Today's Major Market Move: Greek Stocks Climb 6.2% After Passage of Austerity Vote

Just like with the second TARP vote here in the U.S., when legislatures are threatened with financial armageddon, they can be browbeaten into voting for pretty much anything. So it should have come with no surprise to anyone that yesterday the Greek parliament passed the most recent version of austerity measures.

Here are some of the quotes leading up to the vote:

• “We have to sacrifice a lot so as not to sacrifice everything,” Papandreou, leader of the Socialist Pasok party, told lawmakers in Athens. “We must speak honestly and tell Greeks what bankruptcy really means. It means chaos.”
• “It won’t solve the problem, but it will help,” [Leader of New Democracy Party] Samaras told party lawmakers today in Athens, in live comments on state- run NET TV. “It distances us from bankruptcy, looting, the chaos that would follow.”
• “It should be evident that whoever disagrees and doesn’t vote for the new program cannot remain in this government,” Papademos told his ministers. Failure on the package threatens 11 million Greeks with a default that would halt the payment of wages and pensions and shut schools, hospitals and businesses, he said. The vote amounts to a ballot on euro membership, Finance Minister Evangelos Venizelos said today.
• “From today until the next meeting of the eurogroup, our country, our homeland, our society has to think and make a definitive, strategic decision,” Venizelos, 55, told reporters after the Brussels talks. “If we see the salvation and future of the country in the euro area, in Europe, we have to do whatever we have to do to get the program approved.”

With that kind of rhetoric flying around, how could any patriotic, self respecting Greek politician place a vote that would be perceived as causing the downfall of their country? But if they were to take a longer term view to the issues at hand, which way to vote might become less obvious. If Greece had defaulted two years ago, is it possible that they might be better off today? Most certainly a default would cause additional turmoil in the near term, however weighing the negatives vs the positive of a default over a 2,5 or 10 year time frame is much more complicated.

The markets dispensed with all of that mental hand-wringing and received the outcome of the vote with the trader's equivalent of thunderous applause: a multitude of buy orders. The benchmark Greek equity index, the FTSE/ASE 20, climbed 6.2% today, and it's 1.5X ETF cousin, the Cypriot General Market Index, surged 8.1%. Here were the top 10 benchmark equity index performers:

Click here to go to the live table.

Anyone looking for volatility in today's markets need look no further than Cypriot equities. Today's gain is the equivalent of a 1000 point move in the DOW and there are consistently daily moves above the 3% level (equal to 400 DOW points). Here are daily alerts that have been fired on the General Market Index CSE over the past 2 weeks whenever there has been a move > 3%: