Greek Ruling Coalition Collapses Days Ahead Of Critical Vote

Tyler Durden's picture

If one is curious why the EURUSD has been ramping as if no one will ever sell one more euro ever again, the reason is simple: the BIS is desperate to mask the fact that the fragile Greek coalition, whose creation sent Europe to the edge back in June during the Greek re-elections that just barely avoided a Grexit, has just crumbled. And with an illiquid market, the reflexive argument always is a simple one: if someone is buying, the news must be good, so dear momo-chasers - buy along. Only the news isn't good, and in a centrally-planned world, the only buyer left are central banks, who are now solely political, and not market, forces. What the news really is, is that with Greece poised to vote on critical labor reforms (read more layoffs) next week, which must be passed in Parliament with a majority vote in order to get the next Troika bailout tranche, the Samaras-led coalition just lost one of its three members, after the Democratic Left announced it would take its 16 votes and vote against any further austerity. In doing so it has effectively joined Syriza and any other anti-bailout powers, and has made certain that yet another Greek election is imminent, one which will finally see the rise of the "anti-memorandum" forces on top, and finally launch the 3 year overdue departure of the Greek ferryboat from the monetary landmass, with even more dire consequences for the USS EURtanic.

From Reuters:

A Greek coalition partner confirmed on Tuesday it would vote against labour reforms proposed by foreign lenders, ignoring the prime minister's appeal for a united front to push through more unpopular austerity.


The Democratic Left party's refusal to back the reforms leaves the government facing an unpredictable vote when they are presented in parliament next week, making it the fragile coalition's biggest test since taking power in June.


"The Democratic Left has fought on the issue of labour relations, to protect workers' rights which have been already weakened," the party said in statement.


"It does not agree with the result of the negotiations. The Democratic Left sticks to its position."


A party official, Dimitris Hatzisokratis, told Reuters the party would not vote in favour of the labour reforms.a

Meanwhile, the current (if not for much longer) PM Samaras, resorted to the usual trite and overused threats of global destruction if anyone dares to vote against the will of Europe:

"What would happen if the deal isn't passed and the country is led to chaos?" Samaras said in a statement. "Such dangers must be avoided. That is the responsibility of each party and every lawmaker individually

Sadly for him, nobody buys the MAD argument any more, and especially not Greece, where one can't hit more rock bottom if one already is at rock bottom.

The only good news is that the Democratic Left can't alone scuttle the majority needed for the vote to pass. It can, however, show that the coalition government has now collapsed, and get more defectors to join them across the aisle, in hopes of being on the right side during the next parliamentary elections which now appear to be imminent.

The Democratic Left party has the support of 16 deputies in the 300-seat parliament. The government -- which has a 176-seat majority - could pass the reforms without its support.


But a vote against the package by the party would undermine the already fragile coalition and could encourage other lawmakers to defect and vote against unpopular measures, leaving the outcome uncertain till the end.


Already some lawmakers from the other junior partner in the coalition, the Socialist PASOK, have threatened to vote against the measures, though the party's leader has hinted the group will vote in their favour to ensure stability in Greece.

Expect all this and much more to be once again in the daily headline rotation, but not before the US presidential election: can't rock the boat before that. Cause Tim Geithner said so. After that, pardon the phrase, the deluge (only this time in Europe).

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
maxmad's picture

Boy, this is a slow news week!

mick68's picture

In fact, Greece leaving the Euro and reneg'ing on its debt WOULD collapse the world financial system and here's why:


RE-HYPOTHICATION- Every treasury Greece has issued has been re-hypothicated, as all assets are in today's brave new world of debt on top of debt on top of debt. So, suffice to say you can multiply Greece's debt by at least 5X to ascertain the real impact of Greece's departure from the Euro.

nope-1004's picture

Greeks don't have a problem.  Germany, you lent us the money.  YOU have the problem!  Genius, genius, genius !!



lineskis's picture

one can't hit more rock bottom if one already is at rock bottom.

But if you're in a hole, stop digging...

insanelysane's picture

Same thing Rajoy over in Spain knows.  Spain isn't screwed, Germany is.

lolmao500's picture

Next up : Spain and Japan... then the world.

