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Mish's Global Economic Trend Analysis

SYRIZA Surges in Greek Polls, Would Win Election if Held Today; Message People Want to Hear; Contagion Guarantee

Posted: 18 Jan 2014 11:35 AM PST

Support for Prime Minister Antonis Samaras' New Democracy coalition has finally crumbled to pieces. For the year things had been close between New Democracy and opposition "Radical Left" party SYRIZA.

Not anymore. The Greek Reporter notes SYRIZA Killing New Democracy, PASOK in Attica, a critical Athens region of Greece.

A series of scandals, unresolved talks with the country's international lenders, and the escape of a terrorist seem to be taking their toll on Prime Minister Antonis Samaras' coalition government and his New Democracy Conservatives, who have fallen 7.7 percent points behind their rival, the Coalition of the Radical Left (SYRIZA) in the critical Attica region including Athens.

SYRIZA, which opposes the austerity measures being imposed by the government, had been battling for the lead in surveys for a year with New Democracy, both sides barely one percent apart, but now has a lead of 24.6-16.9 percent in the poll taken by GPO for Newcast.

That comes in the wake of a series of arrests involving a scandal at the failed state-owned Hellenic Postbank, the defense ministry, a publisher charged with failing to pay his taxes and as Samaras is trying to assert the country is poised to make a comeback. Voters aren't buying it.

Despite the arrest and prosecution of its leaders on charges of running a criminal gang, the ultra-far right extremists of Golden Dawn remain a steadfast third with 11.1 percent, even though its leader, Nikos Michaloliakos and four other of his party's Members of Parliament are in jail awaiting trial.

As bad as the results were for Samaras, it was worse for his partner, the PASOK Socialists who got 44 percent of the vote in 2009 when it won the elections. Under current leader Evangelos Venizelos, who gave Samaras his votes to join the coalition and was rewarded by being named Deputy Prime Minister/Foreign Minister, have fallen to 3 percent, the threshold needed to win seats in Parliament.

PASOK is now dead last among the seven parties in the Parliament. The Communist party (KKE) is fourth with 4.9 percent, followed by the Independent Greeks at 4 percent, the Democratic Left (DIMAR) – a former partner in the coalition – at 3.1 percent and also in danger of disappearing as a party next, just ahead of PASOK.

About 13 percent of voters are undecided and while the survey wasn't nationwide, it covers the most populous area and if the lead holds it would be difficult for New Democracy to catch up and stay in power in the 2016 elections – if the government lasts that long and snap elections aren't held.

SYRIZA leader Alexis Tsipras, who opposes the austerity measures and said his party wouldn't repay the $325 billion in loans granted by the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) has predicted the Leftists will come to power.

He has promised a return to Utopia by restoring pay, cutting taxes, returning pensions to their previous level and no public worker firings as demanded by the Troika. He didn't say how he would do it without the loans or if Greece continues to be locked out of the markets.

Message People Want to Hear

I have no love for leftists. And Tsipras' promise of restoring pay, cutting taxes, and no public worker firiings is of course ridiculous.

Nonetheless, his message is what people want to hear. It's hard to say whether people truly believe in what he is saying or not.

Mathematically, it's impossible to do what he says and maintain a current account surplus as well. Perhaps Tsipras himself even recognizes that.

Regardless, the one thing I am reasonably sure of is Greece will not pay back $325 billion in loans granted by the Troika. I even support that policy.

It would be better if it came with a realistic message to Greek citizens as to what that would mean. Short-term there would be more pain. But long-term it's the right ting to do, if accompanied by badly-needed reforms.

Default Coming One Way or Another

Whether done properly, or with promises that cannot be met, Greece is going to default on that debt. When that happens, German citizens will discover that Chancellor Angela Merkel's promise that German taxpayers won't be impacted is as hollow as most chocolate Easter bunnies.

Calculating taxpayer responsibility percentages of various countries is simple enough.

Eurozone Financial Stability Contribution Weights

Country	Guarantee Commitments (EUR) Millions	Percentage
Austria	€ 21,639.19	2.78%
Belgium	€ 27,031.99	3.47%
Cyprus	€ 1,525.68	0.20%
Estonia	€ 1,994.86	0.26%
Finland	€ 13,974.03	1.79%
France	€ 158,487.53	20.32%
Germany	€ 211,045.90	27.06%
Greece	€ 21,897.74	2.81%
Ireland	€ 12,378.15	1.59%
Italy	€ 139,267.81	17.86%
Luxembourg	€ 1,946.94	0.25%
Malta	€ 704.33	0.09%
Netherlands	€ 44,446.32	5.70%
Portugal	€ 19,507.26	2.50%
Slovakia	€ 7,727.57	0.99%
Slovenia	€ 3,664.30	0.47%
Spain	€ 92,543.56	11.87%
Eurozone 17	€ 779,783.14	100%

The above table from European Financial Stability Facility

Note that Greece is responsible for 2.81% of Greek defaults. How is that going to work?

