Greek exit coming soon

pmbug

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Looks like it's on like Donkey Kong...

Now that the consensus seemingly is one that a Greek exit is inevitable, there was only one missing step: an actual New Drachma currency, not in When Issued, electronic 1s and 0s format, but real, based on cotton and linen. It appears UK banknote printer De La Rue is now on top of that. From Reuters: "De La Rue (DLAR.L) has drawn up contingency plans to print drachma banknotes should Greece exit the euro and approach the British money printer, an industry source told Reuters on Friday. The news comes as EU trade commissioner Karel De Gucht said on Friday the European Commission and the European Central Bank are working on an emergency scenario in case Greece has to leave the euro zone - the first time an EU official has confirmed the existence of contingency plans." Now as noted earlier, the "emergency scenario" was promptly denied by the EC, but as of now nobody has denied the drachma printing yet ...

More: http://www.zerohedge.com/news/de-la-rue-warming-new-drachma-printer

Fitch and Moodys both were busy downgrading Greece, Spain and Euro bank credit ratings over the last couple of days.
 

bushi

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....one blindingly obvious thing, that everyone seems to overlook is, that Greece has an option to default, WITHOUT leaving the Eurozone.

Because a) Greece exit would mean beginning of an end for the Euro project, b) an end of the Euro Project is not acceptable politically, without much much MUCH more suffering to the sheeple c) nobody (and I mean NOBODY) says ANYTHING about that quite obvious possibility in the mainstream media -

...I personally conclude, that it will be the case. Greece will default, will have to ballance the budget (or at least straighten it, to the levels passing as normality in today's developed world), but I believe it will stay in the Eurozone. Most definitely, it will stay within EU - many countries within EU still have their own national currencies.

All that talk about "austerity or exit EU" is just saber rattling, and of course nobody would like to be shown a finger on his Greek bonds, so they are trying to paint it as it was either/or situation, and it serves as a gun at Greece's head. Actually, it works well both ways - Greece threatening EU with their exit, they know all to well what it would mean for the future of the Euro... But it only works until it doesn't, and I think it is just too obvious and too quiet about that, to overlook it.


Not that I am a big fan of EU in it's current monstrous bureaucratic form, but that's just the most probable course of action IMHO.

It is pretty much the same in the US - how many states/municipalities went bankrupt - but I don't remember any of them getting out of the Union.
 
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Penn

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the county I live in said we will be bankrupt in 3-4 years.. but should do it now
 

rblong2us

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....one blindingly obvious thing, that everyone seems to overlook is, that Greece has an option to default, WITHOUT leaving the Eurozone.

Dont agree Bushi

ok theoretically they can but then everyone except germany and a couple of minor players, defaults too. even the big german banks default.

So for Greece to default and stay in the eurozone we are contemplating a giant reset ..............

which i think would be a good thing but suspect many would disagree as their pension, paper investments and savings vanished.
 

bushi

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Dont agree Bushi

ok theoretically they can but then everyone except germany and a couple of minor players, defaults too. even the big german banks default.

So for Greece to default and stay in the eurozone we are contemplating a giant reset ..............
...but what would be the difference if they exit the Eurozone? They are bankrupt, completely and finally. The default is the only real option, mid-long term. If they exit Eurozone, they are exactly as bankrupt as they are, without exiting it. With all the same consequences to the creditors (ze Germans including, they are in a very peculiar position, with their exports depending on the size of Eurozone, and also weak Euro - they are not that much interested in local, strong currency, as one might think - their economy lives and dies by their exports.

Question remains (and IMHO it is the only question that matters) how to make Greece default, an orderly default - and when. I think that is the only thing that goes behind the closed doors - how much Greece will default, so it is bearable to creditors. But the pain will be shared across the board.

Anyway - Spain is next in line... That simply cannot continue for much longer
 

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Swiss newspapers are reporting that Orell Füssli (http://finance.yahoo.com/q?s=OFN.SW&ql=0 ), Switzerland's money printing company, is also trying to bid for this order. The Swiss National Bank is the biggest shareholder of OF, holding 33%. Swiss banknotes are considered to be the safest in the world.
 

rblong2us

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bushi said - ...but what would be the difference if they exit the Eurozone?

the difference is that in order to show the rest that they should not default, Greece is the sacrificial lamb.
 

bushi

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bushi said - ...but what would be the difference if they exit the Eurozone?

the difference is that in order to show the rest that they should not default, Greece is the sacrificial lamb.
Yes probably, but it doesn't really matters. My point is, they can be skinned equally well, within or out of Eurozone, they are still on the same hook, if not default. Even if they exit, and devalue drahma, to revive experts/economy, their debts are denominated in Euros, so they won't print their way out - opposite, their debt, measured in drahmas, would go up as much, as they devalue - so from their point of view - out would go up.

