We already relayed Deutsche Bank’s star assessment of the Greek vote, which in a nutshell goes like this: The odds that the current bailout program can go through unscathed is very low.Deutsche’s language is very severe, and calls the election a clear negative surprise for markets.
Goldman has basically the same assessment, but the language from Themistoklis Fiotakis is a bit more polite.
In short, while incentives are still in place for mainline Greek political forces to avoid extreme solutions that would lead to an interruption in the Greek rescue package, the risk is that lack of coordination and the prevalence of populist agendas in the parliament could potentially lead to the less desired scenario. The latest budget data shows that Greece may be running a flat-ish primary budget position, which may reduce the consequences if such risk were to occur. That said, it becomes hard to assess the hit in confidence and the financial turbulence involved in such a scenario. In addition, the failure to pay the arrears will be an additional source of shock for public sector corporations. Finally, the results could further estrange Greece from the core of Europe.