Greek Tragedy

by CC November 1, 2011 5:07 pm • Commentary

Here’s a roundup of all the latest moving parts having to do with Greece and the Eurozone bailout


French President Nicolas Sarkozy and German Chancellor Angela Merkel will hold an emergency meeting with Greece on Wednesday to push for a quick implementation of Athens’ bailout deal, the “only solution” to its debt crisis, Sarkozy said on Tuesday.


Greek Prime Minister George Papandreou is sticking by his plans to hold a country-wide referendum on the bailout.


I’ll let Roberto Perli, from the International Strategy and Investment Group, explain the political dynamics:

Papandreou’s motives are understandable: So far the opposition has provided no support for the measures that he has been forced to push through, and he and his party have been left alone facing the public anger. The opposition’s tactics are in a sense similar to those used by the Portuguese opposition earlier this year. There the opposition forced the government to fall, took over power, and promptly implemented policies very similar to what the previous government was going to do anyway. Papandreou knows that story, and his decision can be interpreted as a refusal to be the victim of the same game.

The hope is that the opposition, recognising that there is little choice but to implement agreed upon policies and understanding that the public is likely to reject the deal, will be forced to support the government’s austerity measures, thereby making the referendum unnecessary.


The prospect of an angry Greek electorate voting down the latest EU deal is clearly a concern for investors and follows harsh criticism of the plan from all over the Greek political spectrum.

“The PM is under heavy pressure from his own party to step down and from the opposition to call for new elections” said Jan Poser, the chief economist at Sarasin in Zurich said following news of the referendum.

“By threatening a referendum, Papandreou takes a huge gamble. Faced with a stark choice between sovereign default and a EU rescue package, he believes that the people will give him the support” said Poser.

Poser believes the Greek leader is playing for high stakes.

“To save his own skin, Papandreou is obviously ready to take the Greek people to the abyss and to let them have a glance at the possible consequences of a sovereign default and a euro exit,” he said.


ATHENS — The Greek government was plunged into chaos on Tuesday, as lawmakers rebelled against Prime Minister George Papandreou’s surprise call for a popular referendum on a new debt deal with Greece’s foreign lenders.

The revolt by lawmakers and a no-confidence vote planned for Friday raised the prospect of a government collapse that would not only render the referendum plan moot but could also scuttle — or at least delay — the debt deal that European leaders agreed on after marathon negotiations in Brussels last week. That, in turn, could put Greece on a fast track to default and raises the prospect of the country’s exit from the monetary union of countries sharing the euro currency.

And finally a timeline of how Greece got to this point from Credit Writedowns

The date when it was first obvious that Greece would default: a timeline of the Greek debt crisis