Greece: Before And After

Tyler Durden's picture

In one of the most fascinating psychological shifts, there has been a massive shift in the perspective of the Greek electorate since the election two weeks ago. Almost as if the size of the actual votes for Syriza, the far-left anti-bailout party, gave citizens 'permission' to be angry and vote angry. The latest opinion polls, as per Credit Suisse, show the center-right New Democracy party crashing from 108 seats to only 57 as Tsipras and his Syriza colleagues soar from 52 seats to a hugely dominant 128 seats. Is it any wonder the market is pricing GGBs at record lows and 'expecting' a Greek exit from the Euro as imminent given the rhetoric this party has vociferously discussed. On the bright side, the extreme right Golden Dawn party is seen losing some of its share.

Greece: Election results...

Greece After Elections - current opinion polls...


UBS: Europe: Time to choose

Recent election outcomes in Europe herald the next, increasingly perilous stage of the Eurozone crisis. Voters are angry and are venting their anger at the ballot box. Their sources of frustration are clear—recession, surging unemployment, and the erosion of the previously sacrosanct welfare state. Increasingly, too, those wrenching dislocations are associated with ‘sinister’ external forces: 'Germany', 'Brussels', 'The IMF', 'globalisation', 'creditors' or 'capitalism'. Yet the implications for Europe of voter discontent are much less obvious. The desire for change has not found a coherent expression of what changes Europeans want. Incumbents are being shown the door, but the patchwork of protest parties that replace them does not offer a viable alternative, much less a blueprint for dealing with Europe's economic and financial crises. And expressions of frustration in debtor countries have their analogue in creditor countries as well. No one is happy with the status quo.


Still, how Europe's political leaders address voters' grievances will go a long way to determining the fate of the Eurozone and, quite possibly, the course of European history in the 21st century.


Matters in Greece deserve most attention. The fragmentation of Greek politics suggests that Greece may be economically, politically and socially incapable of restoring fiscal sustainability and a competitive economy by pursuing the orthodoxy demanded of it by the troika (the EU, ECB and IMF). At the very least, a substantial fraction of Greece's debt will have to be further written down. But even then it is improbable that the social fabric of Greece can withstand, unaided, the years of declining living standards required to restore its fiscal health and competitiveness within the Eurozone.


That narrative is not new. But until now it has been considered taboo by the troika, which has insisted that its plans, properly implemented, would work. The flaws in that thinking have been laid bare by the outcome of the Greek elections.


What are the alternatives? Greece could decide to leave the Eurozone. That once-unspoken possibility was broached this weekend by ECB Governing Council member Honohan. Yet it is by no means clear that the re-introduction of a national currency would be Greece's best option. Exit would entail leaving the EU, large-scale default on foreign obligations, a collapsing financial sector, surging inflation, and most probably little improvement in national competitiveness. And, as we pointed out in earlier research, history suggests the calamitous financial and economic consequences of an exit could threaten the institution of democracy itself.


A Greek exit could also put the rest of the Eurozone at considerable risk. Residents of other countries, such as Portugal, Spain, Italy or Ireland, might well conclude that the probability of leaving the Eurozone had increased, prompting them to move deposits out of their banks. The resulting bank runs could prove impossible to manage, resulting in a rapid and significant deterioration of financial and economic conditions across the Eurozone.


The other option is for Greece's official creditors to acknowledge the impossibility of their policies and grant Greece substantial debt relief as well as support via fiscal transfers. Those policies would not change the inevitable decline in Greek living standards from today's unsustainable levels. But they would cushion the blow, making it politically possible for Greece to remain a member of the Eurozone (and the EU). In this second scenario, Greece would essentially become a ward of the Eurozone. The price would undoubtedly be some loss of sovereignty and an economy in long-term decline accompanied by a shrinking population as many of Greece’s more ambitious and talented residents leave to seek better futures elsewhere.


So the choice facing Europe is stark. One path leads to fragmentation, accompanied by considerable risk of Eurozone financial and economic disarray. It threatens to end more than a half century of political integration in Western Europe, effectively changing the post-war course of European history.


The other path requires a degree of political change that is next-to-impossible to imagine. It demands acceptance of economic and political integration beyond Europe's current grasp. In particular, Europe's richer countries would have to acknowledge that European unity requires burden-sharing on a scale which hitherto has been politically unimaginable.


Faced with those choices, Europe's politicians will undoubtedly prevaricate and deny. The troika will, with minor modifications, probably insist on 'staying the course'. Yet it seems to us that ignoring clear voter demands for change might well be Europe's worst choice.