Thus either way, they'll have to default at some stage. If they stay within or leave EZ, doesn't change anything, from their bankrupt point of view.

It is only a matter of political will, when (not if - it is inevitable with mathematic certainty) they will be allowed to default, how much of their debt will be destroyed, and who will bear the hardest hit (hint: the smaller the bondholder, the tougher shit for him), also it is only a matter of political will, if they'll be allowed/required to stay within EZ afterwards. My bet is strongly on that option-much less risky to the EZ & Euro, than greeks exiting the party.


Wysyłane z mojego GT-I9100 za pomocą Tapatalk 2
 

rblong2us

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If they default on 100% of their debt and start again with a new ( % gold backed ? ) currency, they now only have to live within their means and have NO further interest payments sucking their lifeblood.

Yes, buying oil and general energy / raw material costs will require sending money abroad but their tourist trade will pick up when its cheap enough.
Growing food should not be beyond their capability as they have a reasonable climate ( theyve grown plenty of heavily subsidised olive oil )

The idea of living within their means seems to be beyond the ken of the pols though ......
 

pmbug

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Oh my...
..Greek political leaders reacted angrily on Saturday to a suggestion, attributed to German Chancellor Angela Merkel, that the country hold a referendum on euro membership alongside an election next month.

The chancellor's move -- despite a denial by Berlin -- went down badly with leaders sensitive to any comments from Germany, which has insisted that Athens stick to tough austerity measures agreed in return for a massive EU-IMF bailout.

"The Greek people have no need for a referendum to demonstrate their choice for the euro, they have already made enough costly sacrifices to show that," said Antonis Samaras, leader of the conservative New Democracy party which won inconclusive May 6 polls.

Merkel's suggestion, "above all coming in the run-up to the election, is regrettable and unacceptable," Samaras said in a statement. "The Greek people has the right to respect from its (European) partners."

The office of the caretaker prime minister said on Friday that Merkel "conveyed thoughts (to the president) on holding a referendum alongside the election, on the question of whether Greek citizens wish to remain in the eurozone."

The suggestion was turned down, a statement said, because the caretaker government only has the authority to organise the new polls, expected June 17.

Berlin bluntly denied any such move.

"The information reported that the chancellor had suggested a referendum to the Greek President Carolos Papoulias is wrong," a Merkel spokeswoman said.

Alexis Tsipras, leader of the radical left Syriza party which came second in the May 6 vote on a campaign against the austerity policies, alluded to Germany's wartime record in Greece, a hugely sensitive and controversial period.

"Madame Merkel is used to talking to Greek political leaders as if she was addressing a protectorate," Tsipras said.

"Greeks are going to give a definitive answer (in the upcoming polls) and are going to put an end to the policies of austerity and submission, they will open the way for progressive forces across Europe," he added.

The leader of the socialist Pasok party, which along with New Democracy backed the EU-IMF accord and suffered accordingly on May 6, said only the Greek parliament and government had the authority to call a referendum.

"The question for Greece is not whether it stays in the euro or not, but whether it can get out of the crisis," Evangelos Venizelos said.

Greek newspapers were even more critical -- "Merkel Ultimatum," was the pro-Socialist Ta Nea front page headline.

"It's a Merkel Bomb for a euro referendum, an unprecedented political intervention which makes things worse," wrote Eleftheros Typos on the right, while financial daily Naftemporiki also spoke of a "political bomb."

The Merkel imbroglio comes at a bad time, with the chancellor in Washington for G8 talks hosted by US President Barack Obama who has shown himself more sympathetic to the need for growth than austerity as Greece tops the agenda.

Obama said Friday he supported Greece staying in the eurozone, a region of "extraordinary importance" not only for Europe but also for the global economy.

Up to now, Merkel has insisted that Greece must stick to the austerity terms in the bailout deal or risk losing access to debt funding -- effectively forcing it out of the eurozone.

But in recent months, calls for the focus to be rebalanced towards growth have increased, with new French President Francois Hollande winning office earlier this month on a pledge for change.

Despite the brickbats, it is also clear that in effect the June 17 polls are fast becoming a straight vote on Greek acceptance of the bailout deal and its continued place in the eurozone.

After recent polls put Syriza in the lead, a survey Friday showed the race narrowing, giving New Democracy 23.1 percent of the vote, up from the 18.85 percent it won on May 6, with Syriza on 21 percent, up from 16.8 percent.

