Tuesday, May 8, 2012

World markets react as possibility of Greek exit from Euro increases; a second round of Greek polling expected

Acting as if they are surprised by developments, though surely they can't be, investors are punishing stocks worldwide as fears grow that anti-austerity politicians could lead Greece out of the Eurozone.

The Athens Stock Exchange, which suffered horrible losses on Monday, continue its fall, closing down 3.62 percent on the day.

Things aren't much better on other stock exchanges, either. The Dow is falling over one precent this afternoon, as is the NASDAQ. In Europe, the German DAX closed down 1.9 percent, or over 124 points. The British FTSE fell over 100 points, or 1.78 percent. The French CAC40, which responded moderately to the election of its first socialist president in two decades, was hit hard today, losing 2.78 percent on the day.

Markets are said to be reacting to the words of Alexis Tsipras, the leader of the SYRIZA leftist coalition, who is now trying to form a government following the failure of New Democracy to succeed at the task. SYRIZA has three days to try and assemble a working majority in the Greek parliament. If they fail the task will be handed off to PASOK, the socialist party that saw the biggest drop off in support. If they fail then new elections will be called, most likely for June 17.

Few believe any government can currently be formed. As a result, Tsipras's pledge that the Greece bailout terms were "null and void" can be seen more as pre-election posturing than the words of a politician that can actually effect policy.