RiverRoad's picture

IMO if the world's financial system collapses those who will get hurt the most will be the world's banksters and the 1%.  The rest of us will manage to get buy growing our own vegetables, forming strong community networks, etc.  The big Reset is inevitable anyway; might as well get on with it.

earnyermoney's picture

You'll know the reset has happened when the 1% begin to hang themselves.

Tursas's picture

Don't see any Help needed ads!

Non Passaran's picture

I am not buying this.
To net it off one can simply rehypo his gold as many times over. Problem solved.

bank guy in Brussels's picture

That's right, as much as we all should be sceptical of the lies of the banksters - and thus suspicious of the 'world will blow up' Hank Paulson type extortion warnings -

Yet some of the most anti-bankster people, do also agree the economic world can blow up easily if the wrong move is made, and that simple liquidation could be catastrophic.

Jim Sinclair has long had this view, that aside from 'QE to infinity', it will be very hard to avoid disaster, although he does think that a 'saint' in power could do it ... But Sinclair would certainly be opposed to the common ZeroHedge liquidationist 'let the banks fail' advice in many ZH articles.

Sinclair puts it like this, on how difficult and delicate it is to put the global debt bubble into reverse ... how narrow a path it is to avoid disaster:

« The economy is a drug addict. ...  You go cold turkey on money creation, you unleash the economic wrath of hell in the entire Western world. It all comes down in one great implosion. ... You have to wean a drug addict off the drug in order to not kill him in recovery ... the mishandling of any situation due to dogmatic beliefs can set off a nuclear explosion. I would walk the Western World Financial System back to sobriety, not try to blast it back which would fail miserably.

We need a new monetary system complete with a strategic plan of transitions from here and now to there. There is no politician out there that will do this ..

If I was made Chairman of the Federal Reserve in January 2013, I would wean the system slowly down while working to recreate the monetary system with required total gold value for government treasuries tied to a world index of total Western World M3. That is a simplification, but it would be the heart of my plan ... »

MachoMan's picture

This is nonsense.  This proposition requires an incredibly generous assumption, THAT WE HAVE THE KNOWLEDGE AND POWER TO PROLONG THE CHARADE THROUGH CENTRAL PLANNING.  Sorry, but control, in this context, is merely an illusion living on borrowed time. 

The other issue is that there has not been devised a method of "rehab" and successfully implemented that avoids such moral hazard as the cantillon effect.  In a situation where governments and central banks work together to benefit a very select group of people, any rehabilitative efforts will perform likewise.  Unless you fix things from the ground up, the "stimulus" will simply worsen economic disparity and beget additional and unforseen moral hazard.

Zero Govt's picture

Bank Guy in EU Loon HQ  -  I do not believe either Wank Paulsons threats of "catastrophe" nor Gentlemen Jims. Liquidation is going to happen like it or not, we face the pain now or much more later. There is no 'right' time, but the present beats stringing this fraud out.

When Jimbo says there's no political alternative to QEternity i'm pleased he qualified this remark a few days ago as in his practical view of the situation, not his personal view. He also thinks Romneys threat to sack bubbles Ben was suicide and again i hope it's his practical understanding that once politicians paint themselves into the corner there's no alternative but to keep faking a grin/grimmace and soldier on like a stuffed buzzard

..because Bernanke should have been sacked without pension in 2008 for his complete incomptetnce and forsight (bang!)

Again where I veer away from Jimbos advise and any other guru i listen to on what replaces our current system is any kind offers to replace one monopoly monetary system with another monopoly monetary system, as Jim suggests we do.

We need a free market in money. Period.

Nobody dead or alive, no committee of wise men, not even God can beat, out-think or get remotely close to the beenfits of a free market.

Treat all gurus offering a single replacement monetary system with suspicion until further notice that they've learnt the lesson of history, freedom beats dictate and hand-me-downs

Renewable Life's picture

I think everyone who is predicting a Greek collapse, is somehow under the illusion, that these banks and politicians in charge of everything, are democratic in nature and would allow a "vote" to undo them!!!!!

The next step, will be a military coup of some kind, a suspension of elections, and a rewriting of the constitution, if you resist, you are a terrorist and will be dealt with!!! After they have rewritten things again in the bankers favor, NEW elections will be held, maybe 2-3 years down the line, and democracy will be "reborn" in Greece!!!

This will be the model all over the world as people begin to rebel more and more!!

