Voting has begun in Greece in what is seen as the most critical election for that country in decades.
The result of the crucial vote could throw the debt-stricken country's future into further doubt and shake the wider euro zone.
Austerity is the biggest enemy in these elections: Greeks hammered by two years of deep spending cuts were voting on Sunday in an election critical to the country's prospects for pulling itself out of a deep financial crisis that has roiled global markets.
PolicyMic will be following the results of the Greek election live. Bookmark and refresh this page for live updates (all times in EDT).
Voting ends at 7 p.m. local time (noon Eastern Time).
Monday 10 a.m. Stock Market Impact Will Continue As Spain and Italy Problems Deepen
The European Union’s travails continue to drag along without any permanent solutions, leaving the rest of the world and global stock exchanges in a lurch as they parse every bit of news emanating from the continent.
On Saturday, there was a ray of hope as the leftist Syriza Party, the political bloc opposing austerity, lost the Greek election. The conservative and pro-bailout New Democracy was victorious. If it can form a coalition government, the country will continue the austerity alternative to recovery and remain in the euro zone. Negotiations will continue between the newly formed Greek government and the so-called troika of foreign creditors — the European Commission, the European Central Bank, and the International Monetary Fund — over the terms of a bailout agreement.
Greece is a small but symbolic piece of the economic puzzle in Europe. The government borrowed too much money and is now running out of cash for salaries and medical costs. The EU has already provided some financial support (two bailouts), which has not been enough. The bailouts include a number of austerity measures not yet implemented by Greece.
If a coalition is formed, most believe Greece will get the money it needs from continent-wide sources. Skeptics believe that a new bailout will only enable the Greeks to survive for a short period of time. Also, the government must deal with a flight of capital from the country. In a nutshell, Greeks, as well as Spaniards and Italians, are running on their banks and moving their deposits to safer places such as Germany and the Scandinavian countries. Only a guarantee of deposits by the EU will stem the tide of this flight to safety.
Next on the agenda is Spain. Its problems have mostly resulted from a weakening banking system that experienced serious loan losses in real estate. The country recently received a 100 billion euro bailout that has not been sufficient to create confidence among investors and depositors. And finally, Italy needs to clean up its financial problems and begin to pay down its significant debt or be subjected to higher interest rates and bank system issues. A worsening financial crises in either country would create a much greater risk to the global economic system than a default of Greece.
All three of these countries are struggling to find the best road to recovery. Is it stimulus, which will exacerbate their bloated debt situation? Or, is it austerity that will hit workers hard and worsen their unemployment problems? Does this dilemma sound familiar? Consider the debate about stimulus versus spending cuts in the U.S.
Most analysts believe that the euro zone will ultimately get back on track, but this will only be possible when Germany uses its considerable economic clout to resolve the continent’s economic problems. It should be noted that the U.S. is not just an innocent bystander as Europe receives about 20% of its total exports. It is conceivable that Germany will ask America and Great Britain (another highly interested party) for help in its rescue efforts. It is inconceivable that either will support the euro zone with any great enthusiasm given the domestic problems of each.
Lastly, the fate of the euro is at stake. The currency has declined precipitously since mid 2011, and reached a two-year low of $1.26 last week. The implications of a weaker euro on global trade should not be underestimated. Yet, many traders continue to bet against a short-term recovery as short sales of the euro have reached unprecedented levels.
The euro imbroglio must be rectified, the currency must survive and depositors must stop moving their money. European banks will need to be supported with huge bailouts and will then be able to play a major role in the reemergence of the zone. When this will all take place is up for debate. But, it will happen only if Germany is placated with austerity measures from those it supports financially, and its EU partners allow it to assume the leading role in euro-politics.
The impact on the U.S. is clear. Our financial markets will be disrupted until a long-term plan is in place to deal with the weaker European countries.
The American stock market will experience volatile swings led by financial institutions, which face huge losses if any European banks default. The debt market will continue its upward spiral as it represents the safest place for global liquidity.
