Training Day

Tomorrow is the start of silly season in Southern Europe, as electoral autumn gets underway.

The Greek snap election kicks things off, and I think the people will kiss Syriza goodbye.

The situation there is bad enough to warrant a radical solution, i.e. withdrawal from the euro and the desert crossing that would follow, in the steps of countries such as Argentina. Tsipras, however, chose not to pull the plug—certainly it would have caused immense misery: a double leg amputation to ensure survival, rather than a limp that becomes progressively worse.

It seemed to me his executive had a Star Wars-like quality, with the prime minister as Luke Skywalker and Varoufakis as Darth Vader—I never figured out who Princess Leah was—certainly not Auntie Angela.

The road of bluster is a common one in politics—Bismarck proclaimed there are three occasions when men never tell the truth: before the elections, during the war, after the hunt. If you look closely you can find a Tsipras everywhere: he may use an assumed name such as Trump or Farage, but the game’s the same.

One says he’ll make the European Union bow to Greek wishes (it didn’t), another claims Obama is a Muslim (he isn’t); yet a third persuades Brits that the EU is responsible for their woes (sorry, no).

But whereas Trump stands no chance of winning the nomination, and the British first-past-the-post system would never elect Farage unless he ran in Scotland, the Greeks were serenaded by Syriza’s siren song and succumbed to the spell. Their tenuous recovery flew out the window, sovereign bond rates sky-rocketed, and the banks closed.

Greeks watched their government sign a more stringent agreement with the EU than the conservatives, after months of expensive radical posturing. Fool me once, shame on you.

Portugal is next up on October 4th—the birthplace of The India Road is also up for grabs. Here, too, austerity bit with iron teeth: the public sector took a forty percent pay cut, twenty outright and the rest in benefits.

And it was the incumbent coalition that delivered the pain. Unemployment soared, stores closed, young people packed a bag. But there’s a clear perception now that things are better, at least in the private sector.

That leaves the opposition in a difficult place. The government argues that it was the socialist party that created the mess in the first place—there is truth in that, but politicians play the roller-coaster game, and if everything is booming they get crucified for being cautious.

Stock market operators know the syndrome well: it’s called the madness of crowds.

The Portuguese socialists are very unlikely to win an outright majority, and the fringe electorate on their right will be cautious—they know the natural ally lies waiting to the left.

The communist party has endured quite remarkably, given it was one of the most pro-Soviet, one of the very few who refused to condemn the invasion of Czechoslovakia. Together, two parties on the left scoop up fifteen percent of the vote, so either the traditional communists or the Syriza-like left block are good candidates for a socialist coalition.

The many undecided voters will dwell on these realities. With an improving economy do you vote out the incumbent? And if so, how would a left alliance with an anti-euro, command economy party fare? And as important, how long would it last, given the mutual hatred between communists and socialists.

The polls show the left holds 49% of the vote, but that may well count for nothing if PAF wins.

The polls show the left holds 49% of the vote, but that may well count for nothing if PAF wins.

So the polls give the present coalition, which has the bizarre acronym of PAF, a seven percent lead, but bear in mind the total only adds up to 93%.

After Portugal will be Poland, on October 25th. The Poles have a different set of worries. They’re not in the Eurozone, and like Britain or Sweden can regulate exchange rates—nevertheless, apart from a period during the 2007-2008 financial crisis when the currency appreciated, the zloty has been faithfully tracking the euro.

I was hopeful that a one-armed bandit in Poland might be called a zlot machine, but unfortunately not—however the country will not consider joining the euro until at least 2020, so there’s still hope.

Refugees and migrants aren’t a worry, as they are for the Balkan area—the principal Polish headaches are the Ukraine and coal.

Finally, toward Christmas, Spain goes to the polls. Like their western neighbor, the ruling party is center-right, and the economy is rebounding. And like Portugal, the incumbent hopes to win on the strength of that recovery—Spain is predicting 3.1% growth this year.

The timing is exquisite, for better or for worse. The general election is in December, giving prime minister Rajoy a chance to submit an electoral budget, featuring such gems as reinstatement of the Christmas bonus for the public sector.

So is it all back to sun and siesta for Spain? Unfortunately not. A dark Catalan shadow draws over this, with local elections on the 27th of September, midway between Greece and Portugal.

Atmos Fear and The India Road. Quick links for smartphones and tablets.

Atmos Fear and The India Road. Quick links for smartphones and tablets.

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2 Responses to “Training Day”

  1. Miriam Says:

    In fact the greeks didn’t “kiss Syriza goodbye”. Again (as in UK elections) the polls failed. Let’s see what will happen in Portugal.

    • Peter Wibaux Says:

      As Niels Bohr famously said, ‘predictions are always difficult, particularly where they concern the future.’ In this case, my basis for the Greek forecast was the fact that Syriza signed a more conservative agreement with the EU than the conservatives themselves. Hardly appealing to their anti-euro constituency, so I’m surprised at the Greek choice. Polls are a much more difficult proposition, of course, given their amazing lack of predictive power in recent years.

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