Dugald's picture

When you say Military who do you have in mind, surely not Greek, so that leaves what? German boots on the ground....not going to happen!!

Renewable Life's picture

But hey I could be wrong, but what would those 400,000 projected world wide new drone orders be for then??????

Eireann go Brach's picture

Obama announces " can't those pesky Greeks just keep quiet and do without food until after November 7th"

Vigilante's picture

Not so fast Tyler..

I just ran through a host of Greek sites...

The third party in the coalition has said it will vote against the new measures.

Also leakage is appearing at the Socialist party.

It will all clear tomorrow as the austerity bill heads to Parliament.

The voting should be on the same day I gather...

Make or break time?  We've been here before...I hope it all crashes though.

Damn...I had a conversation with a friend yesterday and I was challenging him to a bet that this charade will be over by spring...

...seems I was too conservative..!

Howdan's picture

I'm sorry to say I hope they do fail to pass the further austerity measures and do not get the next bailout tranche (EUR 32bn) as it would just prolong the patient's agony.

Perhaps EUR/USD is ramping on the news that the Troiki/Greek Government negotiations have gone successfully after they broke down on the weekend?

"Samaras's office said the negotiations with the troika have been concluded «successfully» and that «significant improvements were made. Today we concluded negotiations over the measures and the budget,» the statement read. «We did everything we could. We exhausted all the limits of pressure and time. We achieved significant improvements even in the final hour."

bank guy in Brussels's picture

What might be more telling, and honest, is having Greece vote and say 'No' to the bailout measures

But still get the 'bailout' money anyway

As the Germans finally admit they really just are trying to prop up their own banks, insurers and pension funds, and merely using Greece as the excuse

Cast Iron Skillet's picture

“When it becomes serious, you have to lie

FL_Conservative's picture

It's about fucking time.

PaperBear's picture

Can the insolvent big banks finally go bankrupt now ?

semperfi's picture

They can stay alive longer than you can wait - 5+ more years to go - they aren't going down easily and not without a nasty fight.  In the meantime, accumulate -accumulate - accumulate.

pods's picture

So basically Greece is not solved, again.

Greece fire in the kitchen again.


Zero Govt's picture

Christine Lagarde must be losing her head when all around her are ...losing theirs as well.

Bloody Greeks, what's so complicated about cutting Govt, increasing taxes and raping their country to keep the bankers luxury yachts fueled and dripping in champagne??? 

insanelysane's picture

Government cutting government is close to impossible unless there is no other option and then it is still difficult.  

Dick Darlington's picture

Remember the days when the former barking dog Samaras refused to sign MoU? Yes, the same Samaras who is now the Troika's favorite lap poodle. Those were good days, lol.

Zero Govt's picture

"Greek Ruling Coalition Collapses Days Ahead Of Critical Vote"

Hehehe ...hahaha  .....hohoho

Birthplace of Democractic Govt, a shining example to us all of this institution of complete farce and corruption

Bin It 

Dr. Engali's picture

Do the world a favor and default Greece...put an end to this madness.

ekm's picture

Just for fun:

Former prime minister Papandreou made the mistake of going to a greek restaurant in Germany.


lindaamick's picture

Bring it Greece.  Be the second. (Iceland was first).

Mr Lennon Hendrix's picture

If one is curious why the EURUSD has been ramping as if no one will ever sell one more euro ever again

Tyler, what is the short pos on the EURUSD?

Ghordius's picture

in a different and ZH-heretic way: Tyler, why are you so fixated* on the EURUSD levels when they go up? For all other views you have tons and tons of arguments, but when it comes to the EUR... faith? Cognitive dissonance? The (small) danger for the EUR is - as so many analyze left and right - a breakup, not a catastrophic devaluation. This (small) danger is, currently, reserved to the USD and it's sidekick GBP.

You have written yourself so much about the deleveraging process that is holding up the USD - none of this in the eurozone? which is nevertheless a region with a completely different and more contained set of balances, both financial and import/export?

What is the bearish expectation anyway? Parity?

(*) only because I sport this avatar I'm not expecting the EUR to be a currency fit for your savings for a long, long time. and no, it's not it's function anyway. so gold, bitchez

Tyler Durden's picture

This has been explained on numerous occasions.

