Greece puts debt deal up for referendum

Greek Prime Minister George Papandreou arrives for a cabinet meeting at the Greek parliament in Athens on Nov. 1, 2011.

Kai Ryssdal: On the face of it, what Greek Prime Minister George Papandreou did yesterday makes sense. Offering the people a chance to vote in a country that basically invented the chance to vote.

You wouldn't normally expect financial market pandemonium to follow. But these aren't normal times. Investors and entire economies are fragile. So when Papandreou said he'd hold a referendum on the latest eurozone bailout, what followed was sadly predictable: Stock markets tanked; currencies gyrated. And speculation mounted that the rescue package hammered out last week is already unraveling.

From the European Desk in London, Stephen Beard gets us going.

Stephen Beard: No one was expecting it, not even his cabinet colleagues. Last night, Prime Minister Papandreou stunned Greece and the rest of Europe by offering his voters a say on the latest bailout package.

Blanka Kolenikova of IHS Global Insight.

Blanka Kolenikova: It seems like a kind of act of desperation to receive wider and better public mandate for pushing through further austerity in the future.

The move was undeniably democratic but also risky. If the Greeks reject the bailout package, the country will almost certainly default and then possibly crash out of the eurozone.

Most Greeks want to stick with the euro, but commentator John Psarapolous says the people are so fed up with austerity, they could all too easily vote no in a referendum.

John Psarapolous: People are very disoriented and they're suffering from the economic austerity measures and the collapse of the Greek economy into recession for the third year running. There's no way of knowing what will happen.

Even before the referendum, Papandreou's move has already backfired, says Greek journalist Matina Stevis.

Matina Stevis: What Papandreou saw as a good move for him internally, politically in Greece, is turning into the market's biggest nightmare.

And Greece's biggest European partners, Germany and France, are turning their guns on the Greek leader. At this week's G20 summit, Papandreou will come under intense pressure to reconsider his referendum.

In London, I'm Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.
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Here's some scenarios:

If Greece votes Yes:
They will be "part of the euro/part of Europe/accepting the of the austerity" as papadreau puts it.
The 40 something percent that voted no will still wreck havoc on Greece. Europe will lose all respect for Greece. And Greece still has a March debt payment.

If Greece votes No:
They are "not a part of Europe or the Euro and stands firm against the austerity put upon them."
The 40% that voted yes will probably still wreck havoc on Greece. The subsequent depression with NO ALLIES will hurt Greece. Europe will still hate Greece forever. Japan, China, the US, and the rest of the world will hate Greece for putting the world into an unnecessary recession. Greece wouldn't have to make any more debt payments. In fact no one in their right mind will lend to Greece.

Have you noticed? You are using the term "eurozone bailout" a bit more frequently than "Greek bailout". That is the central fear: that Greece is merely the first Euro-domino in this contagion. Can we learn the lesson: unrestrained debt is harmful!

We have a name for people who refuse to take their medicine, so they can get better...

...we call them children.

Also, does Greece even have a plan B?
Is there something better to choose from?
If they vote no, then what? Have Greece secretly printed enough Drachmas? Do they have valuable natural resources to sell?

This is the scenario that came to mind when I heard this news this morning:

Jack Bauer spends 23hrs 59min trying to locate and disarm a nuclear device to save the country.
Everyone breathes a sigh of relief.
A guy named Papandreou, goes back and re-arms the nuclear device.

In television, it would be a sweeps week gimmick.

There is absolutely no way out of this for Greece unless they vote in favor of this bailout. Even if Greece defaults and comes back on the other side, they will be isolated for eternity by the rest of Europe and other respectable nations.

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