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No end in sight to the Euro debt crisis

Stephen Beard Nov 4, 2011
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No end in sight to the Euro debt crisis

Stephen Beard Nov 4, 2011
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Kai Ryssdal: Say what you will about the political process in Greece the past couple of days, but they’re clearly keenly aware of how their actions are playing in the markets. The no-confidence vote on Prime Minister George Papandreou — originally scheduled for at least close to normal working hours — has been pushed back to the middle of the night Athens time, after the market close in New York.

Marketplace’s Stephen Beard brings us up to speed on what a wild strange week it’s been.


Stephen Beard: On Monday, the Greek prime minister dropped a bombshell. He announced a referendum for the Greek people on their second bailout package. Stock markets across the world fell sharply.

Terry Smith, one of London’s top financiers, said if the Greeks voted no, there would be catastrophic consequences.

Terry Smith: Greece will default and leave the euro. I think it will probably be followed by similar action in Portugal, Spain, Italy and even possibly France.

In France, on Tuesday, preparing to host this week’s G20 summit, President Nicholas Sarkozy reacted coolly to Papandreou’s plan. He said this announcement has taken the whole of Europe by surprise. He summoned Papandreou to come to Cannes to explain himself. Arriving there on Wednesday, Papandreou defended his decision to give his voters a say on the bailout.

George Papandreou: It’s their democratic right, and the Greek people, I believe, are mature and wise to make the decision that is to the benefit of the Greek people and the country.

But the French and German leaders warned him that Greece wouldn’t get anymore bailout money unless they voted yes. And if they voted no, they’d have to leave the eurozone.

Back in Athens, that threat further dented Papandreou’s support. By Thursday, says businessman Constantine Mihalos, the Greek leader was fighting for his political life.

Constantine Mihalos: I think it is very difficult for him — having seen the reaction by members of his parliamentary group for him to remain as prime minister.

Papandreou was forced ditched the referendum plan, and he faces a vote of confidence in his parliament later today. He’s damaged, but something was broken in the eurozone this week. For the first time, its leaders admitted that Greece may have to leave.

In London, I’m Stephen Beard for Marketplace.

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