The EURUSD is the simplest and most levered way (between 500 and 1000x implied leverage) to ramp up the entire risk complex, by taking advantage of correlation algos. A linkage which the BIS and all those whose interest it is to ramp the EURUSD (because for some reason a higher EURUSD means "less risk" of European collapse - at least if those in power pander to idiots that is) are all too aware of.  Furthermore, what is truly idiotic, is that Europe is the only entity whose central bank intervenes to send its currency higher. Because even a monkey with a Finance 101 textbook realizes that what Europe should be doing, is doing everything in its power to send the EUR lower because that, and not through constant empty, hollow rhetoric, propaganda and lies, is how one fixes an imbalanced economy.

Sadly, it is now all about optics, that the system is stable, when it in fact it isn't, and the EURUSD is the status quo's favorite telegraphing mechanism to represent said stability. Of course, everyone who knows the reality, understands how everything is patched together by scotch tape.

Then again, there are always people, usually who have useless emotional attachments, who enjoy being "pandered to."

Hopefully this makes it quite clear.

Mr Lennon Hendrix's picture

Because even a monkey with a Finance 101 textbook realizes that what Europe should be doing, is doing everything in its power to send the EUR lower because that, and not through constant empty, hollow rhetoric, propaganda and lies, is how one fixes an imbalanced economy.

Which textbook?  One written by Ben Bernanke?  Because that is true; as I have often written on your blog (Fight Club is free to all??) the textbook move to "increase exports" is to devalue the currency.  Does it work?  Well, if there is anything to export then sure!  What is the West's current chief export?

Debt.  And since the EUR vs. USD is weighted inversely Bernanke and the Fed, who control the largess of debt in the known universe (hopefully Krugman is right and aliens will come here to negotiate a debt swap), needs his doelarr lower to do what you suggest Draghi do.

So although the CBs control the "money" supply, it is often pointed out here (like the above quoted statement) that investors do such and such.  So, once again, what is the net short on eurusd?

Zero Govt's picture

Great response TD... the only issue i'd take-up is regards currency devaluation 'fixing' the economy.

A study of Japanese car exports to the USA some years ago showed a strong Yen made no difference as Jap Co's just hedged, or absorbed the hit in their margins.

This is another myth in the modern day economics handbook of simplistic 'adjust A and B will happen' Pavlov Dogs school of political and central bank muppet meddling. As repeat QE (and devaluation attempts) in Japan, Europe and US proves beyond doubt they're having no effect on the economy or imports/exports

Recovery comes about quite simply when rock bottom is hit and there's nowhere else to go ...but up. 

Ghordius's picture

I fully agree on the scotch tape. Nevertheless IMHO you somehow misread/misinterpret the ECB's 17 CBs modus operandi.  A bunch of European central bankers, for all their faults, typically do not want to "fix an imbalanced economy". They believe in a different central banker voodo, i.e. "let stability heal an imbalanced economy".

Got to ponder a bit on your answer. Sounds like the politics behind the USD, and this is making me a bit skeptical on it's application. Thanks, btw

Ghordius's picture

Mr. Lennon Hendrix, the eurozone is exporting more than importing and it's financial balance is not bad, too. So the question would be: why should the EUR be sent "artificially" down? In order to get more fiat from the others? But Tyler argues that it's being sent up. And this begs for a reason, too. Only propaganda? I doubt it.

Freegolder's picture

'Furthermore, what is truly idiotic, is that Europe is the only entity whose central bank intervenes to send its currency higher. Because even a monkey with a Finance 101 textbook realizes that what Europe should be doing, is doing everything in its power to send the EUR lower because that, and not through constant empty, hollow rhetoric, propaganda and lies, is how one fixes an imbalanced economy'

The ECB intervenes to fulfill its mandate, nothing else. Once commentators realise that the ECB doesn't give a stuff about recovery, one's view of the Euro is so much simpler.

Oh yeah, imbalances, well, they will be sorted out under a system with free-flowing physical only gold as the balancing mechanism, but that is for a bit later.

So few grasp the crapness of the dollar-based monetary syste, it is sad to see the BS written about the ECB and the Euro.

All currencies are NOT the same, some are well managed, some not. One must be blind to view the Eurozone and its actions as in any way similar to the dollar and America. Blind. Wilfully blind? Who knows.

