Greece's Presidential Vote Just Failed And Markets Are Crashing

Greek flag europeREUTERS/Yannis BehrakisSnap elections could have a huge impact on Europe if Syriza come to power.

Greece’s parliament just voted on the government’s presidential candidate, and didn’t get the super-majority it needed. Snap elections are now coming on January 25th, and Greece’s stocks are going through the floor again.

This was the third and final round of voting by Greek politicians: The government need a super-majority to avoid the sudden elections. That meant it needed 180 of 300 MPs to approve Stavros Dimas, the candidate. The governing coalition has 155 MPs, and it persuaded another 13 to back Dimas in the last round. It needed another 12 today and it didn’t get a single extra one. 

The Athens Stock Exhcnage is down by more than 8.4% as of 11 a.m. GMT, after falling 11% immediately after the vote. Far-left Syriza seem likely to win the snap election less than a month from now. Since the presidential vote was announced in the first week of December, the Athens Stock Exchange has tumbled by more than a quarter. 

Syriza isn’t likely to be able to form a government on its own, but the highly unorthodox programme it promotes suggests rolling back many of the reforms in recent years and scrapping bailout agreements with Greece’s international lenders. It could be the first instance of a eurozone government which simply refuses to co-operate with the currency union’s institutions.

Greece’s banks, which Syriza has suggested it will nationalise, are getting hit hardest in the stock sell-off. Piraeus Bank and Alpha Bank, two of the country’s largest, are down more than 14%.

There’s are now a couple of major issues: The first is whether Syriza’s poll lead will hold up. In some surveys, its lead has been narrowing recently. Will voters get a little less radical as the election approaches? Even if Syriza wins, it remains to be seen what sort of coalition it could build to govern.

There are also rumours that the government will try to abolish the 50-seat bonus that Greece’s winning party usually gets. It isn’t likely to be able to do that before the snap election, but if Greece has to go back to the polls afterwards (not a rare occurence), it could have a major impact. 

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