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Syriza Forms Coalition Government With Anti-Bailout Independent Greeks: What Happens Next
There was some excitement in the capital markets overnight, when what was initially seen as an outright victory for Syriza, giving it an absolute, 151-seat majority in parliament - a fear that briefly pushed the EURUSD under 1.11 when the Euro PPT stepped in - ended up being a placing just shy of a majority with 149 seats. However, that same excitement fizzled several hours ago when the "radical left" party agreed to form a government with the "rightwing" group of the Independent Greeks in the aftermath of Syriza's historic win which harnessed the public backlash against years of belt-tightening, job losses and hardship.
As the FT reports, Panos Kammenos, leader of the fiercely anti-bailout Independent Greeks, said as he left Syriza’s headquarters after a meeting with Alexis Tsipras, the prime minister-elect: “The country has a government. Independent Greeks will give a vote of confidence to Alexis Tsipras.” The deal would give Syriza a comfortable working majority in parliament but Mr Tsipras has yet to confirm anything as he continued coalition negotiations with other parties.
So in a parliament in which the nationalist Golden Dawn placed third, the new leadership will be comprised of a far left and a far right group, both united by the hatred of European bailouts and the stifling Greek economy, both of which they are eager to blame on Germany and the Troika.
Despite their ideological differences, the two leaders established regular contacts while the previous centre-right New Democracy government was in office, based on their shared stance that Greece should abandon austerity and seek a debt write-off, while remaining a member of the eurozone.
Mr Kammenos, a former deputy merchant marine minister in a New Democracy government, left the party in 2012 to set up his own party, taking a handful of lawmakers with him.
This means that any potential agreement with the next party Tsipras is looking to work alongside, the new To Potami party, becomes of secondary importance:
Mr Tsipras was meeting Stavros Theodorakis, leader of the centre-left To Potami (The River) party later in the day to discuss possible co-operation. Mr Theodorakis has refused to participate in a Syriza-led government but could offer support even if his party is not part of a formal coalition. To Potami finished fourth in the election with 6.4 per cent of the vote and 17 seats.
And while bankers across Europe were fast to talk down the possibility of a hardline Syriza, having failed to get those two elusive seats, the fact that it has aligned itself with a just as rabid anti-Europe party will actually end up forcing Tsipras hand to deliver on at least some of his anti-bailout, anti-Troika, promises, all of which Germany has shot down apriori.
So what happens next?
Well, on one hand, as RBS' Greg Gibbs points out, the ECB's just announced QE "substantially" increases the incentive for Greece to stay in an acceptable EU/IMF austerity program as a decline in EUR and regional bond yields provide a draw for the country. He adds to expect a lot of “bluff and bluster” from both sides of the Greek debate in 1H2015 especially since EU members will concede little ground to Syriza-led Greek government. The problem is that Syriza can hardly agree to no concessions as it has built reputation on easing austerity.
This leads Gibbs to conclude that the most likely outcome is just enough ground conceded on both sides to save face.
Immediate focus likely to be troika review expected end-March; most important deadlines expected when Greece faces repayment pressure on large amount of bonds in July/Aug.
The take of Morgan Stanley's Hans Redeker is less optimistic: he, alongside other fx strategists, thinks that the Greek election outcome don’t bode well for the Euro, adding overnight that investors will watch which party Syriza reaches out to. We now know that said party is the a rightwing anti-bailout organization, which weaknes the compromise angle.
MS says to expect a modest core European opposition against Greek debt restructuring as no doubt current debt levels are unsustainable.
Friction with EU partners will probably be on reforms as Syriza has not only called for the end to austerity, but wants to roll back some structural reforms and re-hire in public sector.
The conclusion: it will be up to the German government to "make a difficult decision."
So what was Germany's kneejerk take? Well as Michael Grosse-Broemer, chief whip of German Chancellor Angela Merkel’s party, said in a N-TV television interview, Alexis Tsipras will have to face reality “once the smoke of the election campaign lifts" adding that "you have to abide by agreements that were made in the past. Tsipras has promised a lot, but he will have to deliver if Greece wants aid disbursements to continue." It is not quite bailoutmail but if the word fits.
