Germany approves Greek bailout, showing willingness to help Europe - by Michael Birnbaum

Germany’s parliament overwhelmingly approved its country’s contribution to the Greek bailout on Monday, serving as a reminder that, for all of Germany’s caution about funding its poorer neighbors, Europe’s largest economy is still willing to muster billions to aid others.

The rescue package was approved despite weeks of threats to let Greece default on its debt, with just 90 votes of dissent and five abstentions out of 591 members of parliament present for the vote.

Coupled with France’s presidential election, where pro-bailout Socialist Francois Hollande is leading polls over the more fiscally cautious Nicolas Sarkozy, the political dynamic suggests that both countries have more flexibility to help struggling European countries than they have acknowledged at the bargaining table.

For more: Germany approves Greek bailout, showing willingness to help Europe - The Washington Post

Greek referendum is very clever poker game of Papandreou

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

Merkel, Sarkozy Battle Over Greek Default by Marlene J.Satter

There is a great divide yawning between Germany and the rest of the eurozone over the question of whether Greece should be allowed to default. While Germany says it will do all it can to avoid such an event, France is desperate to avoid it at all costs.

A default would mean potential disaster for French banks as well as a possible loss of the country's Triple-A credit rating. And if that goes, the financial rescue mechanism for all the eurozone could fall apart; France is the second biggest guarantor of the fund after Germany.

Bloomberg reported Friday that Angela Merkel, German chancellor, is pushing to prepare investors for an inevitable Greek default. Opposed to using the European Financial Stability Facility to recapitalize banks, something French President Nicolas Sarkozy is advocating, Merkel instead wants to wall off Greece from the rest of the eurozone without it departing the currency bloc entirely.

For more: Merkel, Sarkozy Battle Over Greek Default

Netherlands: Dutch will only agree to further funding for Greece if private investors participate in Greek bailout

The Netherlands will only approve further support payments to Greece if private creditors accept substantial extensions on the maturity of Greek debt, Mr. J.K. de Jager, the finance minister, announced in a letter to parliament. European Union aid to Greece must be approved by all 27 member states, meaning that should the Dutch refuse payment it would trigger the end of the support payments and potentially a Greek default.

The government has relied on the opposition Labor and left-liberal D66 parties to push previous aid payments through parliament. But in recent weeks Labor has become increasingly critical of the bail-out strategy.

Parliament’s finance committee is scheduled to meet on Tuesday to respond to Mr De Jager’s report.

Some economists believe a default by Greece would not only be the best solution for Greece and the EU, but also serve as an example to the other EU-member states, which have received EU bailouts, to take austerity measures very serious. It would certainly not cause the EU to fall apart as some people say, but rather strengthen the monetary and political union by getting rid of those member states ( bad apples), which are not taking the rules and regulations of EU membership they agreed to seriously. As to present hysterical reactions by the financial community and Wall Street to avoid the above scenario, these are quite normal, they are purely based on self interest, and not to forget, their insatiable greed.

EU-Digest