Econintersect: Greek leaders announced Tuesday (15 May 2012) that they had failed to reach a compromise coalition to form a government. Because no party received an outright majority in the May 6 elections a coalition of parties is necessary to get over the 50% participation rate to form a government. The conservative New Democracy party won the most votes, but with only about 20% of the vote it cannot be said that they won the election. With the highly fragmented vote (at least six parties with 5% or more of the vote), at least three parties have to agree to form a coalition.
The latest opinion polls in Greece show that the leftist SYRIZA party now is on course to come out on top in the next election after a virtual tie for second ten days ago. There has been growing opposition among Greeks to the extreme austerity plan that has been agreed to by the previous conservative led government. It was that opposition that forced the previous government to call the May 6 election. On May 6 the conservative New Democracy party and the center left socialists lost strength and leftist parties gained. It now appears that another election, expected in about a month will produce more gains on the left and further decline for the right.
In a New York Times article several observers give opinions that Greece is becoming more and more likely to leave the Euro. The article also says that the concern then is for contagion as other weaker economies could follow suit.
On May 13 Econintersect published a Great Debate© wherein three contributors argued the merits of three outcomes in settling the Euro crisis, Elliott Morss argued for the expulsion of Greece (and possibly other “weak sisters”) from the Euro.
- Greek Coalition Talks Fail, Forcing New Election (Liz Alderman and Rachel Donadio, The New York Times, 16 May 2012)
- Greece: Conservatives Lead in Early Returns (GEI News, 6 May 2012)
- The Great Debate©: How to Resolve the Euro Crisis (Amar Bhide, Elliott Morss and John Lounsbury, GEI Analysis, 13 May 2012)