Follow the Bouncing Ball

Over the weekend, roughly 30% of Greek voters went for the New Democracy party of Antonius Samaras, 26% supported Alexis Tsipras of Syriza, and 12.5% gave their votes to the PASOK Socialist Party.  Both New Democracy and PASOK are pro-bailout.  Syriza is anti-bailout.  Presumably the conservatives of New Democracy and the Socialists can found a coalition government with their combined totals of 164 seats in the 300-member parliament. 

This would mean that Greece would accept the austerity measures called for by the EU as a condition of bailing out the Greek banks, and, by extension, Greek government bonds.  So, for the moment, Greece can continue to run deficits at barely acceptable rates -- even though they are unlikely to ever retire the bonds.  Maybe. 

Spanish bond rates moved into the intolerable range this morning at over 7%.  Italy is facing pressure.  The Greek economy has collapsed, and a single bailout is not going to revive it.  In fact, if the Greeks accept all the conditions and get their money, it merely sets them up to require another bailout in a few months and another and another after that, each accompanied by spiraling cuts in government expenditures as the interest payments on debt eat an ever-increasing chunk of declining revenues. 

This is aside from the fact that Samaras is saying that he wants to renegotiate terms in light of the sweeter deal Spain got last week in its bailout.  As investors and traders have an opportunity to look at the situation in better light, I expect the euro to resume its slide along with equity markets. 

Something that could alter the dynamics would be the Supreme Court decision on Obamacare.  I could see a U.S. market spike if the whole package is tossed -- maybe even just the individual mandate.  A second factor would be an announcement of more QE, either outright or in some more esoteric form, from the Fed. 

I'm tired of this.  I'm going to talk about snubbies later today if I get a break.