Merkel's lawmaker concludes that the Greek left is “a bit blinded by their ideology,” and that the German-led approach has worked in other euro-area countries that received bailouts.
It almost makes one wonder if it wasn't "austerity" as much as corruption and incompetence that is behind the endless Greek drama...
In any event, both sides are now on collision course, with Tsipras knowing full well that if he dilutes his promises sufficiently his political career will also be measured in months. Speaking of Tsipras, here are some amusing snippets about his ideological position from the Guardian:
As Greece descended into economic crisis, there were almost no signs that the young ideologue, an ardent admirer of Ernesto “Che” Guevara – he named the youngest of his two sons after the Argentinian Marxist revolutionary – would emerge as the wild card to challenge Europe or Athens’ own dynastic politics and vested interests.
...
Tsipras, perhaps more than any other Greek politician, has flourished on the back of crisis, his anti-austerity rhetoric and dexterity as a political operator becoming sharper by the day. His determination to learn English – swotting from textbooks in his spare time – helped turn him into a polished performer and earned grudging respect from his greatest opponents.
“Although trapped in his own rhetoric, he is very good at deflecting criticism and often using it to his advantage,” says Dr Eleni Panagiotarea, a research fellow at Greece’s leading thinktank, Eliamep. “His electoral campaign has been slick and very media-savvy.”
...
At 40, the former communist party youth activist, student leader, self-avowed atheist and firebrand appears determined to jolt not only his own country but also Europe. Nonconformity is part of the package. Others, say aides, will have to wake up to the reality that the radicals – for they wish to be called nothing else – will be doing things differently.
Under Syriza, Athens will challenge fundamentals: the politics of austerity, fiscal policies, how business is done. With the eyes of the world media on him, Tsipras rammed home that message himself on Sunday after casting his vote in Athens.
"Our common future in Europe is not austerity, it is the future of democracy, solidarity and cooperation," he announced.
...
Greek politicians are unaccustomed to taking Europe by storm. And they are certainly not used to being seen as trailblazers capable of galvanising public opinion in the 28-nation bloc.
But, mixing chutzpah and charisma, Tsipras has managed to do both. From political unknown he has become the gadfly tormenting the big players in the EU.
"Merkelism,” he says, is in his sights. It is hard to overestimate the significance of this outcome for the left. Or Tsipras’s role in uniting groups that, famously, have remained fractured on the edge of political spectrum.
Deploying unrivalled communication skills, the telegenic Tsipras has allowed Syriza to speak for a whole sector of society that for decades was hounded and harassed by authoritarian rightwing rule.
In a nation still polarised by the fault lines of a bloody left-right civil war, both he and his alliance of Euro-communists, socialists, Maoists, Trotskyists and greens – since united into a single force – were only three years ago firmly relegated to the sidelines of Greek politics.
Outside the eclectic world of Syriza committee meetings, congresses and conventions, they were not a force to be reckoned with.
Maybe they are, but Europe is well-aware that any Greek renegotiation means one thing: an impairment of the ECB balance sheet, something which is also a non-starter for the central bank which is already toying dangerously close with losing all credibility as well as big losses for German taxpayers now that the bulk of Greek debt exposure has been mutualized outside of the banking sector,
Whatever happens, expect a substantial increase in volatility in coming weeks as Greek pre-election promises and the harsh European reality finally collide, and lots and lots of red flashing headlines and FX kneejerk responses.
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Moar government handouts is the solutions! The gubmint will take care of all comrades!
Forward!
Guess this offically signals that socialists (at least in Greece) have run out of other peoples' money.
That happened a very long time ago, hence the insane levels of sovereign debt.
It's funny that the left gets left holding the bag on the insane debt.
But it was the right wing and their ideology that 1) pushed for high levels of defense spending that still is still too high and 2) made Greece's biggest industry tax-free, even incorporating this into the Constitution.
