Mish's Global Economic Trend Analysis

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Round Two of Greek Presidential Election Fails; One More Chance or National Elections Posted: 24 Dec 2014 12:49 PM PST Rounds one and two of Greek presidential elections ended in failure. Recall that it takes a super-majority of 60% of parliament (200 votes), to elect a president, in the first two attempts. The third an final chance takes 180 votes. Even though this is a ceremonial position, should parliament fail to elect a president in three rounds, parliament dissolves and new national elections for prime minister and parliament take place. That has the nannycrats in Europe concerned. Alexis Tsipras, leader of opposition party Syriza, has vowed he will demand a sizeable write-off of Greece's sovereign debt if elected. Syriza is in the lead so fearmongering by the EU has been extreme. The Financial Times reports Greek Parliament Fails to Elect President in Second-Round Vote. Stavros Dimas, the governing coalition's candidate, won 168 votes, eight more than in last week's first-round ballot, following a last-ditch appeal for consensus by Antonis Samaras, the prime minister. But the former European environment commissioner now appears unlikely to capture the 180 votes needed in the third and final ballot on December 29. The additional support for Mr Dimas came only from independent MPs, while the moderate Democratic Left and rightwing Independent Greeks resisted the appeal for consensus to complete talks on leaving Greece's four-year bailout and securing a new credit line from international borrowers. The coalition government's chances of staying in power depend on persuading MPs from the Democratic Left and Independent Greeks to switch sides in the final ballot. Fotis Kouvelis, the Democratic Left leader, and a potential presidential candidate under a Syriza-led government, has told senior party members he is about to announce an electoral alliance with Syriza — a move that prompted one of his 10 MPs to leave the party on Tuesday. "It's time for the country to turn a page. Society wants this to happen, we need a change in Greece," Mr Kouvelis said after Tuesday's vote. Mr Samaras on Sunday offered to bring forward a general election to late 2015 and open up his coalition government to smaller parties as a way of persuading recalcitrant MPs to back Mr Dimas for the presidency. In an unscheduled television address on Sunday, Mr Samaras called for a "consensus" vote for Mr Dimas, urging MPs to "listen to the voice of conscience, national interest and common sense". Some analysts have argued the prime minister would have needed to notch up at least 170 votes in Tuesday's second-round vote to give him a reasonable chance of winning the final ballot on Monday. Bribes to the Rescue? On December 9, I said Snap Elections May Pave Way for Eurozone Exit; Expect Bribes. Certainly the political class in Greece, in Germany, in France, in the US and for that matter everywhere will be out in full force denouncing Syriza. Nonetheless, Samaras will fail on the first two presidential votes. It's the third vote that matters. In the past, the IMF, EU, and other outside influences swayed enough politicians to matter. It's by no means certain they can do so again. Expect Bribes If it appears the final vote for president is headed the wrong way, watch German Chancellor Angela Merkel come out with some wishy-washy praise for Samaras including some small offer of debt relief or other favors. If threats and praise do not work but the vote is close, there's always money under the table to buy a few needed votes. Should bribes fail, expect the stock and bond markets to react with even greater volatility ahead of the next national election because Syriza party leader, Alexis Tsipras, threatens to renegotiate Greek debt. Greek Bribery Charges Last Friday, Pavlos Haikalis of the Independent Greeks party said at a news conference he been offered about €700,000 ($860,000) in cash and help in repaying an outstanding bank loan, as well as advertising contracts to vote for the government's candidate. He estimated the total package to be worth €2 million to €3 million. The Wall Street Journal said Greek Bribery Claims Dismissed for lack of evidence. I am suspicious of the amount, and also because the vote does not seem close enough, at least yet. Then again, I expected bribes, favors, threats, and fearmongering, so had this occurred, it would hardly be shocking. In addition to the claims by Haikalis, Reuters points out "Prosecutors have been investigating similar accusations of political bribery in recent weeks but have not laid charges against anyone." Of course, the party in power never prosecutes itself for offering bribes. Had the charges gone the other way, there would have been an investigation with much fanfare, media attention, and flag-waving. Fearmongering and Interference On December 14, and as predicted, the Guardian reported EU Finance Chief Flies into Athens as Grexit Fears Mount. In response, Leftwing leader Alexis Tsipras cried foul over 'fearmongering and interference' from Brussels. The third and final vote is on December 29. If this thing is at all close, expect more bribes. Even if it's not close, fearmongering by the EU and current prime minister Antonis Samaras is 100% guaranteed. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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