Markets dive after Greek PM demands referendum

[coffeeFreak]

Unbelievable, Papandreou is a *bleep*!!

Markets dive after Greek PM demands referendum

Markets plunged Tuesday on fears that Europe's plan to save the euro was already unravelling after the shock decision by the Greek prime minister to call a referendum on the country's latest rescue.

Stock markets plunged across Europe on Tuesday, with the Athens exchange losing almost seven per cent, while the euro fell another 1.2 per cent, on worries the Greek government could lose the referendum vote with the potentially devastating consequence of a disorderly debt default and Greece's exit from the common currency.

'[Papandreou] has tossed Greece's participation in Europe into the air like a coin.… Instead of seeking ways to extract us from our impasse, he is presenting the Greek people with the ultimate blackmail.'
—Opposition spokesman Yiannis Michelakis
George Papandreou stunned investors, as well as his own citizens and his partners in the eurozone, by announcing late Monday that a plebiscite will be held in what he called "a supreme act of democracy and of patriotism for the people to make their own decision." A confidence vote in the Socialist government will also take place at the end of this week.

The referendum — the country's first since 1974 — is expected to be held early next year. The renewed uncertainty it creates deflated any remnants of optimism over last week's grand European plan to contain the debt crisis. After weeks of complex negotiations, eurozone leaders agreed last Thursday that private holders of Greek bonds should take a 50 per cent loss on their holdings, reducing Greece's debt burden to 120 per cent of national income by 2020 from around 180 per cent at present.

"While it may be the democratic thing to do … what happen if Greece votes 'no', which is possible given how unpopular the bailout plan appears to be amongst Greece's voters," said Michael Hewson, markets analyst at CMC Markets. "The resulting fallout could well result in a complete meltdown of the European banking system and throw Europe into turmoil."

News that Greece's Finance Minister Evangelos Venizelos went to a clinic after suffering stomach pains added to the renewed bout of fears in the markets.

Markets sharply lower
Unsurprisingly, Greek shares led the retreat. The Athens Stock Exchange's benchmark general index fell 6.8 per cent just after trading started Tuesday, with the bank index losing more than 13 per cent.

All other markets were sharply lower too. Germany's DAX was 3.6 per cent lower, while France's CAC-40 dropped 3.2 per cent. The euro fell to a daily low of 1.37 while borrowing rates jumped higher for Italy and Spain, considered the next weakest links in the crisis.

North American markets were also poised for a sharply lower opening, with Dow Jones futures down 238 points, or almost three per cent, to 11,659.

The Canadian dollar plunged on the news, down more than two cents to 98.29 cents US.

Given that Greece is heading for its fourth year of recession next year, investors aren't hopeful that Papandreou will be able to pull off a victory. Success in the referendum, however, could shore up Europe's battle to contain its crippling debt crisis.

Even before Papandreou's pledge, the shine from last week's three-pronged plan to contain the crisis was wearing off. As well as increasing the private sector involvement in the Greek bailout, eurozone leaders agreed to boost the firepower of the bailout fund to €1 trillion ($1.37 trillion US) and a recapitalization of the banking sector.

Jacques Cailloux, an analyst at Royal Bank of Scotland, noted that Papandreou's referendum pledge is likely to derail any hopes that the international community will contribute to the plan to boost Europe's bailout fund, the European Financial Stability Facility, at the upcoming summit of the Group of 20 leaders in Cannes, France.

"The added uncertainty surrounding a potential referendum in Greece will likely block any new potential financial support from countries outside the monetary union given the potential implications for the future of the Union," Cailloux said. "We thus view this as a major negative for Greece and the rest of the monentary union."

'High-risk initiative'
Greece's main opposition conservatives called for Papandreou's resignation, accusing him of incompetence and blackmail.

MAPEurope feels the financial pinch
"Mr. Papandreou is unscrupulous and dangerous," party spokesman Yiannis Michelakis said late Monday. "He has tossed Greece's participation in Europe into the air like a coin.… Instead of seeking ways to extract us from our impasse, he is presenting the Greek people with the ultimate blackmail."

