ZH and has the audacity to pretend its his origional thought.

 

Seriously Graham, this was discussed in detail on ZH THE DAY OF THE ELECTION.  We have already moved on to talking about the Syrza surge post election and yesterday we even discussed how that has faded and ND is polling #1 again.

Thu, 05/24/2012 - 11:58 | Link to Comment Zero Govt
Zero Govt's picture

so even the voting system is causing chaos

"democracy".. you voted for it sheeple, Baaahh

they wanna try freedom (zero Govt) in Greece, it could hardly be crapper than this train-wreck

Fri, 05/25/2012 - 07:36 | Link to Comment Zero Govt
Zero Govt's picture

Thank you so much to the Pro-Govt loon junking me

Please watch your human shithole of an institution (Govt) wreck Greece, its economy and its society for the umpteenth time (the 'Birthplace of Democracy' averages total bankruptcy every 14 years) 

Watch as every Govt in Europe wrecks its economy and goes down the sewer

Then watch as the US Govt drives America into the sewer

Then Japan

Don't at any point think Govt is the problem that's creating this socio-economic chaos and destruction, I wouldn't want you to have a clue in your mindless zombie existence cradle to grave (you're a voter yes?)

Thu, 05/24/2012 - 11:43 | Link to Comment MrPoopypants
MrPoopypants's picture

FOMC meeting starts two days after Greece election.

Do NOT follow this link or you will be banned from the site!