If all of this is still true, then the move higher in ES futures is even stranger when one views the final Greek vote results.
The Pro-Bailout duo of Samaras's New Democracy and PASOK fell two votes short of a majority in parliament, last night they vacillated between having the seats needed and missing them by several seats, this is what I meant by, "The situation is fluid" and those two votes may not seem like much, but it is enough to keep the two pro-bailout parties from having an automatic majority and may have created the biggest uncertainty of all.
As outlined in last night's post, the party with the most votes, New Democracy, will be asked by the Greek President to try to form a coalition government, other than PASOK, there aren't many pro-bailout friendly parties out there. Samaras has 3 days to try to form the coalition government (April 9th).
If Samaras fails, on May 10th, the party with the second most votes (the surprise vote) Syriza's party leader, Tsipras will be given from May 10-12th to try to form what would be an anti-bailout/anti-austerity coalition. These parties received the bulk of the popular vote, but they are smaller, numerous parties (approximately 10) with some vast differences, the only thing they agree on is they don't support what Greece has agreed to so far. So while the numbers are there to build a coalition, the vast differences between the parties may make that a difficult if not impossible task. If such a coalition took shape, it would have dramatic consequences, instantly clashing with the European power/Money structure.
If Tsipras fails to build a coalition government, the 3rd place party, PASOK will be given a chance to try between May 13-15.
If Venizelos fails, (and if we get to this point in which The ND could not build a coalition, it is unlikely their smaller ally PASOK would be able to.
On May 16th the Greek President would ask the 7 parties who were voted in to parliament to try to settle their differences and form a government-VERY unlikely.
In the meantime while all of this is going on, the relatively small $430mm Euro payment will come due for International law bond holders (The holdouts from the Greek Debt restructuring). If there's no government in place, it seems unlikely a decision can be made as to whether to set the precedent to pay the first of such bonds, furthermore it is likely Greece doesn't have the money. The political backlash from paying the bond may be large as well so once again, a relatively small number (like the number of seats the ND/PASOK lost to form a government) can have severe consequences as a lawsuit filed against Greece in International Court could come as soon as May 16th.
Furthermore, while a government is trying to be cobbled together, the June 30th deadline will be looming set by the Troika for Greece to make additional spending cuts as agreed in the last bailout package, this will take time to effect and it will have severe political repercussions should a pro-bailout party make more austerity cuts. Should a anti-Austerity government be in place and reject further cuts, the entire Greek Bailout will be on the ropes and Greece is a huge fiscal dilemma.
Until a new government/Prime Minister is sworn in, Papademos will remain the caretaker PM, but will have no power to legislate as Parliament was dissolved before the elections.
You can see the rocky road ahead and full of uncertainty that could reshape not only Greece, but the entire EU as other PIIGS nations will be watching carefully. For more on the Greek Election Dilemma, see this WSJ article...
As you can see, there are some very important decisions to be made and the chances are high that there's no Captain in the Wheelhouse when they need to be made.
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