The morning after the night before

This morning’s front pages are devoted to Greece, and the consensus is that the result of yesterday’s election amounts to little more than a stay of execution for Greece and the euro. At the time of writing, markets have responded to the news positively; but, fundamentally, nothing appears to have changed, so expect further turmoil.

The formation of a Greek government is the foremost problem. James explained last night that the pro-bailout party New Democracy is unlikely to form a coalition with the centre-left PASOK party, which had indicated that it would only join a coalition that included radical leftists Syriza. This impasse persists for the moment, but there is speculation that PASOK might support New Democracy on a supply basis. Spokesmen for New Democracy are confident that agreement will be reached in a few days, adding that they expect PASOK to renege on its pledge to Syriza and form a coalition.