As we just wrote, Greek election results will be coming over the next few hours.The buzz, according to Greek media people, is that things will be tight, and that early exit polls will be pretty dicey (though we’d note that media people are always saying that about exit people).
So we wanted to make two quick points for people who haven’t really been tuning in.
The first is that they matter. Greece has a “Memorandum of Understanding” (MOU) with its various lenders, wherein it has committed to reforms in exchange for a bailout. The two main parties, New Democracy (conservative) and PASOK (liberal) have commited to the MOU. However, a number of fringier parties are against the current deal, and would like to torpedo what’s been agreed to. If the two main parties can retain a big healthy slice of parliament, the reforms can go forward, and the miserable status quo is maintained. There’s very little to like about the status quo, except that it delays any kind of cascading Euro-wide panic.
But getting to the second point, there’s some question still about whether any election outcome will “work.” In a note out this past week, UBS advised clients to be “very worried” due to the possibility of a major collapse in major part support and also the possibility that even if the major parties maintain control of parliament, they will not have the stomach to keep moving, and a lender like the IMF could call things off.
So yes: Big deal and high stakes.