Bad moon rising: Eurozone governments and markets slide deeper into chaos

May 7, 2012 – ATHENS — A day after Greece’s two dominant parties collapsed at the polls, the leader of the center-right New Democracy party announced Monday that he had failed to form a governing coalition, pushing the mandate to the second party amid growing uncertainty about Greece’s political stability and staying power inside the euro zone. “We did everything we could but it just wasn’t possible,” the leader, Antonis Samaras, said in a televised statement. Greek law gives the front-runner three days to form a government before the baton passes to the runner-up. But a party official told the private television channel Antenna that Mr. Samaras had “not wanted to waste time at such a crucial moment for the nation.” President Karolos Papoulias is to meet with Alexis Tsipras, the leader of the second party, the Coalition of the Radical Left, or Syriza, at 2 p.m. on Tuesday. If Mr. Tsipras fails to form a coalition, the Socialist leader, Evangelos Venizelos, has a try. If he fails, the president of the republic summons the leaders of all parties in Parliament and tries to broker a broad coalition. If that also fails, the president appoints an interim government to bring the country to new elections in 30 days. On Sunday, the traditionally dominant parties, New Democracy and the Socialists, which both backed Greece’s latest loan agreement with its foreign creditors, did not get enough of the combined vote to form a majority in Parliament. Several smaller parties, whose fortunes rose on a rich harvest of protest votes, refused to join in a coalition with the larger parties. The lack of a government could cast Greece’s loan agreement with its foreign creditors into turmoil, with a $4.3 billion refinancing looming this month and a requirement from its lenders to cut $15 billion from the budget in June. Beyond a popular rejection of Europe’s austerity recipe for Greece, the election results also marked the end of a political era for the Socialists and New Democracy. –NY Times 

French President ousted: Jittery stock markets remained stable across Europe today after the Socialists swept to power in France and uncertain election results in Greece left no party able to form a government. The French stock market the CAC-40 fell in early trading – but markets rallied and ended the day up 1.6 per cent. In Greece, where there was no clear election winner, stock markets plunged almost 8 per cent in early trading before ending the day 6.6 per cent down. –Daily Mail 

Shake-up in Germany: Chancellor Angela Merkel’s conservatives were in danger of being ousted from power in another German state on Sunday after the opposition Social Democrats (SPD) said they wanted to form a three-way coalition with two smaller centre-left parties. The Christian Democrats’ (CDU) vote fell to 31 per cent, their worst result in the state since 1950, but they were still just the largest party in the rural region between the Baltic and North Seas, a projection by Germany’s ARD TV network showed. The SPD, which won 29.9 per cent in the northernmost state, said it wanted to form a coalition with the Greens and South Schleswig Party (SSW) that represents the Danish majority. The three parties would have 35 seats in the 69-seat state assembly. Merkel’s conservatives have been voted out of power in three states in the last two years. If knocked out in the traditionally conservative region of Schleswig-Holstein the CDU would rule just seven of Germany’s 16 states ahead of the 2013 federal election, when Merkel is seeking a third term. “She’ll probably lose another state premier and this will make things harder for her re-election campaign,” said Gero Neugebauer, political scientist at Berlin’s Free University. “She can’t be satisfied about the performance of her centre-right coalition.” –The Star

contribution by Stefan