Does no one else grasp the reasons behind the Euro in the first place? To fucking destroy the dollar via a rising gold price.

Ah, that is better off my chest.

Thanks to ZH for a great job, but this issue is too important to wash over I feel.

Ghordius's picture

Freegolder, I disagree on "...the reasons behind the Euro in the first place? To fucking destroy the dollar via a rising gold price."

Of course without King Dollar and the suppression of gold the EUR would not have been launched. But your active and aggressive/activist view on it's purpose is profoundly non-continental_european.

The main goal is (I know, I know, lots of Trichet jokes about that in ZH) stability.

This means no currency wars on this continent, no competitive devaluations between the 17, no active/aggressive/activist role of the money supply and a push-back to politics of what has to be done in the fiscal policy realm.

And - very important - no FX wobbles in the industrial chains inside the zone (because the involved SMEs suffer from that). This is an industrialist continental policy that many commentators from the UK and the US miss or misunderstand.

From a strategic point of view key commodities like oil and gas have to be supplied by several sources (including Russia) and those inflows have to be matched by real streams of exports, both goods and services. The key words are real (not promises) and matched.

The continental Consensus is what King Dollar does should not be fought and cannot be prevented - ZIRP was a big problem and there the ECB had (after trying long enough) to capitulate. The inflows were getting simply too big and the other option would have been "Brasilian" methods like capital inflow taxations - too aggressive.

Your view that "The ECB intervenes to fulfill its mandate, nothing else. Once commentators realise that the ECB doesn't give a stuff about recovery..." is correct in theory, though in practice none of the 17 national banks can just stay completely idle while their governments have the feeling their credit is being trashed by speculation (note: feeling - the truth is debatable) and none of the 17 can suffer the catastrophic destruction of their banking systems - which are seen here as national strategic assets. Hence the new role of the ECB as Great Regulator for 6'000 continental banks - and this might alter the current ECB's outlook (though not it's preservation mindset).

so all in all: no. the EUR biz/design/consensus is about preservation and defence, not attack and destruction. If King Dollar suppresses gold back to nothing there won't be a mourning party, here.


NB of course, like all orgs of relevance the ECB is riddled by many human failures - including an ex-Squid Prez of unknown loyalty. I'm talking here about policy consensus and political expectations, here, and their differences with the FED or the BoE. In one simple summary sentence: keep steady instead of "fixing" problems.

orangegeek's picture

US Dollar continues to rise - everything is being done to hold the US Dollar down.


As many already know, the Euro is 57% weighted against the US Dollar.  So what's keep the Euro up?  Not sure, but last I heard, insolvent countries like Greece appears to be bullish.


Who wants a nice souvlaki?



Mr Lennon Hendrix's picture

LOL DXY 80 is a steam engine on the FX map!

King dollar!!

Madcow's picture

the passing of time makes things get worse not better - 

the deflationary collapse is going to last 30-40 years. things will just get worse and worse and worse and worse ...

all the EU can do now is militarize, dig in, and prepare for a long assault on power and authority from angry, jobless and starving masses.

the "people" of Europe will come to view the EU / ECB / IMF / UN  etc as an occupying army - sent by bankers to collect whatever money is left.

this is great news for the USA - as Europeans with any wits - and any money at all - will flee the continent.


the silver lining is that folks in the USA have quit insisting that we should all be "more like Europe" -

BigJim's picture

 ...this is great news for the USA - as Europeans with any wits - and any money at all - will flee the continent.

Why is this great news for the USA? You don't imagine the fleeing Europeans are going to head state-side, do you?

Freegolder's picture

'one which will finally see the rise of the "anti-memorandum" forces on top, and finally launch the 3 year overdue departure of the Greek ferryboat from the monetary landmass, with even more dire consequences for the USS EURtanic.'


Whilst this may be ZH's prediction, the Greek people have shown time and time again that they know they are better off within the Euro. A massive devaluation via an exit helps no-one at all.

And as usual, the practicalities of an exit are ignored, it is legally impossible and there is no way it will happen. The ECB-led troika have been very creative in managing this issue and I have faith that will continue.

One day these predictions will cease for good, as the US Dollar hyperinflates, whilst the Euro calmly works with the space-rocketing gold price in its favour.

Kaiser Sousa's picture

its about mother fucking time!!!!


alll together now....