Greece relight European debt woes

Europe’s debt woes as a continent have re-emerged after Greek PM George Papandreou opened the door for fresh elections.

Yields on 10-year long Greek bonds rose 31 basis points to approximately 9.57pc with the euro also tumbling 2 cents to around $1.385 against the US dollar as investors woke up to hear news about the risks of political upheaval occuring in Greece that were not helped much by warnings from PIMCO that Athens might default within three years.

While he promised that he would stay with the recently decided EU-IMF austerity plan, Papandreou threatened to go to nationwide, should upcoming local elections not give his PASOK political party a clear mandate, while stating that there cannot be deadlocks in democracy and that the people must always have the final say in any matter.

The main opposing group to PASOK, New Democracy, is yet to convincingly guarantee the Greek people that it will abide by the regulations of the EU’s widely publicised 97 billon pound rescue, which is referred to as the memorandum. While this may be so, PASOK itself is wilting in any case at a socialist anti-Memorandum bloc is currently leading the polls that determine who rules the roost in the Athens region.

In a bid to reach out to more people and win votes, Mr Papandreou is attempting to promise that he will granting pensioners a bonus of around 300 euros while also rejecting requests by Brussels and the Greek central bank to tightening the proverbial belt even further. Mr Papandereou states that the payment is because pensioners have given enough the country over the years.

After recent developments, Europe will be watching on in anticipation along with numerous investors that have interests in the troubled country.