In a shock move last night Grecian Prime Minister George Papandreou called for a nationwide referendum on...the devil is in the details. Generally, on E.U. economic demands before the next tranche of aid is released, but it depends on how the referendum question is phrased. If something grand like "should Greece remain in the European Union," it would probably pass. If something narrow like "do you want your taxes raised and your salaries cut for the rest of your lives," probably not.
Or maybe it doesn't matter. In a reaction probably not anticipated by Papandreou the Grecian legislature has called for a vote of no-confidence. If the Papandreou government falls, no referendum.
Until the legislative revolt it looked here like a brilliant political move. Greece has been in near-constant turmoil since last summer, Papandreou had the damnedest time getting Greece this far--and it wasn't enough for the markets--he clearly bet the house on the referendum empowering his government to push through the E.U. bailout. He forgot about a no-confidence vote.
The Germans are furious, Greece is close to a an "un-controlled" (as opposed to a "controlled") default on its sovereign debt, the E.U. is fraying and Greece's existence therein is in the air. Brighter bulbs than this one have near-unanimously predicted dire economic consequences for Europe and the world if default were to occur.
T'ain't gonna happen.
Economics is too imprecise for the level of certainty being expressed about Armageddon. And too dismal. The Grecian agony has been drawn out for months, increasing the agony. An "expeditious" default will "lance the boil." The Argentines defaulted on their debt some years ago and went back to using the sombrero or whatever their national currency is called. Who knew? The world economy did not grind to a halt. There is no sensible reason for the End of Days if Greece leaves or is kicked out of the euro-zone and goes back to using the drachma. Britain is a far larger economy, is a euro-free zone (still uses the pound sterling) and is none the worse economically. The extent of the euro-zone (17 countries) was a bad economic idea. It's like the Big East conference in American college sports right now, trying to survive by stitching together a crazy-quilt of universities with no relation to each other or with geography. Greece and Germany have too little in common, as do France and Cyprus, Ireland and Malta, and so on, to be so closely welded together economically.
Or maybe it doesn't matter. In a reaction probably not anticipated by Papandreou the Grecian legislature has called for a vote of no-confidence. If the Papandreou government falls, no referendum.
Until the legislative revolt it looked here like a brilliant political move. Greece has been in near-constant turmoil since last summer, Papandreou had the damnedest time getting Greece this far--and it wasn't enough for the markets--he clearly bet the house on the referendum empowering his government to push through the E.U. bailout. He forgot about a no-confidence vote.
The Germans are furious, Greece is close to a an "un-controlled" (as opposed to a "controlled") default on its sovereign debt, the E.U. is fraying and Greece's existence therein is in the air. Brighter bulbs than this one have near-unanimously predicted dire economic consequences for Europe and the world if default were to occur.
T'ain't gonna happen.
Economics is too imprecise for the level of certainty being expressed about Armageddon. And too dismal. The Grecian agony has been drawn out for months, increasing the agony. An "expeditious" default will "lance the boil." The Argentines defaulted on their debt some years ago and went back to using the sombrero or whatever their national currency is called. Who knew? The world economy did not grind to a halt. There is no sensible reason for the End of Days if Greece leaves or is kicked out of the euro-zone and goes back to using the drachma. Britain is a far larger economy, is a euro-free zone (still uses the pound sterling) and is none the worse economically. The extent of the euro-zone (17 countries) was a bad economic idea. It's like the Big East conference in American college sports right now, trying to survive by stitching together a crazy-quilt of universities with no relation to each other or with geography. Greece and Germany have too little in common, as do France and Cyprus, Ireland and Malta, and so on, to be so closely welded together economically.
