No Deal In Greece, Euro And Markets Everywhere DIVE, Here Come Elections

greece graffiti statue of liberty

Photo: Duncan Hull via Flickr

Last-ditch efforts between political leaders this morning to form a new Greek coalition government officially failed today, heralding repeat elections.

Today, President Karolos Papaoulias made a final attempt to broker a deal between most of the leaders of political parties that earned seats in the country’s contentious parliamentary elections on May 6.

But those talks came to naught. As it turned out, analysts were right to be doubtful that New Democracy’s Antonis Samaras, Independent Greeks’ Panos Kammenos, PASOK’s Evangelos Venizelos, Democratic Left’s Fotis Kouvelis, and Syriza’s Alexis Tsipras would reach an agreement.

The euro is tanking on this news, and has now fallen under $1.28 for the first time since January 18. The Italian FTSE MIB and Spanish IBEX 35 also fell nearly 1 per cent right after Greek leaders came out with that news. U.S. futures are also off sharply, though they still point to a positive open. The Athens Stock Exchange crashed a stunning 4.5 per cent in the minutes after those headlines broke. Those losses were led by major losses in Greek bank stocks.

The failure to compromise on a government to lead Greece through the passage new austerity measures that will be necessary to secure the disbursement of the next round of international bailout underscores the political difficulties Greece is facing right now.

While a majority of Greeks still want to stay in the euro, they are no longer willing to submit to austerity measures imposed by their European counterparts.

Without a government, Greeks will have to return to the polls next month, likely on June 17. So far, it is unclear how their vote will change.


Photo: Yahoo Finance

In other news, various news sources reported earlier today that Greece has acquiesced to paying the full value of a €450 million bond denominated in U.K. law which matures today, despite a handful of earlier questions as to whether or not it would come through with the payment.

That decision, though largely expected, signals Greece’s willingness to abide by market rules. It is also a fall-out of agreements made in March to go through with a managed debt restructuring, where the majority of bondholders have agreed to voluntary rather than completely coerced write downs.

Last but not least, The Jewish Chronicle reports that Nikolaos Mihaloliakos, the leader of the neo-fascist Golden Dawn Party which won 21 seats in the most recent Greek election, told reporters on Sunday that he did not believe that six million Jews were killed in the gas chambers during the Holocaust. He called the number an “exaggeration” and denied that the gas chambers existed. Mihaloliakos and his party were not invited to take part in discussions with other party leaders today.

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