Is the Market Terrified of Democracy?
Traders work on the floor of the New York Stock Exchange moments before the closing bell on Oct. 27, 2011 in New York City.
If you want the economy to work better for more people, as the Economy 4.0 tagline goes, you might think putting economic policy to a vote is a bright idea. You might also want to take a closer look at what's happening in Greece.
A new debt deal is in the works for the troubled country, but the prime minister, George Papandreou, wants his voters to have a say before signing on. His announcement on Monday that Greece would hold a referendum came as a surprise to other European leaders and to the financial markets. And not a happy surprise.
For example, here's Paul Mortimer-Lee, global head of market economics at BNP Paribas, quoted in Reuters : "Try as we might, there is nothing good to be said about this decision as it affects markets and growth over the balance of this year."
As David Brancaccio put it to Matthias Matthijs, professor of political economy at John Hopkins School of Advanced International Studies and American University, it seems like a case where democracy is in conflict with financial markets.
"That seems to happen ever more often these days," said professor Matthijs.
In this extended interview with David Brancaccio, he elaborates on what the future holds for Greece, and why democracy isn't always as it seems.