Respected conservative Kathimerini daily called Papandreou's announcement "a high-risk initiative" that further dents the country's international image and will accelerate the country's return to its old national currency, the drachma.

"The last thing Greece needs right now is additional uncertainty," the paper said. "It is certain that the country will be paralyzed and will be caught in an endless debate lasting weeks, during which obviously neither the state nor the government nor any other institution will function."

[url]Greek deputy defects
A Greek governing party deputy has defected over the prime minister's surprise decision to hold a referendum on a European debt deal, leaving the Socialists with only a two-seat majority in parliament.

Milena Apostolaki's office said Tuesday she had declared herself an independent deputy in a letter to the parliament Speaker. The move leaves the governing Socialist Party with 152 seats in the 300-member legislature.

Prime Minister George Papandreou has not set a date for the referendum, expected to be held early next year. He has also called a confidence vote in his government on Friday.[/url]

http://www.cbc.ca/news/world/story/2011/11/01/europe-greece-markets.html?cmp=rss

[Rwede]

All these Socialist morons look alike. How frikken stupid can he be?????????

[The Green Barbarian]

All these Socialist morons look alike. How frikken stupid can he be?????????

There is no depth to socialist stupidity. I have no doubt that if the NDP and/or Greens seized power in Canada, in a very short time we'd be in the same spot as Greece, and those boneheads would be no different than this clown, riding the Titanic right to the bottom.

[trrs]

I can never quite figure out how such a tiny country that makes up only 2% of the European economy can hold such a stranglehold on the rest of the world.

I'm not much on conspiracy theories, but I always get that niggling feeling that somewhere, someone or some group is making a whole lot of money off this "chaos".

I mean really, the Canadian dollar value can drop 2% or more in a day because some minor country can't decide whether it'll take a bailout package or not?

Just kick them out of the "euro", and let them go bankrupt. I guess I just don't get it...

[wthwyt]

So is the house of cards known as global economy on the edge of tumbling down. Wait and see........

[D suzuki]

So is the house of cards known as global economy on the edge of tumbling down. Wait and see........

could be what our world needs, lil reminder of whats really important imo

[Captain Awesome]

I don't envy Greek govt for what they have to do.

Either they go on with absolutely draconian measures of upping retirement age, slashing pensions, laying off workers (although in Greece once you work for the govt you can't be laid off, fired, or downsized), canceling benefits, etc., in which case they'll have a revolt on their hands.

Or EU will throw them under the bus, hyperinflation will kick in, and dark age will begin for the country.

Sadly, the people of Greece will still blame the govt, rich people, corporation, and just about anybody but themselves.

[The Green Barbarian]

Sadly, the people of Greece will still blame the govt, rich people, corporation, and just about anybody but themselves.

yup - in this day and age, it is never anyone's fault for anything.

[kompili]

Don't worry about it, it's all in the big plan of things. Enjoy the standard of life you have now for it will not be long until it is over. :dyinglaughing:

[NAB]

Seems that, as we speak, Papandreou is having his very own version of a "Gordon Campbell moment" :dyinglaughing:

He's done...

Nab

[steven lloyd]

However, I doubt he’ll become the Envoy to France and be awarded the Order of Theseus.

[NAB]

However, I doubt he’ll become the Envoy to France and be awarded the Order of Theseus.

Ya never know steven, ....I'm pretty sure the negotiations over what it will take to get him to resign and go away are still ongoing ;-) I wouldn't be at all surprised to see him gain an appointment to Canada. He might feel very much at home here. ;-)

Nab

[steven lloyd]

True enough. Did they ever meet? Maybe they traded notes.

[NAB]

True enough. Did they ever meet? Maybe they traded notes.

Dunno, was Papandreou by any chance at that secret Buildersberg meeting or whatever it is called?

Nab

[steven lloyd]

:-k I wonder if Papandreou has any family or friends in the shipbuilding business in Germany