Greek ten-year bond yields jumped by nearly a percentage point last Tuesday as stocks plunged by 11%, the worst daily drop since 1987. The panic came after Greece's prime minister called a snap presidential election for next week.
If Prime Minister Antonis Samaras's government loses this three-stage vote in parliament, which it easily could, he will be obliged to call a general election.
The left-wing populist, anti-austerity Syriza group, which is leading in the polls, is in a strong position to win it, potentially leading to a chaotic Geek exit, or 'Grexit', from the eurozone.
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What the commentators said
These have been bogged down in parliament, and winning what is effectively a vote of confidence should allow the government to regain the initiative, hopes Samaras. But "the vote will be tight".
Syriza has tempered its rhetoric lately and may not deliver a "forgive our debts or we'll march out of the euro" ultimatum, said Alen Mattich on wsj.com. But there will be "plenty of scope for friction" as it "presses hard for debt relief", and astand off could mean fresh calls for an exit from the single currency.
"At that point, all bets are off. The anti-austerity revolt in Greece could easily spread," said Philip Aldrick in The Times. "Economics and politics keep getting in the way of finding a... lasting way for 18 disparate nations to share a single currency." All this threatens to make the debate over quantitative easing by the European Central Bank "seem like a sideshow".
Most worryingly, eurozone politicians, as ever, seem to be asleep at the wheel. The EU's economics commissioner, Pierre Moscovici, thinks markets should have been reassured by Samaras's move. "Oh dear."
Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.
After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.
His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.
Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.
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