It doesn't. So take that percentage and spread it around according by revised weight. And what is Spain supposed to do with it's 12% of €325 billion of defaults?

Contagion Guarantee

Thank the economic illiterates at Troika for this setup.

Greece could have defaulted in 2009 with perhaps a €40-50 billion mess to cleanup. In a foolish attempt to prevent contagion, the nannycrats turned a relatively small mess into major €325 billion problem, virtually assuring the contagion they set out to prevent.

Expect to see much use of the word "contagion" in the coming months.

Here is a question I asked in Prisoner's Dilemma Game in Greece; Contagion-Spread Eurozone Breakup More Likely Now; How will Greece NOT pay back €320 billion? So Angela Merkel, when are you going to admit this setup, and what are you going to do about it?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Making 2014 a Year of Action to Expand Opportunities for the Middle Class

Featured

Weekly Address: Making 2014 a Year of Action to Expand Opportunities for the Middle Class

In this week’s address, President Obama said 2014 will be a year of action, and called on both parties to help make this a breakthrough year for the United States by bringing back more good jobs and expanding opportunities for the middle class.

Click here to watch this week's Weekly Address.

Top Stories

Expanding Educational Opportunity: And yesterday, a group of leaders in higher education joined the President and First Lady at the White House to take the next step toward ensuring that every child, rich or poor, has the opportunity for a quality college education so they can get ahead.

“We’ve got philanthropists and business leaders here; we’ve got leaders of innovative non-for-profits; we’ve got college presidents -- from state universities and historically black colleges to Ivy League universities and community colleges,” President Obama said. “More than 100 colleges and 40 organizations are announcing new commitments to help more young people not only go to, but graduate from college.” These leaders made the commitment to take action on areas crucial to making college a reality to more kids.

The day before, the First Lady hosted a discussion on education to support the President’s “North Star” Goal, which states that by 2020, Americans will have the highest proportion of college graduates in the world.

America’s Newest High-Tech Manufacturing Hub: President Obama visited Raleigh, North Carolina on Wednesday to announce that Raleigh is going to be America’s newest manufacturing innovation hub. This new hub will bring leading companies, universities, and federal research together under one roof to help develop the next generation of power electronics. President Obama has proposed building a network of these hubs across the country to help make the United States a magnet for the good, high-tech manufacturing jobs that we need to grow the middle class and keep this country on the cutting edge.

“Together, these hubs will “help build new partnerships in areas that show potential,” the President said. “They’ll help to lift up our communities. They’ll help spark the technology and research that will create the new industries, the good jobs required for folks to punch their ticket into the middle class.” You can check out his complete remarks here.

Cabinet Meeting: On Tuesday, President Obama held his first Cabinet meeting of the new year. “We’ve got a lot to do in 2014. As I’ve said before, this is going to be a year of action,” he said before the meeting. The President said he was pleased that the House and Senate agreed to a budget and put forward a bill to fund the government and is looking forward to working with each side of the aisle to advance economic recovery. Read his full remarks here.

Get ready for the State of the Union: Next Tuesday, January 28^that 9 P.M. ET, President Obama will deliver his fifth State of the Union Address. This year there will be more ways to watch the speech and share exclusive graphics. Want to stay updated on the latest State of the Union news? Sign up to get exclusive content before and after the speech and follow @WhiteHouse on Twitter for real-time updates on the State of the Union.

The Miami Heat back at the White House: The President welcomed the Miami Heat back to the White House on Wednesday to congratulate the team on their back-to-back championship titles. Last season, the Heat won a team-record 66 games and beat the San Antonio Spurs in the finals. "The Heat showed us the kind of heart and determination it takes to be a champion," the President said.

Nomination for the Small Business Administration: On Wednesday the President announced his nominee to lead the Small Business Administration, Maria Contreras-Sweet. The President spoke about her previous experience starting small businesses and her proven track record to helping small businesses succeed.

Vice President Attends Auto Show: While the President was back in Washington, D.C., Vice President Biden spoke at the North American International Auto Show in Detroit on Thursday. After speaking at the event, he got to tour the exhibit. “I’m like a kid in a candy shop,” the Vice President said.

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Seth's Blog : "Bring us your problems"

"Bring us your problems"

We're far more aware of our problems than our opportunities. Our problems nag at us, annoy us and paralyze us.

Every organization wrestles with its problems, and is eager to solve them.

When you generously invite people to bring you their problems, they might just do that.

Solving problems—actually solving them, not just claiming you do—solving perceived, urgent problems, is a surefire way to get the world to beat a path to your door. [HT to Adrian for the photo.]