The PJ Tatler

Lean Forward: Two Days After Leftist Syriza Win, Greece Faces S&P Downgrade

Moments ago (12:29 p.m. EST), Bloomberg Business posted a “Story Developing … ” blurb consisting entirely of the following:

The S&P is considering downgrading Greece’s credit following concerns over whether the nation can continue to service its debt.

Earlier today, Greek stocks, bonds, and banks suffered catastrophic collapse based entirely on the words of incoming Prime Minister Alexis Tsipras:

Leftwing Greek Prime Minister Alexis Tsipras threw down an open challenge to international creditors on Wednesday by halting privatization plans agreed under the country’s bailout deal, prompting a third day of heavy losses on financial markets.

A swift series of announcements signaled the newly installed government would stand by its anti-austerity pledges, setting it on course for a clash with European partners, led by Germany, which has said it will not renegotiate the aid package needed to help Greece pay its debts.

After announcing a halt to the privatization of the port of Piraeus on Tuesday, for which China’s Cosco Group [COSCO.UL] and four other suitors had been shortlisted, the government said on Wednesday it would block the sale of a stake in the Public Power Corporation of Greece (PPC).

It also plans to reinstate public sector employees judged to have been laid off without proper justification and announced rises in pension payments for retired people on low incomes.

Uncertainty over the new government’s relations with the European Union went beyond economic policy. A day before the EU is expected to extend sanctions against Russia for six months, it was unclear if Athens would back its European partners on this move, after dissenting over a joint statement from the bloc on Ukraine on Tuesday.

Tsipras, who met Russia’s ambassador to Athens on Monday and the Chinese envoy the next day, told ministers that the government would not seek “a mutually destructive clash” with creditors. But he warned Greece would not back down from demanding a renegotiation of debt.

“We are coming in to radically change the way that policies and administration are conducted in this country,” he said.

Sigh. Few global events are more predictable than the reaction of markets — and the subsequent drop in general welfare — to socialist policies.