This is disastrous for Greece-it reminds me of the disputes over the war reparations in the Weimar Republic and the growth of the Nazis and Communists there. Hopefully there is a sane coalition of the centrist parties accepting the need for the treaty.
Well, if it’s a victory for the far left and the neo-Nazi right, won’t they balance each other out?
No, silly: they’re both socialists.
Here’s a pretty up-to-date tracker of the votes:
Greek electoral law is way beyond my abilities, so who knows what kind of government is going to result.
I don’t know how Greek elections work, but it seems bizarre that in 2009, New Democracy (main center-right party) got 33.5% of the vote and 91 seats in parliament, while in 2012 it looks like they got 19.2% of the vote and 109 seats in parliament. By contrast, SYRIZA (radical left) got 16.6% of the vote in 2012 and 51 seats. Looking at the number of seats for each party, I can’t figure out how there can possibly be any coalition that could work. The two mainstream parties, ND and PASOK, look to have 150 seats, exactly half. All the other parties that have seats in parliament look to be anti-austerity. This doesn’t look like there’s any sort of politically stable option available.
The Greek Parliament has a proportional representation system, on top of which the leading party in the election gets an extra 50 seats. New Democracy was the second highest party in 2009, but was the highest party in 2012, so it got those extra 50 seats. (The Panhellenic Socialist Movement was the leading party in 2009, with about 44% of the vote, and the 50-seat bonus gave it a majority in the last parliament.)
Looks like New Democracy gets three days to try to form a government, then Syriza gets three days to try, then PASOK gets three days to try, and then we might end up with new elections as soon as June 10th, assuming, as looks likely, all those attempts fail. Greek Elections: Twice Lucky? - WSJ
[insert your own sodomy joke here]
The success of the Golden Dawn in a Greek legislative election is surprising, anyway. Aleister Crowley would be amused. What’s Greek for “Do What Thou Wilt Shall Be the Whole of the Law”?
New elections haven’t been officially called yet, but seem inevitable. New polling puts Syriza (radical left) in the lead, seemingly picking up votes from all the other parties (at least among the seven that won seats last time). Worth noting that all the percentages given only add up to about 75% of the total, as opposed to 81% or so last time.
http://www.nytimes.com/2012/06/18/world/europe/greek-elections.html
New Democracy has enough seats to form a coalition government with the Socialists. Fortunately the feared triumph of Syriza is no longer true and Greece will stay in the Eurozone.
You consider austerity and a continued continental financial crisis “fortunate”?
The New Democrats support renegotiating the bailout plan for Greece, but Syriza opposes such plans which means Greece will be ejected from the Eurozone which will be even worse. The markets seem inclined to respond to this favourably.
The Greeks had a choice between bad or worse. They chose bad.
So, the euro is safe and the Eurozone will not fragment – at least, not this year. Probably.
Gaining control of their own currency would be worse? How? Look, the German banks took stupid risks on corrupt Greek politicians, and are now taxing the Greek people to get repaid for it; I call that corruption. The best thing for Greece was probably to get out and go it alone, and stiff the banks.
In the long run, breaking up the Euro is probably the right course. In the short run, the financial markets - including ours - would go insane if the Greeks left and a worthless drachma wouldn’t help the Greeks much. It’s hard to have too much sympathy for a system of corruption on all sides; the politicians were corrupt but so were the people, and if they had paid their taxes earlier they’d be in better shape now. (Not that we’re in a place to point fingers: no country has any claim to politicians or people behaving well over the past few years.) The banks aren’t an issue at all in today’s Greece. Creating a viable modern economic system is.
Back to the long run. Figuring out a plan to get countries out of the Euro in an orderly transition might help. It’s predicated on one kind of behavior and 17 countries of vastly different sizes and systems apparently can’t all run on it.
Fear Itself got it exactly right. The choice was between bad and worse and they picked bad. As an American I have to be glad they did.
Why?
The Euro is a common currency without fiscal union.
Imagine if there were no federal spending in the USAno Social Security, no Medicare, no military pork, except whatever might be at a state leveland states in dire straits could get no relief.
Or look at how global depressions spread and hung around in the gold standard days.
If the Eurozone had a fiscal union like the USA, it would be OK. If the countries of the Euro could manage their own exchange rates, they could manage. But instead they have a single currency across countries that don’t see each other as the same, somehow. Gold standard redux.
I agree with foolsguinea in this post more than I did in the earlier ones. My expertise in macroeconomics is basic at best, but the analogy with individual U.S. states is a good one. It gets even better if you look at the situation pre-Civil War. The North had an industrialized economy for which they wanted protective tariffs to keep out manufactured goods while the South had a raw materials economy for which they wanted to impose tariffs on imported goods. (And that was because of slavery, the root cause, but I’m going to keep this at one sentence.) Those economies were irreconcilable. One had to fail, and it wasn’t going to be the industrialized one. The South lost, kept a common currency pegged to a different economic system, and stayed in a permanent condition of poverty for a full century.
My limited understanding of the history of the Euro is that they thought that the differences across European countries today were small enough that their inherent discrepancies could be overcome by free trading and banking. That has spectacularly failed. It’s hard to see any future in which it is more likely to work for all of Europe.
It’s a soft opinion for me. Too big a subject, too many unknowns, and way too much ignorance on my part. Heck, I’m somebody who thought it was a good idea when it started. The only consolation is that apparently nobody on the planet can project the future of economies decades into the future. And that’s not something to be happy about.