Greek Election About Austerity, Not the Euro: Former PM

A half-baked editorial on Bloomberg, full of one-sided distortion, warns Greek Voters Need to Look Beyond Syriza’s Dangerous Lies.

ROME — The front-runner to become Italy’s next prime minister warned Friday of a Greek-style social and economic meltdown unless austerity measures were maintained. Final rallies in Rome, Naples and Florence ahead of Sunday’s general election brought a flurry of last-minute appeals to a deeply-disillusioned nation. Polls suggest as many five million Italians have not made up their minds which party to support in the election, which will be held over two days in a country hit by a series of corporate and political scandals.

A small dose of reality has set in for a group of European central bankers: Euro Officials Begin to Weigh Greek Exit as Euro Weakens. Greece’s possible exit from the euro moved to the center of Europe’s financial-crisis debate, rattling markets as authorities in Athens struggled to form a government.

The very instant the Greek "Unity Government" formed it was divided. Antonis Samaras, the leader of Greece’s New Democracy Party, one of the three coalition parties that formed the government says he will not sign a document demanded by the IMF before it will release the next tranche. That's not all, Samaras actually wants to rework the agreement. Neither will fly (at least with Greece receiving the next tranche of money), and tensions fester.

A key question on trader's minds is who will win the June 17th Greece election and whether it results in a Greek exit of the eurozone. Deutsche Bank gives it assessment in a report called Probability weighting EUR views on Greece

Assuming no defects in Pasok or the New Democracy parties, the pro-austerity may just scrape together enough votes to barely piece together a ruling coalition. How long it lasts is another matter as Pasok was humiliated with a third place showing. Reuters reports Angry Greeks reject bailout, risk euro exit

New Democracy won the Greek election. However, party leader Antonis Samaras still needs to form a coalition.  If this seems like Déjà Vu, it's because it is. We were in the same place following the May election. Does the Outcome Matter? This go around, I expect Pasok will reluctantly cave in and form a coalition with New Democracy.  The price might be high, such as demanding the much despised Antonis Samaras to step aside. Regardless, does the outcome matter?