Greece Mandates High Judge As Caretaker PM Ahead Of June Vote

http://online.wsj.com/article/BT-CO-20120516-711909.html
By Stelios Bouras and Alkman Granitsas of DOW JONES NEWSWIRE

Greece Wednesday mandated a senior judge to form a government as caretaker prime minister ahead of new elections next month, after the country's deeply divided political parties failed to agree on a political or technocratic heavyweight for the job.

After talks with the president, party leaders agreed to propose Council of State head Panagiotis Pikrammenos, as the country's next premier. He will be sworn in later in the day and with his new cabinet to follow one day later.

"It's a clear caretaker government, according to our constitution, which has the sole purpose to lead the country to elections. However, no one can deny that our country is going through tough times and--under your guidance and inspiration--we have to secure our country's prestige and its smooth transition to a new political government" Pikrammenos said after receiving the mandate to form a government from Greek President Karolos Papoulias.

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In a sign that the pre-election uncertainty was beginning to affect the country deeply, Greece's privatization agency said Wednesday that it wouldn't take any decisions on asset sales until a new government had been elected. The Athens stock exchange closed 1.3% lower, while bankers reported that depositors continued to withdraw their cash from the nation's banks Wednesday, although one senior bank official said the outflow had eased slightly from a peak of EUR700 milliion Monday.

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Elections May 6 left the country's fractured parties at odds over whether to continue to pursue the strict austerity agenda demanded by its European partners in exchange for a EUR130 billion bailout agreed in March designed to keep the country afloat and inside the euro zone. The vote left mainstream parties without an outright majority and gave a large portion of the parliamentary seats to parties that say Greece shouldn't continue with the painful and unpopular budget cuts.

Among them is the radical left Syriza party, which campaigned on a vocal anti-austerity platform that helped catapult it from a fringe party with single digit support to the second hightest vote-getter in the last elections. That support shows no signs of ebbing.

According to a fresh poll Wednesday, Syriza would receive 20.3% of the vote if elections were held today, more than 3 percentage points higher than its May 6 result, according to a survey by the VPRC polling agency published on the epikaira.gr web site.

By contrast, support for Greece's two dominant parties--the conservative New Democracy and the Socialist Pasok--that made up the previous coalition government, has ebbed further, the poll showed, with New Democracy garnering 14.2%, down from 18.85% in the elections, while Pasok would receive 10.9%, down from 13.2%.

In remarks following the meeting with the president, Syriza boss Alexis Tsipras served notice to the caretaker government that it shouldn't try and implement any of the country's contentious austerity measures during the weeks it will be in office.

"I call on the caretaker government that will take over until the elections not to implement measures that relate to further cuts in wages and pensions, public spending or the destruction of wage relations... until a government is formed that has the confidence of parliament," Alexis Tsipras said.

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Greece's party leaders failed Tuesday to reach a consensus on forming a government to bridge differences over the country's reform program and, by extension, its future inside Europe and the euro zone.

In next month's elections, the country's two pro-bailout parties promise to turn the polls into a de facto referendum on Greece's membership of the eurozone: a vote for austerity means keeping the euro, a vote against means aC

But a seething Greek public that is still angry at its elected leaders and inured to two years of take it-or-leave it warnings over the austerity program--even as the economy stumbles through a fifth year of recession--doesn't see it that way. Many Greeks think the country can cut a better deal with its European and international paymasters and should renegotiate its latest EUR130 billion euro bailout--while still staying in the euro.

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COMMENTARY
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What these latest developments distill down to is:

1) The Greek government  has punted the issue of Euro-austerity vs. a return to Greece's old currency, the drachma, back to the voters.

2)  Meanwhile international observers have considered what will happen if Greece does return to the drachma. There is significant concern that the consequences would destabilize the entire EU, which are discussed in "Between disaster and Armageddon":
http://financial.ahipcup.com/between-catastrophe-and-armageddon/

Reality is in the process of being faced. All of those involved - despite so far being unable to agree on what to do about it - appear to be convinced that this isn't a pleasant experience.

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