Financial analysts are saying the Greek prime minister George Papandreou risks a new euro zone crisis with his shock announcement that he will put the bailout deal struck last week to try to contain the EU's debt mountain to a referendum of voters already angry at harsh cuts. Euro zone leaders agreed to hand Athens a second, €130-billion-euro bailout and a 50-per cent write-down on its enormous debt to make it sustainable.
Mr Papandreou, whose ruling Socialist party has suffered several defections as it pushes waves of austerity measures through parliament while protesters rally outside, said he needed wider political backing for the fiscal measures and structural reforms demanded by international lenders.
Regardless of the fact that financial analysts are saying that holding a referendum - likely to be early next year and only Greece's second in almost 40 years - is bad for the markets, it will be a very direct way of confronting the Greek people with some realities of the actual economic situation in their country.
Voting no in the referendum would mean for Greece it will need to get out of the EU and face more economic hardship. Gone will be all the perks provided by EU membership. Also going back to the old currency, the Drachma, would be a disaster as it would have very little value and nearly impossibility for Greece to obtain any loans.
The referendum is a courageous and democratic gamble by Papandreou. As to the Wall Street Casino manipulators and financial profiteers crying crocodile tears now it will just be a question of "getting with the program" or face bankruptcy.
EU-Digest
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