— Yannis Koutsomitis (@YanniKouts) August 21, 2015
Post originally appeared on Zerohedge.
Once upon a time, Panagiotis Lafazanis had a plan to save Greece.
On July 14, just two days after Prime Minister Alexis Tsipras sold out the Greek referendum “no” vote by agreeing to a shockingly punitive bailout deal in Brussels, Lafazanis convened a meeting of Syriza party “rebels” at a hotel in Athens. There, he allegedly attempted to convince his fellow lawmakers to storm the Greek mint, seize the country’s reserves, and arrest central bank governor Yannis Stournaras. “Obviously, it was a moment of high tension,”one activist who attended the secret meeting later told FT.
Yes, “obviously.” Equally obvious once news of the meeting leaked was that Lafazanis would not be Energy Minister for much longer and sure enough, he was sacked by Tsipras as the premier sought to pave the way for a series of votes in parliament on bailout prior actions.
Earlier this month, as rumors started to circulate that Tsipras might not have the support to survive a confidence vote, Lafazanis announced he was forming his own political party, which was funny right up until Thursday when Tsipras resigned, setting off a series of events that will see Greeks head back to the polls in September. Now, Lafazanis has seized the opportunity to convince 28 other Greek lawmakers to join him and his new party which will be called “Popular Unity,” an ironic choice, given that it grew out of the desire to split with a party leader who had become decisively unpopular among Syriza’s Left Platform.
Here’s more from Bloomberg:
A group of Greek lawmakers opposed to the country’s bailout program abandoned the governing party, Syriza, as Prime Minister Alexis Tsipras moved to force an early election to shore up his position.
The lawmakers, whose names were read out on Friday by a deputy parliament speaker on television from Athens, will be called “Popular Unity” and led by former Energy Minister Panagiotis Lafazanis. The number of rebels reached 29 after four more parliamentarians joined the initial breakaway group, Athens News Agency reported.
Though his eight months at the helm of Europe’s most-indebted country were beset by turmoil and brought the economy to the brink of ruin, Tsipras used a televised address on Thursday to list his achievements, from clinching a new aid package to securing a firmer commitment from euro-area partners to consider debt relief.
Tsipras remains popular with Greek voters, who gave Syriza 33.6 percent support, a 15.8 percentage-point lead over the main opposition New Democracy party, in a July 25 poll by Metron Analysis. Polls haven’t yet offered an indication of how much support Popular Unity would siphon off.
By all accounts, Tsipras will likely be able to carry the day in new elections and indeed that’s certainly the expectation among EU creditors and within the macro strategist echo chamber. Here’s a summary of the latter courtesy of Bloomberg:
Greek PM Tsipras calling an early election could consolidate his position and is unlikely to throw the country’s third bailout off course, analysts say.
- Yet, the vote could delay the first review of the program, originally expected to take place in Oct., and a potential eventual debt relief plan, analysts at RBS and JPMorgan say; this could mean GGBs don’t become eligible for ECB QE until much later in 2015 than had been expected, according to analysts at ABN Amro and RBS
- While the ballot could spur further market volatility, Rabobank analysts suggest any weakness in periphery govt bonds is a buying opportunity
- NOTE: Syriza lawmakers opposed to the bailout will form a new party called “Popular Unity,” led by former Energy Minister Panagiotis Lafazanis, the group said in an e-mailed statement
- RBS (Clement Mary-Dauphin, Marco Brancolini)
- With Syriza maintaining a commanding lead in polls, the election may deliver a more stable parliament but the vote is a source of volatility
- No longer expect ECB to reinstate the waiver for Greek sovereign collateral and don’t expect GGBs to be included in asset purchase plan until the completion of the first program review
- Skeptical that first review of Greek program will be completed in October as scheduled
- Allows a postponement of debt relief talk beyond the horizon of elections in other periphery countries – where the topic could become controversial during electoral campaigns
- Take profit on long GGB Apr. 19 trade in research portfolio, after it reached its target
- JPMorgan (Malcolm Barr)
- Most recent polling showed Syriza comfortably in lead although probably without enough support to form majority on its own
- Difficult to imagine scenarios which return a government more hostile to third program than one already in place
- There’s a risk that the election slows program implementation, delaying process of getting to a debt restructuring and the IMF committing funds to the bailout
- With an interim government likely to be in place for only a month by the time the first program review is due in Oct, it’s difficult to imagine there’ll be substantive progress in many areas by then
- Barclays (Francois Cabau, Antonio Garcia Pascual, Cagdas Aksu)
- Latest Greek polls continue to show strong support for Syriza; this should probably be interpreted with caution given party rift
- A poll published on July 14 said that if a new govt were to be formed, 68% of voters would favor Tsipras as its leader
- Neutral on peripheral govt bonds outright and on a spread basis vs Germany; maintain a short-term tactical outperformance of 10Y Spain vs Italy
- Elections will inevitably inject an added element of uncertainty; stress the current situation should not be seen as analogous to earlier referendum on the bailout, even though electoral campaign will intensify debate
- Under Greek political procedures, largest opposition parties have up to three days to attempt to form a coalition, don’t expect this to prevent elections
- In meantime, a caretaker govt should be put in place, reducing risks to the program
- Any future reviews and disbursements under the ESM support package will hinge critically on political uncertainty being resolved
- DZ Bank (Rene Albrecht)
- Expect Tsipras to emerge victorious again and a more stable government to follow
- Given the increasing political event risks surrounding
Needless to say, if Greek voters should suddenly decide that after having been burned by Tsipras twice (once in January and then again last month), it’s time to vote for someone who seems crazy enough to actually follow through on the whole anti-austerity, middle finger to the troika platform that got Syriza elected in the first place, then the entire bailout deal will not only be thrown into question, but abandoned wholesale because if the eurocrats in Brussels thought Varoufakis and Tsipras were hard to deal with, they’ll find Lafazanis downright intolerable.
So with the entire world basically convinced that despite having lied to the entire country not once, but twice, Tsipras still has the voter support to remain in power, one has to ask: is this the face of the next black swan?