Greeks voted yesterday for a new government for the second time in a month. Attendance at the polls was only moderate, and the anti-austerity vote came in second to the party that wants Greece to remain in the European Union. It was, in part, a referendum on the global austerity drive forced on us by the international financial oligarchy. jpmassar posted a diary that blogged election results.
Around the world, financial markets and financial oligarchs are watching the Greek election closely. The election was a litmus test for voter's tolerance for un-shared sacrifice and their anger with the pro-austerity factions. Results reflected either their desire or despair concerning their European Union membership. The lives of the those who are suffering from an austerity forced on them by the poorly regulated recklessness of international financial markets hung in the balance.
More below the Itzl.
The New Democracy party, which won by a couple of percentage points, wants to maintain Greek ties with Europe and would continue the harsh austerity policies present today in Greece and other countries. The anti-austerity party, SYRIZA, is described by The Guardian as a "coalition of reformists, communists, Maoists, Stalinists". The Guardian asserts that, "The only thing the next government (no matter who is elected) has to distribute is blood, sweat and tears. And that is not what the left is promising in these elections."
Greece is not alone in its present plight. Spain, Ireland, Italy and Portugal have had similar experiences with runs on their sovereign debt. A glimpse into the calculations that went into these maneuvers appeared in a Wall Street Journal article on February 26, 2010.
Some heavyweight hedge funds have launched large bearish bets against the euro in moves that are reminiscent of trades at the height of the U.S. financial crisis.
The big bets are emerging amid gatherings such as an exclusive "idea dinner" earlier this month that included hedge-fund titans SAC Capital Advisors LP and Soros Fund Management LLC. During the dinner, hosted by a boutique investment bank at a private townhouse in Manhattan, a small group of all-star hedge-fund managers argued that the euro is likely to fall to "parity"—or equal on an exchange basis—with the dollar.(Bold mine.)
The hedge fund diners decided that Greek government bonds were the weak link in the euro. They concluded that a Greek debt crisis could initiate an opening to attack the euro, and that the Greek sovereign debt crisis could spread to sovereign debt throughout the world. This would include national, state, municipal and all forms of government debt, including that of the US and all levels of US government.
Hedge funds weren't alone in staging the assault on the euro. The zombie banks were part of the effort. Goldman Sachs, Bank of America, and Barclays Bank of London aided speculators in placing highly leveraged bearish bets against the euro. It is interesting to note that these zombie banks are alive today only because of US taxpayer money, or, in Barclay’s case, through AIG, another recipient of our tax dollars. US taxpayers have helped fund hedge fund attacks on global sovereign debt.
Goldman Sachs and their hedge fund allies used derivatives to establish short positions against Greek bonds and the euro, betting that they would be devalued and go down. The usual response of Greek's central bank would have been to purchase long bonds to derail potential profits hedge funds would make on their short sales. But the central bank response and the response of the powerful troika, the European Central Bank, the International Monetary Fund and the European Commission, was too little too late. Thus Greece faces either further austerity or default.
And the money being received by Greece from the troika is not really funding needed government functions. Rather it is primarily being used to pay interest on previous loans the troika made to Greece. The New York Times has an extensive discussion on why and how this happened.
The Greek election yesterday has left the country in great turmoil. The third party in the election, PASOK a center-left party, has refused to join a coalition without SYRIZA, who has said it will not join a coalition. It does appear that Greece will be facing much blood, sweat and tears in an effort to form a coalition government. Austerity remains the specter haunting coalition efforts.
Former Spanish Prime Minister Zapatero once remarked that Spain was dealing with international speculative attacks and was mocked in newspapers throughout Europe. Wall Street paints the Greeks to be a nation of conspiracy theorists. The day that Germany announced a ban on naked short selling the markets plunged as the media interpreted the move as a sign of weakness. Any action taken against this group of powerful hedge funds is manipulated in the media to be further proof in their favor.
The austerity measures demanded by creditors has borne bitter fruit for the millions of Greeks and other Europeans living under them. But in yesterday's election in Greece, voter apathy has overcome the impetus for change, and the Greek economy faces another round of cuts to appease its creditors to the north, especially Germany.
After the Greek election yesterday, the finance oligarchs have another notch on their gun in their attack on the euro. I heard a Greek government employee speaking on a radio program Friday who hadn't been paid in five months. Until Greece complies with further austerity measures demanded by their creditors, government employees will continue to have further pay cuts or no pay.
The Financial Times today quotes Germany's finance minister, Wolfgang Schäuble.
But the German finance minister also reminded Antonis Samaras, leader of the New Democracy party that came top of the Greek poll, that he had “declared to the eurogroup his commitment to the objectives and to the central measures” of the programme. It was a clear warning from one of the strictest finance ministers in the eurozone against any attempt to renegotiate its principal debt and deficit targets.
More blood, sweat and tears for the Greek people.