That fucking communist Tsipras wants to slash defense spending and tax the shipping magnates. /s
The latter will be a tough task however. They have threatened to leave Greece high and dry if he moves against them. "Sure, tax me. Find me first." Great fucking patriots.
What happens now, is that Syriza will break their election promises and defraud the people.
Same as always. They were either paid off or blackmailed already. There will be some concessions here and there for show.
The days of the Centrist politician are numbered.
Across the West they have dug their own graves by giving unconditional bailouts to bankers and imposing austerity on the people.
For the Centrists it’s still, let’s give more money to bankers and the rich through QE. They have no idea.
In France they have already swung from Hollande’s, Socialists, to Le Pen’s, far right, in search of solutions.
Let us hope Syiriza succeeds in Greece, on the far right lies Golden Dawn.
Yeah... solutions. Just look at the long list of successes of the Tea Party, which isn't an actual party, but rather a "movement".
The Tea Party never saw a war funding bill it didn't like, it's leaders openly call Snowden a traitor, and it's soaked in more money and more oil than you can shake a stick at.
Uhh, not quite.
24 Congressmen actually voted against Boehner, and those MAY be Tea Party principals (or just sharpening their own swords for leadership). But the members have been for REDUCING the size and cost of government, consistently; for nearly a decade (some even before the Santelli rant that generated the name). If you're for REDUCING the size and cost of government, how can you be FOR war funding bills?
SNOWDEN is a personal choice; did his revelations actually serve the cause of freedom? Or did he "de-sensitize" the people to the abuses by the government? I can't see any NSA / FBI / CIA scaling back yet (see Tea Party, lack of sufficient influence of on GOP).
What's really interesting is your last comment, "soaked in more money and oil than you can shake a stick at". So the big oil companies are funding the Tea Party? So they can get their oil subsidies reduced when government shrinks? The EVIL KOCH BROTHERS (who do have some oil interests) are funding the whole Tea Party, including Sarah Palin and Ken Cuccinnelli's Senate Conservatives Fund? IF the Tea Party has so much money, why did only a few of their candidates break through the RINO barricades and get elected last year ( see McDaniel in MS, loss of and whoever ran against McConnell in the primary, loss of). It appears that whatever money they have is coming from small donors and individuals, not the Chamber of Commerce and similar. Why do you feel so threatened by the Tea Party? Is it because it poses a threat to your big-government status quo approach to stifling individual effort and merit?
I contribute to Ken Cuccinelli, and hope his efforts prevail, and I'm no big-money man. Nor do I go to church these days, nor care if you have an abortion or not, nor have I served in the Armed Forces (too young for Vietnam, too old for Grenada, and they never asked me). So I really don't fit the "typical" Tea Party profile, but I agree that the government is too big, too costly and too error-prone to keep as-is. My Republican Representative isn't listening to me, he's too far down in somebody's pocket (even wrote a nice email explaining why he voted for Boehner as Speaker, when I asked him not to). So he's a baby RINO wrapped up in conservative sheep's-wool. Until we get enough representation in D.C. to actually effect some real changes, nothing will change. So we keep on, whether it pleases the RINO leadership or not.
And that won't change. We're doing it "for our children", don't 'cha know?
Syriza's alliance with the local extreme right-- Nigel Farage type team--- is an astute move.
As in his discussions with EU he will represent the euroskeptic current of the populist right, just as the more europhile but austerity-phobe position of Syriza. Thats a clever wedge which could become a double whammy later on.
With 149 seats, Syriza is now playing on all squares of the political checkered board of Greek politics to achieve his aims :
No austerity and no Bank oligarchy further down the road. If he adopts an independent stand on foreign policy and energy by pivoting to Turkey/Putin alliance he will REALLY become a thorn in the EU ass. As that makes Greece, vitally located in East Mediterranean, a discordant voice against EU stance on Ukraine and Syria.