Fears that the new poll might not be able to produce a viable government committed to the bailout have roiled global markets and snared Spain where the government is struggling to stabilise its stricken banking system.

"Time is clearly running out," London-based analysts Capital Economics warned in a note over Greece's continued political paralysis.

"If the government does not meet the conditions required to receive the next tranche of the bailout, it could run out of money before the end of the summer."

http://news.yahoo.com/greece-bridles-merkel-referendum-suggestion-100445732.html
 

ancona

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PMBug,
I think the exit, or "grexit" as it's been named, will come sooner than later. In fact, it may even come before the elections in June. The EU knows that Syriza is moving toward a majority, picking up more and more support as each day passes, which means the austerity measures will go down in flames and the ECB, Troika and Germany's demands become irrelevant. If Greece leaves the Euro but stays in the union, if that is even possible, it will be like spitting in Germany's eye and getting away with it.

I think there is an opportunity for Germany to minimize the damage and kick them out preemptively, as they have already broken their agreement, giving the EU all the ammo they need to simply kick Greece to the curb.

Unfortunately, instead to doing what needed doing two years ago, they doubled down on their bet by giving Greece hundreds of billions of [essentially] German Euros to stay in the union. Whatever happens, it will be good for the dollar and good for gold [in the long run anyway].
 

benjamen

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It would be really bad in Greece for a while if they leave the Euro:
http://in.reuters.com/article/2012/...BO20120519?feedType=RSS&feedName=businessNews

"...newly issued drachmas devalued by up to 70 percent, runaway inflation, a banking meltdown, a collapse in trade..."

"Greece imports 40 percent of the food it consumes, nearly all of its oil and natural gas and much of its medicine."

"Greece would have a hard time to import oil, foods, medicines and other primary inputs. Imagine the navy, police, without fuel. Natural gas spigots would close."

:(:(
 

bushi

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(...)If Greece leaves the Euro but stays in the union, if that is even possible,it will be like spitting in Germany's eye and getting away with it. (...)
...it is possible to be within European Union, but outside monetary union (Eurozone) - examples: UK, Norway, Poland (and most of the recently joined members like Eastern European countries).

Least the complete collapse of EU, I do not see individual countries leaving, it would be end of the beloved Europroject, and as such, unthinkable for the political Illuminati. Again, I can't see it happening without a massive suffering, social unrest, and change being FORCED on individual member states by their citizens - in the form of new, radical governments being elected ("radical", as opposet to mainstream, and not necessarily in any bad meaning).

You won't miss that happening, IMHO we are not there yet.
 

bushi

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....sorry that's not that I'd like to beat a dead horse, just to have the last word, not at all - I think it is important to anyone planning the financial future - the outcome of Greece exit/no exit from the Eurozone - great point by James Richards (I am following him on Twitter, he is very bullish on Euro in general):

"People who consider some banks 'too big to fail', somehow do not think the same to be appropriate for the whole continent"

I think it is a great point - Greece will not leave the Euro, until forced to, by it's citizens, which is unlikely. Otherwise, we will see more of the same - until we either substantially change the whole financial system, or hit the wall (most probably the second outcome). But I would suggest to not bet the farm on the outcomes of Greece exiting the EZ, I strongly believe it is not the case - not yet, nor anytime soon -it will be papered over.

Besides, everyone and their dog currently knows, that "grexit is imminent". If I ever had stronger contrarian indicator, that "everybody knowing" something that is questionable in many ways, and has many, many political strings (shall I say: thigh-thick ropes) attached...

Just be careful with your plans, if their main assumption is Geece exiting EZ in the near future - and following consequences. Also, watch yesterday's Capital Account with Lauren Lyster, they are discussing the very same issue. Good food for thoughts.
 

pmbug

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It's looking like the people, via their election choices, are moving closer to forcing the issue.
 

rblong2us

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they will be fed enough fear to take the 'safe' option

just like happened in Ireland )-:

Iceland got it right ! F*ck the banksters ...... and their political lackeys
 

pmbug

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Greek stock markets rebounded strongly on Monday from a 22-year low on hopes a pro-bailout party will win crucial national elections next month, which would avoid a catastrophic rift with international creditors and keep the struggling country within the euro currency union.

The main stock index in Athens soared to close up 6.9 percent, with the battered bank sector chalking up solid gains.

