Antonis Samaras might well have his reasons for bringing the election forward by a couple of months. The official line is that he wants to stop the damage he perceives the far left opposition party Syriza to be doing by touting its anti-austerity credentials — all the more worrying for Greece’s creditors, given Syriza is ahead in opinion polls.
A more likely reason could be that Samaras wants a mandate from the Greek parliament after failing to exit the country’s bail-out at the end of this year — although the bail-out has only been extended by two months.
Whatever the reasons, they are mainly political. But the market’s reaction has been pitiless.
There is certainly a risk to any upheaval in Greek politics. If Samaras’s pick for Greek president does not get the backing of legislators — far from a sure thing, with the ruling coalition 25 members short of the number it needs for a definite win — then the Greek populace goes to the ballot box for a general, as well as presidential election. Opinion polls suggest Syriza will win if that happens.
But there is nothing to suggest that this sequence of events would not happen in February. If investors were really so worried about the prospect of a far left government taking power in Athens, then what difference does it make if it happens in December rather than a couple of months later?
The damage has certainly been done — Greek yields rocketed on Tuesday after two weeks of gains and kept going up later in the week. That makes any Greek action in primary markets early next year a receding prospect.
This week's turmoil shows that the eurozone sovereign debt crisis may not be quite as over as some people thought. It certainly shows that political risk is likely to be the thing keeping the market most awake next year, with several other eurozone sovereigns scheduled to hold elections.
But while politics might keep the market awake, it seems that in this case the buyside was asleep. The threat of Syriza taking power is real — but no more so this week than in two months’ time.