Some of the parties that form the coalition that rules Greece have pulled out of the alliance. It appears another European government could fall over the question of austerity, or at the very least be neutered. The war over whether austerity measures have gone too far in Greece, Spain and, to a lesser extent, France have made governing alliances unstable and leaders unpopular.
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Greece remains under severe pressure to maintain its austerity promises to the International Monetary Fund (IMF), European Union and European Central Bank (ECB). However, many leaders and much of the citizenry have resisted budget measures that have deepened an already deep recession. Gross domestic product could shrink by double digits in total over the next several years. Unemployment is already more than 25%, and nearly 50% for those under age 24. If a Greek government that resists the mandates of the IMF, EU and ECB is put into place, the three organizations will have to decide whether they will back off of the rules of the Greek bailout. Sovereign bonds may again sell off to crisis levels. It appears that the European credit crisis, which has been hailed as over, may have restarted.
Reuters reports on the Greek ruling coalition:
The Democratic Left party may pull out of Greece’s ruling coalition on Friday after talks to resume state television broadcasts collapsed, plunging the nation into fresh turmoil.
Lawmakers from the small leftist party, angered by the abrupt shutdown of broadcaster ERT last week, will meet at 0730 GMT to decide whether to continue backing Prime Minister Antonis Samaras, who warned he was ready to press ahead without them.
“I want us to continue together as we started but I will move on either way,” Samaras said in a televised statement, promising to implement public sector reforms demanded by Greece’s international lenders.
“Our aim is to conclude our effort to save the country, always with a four-year term in our sights. We hope for the Democratic Left’s support.”
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