Greek socialist makes last-ditch attempt at government

ATHENS Wed May 9, 2012 6:15pm EDT

1 of 14. Leader of the Left Coalition party Alexis Tsipras smiles during a meeting with Greek President Karolos Papoulias in Athens May 8, 2012.

Credit: Reuters/Kostas Tsironis/Pool

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ATHENS (Reuters) - Greek Socialist leader Evangelos Venizelos will make a last- ditch attempt to form a government on Thursday and avoid a new election after voters rejected a bailout deal and pushed Greece into a political crisis.

Chances are slim Venizelos can clinch a deal after both the conservatives and leftists tried and failed to cobble together a coalition in three days of talks following Sunday's election, when voters spurned big parties and their austerity policies.

The political deadlock prompted European threats to eject Greece from the euro, while impatient governments withheld part of the latest tranche of rescue funds to be paid to Greece on Thursday.

New elections in 3-4 weeks loom as Athens, due to run out of cash in June, needs to impose fresh measures in exchange for funds.

"I will continue the effort because it is in the nation's interest," Venizelos told reporters. "Prolonging this uncertainty only hurts the country and its economy, and in the end, the weakest and the unemployed."

But the mood was somber when radical Left Coalition leader Alexis Tsipras abandoned his efforts after meeting main political leaders and a raft of new groups propelled into parliament by public anger at mainstream parties. The biggest party, New Democracy, tried and failed to form a workable coalition within hours on Monday and there seemed to be little ground for compromise between the pro- and anti-bailout parties, split almost down the middle in the new parliament.

Tsipras demanded that New Democracy and PASOK, which ruled Greece for decades and were ravaged in Sunday's poll, tear up the pledges they made in return for the bailout, which they rejected out of hand.

DIRE WARNINGS

European Central Bank policymaker Ewald Nowotny, said Greece could not be helped if it would not help itself, in a stern warning that euro exit was in the cards.

Most Greeks may oppose the tough terms of a 130 billion euro IMF/EU bailout agreed in February but want to stay in the euro.

European governments kept the country solvent for the moment by agreeing to make a 4.2 billion euros payment on Thursday from the region's bailout fund to enable Athens to meet short term bond redemptions. But, in a sign of growing displeasure at the impasse in Athens, a further 1 billion euros was withheld, probably until next month.

Angela Merkel, leader of euro zone paymaster Germany, said in a newspaper interview that she wanted Greece to stay in the common currency but it must stick to the terms of the bailout.

Many Greeks seemed unfazed by the crisis created by the election, but some expressed alarm.

"People voted with anger not with reason," said 51-year-old widow Maria Savelona. "Tsipras lives in his own world. God help us, what is this? I'm afraid we will be kicked out of the euro and he thinks he is our savior?"

Greece's turmoil, and the prospect that it could revive the euro zone debt crisis, helped drive the euro towards a three-month low and pushed down global shares.

(Additional reporting by Karolina Tagaris, Renee Maltezou and George Georgiopoulos; Editing by Giles Elgood)

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Comments (32)
ThomasW wrote:
Greeks have run their own economy, into the ground. By paying rich pensions, employing unaffordable numbers of civil servants, and allowing established business to lock-out youth & competition.

These are the people, who should pay. Payment should be taken from those who benefited from Greece’s stagnation, and beyond cuts — clawbacks.

But ‘austerity’ is not the solution. Economies cannot cut their way to growth, in a recession. Better solutions must be considered, as slashing cuts tend just cause the Greek (or any other) economy to fall further into depression.

http://stratpark.com/us/spending-cuts-not-the-solution/

May 08, 2012 9:38pm EDT  --  Report as abuse
trevorh wrote:
@ThomasW

I absolutely disagree with you. Read your link and pretty much stop when I see Krugman.

“But ‘austerity’ is not the solution. Economies cannot cut their way to growth, in a recession”
You see the problem there?
It’s the >>government>economy

May 09, 2012 2:14am EDT  --  Report as abuse
onlyif wrote:
@ ThomasW
” Economies cannot cut their way to growth, in a recession.”

Neither can they buy their way out of it through MORE DEBT… Debt is the problem, more debt to fix the debt problem is… madness. The EURO governments need to fix the structural problems in their economies that got them here in the first place. Austerity to live within your capacity to pay the bills sounds like the best course of action, instead of borrowing now and leaving future generations to pay the bill.

If government spending was the answer to economic growth, we’d all be Communists right now. But hey, socialism sounds good until you run out of other people’s money, and when you do… best borrow against the future earning of your children

May 09, 2012 3:40am EDT  --  Report as abuse
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