Greek Political Theater Still in High Gear

There isn't much to move the market today as Europe is closed, the US only had 2 economic releases and they were this a.m.. In the first post of the day I wrote the following,

"Starting with the troublemaker, Greece...
The market may get a brief respite according to this article in Ekathimerini from Greece 

"PASOK leader Evangelos Venizelos will hold talks on Friday with his counterparts at New Democracy and the Coalition of the Radical Left (SYRIZA) with the aim of agreeing on a framework for a unity government after Democratic Left leader Fotis Kouvelis on Thursday backed the formation of an ecumenical administration.

Kouvelis had previously insisted he would not enter a coalition with ND and PASOK as long as the two parties remained committed to the austerity policies applied over the last two years. The Democratic Left chief now appears to believe that a unity government with a specific agenda could meet his two specific goals of keeping Greece in the euro and moving the country away from the fiscal restrictions of the program agreed with the European Union and International Monetary Fund."

I don't see the Trokia agreeing to anything less than the original terms, but for now, the crisis is a little less intense, what the goals of Syriza are in this latest endeavor are hard to ascertain, but this is obviously some set up to furthering their goals as they are only an election away from ruling the country. It may have something to do with Germany saying today that a Greek exit of the EZ is manageable, however Fitch disagrees and said if the crisis sees Greece moving out of the Euro, it will likely put ALL remaining Euro-zone countries on Credit Watch Negative-ALL!"

And the update:

"Tsipras says he will not join the coalition and Venizelos says that Syriza's participation is a prerequisite"


So the it's good to see the EU rumor mill is still functioning if nothing else.


Why would Tsipras join a coalition when his anti-bailout party is gaining 1% point a day in polling (at the elections they came in second place and anti-bailout parties carried 60% of the vote) and as of yesterday's polling, his party Syriza was already on track to gain more seats than New Democracy and PASOK (the pro-bailout parties and formerly two largest parties) together?


It didn't make sense this morning and now we know the truth, it looks VERY likely new Greek elections will be held in mid June.


Meanwhile as Greece has no effective government as the President, Venizelos can't do anything as parliament was dissolved before the elections, here's what Greece faces during the period in which they will likely have no government:


May 15th: $450 mn Euros of Greek International law bonds come due. These are the stronger bondholder protection bonds that did not participate in the PSI swap (which would have cost them 50% of the bond value right off the bat) and instead opted to holdout for full payment. If the payment is not made, May 16th Greece will likely be sued and likely will be considered in default.


May 18th: $3.3bn in Central Bank held bond redemptions-the Eco-Fin meeting for the EU will be held May 15th and while they would be shooting themselves in the foot, may decide not to give Greece the bailout money to pay these bonds.


June 30th-Greece to implement the Troika Memorandum Bailout plans, meaning more harsh austerity cuts. If Syriza wins mid-June elections and forms a government which is almost certain, they WILL NOT honor the agreement and will not make the cuts, putting the entire bailout in jeopardy, which is a mild word.


You saw Tsipras's letter to the Troika elements yesterday, does that sound like a man who intends on abiding by the obligations set forth in the memorandum?