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Greek instability fuels euro exit fears

2012-05-14 10 Dailymotion

A week after Greece's inconclusive elections - and the country seems no closer to forming a new coalition government.<br/> <br />The political uncertainty has worried investors - and Greek stocks fell once again on Monday.<br/> <br />Banking shares were the hardest hit - initially falling by 7% before recovering slightly.<br/> <br />The instability has also seen European stocks slide to 4-month lows, says Frankfurt trader Robert Halver.<br/> <br />SOUNDBITE: Robert Halver, Baader Bank, saying (English):<br/> <br />"It's all politics right now and the German equities are suffering, because we have no clear picture considering a Greek policy, a French policy, a European policy."<br/> <br />The situation in Greece could be about to get much worse if the country has to hold fresh elections.<br/> <br />There are warnings Athens could run out of money as early as the end of June, if there isn't a government in place to negotiate the next installment of aid from its international lenders.<br/> <br />Polls show Alexis Tsipras, the leader of Greece's radical leftist party, would now come out on top of a new vote.<br/> <br />He opposes the EU/IMF bailouts - but wants to stay in the euro zone.<br/> <br />That's easier said than done, says Nick Beecroft from Saxo Bank.<br/> <br />SOUNDBITE: Nick Beecroft, Senior Markets Consultant, Saxo Bank, saying (English):<br/> <br />"There's a real danger in the next six months we see a number of misjudgements on the part of the Greek populous led, I would say, astray by Tsipras' suggestion that Greece can renege on the austerity programme and stay in the euro zone. And there may also be a miscalculation going on by let's say German politicians that Greece can exit without disastrous consequences."<br/> <br />But the discussions about a Greek euro exit - or "Grexit" are getting louder.<br/> <br />A return to the drachma would be disastrous, says Greek analyst George Tzogopoulos.<br/> <br />SOUNDBITE: George Tzogopoulos, Hellenic Foundation for European and Foreign Policy, saying (English):<br/> <br />"Political chaos and social instability will follow. Smalll business and enterprise will become immediately bankrupted, and the new Greek currency will be devaluated."<br/> <br />Attempts continue to form a unity government.<br/> <br />Greek voters, who have had enough of austerity, are likely to go to the polls again as soon as mid-June.<br/> <br />EU leaders have warned that without a government backing the 130-billion euro rescue plan agreed in March, Greece would stop getting aid and could find itself pushed out of the euro.<br/> <br />Joanna Partridge, Reuters

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