Greek
shares suffered their worst hammering in nearly three decades Tuesday, on
concerns the country is heading for a political crisis that could jeopardize
its vital bailout program.
Investors
fear the main left-wing opposition party, Syriza, which is leading in the
polls, might win the general election. Syriza has said it will demand a
substantial cut to what Greece owes in bailout loans if it is elected.
Economist
Megan Greene said the country's bailout creditors? The European Union and the
International Monetary Fund? Are not going to stand for that, and Syriza leader
Alexis Tsipras would probably end up falling in line with them?
"The
downside to that is that I think half his party will rebel as a result,"
said Greene, chief economist at Manulife Asset Management. That would lead to
further political chaos and possibly another election, leaving the economy
rudderless just as it tries to recover.
Greek
government bonds also took a hit Tuesday, with the 10-year yield rising 0.84
percentage points to 7.98 percent, a sign of investor wariness.
Analyst
Theodore Krintas said international investors, who account for up to 70 percent
of daily transactions in the Greek market, opted to "just sell and get
out."
"And I
think this explains the magnitude, the extent that we see the losses of the
Athens stock exchange today," added Krintas, the managing director of
Attica Wealth Management.
Although
Syriza has softened past rhetoric, it hasn't clarified whether it would resort
to a unilateral default on the rescue loans. While that would lighten Greece's
debt burden, it could have other server repercussions. It might, for example,
spook international investors away from lending money to the country for years,
hurting its ability to get back on its feet financially. Some suggested it
could cause the country to fall out of the euro union.
Greece's
president is a figurehead with minimal political clout. But the election
requires a super-majority that would include backing by some lawmakers from the
overall hostile opposition, which appears beyond the reach of the struggling
governing coalition. If three successive votes, from Dec. 17-29, prove
fruitless, general elections must be called by early February? Nearly a
year-and-a-half ahead of schedule.
In a
televised address Tuesday, Prime Minister Antonis Samaras nominated Stavros
Dimas, a senior figure in his conservative party and former EU commissioner for
the environment, as the government's presidential candidate.
All opposition
parties said they would not back him, or any candidate the government puts
forth, to force national elections.
Syriza's
Tsipras said the final presidential vote, on Dec. 29, would signify the end of
the governing coalition's "catastrophic" austerity policies.
"At
last, this year we will have every reason to wish a happy New Year," he
said. The bulk of Greece's 240 billion euros ($294 billion) in loans? Those
from the EU? Run out this year. The last batch has still not been paid,
however, as Greece and the EU disagree on whether Athens should impose more
austerity cuts to qualify.
(Πηγή: abcnews.go.com)
