At 9 PM (GMT) the Greek parliament will vote on confidence vote with regards to the government’s proposed austerity economic strategy. The question is how will the opposition vote?
Greece’s problem is that the current administration discovered that public finance were a mess, far worse than anticipated. In fact, they discovered that total debt was three times higher than had been previously revealed. The prime minister tried to form a national unity collation, the opposition would have none of this (why share the blame). Now the opposition has three choices: Support, reject or abstain. My guess is that they will be blamed even if they abstain – since the government would win the confidence vote. So they will have to choose between elections -- maybe taking power and having to solve the mess themselves or support the current administration, and let them suffer the eventual electoral backlash. Difficult calculations if you “believe” that more debt is the solution (in my opinion it is not), but easier if you believe that the ECB/IMF have only kicked the can down the road with the hope that an eventual pain free solution emerge.
Once you believe that the solution lays in negotiating with the ECB/IMF a new deal (including hair cuts for foreign private creditors) then Greece has a chance to make it! Clearly remaining in the Euro area is out of the question. Transition out of the Euro is complex but not impossible.
The solution will not please the ECB, but then, everyone knew that Greece was faking the stats when it joined the Euro – and yet no one said anything!
My gut feeling is that the opposition will support the government, because the next 8 to 12 months are going to be horrible for anyone in power. Might as well be the other guy! I was wrong, eventually the vote was down to party lines. The opposition decided that they had nothing to gain in supporting the government.
Greece’s problem is that the current administration discovered that public finance were a mess, far worse than anticipated. In fact, they discovered that total debt was three times higher than had been previously revealed. The prime minister tried to form a national unity collation, the opposition would have none of this (why share the blame). Now the opposition has three choices: Support, reject or abstain. My guess is that they will be blamed even if they abstain – since the government would win the confidence vote. So they will have to choose between elections -- maybe taking power and having to solve the mess themselves or support the current administration, and let them suffer the eventual electoral backlash. Difficult calculations if you “believe” that more debt is the solution (in my opinion it is not), but easier if you believe that the ECB/IMF have only kicked the can down the road with the hope that an eventual pain free solution emerge.
Once you believe that the solution lays in negotiating with the ECB/IMF a new deal (including hair cuts for foreign private creditors) then Greece has a chance to make it! Clearly remaining in the Euro area is out of the question. Transition out of the Euro is complex but not impossible.
The solution will not please the ECB, but then, everyone knew that Greece was faking the stats when it joined the Euro – and yet no one said anything!