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GetZeeGold's picture



The best liars should come out on top.


battle axe's picture

True, and hopefully the Greeks will see that if they default, it might not be as bad as they think.....

idea_hamster's picture

I suspect most of the shift in seats is due to the fact that the party that holds the greatest number of seats based on the election results is awarded a 50-seat block.

Cosnequently if New Democracy loses its plurality position to Syriza, we will see the seat swing magnified by the 50-seat bonus block.

New Democracy better hire Diebold quick.

Hugh_Jorgan's picture

The voters have no idea the type of "change" the actually need in order to actually recover. I'll give you a hint, it does not involve their current, corrupt parliamentary democracy.

Unfortunately, they and the rest of Europe will never even consider the kind of 12-step program they really need until the Europeans get sick of the destruction from the long bitter war that has yet to happen.

Bicycle Repairman's picture

"Not through speeches and majority decisions will the great questions of the day be decided ........ but by iron and blood."

Eisen und Blut.

MarsInScorpio's picture

I keep seeing these references to war.


Educate me - exactly who is going to war with whom??


What are the objectives of that war - that is, are we going for territorial expansion; governmental takeover, aka "regime change," and if so, who will keep the traitors installed by the conquerors alive?


What will the US do while this war wages in Europe - take sides? If so, which side? (hell, those of you with your war cry never seem to get around to telling us who will be in alliance with whom)


And the Russians - what will they do?


My point is simple - there isn't going to be a war. Everyone over there is NATO. While people will let themselves get raped financially for GS to have its bonus program fulfilled, they aren't going to mobilize their army for the same purpose. (When you take away Heaven and Hell, you take away the promise that sacrificing your life will get you to one, and avoid the other - that's why insane Islamic mass serial murders push the button and kill everyone around them. Lacking such a Belief System is why Europeans will avoid war.)


Oh well, the war talk keeps the ZH Drama Queens happy, so rattle on about it . . .


oleander garch's picture

Exactly right!  Headline misinforms because it fails to account for the ''50 bonus seats" that come with first place.  What would be exciting is if the Syriza earned 130 seats all on its own without the bonus.  The Greeks still want to have their Euro and feed it, too.

greyghost's picture

"the far-left anti-bailout party"? don't you really mean to say NEO-COMMUNIST PARTY? pro!!! do they support the mass murder of peasants in the ukraine? do they support the murder of chinese peasants by the maoist communist party? will they support the mass murder of fellow greek NEO-NAZIS????? just a simple person up on the hill looking down on the forrest of total bullshit from all sides. frankly zerohedge, i don't know who is writing this slanted tone of crap about "NEO-NAZIS" yesterday to shhh....far left anti bailout party today. step up to the plate and call them what they are...NEO-COMMUNIST THUGS. is anyone else worried about both the NEO-NAZI and NEO-COMMUNIST parties getting more show time every where???? sarcasm button on.....oh oh lookie the far left jackboots are on the move, i fell so warm and fuzzy inside oh goodie....sarcasm button off.

Nussi34's picture

Not all parties get this 50 seat bonus. If you are a alliance of parties you do not get it! I think this young guy is such an aliance!

flyweight's picture

Syriza WAS an alliance from 2004 until these days, because they never thought there was a chance of first place in the elections. However, now that there exists such a chance, they would be quite stupid not to morph into one single party, a procedure which was started immediately after the last elections, and will soon be completed.

BlueCollaredOne's picture


I wish there was a way that when politicians made promises while campaigning that they would be held responsible for those promises if elected.  Once they renege on their promises, a special jury selected from the people would be able to determine what the punishment should be.  This would limit all the incessant bullshit they spew.

This of course will never happen because the average person prefers lies to reality, and no politician would pass a bill that says they can't lie. 

StychoKiller's picture

The ancient Greek method of implementing law(s):

"Anyone wishing to propose a new law had to do so while standing on a public platform with a rope around their neck.  If the law was passed, the rope was removed.  If the law was voted down, the platform was removed."

AC_Doctor's picture

Fucked no matter who is in charge


He_Who Carried The Sun's picture


Who cares who will rule this piece of sh*t
as long as Europe stays firm and does not
cave in while being blackmailed by Greek
communists. C'mon Greece, go away, willya...!!!

Fips_OnTheSpot's picture

128+14 is not a majority.. will be funny.


How long will the military watch this?

emersonreturn's picture

Fips onthespot, interesting point.  greece's military has a past penchant for power.  the seemingly obvious connection would be golden dawn.