9 a.m. A Recap of the Sunday Election:
Greece will likely stay in the euro zone after a critical vote on Sunday pushed the conservative New Democracy Party ahead of the anti-austerity Syriza, forcing a coalition government that will be unable to completely unplug from the integrated European financial system and return to the Drachma.
New Democracy won 29.5% and 50 seats in parliament, while Syriza came in close behind with 27.1%. PASOK, the socialist party which had long ruled Greece, notched just 12.3%.
No single party will have enough seats to govern by itself and New Democracy must now form a coalition.
If Syriza had won outright, Greece would have likely exited the euro zone and defaulted on its loans, an event which would have sent the world financial system into turmoil.
After the Sunday election, the 300 seats would be distributed thus: New Democracy 127 (including the bonus 50 for winning), Syriza 72, Pasok 32, Independent Greeks 21, Golden Dawn 19, Democratic Left 16, Communist Party of Greece 13.
New Democracy leader Antonis Samaras says "the Greek people today voted for Greece to remain on its European path and in the euro zone."
He says voters chose "policies that will bring jobs, growth, justice and security.” He will form a pro-bailout government.
Syriza chief Alexis Tsipras, who wanted to cancel Greece's international bailouts, has conceded the election.
What can we expect immediately these election results?
Firstly, financial markets should be mostly calm.
Asian markets will be the first to react, but the biggest movement because of these elections will happen in the European markets and on Wall Street. If Asian and European markets fall, expect a heavy dive on Wall Street Monday morning.
On Friday, Asian stock markets were up for the second straight week on expectations that major central banks in the world would act to tackle deteriorating global economic conditions.
If the two major pro-bailout parties, the New Democracy and PASOK, form a united pro-bailout front, it will be positive for the markets as the probability of a Greek exit would be reduced.
The markets will react negatively if Syriza forms an anti-bailout coalition government, or hinders the New Democracy-PASOK coalition as that scenario could lead to the debt-ridden country's exit from the euro zone and intensify the global economic crisis once again.
Things will be more clear come Monday.
If you haven't been following the elections closely, here's what you need to know: In February, the European Central Bank, the European Commission, and the IMF (known as the "troika") agreed to give Greece a $170 billion bailout for its billions of dollars of debt. But, in return, Greece had to impose a series of austerity measures which were deeply unpopular with voters.
Tuesday 4:25 p.m. Germany Will Play Greece in Euro 2012
How often does sport immitate reality? In a Euro clash that does not involve currency, Germany -- the pro-austerity soccer heavy-weight -- is set to play Greece in the first knock-out round of Euro 2012 on Thursday.
You think the Greeks will be looking for a little revenge?
New Democracy leader Antonis Samaras says "the Greek people today voted for Greece to remain on its European path and in the eurozone."
He says voters chose "policies that will bring jobs, growth, justice and security.
His party beat the anti-bailout Syriza party, which wanted to cancel Greece's international bailouts. Syriza chief Alexis Tsipras has conceded the election.
New Democracy (conservative): 29.5% and +50 seats in parliament
Syriza (anti-austerity): 27.1%
Pasok (socialist): 12.3%
No single party will have enough seats o govern by itself. New Democracy must form a coalition.
2:20 p.m. Here’s a play-by-play analysis of how things could pan out after the election:
The only way there’s even going to be a different election result from what the May election produced is if more voters end up voting for mainstream parties instead of fringe parties like the Communists and the neo-Nazi Golden Dawn. The fundamental problem with last month’s result was that it cut up parliamentary seats among seven different parties in such a way that no like-minded coalition majority could be formed. So for the clear majority of Greeks who wish to stay in the euro zone, government officials are hoping that all the recent talk of a Greek exit from the euro zone might scare enough voters to vote for the mainstream parties this time around.
