Greece’s Move To Snap Polls Raises Spectre Yet Again Of Grexit

By Mani
Updated on

With former European commissioner Stavros Dimas failing to garner the 180 votes required to be elected president, Greece once again threatens to bring instability to the Eurozone. The government’s candidate for President, Stavros Dimas, could muster only 168 votes.

Results of today’s voting

Greek Prime Minister Antonis Samaras faced a vote in parliament Monday to decide whether the country goes to snap elections that could bring the leftwing Syriza party to power and derail an international bailout. Earlier Syriza was leading in the opinion pools, and he vowed again to renegotiate the joint European Union-IMF bailout.

In today’s voting, Greek lawmakers voted exactly as in the first round, again voting 168 / 300 in favor of Dimas. Today’s results would imply that Greece will now go to the pools on either Jan. 25, or Feb. 1. The final date will be announced within 10 days of today’s result. Thus, the EU leaders summit on Feb. 12 and the Eurozone leaders summit on Feb. 16 will be a crucial period for Eurozone stability, or the lack, thereof.

Greece: Spectre of Grexit again

The rise in the recent polls of Syriza, an anti-austerity party, indicates Greeks are frustrated with the EU and even suggests more Greeks want to return to the drachma than keep the euro. Thus, it raises the spectre of Greece’s exit from the single currency – or “Grexit” – once again. If Syriza wins the upcoming election and stands by its pledge to challenge the austerity program, then it again raises the spectre of a euro break-up.

Despite Greece’s emergence from six years of recession, its economy is more than 25% smaller now than in 2008, unemployment is around 25%, and roughly a quarter of households live in poverty. Moreover, some 100,000 businesses have closed, and borrowing costs have climbed back to 8%, a level considered to be unaffordable.

Some analysts believe the Greek parliament will be dissolved within 10 days. They anticipate things will probably get worse in Greece before they get better.

As reported by ValueWalk, Colin Lancaster, Balyasny Asset Management’s senior managing director, expressed concern that the quick presidential election in Greece might not get settled in the Greek parliament and may instead force decision into the hands of the electorate. This could lead to the rise of the populist Syriza party and potentially an exit from the Eurozone, the “Grexit” that caused 2012 volatility.

Signup to ValueWalk!

Get the latest posts on what's happening in the hedge fund and investing world sent straight to your inbox! 
This is information you won't get anywhere else!