Greek election: It’s really up to the ECB and EU now
The result was worse than expected whatever the final outcome – the anti-austerity vote is massive, but it could be an empty gesture as Greece in reality has little choice: Comply with the Troika or leave the EUR. I doubt the later will happen with the same vote as the Greeks are tired of austerity but not off being European.
EUR/USD is down 55 ticks as I write, at 1.1145. I expect Greek stock market will be down 5% tomorrow and that Europe overall could be down 2% unless Germany, the ECB and EU comes out supporting a move towards some compromise (which is unlikely this week)
Game theory dictates that some solution will be found which is sub-optimal for all parties, but the risk it will take longer than market have nerves for.
Syriza did better than expected – making negative reaction more likely
Syriza did better than even the polls suggested – the gap to ND is 10% as I write this, and for the market this is a close call as Syriza may get a mandate to rule alone. (Greek election: Syriza Party set to take power – Source Sky)
It’s a disaster for “austerity” and common sense, but at the end of day, Greece did what we expected them to do: Desperation forced the voters into the arms of a left-wing government who’s rhetoric reminds me of my youth (many decades ago) in the the 1970s: Comrades, capitalism, imperialism is some of the words I heard on TV interview this evening. It makes makes one smile: “What goes around, comes around”.
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