That also presents another contradictory challenge for any coalition government that forms: although the Greeks reject austerity, recent opinion polls show that 8 out of 10 Greeks want to stay in the euro zone. In other words, the public wants the benefits of euro zone membership but refuses to pay the costs that it entails.
Now if the center right New Democracy wins a majority of votes, and has enough seats to form a majority coalition with either the far right Popular Orthodox Rally and/or the Independent Greeks, international concerns will cool down for a while. The New Democracy is pro-EU and has committed to stick to the terms of the bailout, although they may have to be renegotiated (more on that later).
But if Syriza wins a majority and successfully secures a far left coalition government with either the Socialists, Communists, and/or other radical leftists, there could be trouble. Tsipras (a former communist himself) is going so far as to call for not only ending the bailout deal but for the nationalization of all Greek banks, the restoration of all salaries and pensions to their previous higher levels, and bringing back collective bargaining rights. He essentially wants to restore everything that bankrupted Greece in the first place and global markets are reacting accordingly.
Assuming Tsipras does get that far, it’ll then be up to Germany to make the next call. As of now, whatever coalition government forms after the election (if any) has to cut another €11.5 billionfrom the federal budget by the end of June to get the next increment of bailout cash or else Greece’s banks risk default again. The last thing Tsipras is going to do if he becomes the next prime minister is any more spending cuts. He’s going to call Germany’s bluff. It’ll then by up to Germany to decide whether to give the bailout cash to Greece anyway, thereby losing all credibility, or finally cut its losses and let Greece’s banks default.
The EU is now opening up to renegotiating the terms of the rescue agreement. They’re concerned that the austerity measures imposed by the current agreement could spark a disorderly Greek default at a time when several other Eurozone economies are increasingly fragile. The PIIGS (Portugal, Ireland, Italy, Greece, Spain) have definitely not fully recovered from the financial crisis yet, with Spain most recently becoming the fourth of those countries to ask for a bailout. If Italy ends up needing one too – game over. There’s no way the EU would be able to scrounge up enough money to rescue its third largest economy, and Italian banks are exposed to Greek debtand possible default.
So what happens in Greece is obviously not going to stay in Greece. The global ramifications of the next Greek election are real and far-reaching, potentially even affecting the 2012 U.S. election. But the lesson to take in all this is that decades of reckless spending, cradle to grave entitlements, and living beyond your means will blow up your economy to unsustainable levels of debt at which point you will be at the mercy of your creditors.
We’re not far behind our Mediterranean counterparts on the path of out-of-control spending levels and national debt. And if you think China, our creditor, calling the shots around here sounds ludicrous, ask the Greeks if they could have ever predicted the crisis they find themselves in today just 5 years ago.
2:10 p.m. AFP reports that Germany is ready to discuss giving Greece more time to carry out reform.
2 p.m. Exit polls: Greece's 2 traditional parties have enough seats to form pro-euro coalition.
1:50 p.m. New Democracy in the Lead?
The New York Times is reporting that center-right New Democracy favored to win plurality in Greek parliamentary elections, per exit polls and early returns.
Greek state TV estimates that on those exit numbers New Democracy and Pasok could form a coalition. The 300 seats would be distributed thus:
New Democracy 127 (including the bonus 50 for winning), Syriza 72, Pasok 32, Independent Greeks 21, Golden Dawn 19, Democratic Left 16, Communist Party of Greece 13.
As public television announces the second voting report will come out shortly, rumors have surfaced about allegedly burned ballot boxes "from a realiable leftist area." Whether this rumors are true or not, online supporters of the Syriza party are already warning that if the difference between Syriza and New Democracy comes down to a few thousand votes, this could be the cause. However, it is expected the second voting report would favor Syriza as it comes from voters who went to the polls later in the day, and these voters tend to be younger and favor the left.
1:23 p.m. Syriza in the lead?
Skai TV's first seat projections:
Syriza: 28% (124 seats)
New Democracy (ND): 27.5% (73 seats)
PASOK: 13% (33 seats).
