Greeks Political Parties Prefer Chaos Over Compromise; June 17 Elections on the Way; Next Bailout Tranche at Risk
In the wake of the Greek election, one thing is clear: No party or coalition of parties is in control. More elections are coming, but will the results be any different?
In the meantime, the next disbursement of Greece bailout funds is at risk, and Greece faces being unable to meet pension, salary and debt commitments next month.
Please consider Greece braces for a repeat of elections
Greece is bracing for a repeat general election after its centre-right leader failed to win leftwing support to form a “national salvation government” in the wake of Sunday’s inconclusive outcome at the polls.
“We are now heading for a second vote next month in a deeply polarised atmosphere,” said a disappointed government official. The repeat election would probably take place on June 17, he said.
Decision-making on further reforms, including finalising a new €11.5bn medium-term austerity package, will be stalled until a new administration is in place.
“Only non-political measures can go ahead,” the official said, admitting that it will be hard to push forward with 77 separate structural reforms due to be completed during June.
The stalemate puts at risk the timetable for disbursement of Greece’s next loan tranche from its second €174bn bailout. Despite a recent transfer of €3.5bn to cover financial emergencies, the country faces being unable to meet pension, salary and debt commitments next month.
The European Union and International Monetary Fund have warned they will block further loan disbursements until the next Greek parliament approves the medium-term package, which would include deep cuts in healthcare spending and in public sector employment – measures that triggered parliamentary rebellions under the two previous governments.
June 17 Elections on the Way
Let's hope this is the end of the end of the insanity in Greece instead of yet another package of proposals that sinks Greece further into ruin for the sole purpose of bailing out French and German banks.
The sooner Greece tells the Troika "Go to Hell", the sooner Greece has the potential to be on the road to recovery.
The keyword in the above sentence is "potential". Greece has a zero percent chance under Troika proposals. However, unless Greece adopts genuine reform on work rules and pensions, it is headed to the gutter, bailouts or not.
Mike "Mish" Shedlock
Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
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