Sunday, June 17, 2012
This Is What The Greek Election Results Mean
June 17, 2012
The first exit polls are out in Greece, and it looks like New Democracy is in the lead, albeit by a tiny margin.
While these are just early results, this could bring either a huge sigh of relief to Europe--or another disastrous deadlock.
If the conservative, pro-bailout New Democracy party is able to hold out in front as more results roll in, it will get a 50 seat bonus. Then it's all up to PASOK to win enough support to allow the two pro-bailout parties to form a coalition.
Market-positive news is that PASOK may just have won that support...barely.
Bad news (for markets, at least) is that ND's lead is razor thin--just 0.5 percent ahead of SYRIZA in the exit polls. Different polls out of SKAI TV even suggest that SYRIZA is actually in the lead by a 0.5 percent margin.
If ND is unable to come in first place, then SYRIZA would receive the 50-seat bonus, making it difficult for PASOK and ND to form any kind of coalition. That would likely leave all parties unable to form a government, meaning that we'll see a third round of Greek elections.
A third round of elections would potentially be disastrous for markets. Fear that Greece will default in a disorderly fashion and leave the euro have already led Greeks to start pulling euros out of their banks. Analysts worry that full-scale bank runs in Greece could prompt bank runs across Southern Europe, as investors speculate that Greece won't be the only country to leave the euro.