Wednesday, November 2, 2011

Greece: the first domino falls?

Greek Prime Minister Giorgios Papandreou has balked at accepting the bailout plan worked out by the EU last week. Instead, Papandreou has decided to offer up the plan as a referendum for Greek citizens to consider:
Papandreou, whose Socialist party has been hit by defections as it defied waves of at-times violent public protests and strikes to impose austerity measures demanded by international lenders, said he needed broader political support for the measures. 
"We trust citizens, we believe in their judgment, we believe in their decision," he told ruling Socialist party deputies. "In a few weeks the (EU) agreement will be a new loan contract ... we must spell out if we are accepting it or if we are rejecting it."
There's something to be said for democratic processes, but this is neither the time nor the place. The bailout plan is going to cost Greece's creditors a boatload of money, as they will eat half of the debt, straight out (maybe this is where some of Corzine's money went). The austerity measures will impact the Greek population, this is true, but that population has been benefiting from the reckless spending of other people's money, not their own.

That reality, however, is not likely to be realized and/or accepted by the population-at-large:
There are big doubts whether Greeks will back the bailout. A survey carried out on Saturday showed that nearly 60 percent viewed the agreement on the bailout package as negative or probably negative.
And that's pretty unsurprising; how often do people willingly give up benefits they've been getting free of charge, nevermind who is really footing the bill?

I suspect the referendum will fail, the Greek government will be forced to ignore it or default completely and Germany--faced with looming crises in other member-nations--will start to call for an end to the EU. Papandreou's government is in jeopardy, as is Merkel's. And why? Fear. Nothing more.

Cheers, all.

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