1:02 p.m. Syriza's Share of Vote Increases by 10%
So far, unofficial results are showing that Syriza improved its performance by a 10% margin compared to the first round of the elections. While official results haven't been released yet, this margin could increase as younger voters -- who usually vote late -- tend to vote for the left-of-center party.
12:50 p.m. How Will the Greek Elections Impact the U.S.? Here's a great (and possibly prothetic) primer from PolicyMic Pundit Lydia Austin:
Days after Spain received an underwhelming bailout package (see: failout), Spanish government bonds reached a yield of 7%, reflecting the downgrade of the Spanish government and sinking expectations in the euro zone. The bailout package failed to convince markets that the future of the euro zone is assured, and does little to alleviate the feeling of impending doom in the euro zone. The Spanish deal was essentially contingency-free, and recapitalized Spanish banks – as opposed to the Greek bailout package, which forced austerity measures on the country and facilitated a debt exchange with credit holders.
Some Greek politicians are using the outcome of the Spanish bailout package to take a tougher line in negotiations with the Eurogroup. Greek hard-lining is happening against a backdrop of upcoming government and parliamentary elections occurring Sunday. Austerity reforms will not work unless the citizens agree to implement and live by them – a diet that has been hard to swallow for the Greek people. The outcome of the election could be the turning point for the beginning of another global recession.
A stronger political union – what many agree is the best way for the euro zone to move forward – is politically unpopular among European citizens. This makes it difficult for European politicians to implement needed reforms, as they seek re-election in often-unstable parliamentary systems. Prime Minister Jean-Claude Juncker of Luxembourg, the chairman of euro zone finance ministers, explained, “We all know what needs to be done, but we don’t know how to get elected after that.” The result is paralyzed European governments that fight for the interests of their constituents rather than focus on the future of the euro.
Signs in Greece seem to point to the election of an anti-austerity party, such as Syriza. Capital flight is already occurring in Greece at a staggering rate – estimates put withdrawals between €600 million euros ($750 million) and €900 million per day. If Syriza is able to form a government, and rejects overtures from the European Central Bank to adopt pro-Europe reforms, Greece may very well leave the euro zone. In the worst-case scenario, with a Greek exit from the EU, money begins to leave European and American markets at a staggering rate. Strategists at Merrill Lynch have provided a cheat sheet of scenarios for the Greek election results; here’s what they have to say about a Grexit:
“The strategists see the 10-year Treasury yield at 1.3%, sliding U.S. and European stocks, the euro at 1.20 and deflationary pressures compressing gold and oil prices.”
This, of course, would spell trouble for incumbent Barack Obama. The economy is Issue #1 for most American voters, particularly middle- and lower-class workers who haven’t seen much relief during the recovery. President Obama has been making the case that he has, in fact, made things better, but is facing a tough audience. Recently, the campaign shifted tactics as the president focused instead on underlining how much worse the economy would be under a President Romney, and that he needs four more years to show people the results.
Will Americans give Obama another chance, particularly given the very real possibility that we are sliding into another global recession? It depends on how well the president can charm donors and voters who voted for him in 2008 but are now skeptical. With the latest polls showing Romney and Obama neck and neck, the battle for the white house (capitalize White House) will be drawn-out and difficult.
But there is only so much the incumbent president can do to control circumstances surrounding the election. European parliamentary elections could play a much bigger role in the global economy than ever before. Ultimately, the Greek elections this week will send a message to the world: one that will reverberate until November.
12:40 p.m. Greek exit polls are showing the two front runners in the country's elections, New Democracy and Syryza, are tied, in a dead heat, as follows:
New Democracy: 27.5% to 30.5%
Syriza: 27% to 30%
June 17 Polls Are Now Closed in Greece -- What can we expect immediately after the Greek election results are announced?
Whether Syriza or New Democracy win, expect markets to react quickly.
