The Greeks are electing who is to trigger the Euro-exit and not if there will be an exit...

Greeks are becoming more responsible after the fears of chaotic bankrupt and Euro-zone exit shattered not only the Greek society, but also the global markets. In new pre-election polls, the radical left populist party SYRIZA is stepping back, and again the leader is pro-Europe and pro-bailout right party New Democracy. It is obvious that the radical ideas of Alexis Tsipras are frightening the Greeks and trying to save what is possible to save, they are returning back to traditional and some more conservative politicians.

Anyway even if New Democracy becomes a winner, this does not mean a salvation of Greece. New Democracy has already won last elections, but was not capable of forming a government. So if we have a repeat of the last result - New Democracy first and SYRIZA second, it may become a new stalemate situation.

But more important is something else. Even if Greece elects a pro-EU and pro-bailout government it is not sure if this government will succeed. 3 months before there was a pro-bailout government that had 2/3 majority in parliament. And this government has made very weak and palliative reforms that very little helped the country. So even if now Antonis Samaras becomes a prime minister it is not sure that he will change something. His majority will be much weaker (may be only 5-10 deputies) and he will be in coalition with one or two other parties. In opposition will be the fierce SYRIZA that will sabotage any bailout implementation.

Greece needs too deep reforms, and that need becomes even deeper due to too long postponement and simulations of reforms. Some of the problems are constitutional (for example the ban to fire government employees) and a more powerful majority is needed for changes. These changes did not happen even when such majority existed. Now the chance to be implemented is even lower.

So in fact a conservative pro-bailout majority does not guarantee real changes. In fact in last 2-3 years Greece was more simulating reforms than making them. As the pro-bailout politicians will be the same, it is not very realistic to expect a great reforms effort.

And at the end, it is not sure if generally there is any chance of saving Greece. The country is out of money and in fact it needs may be 2 or 3 times more than the bailout plans guarantee. It would not need so much if the reforms were implemented. But reforms are not fact, so the expenses are the same. In addition the tax-flow is worse than expected, due to the simple fact that higher taxes mean lower collection because of hiding incomes. Out of this an extra decrease comes from uncertainty in country. So as a result of all this Greece will need much more money than even the most optimistic bailout program can provide. Going out of money any Greek government will have to go bankrupt and leave the Euro-zone.

So even with pro-bailout party ahead in polls, the election is may be on the question not if Greece will go out of Euro, but who will make this catastrophic decision. As this is a suicidal move, it is possible again no one to apply for prime-minister's job, and everyone to return back the mandate, excusing himself with not enough parliamentary support... :)

Dobri
May 28th 2012

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