A new governing coalition has been formed in Greece, with New Democracy, Pasok, and the Democratic Left as participating parties. Antonis Samaras, the leader of New Democracy, has been sworn in as Prime Minister. Members of Syriza, New Democracy’s strongest opponents, have promised strong opposition to the new government’s policies. Samaras may struggle to maintain the coalition, Pasok and the Democratic Left are not traditional allies of New Democracy, and securing a deal that reassures Brussels may prove difficult.
The cabinet has not yet been selected, although Vassilis Rapanos, the current chairman of the National Bank of Greece, has been considered a favorite for the finance minister position. The outgoing finance minister, Yiorgos Zanias, is set to meet eurozone finance ministers to plead for leniency in a future bailout agreement. Today meetings are taking place after which it is expected that the new cabinet will be announced.
Speaking as a “horrified onlooker” Paul Krugman recently urged the German government to stop their austerity program and for the European Central Bank to “stop obsessing with inflation”. Krugman went on to say that the Greek election only saved Greece’s membership of the eurozone by a matter of days, and that other countries were at risk of exiting the currency group. Speaking on the ECB and its potential role in future bailouts Krugman said, “ The European Central Bank can come up with as many euros as needed because the ECB prints euros.”
In Egypt the military authority has delayed the result of last week’s election. Both Mursi and Shafiq are claiming victory and protests in support of the Muslim Brotherhood are growing in Cairo’s Tahrir Square. The delay coincides with the rapid deterioration of former president Mubarak’s health. Some have argued that the delay is being used by the military in order to prompt a “soft coup”. Whatever the outcome Egypt will be under the rule of the military, a committed Islamist, or a member of Mubarak’s regime.
Greece’s new government will not succeed in keeping Greece in the eurozone, something now admitted by Keynesians and Austrians alike. How much worse the politicians can make the situation before the collapse will depend on the bailout agreement negotiations.
Egypt’s election last week was meant to be a historic example of a freed people engaging in democracy, it now looks on the verge of being voided or ignored.