Global markets tumble with news of Greek debt referendum

Predictably global markets have responded badly to the threat of a Greek referendum on the latest EU bail out package.

Yesterday the Greek Prime Minister announced that there will be a yes or no referendum in which the people will decide the future of Greece and in effect the Eurozone.

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For people who underestimate the power of the markets think again.Markets may no longer hold the proverbial one person who, when he or she sells the markets tumble, but basically things are still the same, The referendum announcement was enough to wipe millions of stock exchanges around the world. This will reduce confidence further and cause more rapid selling of shares. And on it will go.

If the Greek people vote a resounding NO to the latest bail out deal it will cause an unprecedented crash. Some are wondering just why Papandreou has chosen to call a referendum now. Many see the latest debt package as the most lenient yet. Perhaps this is the reason why he has decided to let the people have the final say. If they do not want this package then he will be finished.  A vote of confidence is also to be scheduled.

This debt referendum will be the first held in Greece since 1974. That referendum decided once and for all the fate of the Greek Monarchy and established Greece's Third Hellenic Republic. Perhaps the 2011 referendum will result in the end of this republic.