Greece has been the focus of the markets ever since Monday when the nation’s parliament rejected Prime Minister Antonis Samaras’s nominee for president, resulting in a call for an early general election next month.
Stavros Dimas fell short of the 180 votes needed to become president in the decisive third round of voting, triggering the dissolution of parliament and raised political uncertainty since one cannot know if the result of early elections will be a viable government.
Greece could return to the brink of a financial crisis if it fails to put together a government soon. The country will be in danger of losing its bailout package from the troika (ECB, IMF, EC). Moreover, if the opposition party Syriza gains power, it would overturn the austerity approach as it is “anti-bailout”.
“With the will of our people, in a few days bailouts tied to austerity will be a thing of the past,” Syriza leader Alexis Tsipras said after the parliamentary vote on Monday. “The future has already begun.”
On Monday on the announcement of snap elections, flight to safety drove yields on German 10-year Bunds to an historic low of 0.54% while Greek 10-year bond yields surged to a 15-month high near 10% and the Athens stock exchange fell 10%.
Troika inspectors will postpone a visit to Athens until after a new government is in place in order to resume discussions on concluding a review on a final bailout due to unlock over 7 billion euros in aid. The troika was due in Athens in January. The Greek elections will be held on January 25.