Syriza could now put it's foot in the Syria Ukraine door! He even talks of defending Palestinian rights and obliging Israel to go back to 1967 frontier.
Holy Mackerel ! Where will this rebellion end?
Yes, it looks like he's making all the right noises to elevate Greece back to a sustainable position, which makes me think... what colour will their coming revolution be?
Even if they default on all the debt..go to zero...they still do not have near enough income to do what this guy wants to do....a socialist heaven...everyone with government jobs.....its not going to work...empty shelves will abound....sickness and hunger...except for the rulers..they get first dibs on any funds that come in...and most of that will go to a Swiss Bank in some hidden account...
First, tell the IMF and ECB to fuck off. Take back all greek property and resources. Become the world's vacation destination (what else are you gonna do, aside from maybe increase olive and wine production.
If any foreigners want to own property on those beaches, they will be happy to pay (I have seen the german estates on those islands when sailing there in the 90's).
Fuck em, fix yourselves people of greece. The rest of the world can just fuck right off while you get it figured out.
If you let the squid and foreigners back in, well then you get what you deserve.
first, he did. at least he promised to do exactly that. though, note, he wants to do that by talking only with the EU
If that's the case then nothing has really changed. Motivated (not the lazy) Greeks have always made some of the best resistance fighters. Unless greek culture and language is to die off, let's hope that there are a few of these folks around when the supply line get cut off.
As I have said for about two years now, all of my friends and former military colleagues from Delta are extremely busy right now. Something's up.
^^this^^
Well DUH.
And this is why you buy gold.
LMAO
i hate party ideologies. i am opposed to collectivism. i am all for letting greece makeing its own financial mistakes but leave me out of it.
so i'm for the new communist party non-austerity slant but how they correct it is alone their problem.
moved
Everybody else see Greece becoming the world's leading manufacturer of nailguns?
Communism, come on in. People really can't handle freedom.
If the possibility of default does not really exist, why is the rate of return variable?
"new leadership will be comprised of a far left and a far right group"
That is a "coalition" that cannot govern. EU Bankers will punch a whole in that paper bag in short order.
Another EU CB technocratic governing appointee looming? Looks like it.
Where the F*** you think yer goin'. Back here and on yer knees, bitch.
By past experience we know how the criminal friends of the banksters in the EU will react . Remember Ucraine .
1) try to buy off members of the Siriza party and the radical left .
2) Use the banks including the BCE to put pressure on Tsipras ,
3) Use EU politicians to lean on Tsipras ,
4) Use , menaces , Threats , attempt to blackmail to condition the new government ,
5 ) Send in NGO to make propaganda anti government , take over broacasting stations and newspapers in order to foment a color revolution .
6) If things get desperate , try to buy the support of the Military .
7) If all of the above fail , send in the Jackal to kill member of the government .
Knowing Greek politicians I'd say 1) will be achieved within weeks. No need to progress to the others.
Lawnchair and popcorn for the jawboning sessions.
This should be quite amusing.
At least for a lil bit until the fists start flying.
Then we'll see who got what.
Tyler - You need an editor. Your typos, misspellings and grammatical errors sometimes make it difficult to figure our what you are trying to say. The item is very good, nevertheless.
From wiki:
"The Thessaloniki programme is a manifesto adopted by the Greek Coalition of the Radical Left (SYRIZA)...At the European level, the programme demands a "European New Deak" of large-scale public investment by the European Investment Bank, extended quantitative easing by the European Central Bank, and a conference for the reduction of Greek and southern European debt modeled on the London Debt Agreement of 1953. Domestically, the programme sets out a "National Reconstruction Plan" based on the rebuilding and extending of the welfare state, and the strengthening of democratic institutions alongside the implementation of forms of direct democracy. These policies would be financed through revenues raised by combatting tax evasion and appropriating European funds from bodies such as the Structural Funds and Cohesion Fund."
tl;dr = more make-work projects, more welfare spending, more money printing, more taxes
I'm sure Greece will be experiencing green shoots any day now...