One by one they were rolled back, blitzkrieg-style, mercilessly, ruthlessly, with rat-a-tat efficiency. First the barricades came down outside the Greek parliament. Then it was announced that privatisation schemes would be halted and pensions reinstated. And then came the news of the reintroduction of the €751 monthly minimum wage. And all before Greece’s new prime minister, the radical leftwinger Alexis Tsipras, had got his first cabinet meeting under way.

After that, ministers announced more measures: the scrapping of fees for prescriptions and hospital visits, the restoration of collective work agreements, the rehiring of workers laid off in the public sector, the granting of citizenship to migrant children born and raised in Greece. On his first day in office – barely 48 hours after storming to power – Tsipras got to work. The biting austerity his Syriza party had fought so long to annul now belonged to the past, and this was the beginning not of a new chapter but a book for the country long on the frontline of the euro crisis.

Facebook Twitter Pinterest Alexis Tsipras, accompanied by members of his government, poses for a group picture outside the parliament in central Athens. Photograph: Lefteris Pitarakis/AP

“A new era has begun, a government of national salvation has arrived,” he declared as cameras rolled and the cabinet session began. “We will continue with our plan. We don’t have the right to disappoint our voters.”

If Athens’s troika of creditors at the EU, ECB and IMF were in any doubt that Syriza meant business it was crushingly dispelled on Wednesday . With lightning speed, Europe’s first hard-left government moved to dismantle the punishing policies Athens has been forced to enact in return for emergency aid.

Measures that had pushed Greeks on to the streets – and pushed the country into its worst slump on record – were consigned to the dustbin of history, just as the leftists had promised. But the reaction was swift and sharp. Within minutes of the new energy minister, Panagiotis Lafazanis, announcing that plans to sell the public power corporation would be put on hold, Greek bank stocks tumbled. Many lost more than a third of their value, with brokers saying they had suffered their worst day ever. While yields on Greek bonds rose, the Athens stock market plunged. By closing time it had shed over 9%, hitting levels not seen since September 2012 and losing any gains it had clawed back since Mario Draghi, the European Central Bank chief, vowed to do “whatever it takes” to save the euro.

‘Hope begins today was their mantra’: the inside story of Syriza’s rise to power Read more

By nightfall there was another blow as Standard & Poor’s revised its Greek sovereign rating outlook, taking the first step towards a formal downgrade. The agency warned that a bank run might also be in the offing, noting that “accelerated deposit withdrawals from Greek banks had created “a credit concern”.

Perhaps prepared for the onslaught, Tsipras had also acted. On Tuesday, he met the Chinese ambassador to Athens to insist that while Syriza and its junior partner, the populist rightwing Independent Greeks party, would also be cancelling plans to privatise Piraeus port authority, the government wanted good relations with Beijing. China’s Cosco group, which already controls several docks in Piraeus, had been among four suitors bidding for the port.

On Tuesday, Greece’s anti-austerity finance minister, Yanis Varoufakis, held late-night talks with his French counterpart, again to placate and reassure. “Our priority is to conduct new negotiations with our partners with the aim of reaching a fair, viable and mutually beneficial solution,” insisted Tsipras, at 40 the country’s youngest postwar leader, “so that the country exits the vicious circle of excessive debt and recession.” As he was handed the reins of the finance ministry, by Gikas Hardouvelis, his predecessor, Varoufakis, 53, an academic who has taught economics in Athens, Britain, America and Australia, repeated that message. The new government’s aim was not to spar with its partners but to create a “new relationship of friendship and sincerity”.

There is no denying Athens’s young revolutionaries have hit the ground running – and hit it with a thunderous thud. In some ways no one represents this better than the iconoclastic Varoufakis, whose investiture should go down as a textbook case of what happens when radicals come into town.

Yanis Varoufakis: maverick economist with Greece’s fate in his hands Read more

If Hardouvelis, had had his way the handover would have been uneventful, if a little lachrymose. “I sincerely wish the new government well,” he said, eyes firmly fixed ahead. “Greece doesn’t have the luxury of waiting until June to conclude [negotiations] with our partners. There are debt repayments that have to be made.”

And then it was Varoufakis’s turn and he was off, rocking and rolling his way through Hardouvelis’s script, demolishing the philosophy of a government that had, he said, thrown the country into a self-perpetuating economic death spiral and all because of a mistake “a huge toxic mistake made in this very building”. There was no looking back and as Hardouvelis nervously looked on – at times relieved, at times alarmed – it was quite clear that there was no stepping back either. Greece sincerely had no intention of clashing with its partners, Varoufakis insisted, but the logic of austerity was such that policies conducted in its embrace could only fail.

“We will rehire the cleaners who were fired from this building,” he said, all guns blazing, as he promised to reinstate the women who have become the face of austerity’s injustice. “And then we will seek a pan-European new deal to reboot [our] economies.”

Facebook Twitter Pinterest Greece’s new finance minister Yanis Varoufakis (right) and outgoing finance minister Gikas Hardouvelis during the handing over of the reins to the finance ministry. Photograph: Marios Lolos/Xinhua Press/Corbis

• This article was amended on 29 January 2015 to correct the spelling of Piraeus.