Four polls published Sunday reversed previous trends to indicate that conservative New Democracy could come first in the June 17 vote, slightly ahead of the anti-austerity radical left Syriza party. Although the conservatives would still fall short of a governing majority, the surveys suggested they could form a coalition government with socialist PASOK, which have also pledged to stick to Greece's austerity commitments.

The debt-crippled country is being kept afloat by huge international rescue loans, granted on condition of harsh cutbacks and reforms that slashed living standards. The austerity, however, also caused huge popular resentment toward New Democracy and PASOK, the two parties that accepted the terms. Voters expressed that anger clearly in May 6 elections, giving a boost to anti-bailout parties. But the election proved inconclusive, with none of the parties able to form a coalition government, leaving Greece to hold another ballot next month.

Greece's bailout creditors — the other countries in the 17-nation eurozone and the International Monetary Fund — insist that if the country reneges on its austerity commitments, the rescue loans will stop.
...

More: http://news.yahoo.com/greek-stocks-soar-pro-bailout-partys-poll-gain-120819219--finance.html
 

ancona

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Thanks for the Monday humor Bug!

There simply is no way for Greece to pay back the money they have already borrowed. Their economy is in complete shambles and tourism, which is a huge part of their income stream has fallen off precipitously on fear from tourists of violent demonstrations in the lead up to elections. Tax revenues have fallen off a cliff, proving once again that austerity cannot work without an actual income for the government to feed from.

With or without austerity, expect more rioting and mayhem in Greece. This is a dead cat bounce in their markets, AKA irrational exhuberance.
 
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pmbug

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I was on the road last week attending a conference for my day job, so I missed some of the news I would normally highlight here. This is interesting enough to highlight even though it's a few days old:
Behind the scenes at the G-8 and NATO summit meetings, some significant decisions were made that will impact over the coming weeks.

The critical decision at the G-8 meeting and several of the bilateral meetings that took place on the sidelines of the Camp David gathering centered on the decision to plunge ahead with the bailout of the European banks in an effort to save the Euro system, with Greece still inside. President Obama is terrified that a financial meltdown of the Euro system will spill over into Wall Street and result in his losing the November elections. Behind the scenes around Camp David, Christine Legarde put the IMF squarely behind a bailout of the European banks, with the full backing of the Federal Reserve and Treasury in the United States to boost the leveraged lending of the European Central Bank (ECB) to prop up the European banks. ECB will take junk bonds and other vastly over-priced assets as collateral for loans to the Spanish, Greek and other European banks. This will offset an additional estimated $500 billion in new write-offs by bondholders of Greek debt.

The bottom line is that if Greece leaves the Euro, the contagion will spread overnight to Spain, Portugal, Ireland, and, perhaps, even Italy. So, the IMF, the Obama Administration and the ECB are all on board to further delay the reality of the financial and banking crisis through hyperinflationary measures. The idea is that the situation will take many months to fully play out, and Obama and his re-election team hope that the system will hold together past the November elections.

In his sideline meeting with new French President Hollande, Obama reached a full agreement on this perpetuation of the Euro. This is an area where Hollande and Merkel will agree to disagree. They both want to defend the Euro, but Hollande will continue to insist that the austerity must be limited and a growth program initiated. This is actually impossible to accomplish, but this is the growing perspective of the Eurosocialists, including Hollande and his colleagues in Germany’s Social Democratic Party (SPD) and the Italian Socialist Party (PSI). A majority of Greek voters are in favor of staying in the Euro, so long as the austerity is reduced.

Hollande will make another effort this week at the European Monetary Union heads of state meeting to push for Eurobonds, as one way to implement this bailout plan. Merkel will likely oppose and block this latest Eurobond argument. The total amount of assets on the books of the US Federal Reserve and the European Central Bank fall far short of the currently estimated 4 trillion euro liability of the European private banks.

This was the single-most important decision taken at the G-8 meeting, and it was a deeply flawed decision that will have severe consequences. For Obama, the crucial question is: Will the consequences hit before or after the November elections in the United States? This may be the deciding factor in the outcome of those elections.
...

More: http://www.jsmineset.com/2012/05/27/behind-the-scenes-with-harry-schultz/
 

benjamen

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rblong2us

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http://www.zerohedge.com/news/why-grexit-would-make-lehman-look-childs-play

From Peter Tchir of TF Market Advisors

Why A Grexit Would Make Lehman Look Like Childs Play

Maybe I’m wrong, but every time I look at the possibility of a Greek exit right now I see it spiraling out of control and dragging down the entire global economy. I hear and read the arguments of why it is controllable and they just don’t seem credible. They either link a Greek devaluation to other devaluations that have little, if anything in common. They also seem to ignore human nature and how the markets will likely respond. I think with planning and time, a Greek exit would be manageable but right now it would create chaos, first within Europe and then the globe.

The ECB, EFSF and IMF will take massive losses ..........
 

ancona

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I agree with Rblong. If Greece exits, there will be a cascade of CDS redemptions, and all other risky sovereigns will require more collateral on CDS, and on and on and on. Eventually, the whole thing comes down in a smoking heap of worldwide destruction. The only thing that can stop it is if all CDS were to be declared null and void immediately and declared illegal as well.
 
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benjamen

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I agree with Rblong. If Greece exits, there will be a cascade of CDS redemptions, and all other risky sovereigns will require more collateral on CDS, and on and on and on. Ebentually, the whole thing comes down in a smoking heap of worldwide destruction. The only thing that can stop it is if all CDS were to be declared null and void immediately and declared illegal as well.

I have been assuming the swaps will be declared null and void when Greece defaults. It may be through law changes or forced haircuts, but it will be done quietly.
 

ancona

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I'm not sure how quite they will be able to keep it, because after all, they are supposed to be instruments of protection; insurance policies.

If someone arbitrarily abrogated a contract in to which I entered with a third party, I would be murderously angry. Imagine how angry all those people holding swaps on nearly a trillion in cumulative debt will be. That's a lot of cabbage man. I rather believe they won't just go quietly in to the night.
 

benjamen

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I'm not sure how quite they will be able to keep it, because after all, they are supposed to be instruments of protection; insurance policies.

If someone arbitrarily abrogated a contract in to which I entered with a third party, I would be murderously angry. Imagine how angry all those people holding swaps on nearly a trillion in cumulative debt will be. That's a lot of cabbage man. I rather believe they won't just go quietly in to the night.

True, but think about how much people lost when they were forced to take haircuts on existing Greek debt in the past two years. Why was there not more of an uproar over that?
:shrug:

Also, if I remember correctly, those that had haircuts forced upon them could not invoke their CDS policies.
 
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ancona

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Benjamen, those who agreed to haircuts were not eligible to cash in on CDS because the haircuts were "voluntary". Those with english law bonds who held out recently got paid face value.

The haircuts were presented to the big boys much the same way as TARP was presented to Congress. They were told the world would end if they forced the issue and triggered CDS and they fell for it.
 

rblong2us

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I have been assuming the swaps will be declared null and void when Greece defaults. It may be through law changes or forced haircuts, but it will be done quietly.

Theyve already got a date when they get together and decide how a CDS will trigger.
And yes, even the greedy controllers realise thay cant let any CDS trigger ..... ever .....

unless they can figure a way that allows some that will benefit them, before declaring the remainder null.

Or am i being a bit cynical :popcorn:
 

benjamen

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Greece bans political polls ahead of the election to prevent bank runs, but it is not working:

http://www.reuters.com/article/2012...=Feed:+Reuters/worldNews+(Reuters+World+News)

"Bankers said up to 800 million euros ($1 billion) were leaving major banks daily and retailers said some of the money was being used to buy pasta and canned goods in case of shortages, as fears of returning to the drachma were fanned by rumors that a radical leftist leader may win the election."

"As the election approaches, publishing polls is now legally banned and in the ensuing information vacuum, party officials have been leaking contradictory "secret polls"."
 

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http://www.newsdaily.com/stories/bre85h0e8-us-greece-divisions/

"New Democracy's Samaras now faces the awkward task of convincing the centre-left PASOK movement to join a coalition charged with implementing highly unpopular spending cuts and privatizations, while the economy nosedives.

Under the terms of the international bailout, the new government must fire up to 150,000 civil servants, slash spending by 11 billion euros this month, sell off a swathe of state-owned companies, improve tax collection and open closed professions to competition.

Once Greece's ruling party, PASOK's support collapsed to just 12.3 percent in Sunday's vote, giving the two pro-bailout parties just 40 percent of the popular vote, not a strong mandate for austerity."

:popcorn:
 

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http://www.telegraph.co.uk/finance/...nt-will-be-forced-to-seek-third-bail-out.html

"While Antonis Samaras, leader of Greece's New Democracy party, scrambled to forge a coalition with Pasok, his officials admitted their first task would be to renegotiate the €130bn (£104.4bn) bail-out agreed in May."

"New Democracy won 129 of the 300 parliamentary seats in Sunday's election, including a bonus 50 seats for coming first. Mr Samaras has three days to form a ruling alliance with the mainstream socialists of Pasok and the Democratic Left."

:popcorn:
 
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