Greece On The Edge After Second Failed Presidential Vote
A week after the Greek Prime Minister, Antonis Samaras, was unable to push through his nominee for president, Stavros Dimas, in a vote in parliament that needed 200 votes to pass, hours ago the second presidential vote took place and just like last week it again failed to secured the needed 200 votes, with just 168 lawmakers voting for the designated appointee. This means that in the third and final voting round next week, on December 29 - a trading day where bad news will propagate like wildfire in the absence of any market liquidity and means Kevin Henry will have to workovertime buying ETFs - New Democracy's Samaras has to find (or bribe) another 12 votes or else Greece is facing a snap election where the anti-bailout/anti-austerity leftist Syriza party is expected to win, and set off a chain of events that may result in Greece being kicked out of the Eurozone at least if the jitters seen during the summer of 2012 are any indication.
Then again, judging by the absolute non-reaction by the market, it seems that not an algo cares any longer if Greece is or isn't part of the Eurozone, and/or if peripheral European bond yields trade with the implied ECB monetization premium or are allowed to trade at fair value, well into double-digit yield territory.
In the meantime, the PM is starting to sweat:"I hope in the final vote for president we will avert a national catastrophe," Greek PM Antonis Samaras told reporters in Athens today after the failed second round vote. By "national catastrophe" he, of course, means allowing the majority to express its opinion.
Here is what Bank of America had to say via Bloomberg:
- Unless Greek Prime Minister Samaras comes up with a new initiative, early election is increasingly becoming the most likely scenario for Greece, Athanasios Vamvakidis, BofAML’s head of G-10 FX strategy, says in e-mailed comments.
- Greek prime minister Samaras could improve his chances at 3rd round of election on Dec. 29 by changing candidate
- Today’s outcome of 2nd round of vote as expected
- Estimated range for 3rd final round of Greek election at 168-172 unless Samaras persuades independent parliamentarians and small parties to vote for his candidate
- Early elections are likely to take place by late Jan. or early Feb.; this shouldn’t be a big surprise for investors
- Markets are likely to react positively to any poll released in any pre-election period showing that the difference between the main parties continues shrinking
Further details from Reuters:
Greek Prime Minister Antonis Samaras failed to capture the support needed to elect a new president in a second round of voting on Tuesday and now needs another 12 votes in the final round next week to avert a snap general election. Samaras' nominee, Stavros Dimas, the only candidate in the race, had not been expected to win the second round and the score of 168 votes was broadly in line with expectations.But it leaves the result of the decisive third round on Dec. 29, when Samaras needs 180 votes, finely balanced.There were 131 blank votes on Tuesday, which count against the candidate, and one absentee. Parliament must elect a president or a general election would have to be held by early February, potentially bringing in the leftwing Syriza party which wants to renegotiate Greece's international bailout and roll back the austerity policies of recent years.The second round vote followed an offer by Samaras at the weekend to bring pro-European independents into his government and hold early elections late next year if Dimas is elected. Greek stocks trimmed losses in the minutes following the result, with the main Athens index trading 2.1 percent lower by 1052 GMT.Samaras must now concentrate on winning over independents and rebels from the smaller parties.
Maybe Jean-Claude Juncker can add a "bribe" carve out sub-fund in his infrastructure "fund" CDO-squared?
Both the Democratic Left, which left the ruling coalition last year and Independent Greeks, a right-wing anti-bailout party, have said they would not vote for Dimas.But it is unclear how much discipline they can impose on their members and a furious round of lobbying and telephone calls is likely over Christmas. Two Democratic Left lawmakers announced they were leaving the party to sit as independents just minutes before the vote.
By lobbying, Reuters of course means bribery.
Ironically, even a worse case scenario, with Dimas not getting the third round vote may not be the end of the Eurozone: all Brussels would have to do is fund an offshore Antonis Samaras bank account with a "necessary and sufficient" number, and lo and behold, all of Greece's anti-bailout demands will evaporate into thin air:
Syriza still leads in the opinion polls but its advantage has narrowed over recent weeks and a survey at the weekend gave it a lead of 3.4 points. The party has sounded a more moderate note lately, seeking to reassure Europe that it would be a responsible negotiating partner and would keep Greece in the euro.But a victory would signal a major shift in the politics of the euro zone, for the first time bringing in a government openly opposed to the Brussels consensus which has governed the bloc's response to the wider crisis.
It would also mean that European GDP numbers will now be adjusted to include "Eurozone cohesion fees paid to ruling politicians" as part of the addbacks to make sure that nobody has any idea that all of Europe is now in a triple-dip recession.
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