Confirming the fears that resulted after the Greek elections and was followed with a 7% decline in Greek stocks, Antonis Samaras, the President of the New Democracy Party who got the most votes is saying he is unable to form a coalition government with the other party leaders. He is giving back his mandate to the President who will now give the Syriza party (otherwise known as the Coalition of the Radical Left Party), the number two vote getter, a chance to form a new government. This party is against the bailout terms as are all the other parties except New Democracy and Pasok. Unable to create a new government, Samaras is quoted on BN as saying “renegotiation of bailout terms now accepted by all.” The question for the markets, which is partly being answered today with a rally well off last nights lows, is whether Greece can still be contained to Greece and whether they leave the euro or not. I believe it’s all about Spain and Italy and the rally in their equity markets today and little change in bond prices says they at least are only focused on the travails of themselves and Greece saying screw you to the EU possibly soon is Greece’s problem, not a broader one.
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