Austerity Repudiated-As Greece Goes Part 1

      The people of Greece have spoken. And what they say is a resounding no to the austerity lovers, those who would abdicate their positions as Greece's leaders and instead allow foreign bondholders to write legislative and fiscal policy. Of course France also voted a resounding no to the austerity lovers by electing Socialist Francois Hollande. Let's hope he is another Mitterand.

    I will get to Hollande and France in Part 2. In part 1 we look at Greece. See what this does is enable me to call this post "As Greece Goes" and then follow up in Part 2 with "So Goes France!"

    For now Greece. It was a very bad day for politicians that voted for austerity.

    "Greek political parties stung by a wave of anti-austerity anger began trying to piece together a coalition government on Monday amid a reminder from the European Commission that the debt-riddden country should stick by its obligations."

   "The commission hopes and expects that the future government of Greece will respect the engagements that Greece has entered into," spokeswoman Pia Ahrenkilde Hansen told reporters."

    "The center-right New Democracy party finished first in the polling, but with 19% of the vote, giving it 109 seats in Greece's 300-seat parliament. Voters also delivered a rebuke to PASOK -- New Democracy's partner in the outgoing coalition government -- stripping the party of 119 seats.

    "State-run broaccaster ERT said New Democracy leader Antonis Samaras was expected first to approach leaders of the radical-left coalition Syriza, then PASOK, in an effort to form a new coalition government."

    "I asked for a strong mandate, but people chose differently. I respect their message," Samaras said in remarks Sunday on state television. "Today's result expresses people's disappointment toward the implemented dead-end economic policy that tested their limits and didn't include the necessary development policy."

    "The results were widely seen as a message to politicians to back away from the harsh economic austerity measures imposed in Greece."

    "This is a message of a peaceful revolution," said Syriza party leader Alexis Tsipras. "European leadership and especially (German Chancellor Angela) Merkel have to understand that austerity policies have suffered defeat."

     Samaras' comments are heartening. Hopefully he will remember them and take them to heart. It's very clear what will happen to him and his party if he doesn't. At this point the important lines in European politics are less about Left vs. Right than who is for growth and who is for austerity. Who is for the  interests of the people and who is for the interests of the bondholders.

    "In a deep repudiation of European austerity policies and the lawmakers forced to impose them at home, Greeks punished their ruling parties in parliamentary elections on Sunday and turned instead to an array of anti-bailout parties on the far left and right. PASOK and New Democracy, the two parties that have dominated Greek politics for nearly 40 years, received a combined 33% of the vote -- less than half what they garnered during the last elections in 2009. The conservative New Democracy party came in first with about 19% of the vote, while the Socialist PASOK party, which won in a landslide in 2009, came in third with a humbling 13.4%. With nearly all precincts reporting, the two parties won a combined 150 seats, which was not enough to form a coalition government on their own."

    "The surprise of the night was the strong showing by Syriza a coalition of radical left and green groups. Led by Alexis Tsipras, a young, politically savvy engineer known for shouting down pro-bailout politicians in parliament, Syriza attracted many disaffected PASOK voters and finished in second at 16.6% -- its best showing ever. Tsipras, who wants to cancel the bailout loan agreement Greece's leaders have signed with euro-zone countries, told supporters late Sunday that the austerity policies of German Chancellor Angela Merkel "have suffered a crushing defeat."

     http://news.yahoo.com/angry-greek-voters-punish-leaders-over-austerity-ballot-093803784.html;_ylt=AsYejlDSGcgsXGkB66y2vYOs0NUE;_ylu=X3oDMTNtNjhlM2ZjBG1pdANUb3BTdG9yeSBGUARwa2cDZDEzMTMxM2ItNjA1YS0zMmJiLWFkN2QtODM5N2Q4ZTVkZGY3BHBvcwMxMQRzZWMDdG9wX3N0b3J5BHZlcgM1NzZhM2VjMC05ODI4LTExZTEtYjdmZS00MGUwOTdmNjM3MWU-;_ylg=X3oDMTFlamZvM2ZlBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdAMEcHQDc2VjdGlvbnM-;_ylv=3

