The Greek Election

18 Jun

 

 

Greek Election Dilemma

Greek political parties supporting a bailout for the country have won a slim parliamentary majority in Sunday’s elections. Any coalition’s majority is set to be narrow and may lack the stability needed to push through painful reforms.

Whatever the outcome, Europe’s problems are far from over as the debt crisis threatens to further engulf the larger economies of Spain and Italy.

The markets are expected to gain from this calming (huge relief) of the markets – understandable given the massive fallout that could have happened had the (pro-bailout) New Democracy Party lost.

The Greek conservative New Democracy party and Socialist PASOK, who broadly back an EU/IMF bailout package keeping Greece from bankruptcy, looked set to jointly secure a slim majority. SYRIZA, the leading leftist party that pledged to tear up the terms of the bailout package, conceded defeat.

If there is any sign of market stress on Monday morning, investors will look for action from the world’s central banks who, according to officials, stand ready to intervene if trading becomes turbulent.

Official results released by the interior ministry, with 97% of ballots counted, showed New Democracy taking 29.7%, SYRIZA 26.9% and the PASOK Socialists were set to take 12.3% of the vote.

The Greek election system awards a 50-seat bonus to the party which comes first, that would give New Democracy and PASOK 162 seats in the 300-seat parliament.

Supporters of New Democracy.

 

What Next ?

G20 leaders kick off a two-day summit in Mexico on Monday and the rest of the week is not likely to be any quieter.

The Federal Reserve is due to release a policy statement on Wednesday at the end of its two-day meeting, and the steady flow of sovereign debt warnings and downgrades is likely to continue.

 

 

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