http://online.wsj.com/...
Greece's small Democratic Left party lashed out Thursday against the anti-austerity rhetoric deployed by the larger and more left-leaning Syriza party, signaling a shift that could open the way for a cross-party deal after the country's election deadlock.
After agreeing to team up with Syriza earlier this week to form a leftist coalition, Democratic Left switched tack late Thursday. In a statement, it said that contradictory comments from Syriza officials on the Greek economy, and their insistence in condemning the country's bailout agreement will lead Greece to default and an exit from the euro zone.
The WSJ is the first American or English-Language news service with this news. In Greece, this is already a done deal.
Despite predictions that Greece's election would create a big mess that would force them into new elections, three Greek parties have managed to form a coalition gov't that favors austerity.
So, any dips in the stock markets for fears of a euro meltdown will now be met by exuberance over the next week.
But that exuberance will be irrational. The troika is demanding of Greece a further 11% cut in the budget. Greece has already cut its budget by 34%. The troika is requiring this of Greece by late June at the latest. The thing is, this new coalition is 168 seats in Parliament strong, just 17 over the 151 majority needed to enact new laws (i.e. austerity measures). Given the recent election in which the pro-austerian parties were punished severely (dropping from 80%+ of the vote two years ago to a combine 31% last week), there will be extreme pressure to hold the coalition together to pass through new measures. It will not happen. That's my prediction. By early July, we will see the EU's furor at the inability of the pro-austerity parties in Greece to pass austerity measures.
In other words, the forming of the pro-austerity gov't has only produced a 2 month reprieve. This gov't will eventually fail in the eyes of the troika.