Asian markets will be the first to move, but the biggest reactions should happen in the European markets and on Wall Street. If Asian and European markets fall, expect a heavy dive on Wall Street Monday morning.
On Friday, Asian stock markets were up for the second straight week on expectations that major central banks in the world would act to tackle deteriorating global economic conditions.
Opinion polls in early June have put pro-bailout New Democracy party and anti-bailout Syriza party at very close margins ahead of the vote. Opinion polls are not allowed in Greece two weeks before the election, so it is unclear if one side has gained momentum in the last few days. Recent secret polls have pointed to a slight lead for the New Democracy party, but they are unlikely to be very reliant.
It is unlikely that either party will win an outright governing majority, and we are likely to see some sort of a coalition (which will only muddle the world reaction even more).
If the two major pro-bailout parties, the New Democracy and PASOK, win enough votes to form a united pro-bailout front, it will be positive for the markets as the probability of a Greek exit would be reduced.
The markets will react negatively if Syriza forms an anti-bailout coalition government as that scenario could lead to the debt-ridden country's exit from the euro zone and intensify the global economic crisis once again.
May 6 12:30 p.m. Greek Voters Reject Pro-Austerity Parties: A menagree of new voices will have their say in parliament after a majority of Greeks rejected the two pro-bailout political parties that have dominated the country’s government since the fall of the dictatorship almost 40 years ago, according to an exit poll released after voting stations closed. A weak coalition government between the remnants of those major parties may be the result, analysts say, but its flexibility — and legitimacy — to push further painful austerity measures on the Greek people is likely to be tightly constrained, reports the Washington Post.
The projection had New Democracy on 19.2%, Left Coalition on 16.3%, and PASOK on a13.6%. In the previous election in 2009 PASOK, won a landslide victory with 44% and the Left Coalition had 5%.
The future of the $171 billion bailout, approved in February, is now further in doubt. If the Greek government fails to live up to promised plans to collect more taxes, drastically cut the size of the public sector and institute further cuts to services, the European Union and International Monetary Fund could pull the plug altogether.
11:33 a.m. Antonis Samara's Strategic Mistake Could Cost Him Premiership: Conservative leader Antonis Samaras, whose great-grandmother's suicide when German tanks invaded Athens during World War I has inspired most of his right-wing views, could loose Greece's premiership due to what critics define as his uncompromising character and the decision to pander to conservatives as opposed to trying to broad his base of voters.
9:53 a.m. Traditionally Faithful Voters Might Switch Allegiances: Experienced Greek pollsters insist that traditionally faithful voters might switch allegiances and castigate the two establishment parties, conservative New Democracy and socialist PASOK, this time, as reported by CNN. These parties, descendants of the Royalists and Republicans of the 19th century divide, have won as much as 80% of the vote in the past, but today they are expected to loose one in two of their 2009 share of votes while the left wing vote is expected to double.
9: 15 a.m. Turn Out High: A total of 9.85 million people including 360,000 new voters, are eligible to participate. Voting began at 7 a.m. and ends at 7 p.m. local time (12 p,m, EST).Turn-out has been said to be considerably up on the country's last general election.
9:00 a.m. The result is highly uncertain, with angry voters broadly expected to punish the two main parties that have dominated the country's political scene for decades.
As PolicyMic pundit George Methos explains, the Greek political system has fragmented past the point of repair as the two party system that has reigned since 1974 implodes into a supernova, as my mentor John Psaropoulos put it. Almost a dozen parties have a legitimate chance of securing enough of a percentage for seats in parliament (3% needed). More than half of them can agree on one thing: they hate internationally imposed austerity.
The socialist Panhellenic Socialist Movement or PASOK party and the New Democracy conservatives have alternated in power since the end of a military junta in 1974, but a seismic shift is expected on Sunday, with as many as half of the votes going to around 30 smaller parties.
"Sunday will decide whether we remain in Europe and the euro, and we stay on a course that is difficult but safe," PASOK leader and former finance minister Evangelos Venizelos said.