Greek Coalition May Fall After Austerity Vote

Greek Leader Warns of Chaos If Austerity Is Blocked – WSJ.com.

UPDATE 1-Greek coalition ally confirms will vote against reforms | Reuters.

Greek Socialists urge PM to seek more concessions | Reuters.

When Samaras says that chaos will result if new austerity measures are not approved, what he really means that he will lose his job. Uncertainty, not chaos, will be the likely result of new Greek elections.

The Syriza party, also known as the communists, have a 50-50 chance of prevailing in new elections. They would need additional support to form a governing coalition. Syriza has vowed to tear up the terms of the bailout and renegotiate a new agreement from scratch. This would probably cause chaos in the financial markets but may just stabilize the Greek political situation.

All of this in unlikely to happen, yet. Without the support of the Democratic Left, Samaras still has 160 votes in a 300-person chamber, so these austerity measures should pass.

As long as Greece passes more cuts, they should receive the next tranche of bailout loans in a few weeks. There is still road to kick this can down.

dareconomics.wordpress.com

 

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