When George Papandreou, the Greek Prime Minister, dropped the referendum bombshell on October 31, 2011, he stunned other EU countries and caused stock markets to go into free-fall. Such is the fear that the Greek people will vote NO, to the latest debt bail-out package.
Whatever the motive for calling a referendum it will take the markets sometime to recover. Perhaps leading Greeks will be buying stocks at rock bottom process before the people vote, who really knows. So what was the Greek Prime Minister's motive for the referendum announcement?
In Germany the response by some was that Greece was being ungrateful. That this referendum could push Greece out of the Eurozone once and for all. Perhaps that is what is hoped for. Let's face it, in the last week Greece has been slated by France, with their Prime Minster denying that Greece was ever financially fit to join the Erozone.
Today it has been revelaed that even Papandreou's Finance Minister was not informed of a referendum announcement. It came as a massive shock to him also. However, Papandreou has inisted that he needs wider political backing for accepting the latest bail-out.
In some ways he is doing what all the other G20 leaders do and is looking after his own back-yard. Germany and France have been good at this in recent years so they can hardly bleat when Greece folllows suit.
The Greek people have widely poured scorn on Papandreou's announcement. They see it as a way to blame the people for the country's ills but perhaps finally put an end to social unrest in the country. If the people vote YES and accept the austerity measures and bail-out surely strikes and protests will cease?
Most Greeks, it seems think, Papandreou is simply bluffing and angling for political survival. Could be. They would have been happier to have held a referndum when the Greek debt crisis began.
The vote is not likely to be held until early next year so what will happen in the interim?
The latest debt package, hammered out last week, will give the Greeks a 130 billion euro ($181 billion) rescue package. It will help keep the Greek economy afloat. Without it Greece and much of the Eurozone has frankly, had it. Maybe it is time to let what will be, be. Currently it seems as if Europe is just delaying the inevitable.
As markets continue to tumble today, November 1, 2011, it will be a black day as far as financial matters go.
Eileen Kersey manages TEK Staff Blog