BlueCollaredOne's picture

And its a pretty big army in relation to all other EU countries. In recent years Greece was the third biggest arms importer behind China and India.  Greece also spends 4.4% of its GDP on military, as opposed to the 1.4% EU average.

The amount of bailouts begin to make sense though when you look at who those arms come from.  A majority of the arms are purchased from German and French dealers which show why Merkozy have no problem giving Greece more fiat fuel. 

Not to mention that while Greek people face a 30% decrease in standard of living those very same guns can keep the people in line. 

WhyDoesItHurtWhen iPee's picture

great post.  try "fiat ammo", "fiat guns"

ThirdWorldDude's picture

Count in the Commies (KKE) + 20 and they make a good majority...


Though, it might get hot'n'heavy if the result is another clinch or if there's mass unrests.

Fips_OnTheSpot's picture

KKE is not likely to join.. so far.

vote_libertarian_party's picture

So what are the chances Greece goes the Iceland route and just defaults on all $500B left of the soverign bonds?


If I were making a big change leaving the Euro I'd want to start with 0 loans due.

Spitzer's picture

they would be better off doing that while staying in the euro

Loukanika the riot dog's picture

One thing they haven't factored in here is the fact that Syriza is a coalition and as such under Greek Electoral law does not qualify for the extra 50 seats even if it was first past the post. This is one of the things Tsipras wants changed by interim government before next elections along with removing incumbent MP's immunity from prosecution.
If I was entitled to vote here that alone would give him MY tick in the box

MS7's picture

I didn't know that SYRIZA wouldn't qualify for the extra 50 votes. That will make it tough for them to govern.

That's good you pointed it out that the victor of the elections typically gets 50 extra votes. That is why New Democrcay got a huge number of seats in the last election but only beat SYRIZA by a couple of percentage points.

Loukanika the riot dog's picture

Latest from Greeks Twitter...... Tsipras is trying to merge coalition into one party to avoid this pitfall. Watch this spacer

mr1963's picture

Germany is screwed...

StychoKiller's picture

More like Greece and the EU are in a bad marriage -- they're only staying together "for the children!"

bankruptcylawyer's picture

what's beautiful about democracy is the importance of the 'story' of what the 'people' want. 


the mob has always been important, and the difference between 'democracy' and sheer tyranny is the importance of the veneer of civility. in roman times, the germans and french would have sent their armies to greece, to help the local greek armies ravage their own countrymen and loot their own country. and if the greek armies refused, there would be a nice little war and devasation and then everyone would settle down and figure out the financial arrangements. and that...would be that.

kralizec's picture

This group of 300 is not adequate my King!

RoadKill's picture

Last vote the Center had 168 seats (Pasok, ND, DL) now the Hard Left will have 162 seats (KKE, Syrza, DL) so not only will their be more vociferous noisy anarchistic commies running around BUT the abillity to form a unity government is LESS so we will have a 3rd election while nothing gets done.

theTribster's picture

Since 50 seats are given to the winning party, the delta isn't quite as extreme in terms of votes. In fact, the New Democratic party looks to have only lost a single vote. Ideally, the KKE and Democratic Left get some additional votes so as to make the coalition gubmint easier to get to - much easier. Pasok and ND would be all but irrelevant, I figured that another election would turn out this way.

I still don't see Greece leaving the Euro, its a game of chicken between Greece and the Troika and based on those projected election results Greece will win and get a much, much better deal. They have to play hard (Troika) otherwise everyone else will want the same thing or better (Spain, Italy) in terms of a deal. It would be best if they (IMF, ECB, Fed, etc) would just commit the funds required to backstop ALL the banks across the Eurozone and eliminate this ridiculous game playing.

In the end, the Euro will not fail because their is too much political will in Brussels. This is all part of a NWO who's plans do not allow for Greece (or anyone else) to leave the Euro - why do you think there is no plan B, no way to exit? Because there is no exit, ever - its like the roach motel :) I'm reasonably sure the Eurozone will resolve the issues they have, although it looks like they are willing to generate a lot of pain to get there - silly it is.

In any case, we're likely to see a major program(s) released to address these issues. Things like the ECB monetizing debt directly, liquidity injections across the board, EuroBonds, further Euro devaluation, etc. They have to address this now and completely - no more bandaids otherwise the markets will continue to freak. I expect formal announcements to be made as early as Monday and hints of it starting today. Christine Laguarde will be a major cheerleader for this efforts, she is likely to be the salesperson!

