The failure of the Greek Parliament to elect a successor to President Papoulias yesterday means Greece will hold national 'snap' elections late in January. It's expected those elections will bring down the pro-austerity New Democracy party, and may open the door for Syriza, the radical left party that is leading in polls, to take over.
The Syriza party has vowed to stop payments on Greece's debt, and ramp up public spending unless the country's $284 billion in bailout loans are re-negotiated to more favorable terms. The concern is that if Syriza were to succeed in that threat that problems could spread, increasing already troublesome public unrest regarding austerity in other countries, most notably Spain and France.
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Already, the new worry has rattled eurozone financial markets, just as the European Central Bank is considering a QE bond-buying stimulus program. The plan was to buy the bonds of all eurozone countries, including Greece, in an attempt to halt the euro-zone's slide toward recession.
Even if the Syriza party does not obtain the roughly 35% of the vote needed for absolute control, the election could result in another unstable government coalition similar to Greece's serious political problems a few years ago.
It is a new uncertainty at a critical time, just as the economy of Greece was showing signs of stabilizing.
European markets are not happy about the situation this morning.
Or is it just that they have again become short-term overbought above their 50-day moving averages?
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