      What's clear is that Samaras better not just be playing politics but fully mean what he is saying. His party was lucky. The Socialist party who was in coalition with Samaras' New Democracy party got most of the blame. Note that today it's not about party necessarily, it's who will put an end to the politics of austerity. In Greece it meant the end of the long 23 year rule of the formerly very popular Socialist party. In France it meant the return of the French Socialist party after two decades of conservative dominance in France.

     This could be a real opportunity for the leftist Syriza:

      "Rena Dourou, a newly elected parliamentary deputy for Syriza, said she hoped other leftist parties would endorse Tsipras' proposal to form a leftist coalition of anti-bailout parties to lead the next government. "We want to send a message to Europe from the country where austerity policies started," she said as she celebrated with about 500 elated Syriza supporters in central Athens. "I want to emphasize that we do not want Greece to leave the eurozone. We want to stay in the eurozone so we can change its policies, because those policies are unfair to people. But we won't stay if Europe gives us no choice but austerity."

      As long as Syriza continues this position they should meet with electoral success. Remember though the Socialists used to be seen as the populist part that met the Greek people's true needs. There is some concern with some of the Far Right coming to power:

      "In a troubling development on Sunday, some of these angry anti-austerity voters turned to far-right parties such as Chrysi Avgi (Golden Dawn), a fascist -- some say neo-Nazi -- party which got just 0.23% of the vote in 2009. This time around, it received a stunning 7% percent and at least 21 seats in parliament. Golden Dawn supporters are known for their violent attacks on immigrants, especially those from Africa and South Asia, whom they blame for the rising crime in Athens. Some of the party's members also advocate for planting land mines along the border between Greece and Turkey and "cleaning" Greece of foreigners. Golden Dawn leader Nikolas Michaloliakos, who gave a Nazi salute shortly after being elected to the Athens municipal council in 2010, demanded that journalists gathered for a news conference on Sunday stand to attention when he walked in. "I'll say one thing: Veni, Vidi, Vici," he declared, borrowing the Latin phrase attributed to Julius Caesar, "I came, I saw, I conquered."

      T"he Golden Dawn does bash the eurozone but on more atavistic, "nationalist" lines-things like loss of national sovereignty and of course they blame all the problems on immigrants. This is another negative byproduct of austerity: by depressing growth some people are led to the Extreme Right.

The elections, meanwhile, left the once-mighty PASOK in tatters. The Socialists have governed the country for 21 years since 1981, when founder Andreas Papandreou, a Harvard-educated economist known for his fiery populist speeches, was first elected Prime Minister. In November, the debt crisis forced his son, George Papandreou, to resign as Prime Minister and then in March, as leader of the party. Many Greeks blame PASOK and Papandreou for enacting debilitating austerity measures in order to receive the billions in bailout loans from European Union leaders that are currently keeping the country from going bankrupt. The new PASOK leader, Evangelos Venizelos, a combative constitutional lawyer who had recently served as finance minister, had campaigned hard to keep his party from hemorrhaging voters. "We knew that we would pay the price, having taken an emotionally and politically unbearable position to take the measures that are necessary," he told supporters late Sunday night, looking defeated."

     Well for the sake of both the Syriza and New Democracy parties let's hope they don't find religion on austerity as the Socialists like Venizelos did. The Greek people have decided that far from being "necessary" it's a nonstarter. Michael Kinsley once said "Democracy can goof."

    Yet but sometimes it works just as it supposed to do and this is what happening in both Greece and the larger Europe right now. If the new leaders conclude austerity is necessary they will be gone next. The selloff in Europe suggests that not everyone is so confident they will. My guess is that this might change. At some point maybe investors might figure out that growth is in their interests not austerity which creates nothing but more of the same.