Greece steps back from the brink of an abyss in early poll results

June 17, 2012 – GREECE – Greece isn’t ready to call Europe’s bluff. If early indications from the polls are correct, the top vote-getter in Sunday’s parliamentary elections was the pro-euro New Democracy Party–not the leftist Syriza coalition, which campaigned on a platform of rejecting Europe’s conditions for bailout assistance. That’s good news for the rest of Europe–and indeed the rest of the world, which would be harmed by a chaotic exit of Greece from the 17-nation euro currency zone. New York University economist Nicholas Economides, who was in Greece for the elections, said in a telephone interview that “if things go the way it looks like now, the Europeans should breathe a sigh of relief.” Bloomberg News reported that according to final exit polls, center-right New Democracy had narrowly edged out Syriza, with Pasok, the center-left party, which is also pro-euro, coming in third. It appeared New Democracy and Pasok would have enough seats to win an outright majority in parliament if they formed a coalition government. “I don’t see a collapse now. There’s going to be a lot of noise, a lot of worry, but I think at some point we will have a government. When, I don’t know,” says Tufts University economist Yannis Ioannides. “I don’t predict that the financial markets are going to say, ‘Oh, my God. This is the end.’ Leaders of all three parties said they favored staying in the euro, and all three also said the conditions imposed on Greece to receive bailout funds are unacceptably draconian. The difference is that only Syriza was prepared to reject the conditions unilaterally. The more centrist parties favor renegotiation. –Bloomberg BN

Market reaction: LONDON– Early market relief at the future of the euro zone turned to negativity by mid-morning Monday, as stocks and the euro retreated and Spain’s borrowing costs pushed up to around the 7 percent barrier seen by many as unsustainably high. European and Asian markets opened immediately higher Monday after the Greek legislative election Sunday handed victory to a center-right party, New Democracy, that supports Greece staying in the currency union. That had eased fears that the country will leave the euro and unleash further turmoil on the beleaguered single currency. But by mid-morning, Europe had given up those gains, with most major indexes down from Friday’s close. And although reaction from political and economic leaders was broadly optimistic about the chances for the euro zone, opinions were tempered by the size of the challenges ahead for Greece and for Europe. –New York Times