‘Greek fire’ threatens to engulf the eurozone

The Original Greek Fire in action

After the New Democracy party failed to form a government in the wake of Sunday’s election, the Left coalition SYRIZA is giving it ago, the they’re demanding an end to that notorious austerity pact.

The announcement sent Europe’s stock markets tumbling.

If SYRIZA is able to forge a new coalition government, the result could be both a Greek exit from the eurozone — the 17 European nation bloc that uses the eurpo as a common currency — and an eventual end to the eurozone itself.

From Andy Dabilis of Greek Reporter:

Greece’s new power broker, SYRIZA party leader Alexis Tsipras, is trying to form a coalition government in the wake of the country’s fractured election results, but has laid down tough conditions that would require a rejection of the deals that provided the country with a first rescue package of $152 billion in emergency loans from international lenders and a coming second bailout of $173 billion more.

Those came with attached austerity measures that have infuriated Greeks and set off two years of protests, strikes and riots and led voters to abandon the traditional ruling parties who supported the pay cuts, tax hikes, and slashed pensions – New Democracy Conservatives and PASOK Socialists.

Tsipras said he wouldn’t deal with them unless they take back their signatures and renege on their deals with the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) and warned he would nationalize Greek banks.

Read the rest.

More from the BBC:

The leader of Greece’s left-wing Syriza bloc has said he will try to form a coalition based on tearing up the terms of the EU/IMF bailout deal.

Alexis Tsipras, whose bloc came second in Sunday’s vote, said Greek voters had “clearly nullified the loan agreement”.

He has three days to reach a coalition deal and has told the two major parties to end their support for the austerity terms if they want to take part.

The European Commission and Germany say countries must stick to budget cuts.

European Commission President Jose Manuel Barroso said on Tuesday: “What member states have to do is be consistent, implementing the policies that they have agreed.”

Read the rest.

Rachel Donadio and Niki Kitsantonis of the New York Times have more of Tispas’s remarks and some insight from a Harvard economist who has served as the chief economist for the International Monetary Fund, a key member of the Troika that imposed the austerity plan:

“If Mr. Samaras and Mr. Venizelos genuinely regret their disastrous decisions, let them write to the E.U. and I.M.F. leaders tomorrow, revoking their signatures,” Mr. Tsipras said. “If they don’t, I call on them to stop duping the Greek people,” he said, referring to appeals by the New Democracy and Socialist leaders for the formation of a national salvation government based on the terms of the bailout.

Later, Mr. Tsipras told reporters, “The popular verdict clearly renders the bailout deal null.”


The Greek election and ensuing political tumult showed that “it’s not clear how they can survive within the euro over the longer term,” said Kenneth S. Rogoff, a professor of economics at Harvard and a former chief economist at the International Monetary Fund. That could have grave implications for the rest of Europe.

“A Greek exit,” Mr. Rogoff said, “would underscore that there’s no realistic long-term plan for Europe, and it would lead to a chaotic endgame for the rest of the euro zone.”

Read the rest.

The Guardian offers a brief portrait of the man at the eye of the firestorm:

So, who is Alexis Tsipras, the man who will attempt to form a new Greek government today?

Well, he was born just a few days after the fall of the Greek military dictatorship in 1974. Today, the 37-year-old is the youngest leader of a Greek political party.

He was an active youth politician, and was involved in a famous protest organised by school students against education minister Vasilis Kontogiannopoulos.

Tsipras first joined the Greek Communist Youth, and later became part of the Coalition of the Radical Left which he now leads. He studied civil engineering at the National Technical University of Athens (NTUS).

Unlike certain well-groomed rivals, Tsipras dresses down and is often driving around Athens on a motorcycle.

Damn, this is starting to get intetesting!

The real question is whether or not Tsipras will be able to form a government. He’s busy talking to potential allies, as CNN reports:

Tsipras met Greek President Karolos Papoulias earlier Tuesday to get instructions to try to cobble together a government in the wake of elections that left the country’s political system in chaos.

Syriza will have three days to form a government.

Communist Party leader Aleka Papariga spoke with Tsipras by phone but will not meet him, Syriza said.

Fotis Kouvelis of the Democratic Left, which splintered from Syriza in 2010, told Tsipras when they met Tuesday that Syriza needed the support of more than just the left, Tsipras’ bloc said.

Read the rest.

We certainly like the idea of nationalizing banks, because as long a governments create money as debt issued by private banks, further boom-and-bust cycles are inevitable, with the booms getting smaller and the busts growing more devastating.


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