Fireup the popcorn machine....


MS7's picture

Interesting thoughts. I think you may be right.

One minor point of disagreement-- The KKE wll not join a coalition. I don't know whose side this supposely communist party is on because they always seem to prop up the more conservative parties by their actions, like now, by refusing to join a coalition. The head of the KKE says she wants out of the euro. I believe that is her excuse for not working with SYRIZA. Funny how when the first "bailout" was being discussed she said it would be a "disaster" to go back to the drachma. Then she was criticized and backtracked, but the damage had been done by making everyone think that 100% of the parties agreed that the drachma would be catastropic.

nicxios's picture

I tend to agree with this. Syriza will present concessions by troika as a victory; the word growth will be thrown around alot. Greeks will go along for now, they're not quite ready for the drachma...yet.

midgetrannyporn's picture

their system is better. in the usa we have two wings of the same fascist party.

asteroids's picture

There will be no further bailouts. Greece will default. There is no way out, the math doesn't work. The sooner Greece refutes ALL of the debt, the better. If Iceland is any example, things will be tough for a few years, but the pain will be over and real growth can resume.

DogSlime's picture

The problem there might be that other countries have seen how Iceland fared already and are watching Greece.  If an all-out default results in things getting better for Greece, then others will follow.

That would really hurt the bankster oligarchs.  They'll see us all dead before they'll let that happen.

On the bright side, WWIII could be a fairly quick affair considering all the nukes everyone has :)

PR Guy's picture

What New Democracy and PASOK need is some of that magic chad from Florida.

writingsonthewall's picture

GOOD - now the winging fools of the west will witness REAL socialism, where the value of humanity is far greater than the debt imposed by Bond holders. Where the important things are nurtured and the unimportant things (like debt) can be ignored.


Prepare for losses my 1% friends - the Greeks are going to change the world (again)


For as long as I have lived - Greece has defaulted - if people are stupid enough to lend to them - then they deserve the losses in return.


What makes me laugh everytime is to hear people talk about "paying your debts" - well the fucking Germans never paid theirs after WWI - to the GREEKS - so why should the Greeks pay now?


The only countries who have never defaulted are generally ones who stole through colonialism (thieves never default). It's about time the small ones struck back.


'You shall not lend him your money for usury, nor lend him your food at a profit. (Leviticus 25:35-37)


Islam is right, ursury is wrong - this is why the US right wing really want to start a war on muslims.

You have been played like fools.

MS7's picture

I just wanted to point out that SYRIZA is not a far left party. In fact the leader of a new party, the Indepedent Greeks, that the media has called far right, says that he agrees with SYRIZA on economic issues. There may be people in the SYRIZA who are far left but not the leadership.

kralizec's picture

Just what the hell is an anti-bailout far-left clown anyway?  If they think they can spend spend spend without incurring debt then these morons must be planning on printing money by the truckload...yeah, that'll work, just ask Zimbabwe!

Greece is fucked, anybody with the means should flee now.

tempo's picture

Please explain what happens to CA which is running $16+billion deficits and is run by extreme Union entitlement junkees who don't give a damn about deficits.   How is CA irrational anti- business climate changed w/o massive social unrest?  Greece is easy compared to CA.

nicxios's picture

Another poll has Syriza in 1st far and away, with Independent Greeks threatening to pass New Democracy for #2, only 0.9% back and gaining steam.

Peter K's picture

Bad day for DIVERSITY, you say. :(

AustrianEconomist's picture

Check out the latest from the Capital Research Institute (CRI)

The Greek Dilemma

JackT's picture

Pretty good write up, but I have to admit whenever I see this kind of language I cringe a bit.  I get the point, but anymore the whole "change" phrase just feels sooo...ummmm...phoney:

"It is time for change, change that all of us have to demand,"

falak pema's picture

This poll prediction contradicts Bruce Krasting's thread here the other day. It would be nice to have his comments on this after what he said here :

A Surprising Conversation With Athens | ZeroHedge

penexpers's picture

Get it through your head Greece: you will never have a competitive economy when your main exports are fish and olive oil.

You think Syriza or the fascist Golden Dawn is going to bring you out of your depression?

Default, devalue and get to work!


ElvisDog's picture

It's one thing for Syriza to win the election on their "leave the Euro" rhetoric, and it's another thing for them to actually do it once they're in power. Seems like we've been down this road before with, ummm, Ireland? The new Irish government rolled over almost immediately and started doing what the bankers wanted.