Praise the Heavens - Greece is holding a referendum

[LemonDifficult]

I was wondering when someone would, like, mention Democracy.

The Greek PM has played a political blinder. He's refusing to take the historical buck for the austerity measures, he's making the people listen to his message, and he's making sure that whatever details get thrashed out on the latest Euro Zone Package have to go Greece's way so that the Greeks will approve it.

Oh, and he's also doing the morally correct thing in a democracy and putting this massive piece of legislation to the Greek people. Respect.

And proof that the markets don't like democracies (not really) they're falling. Not good that bankers thought we lived in a world where they really did have the last word.

Here's the BBC article on this.

I agree that a referendum is a good thing in the interests of democracy.

But it seems it may not be possible to hold it until January, and they haven't yet announced what the question/s will be (will it turn out to be a de facto referendum on membership?) Markets have plunged today on the prospect of continued uncertainty and, if the whole deal falls through, where will that leave the Eurozone?

The deal was meant to contain the debt crisis: if it is not contained, then there are some worrying scenarios.

The Greek government might fall over this.

It'll be interesting to see the more considered comment which I expect will emerge later today. At the moment, Peston is saying we are "staring into the abyss"!

Politicians and bankers were thinking they could move to Fiscal Union without recourse to their electorate and that just isn't OK.

Crisis or no crisis, the politicians did need their peoples' sanction.

As a resident of Greece, this has really got me worried.

Recourse to the electorate is all very well, but I don't think this is the time. Papandreou (the Greek PM) has become so unpopular with being blamed for the current mess, the austerity cuts and so on, that a lot of people will vote against whichever camp has his backing, whatever the exact question is on the referendum. People are now expecting the government to fall.

People I know here have been rushing to the banks to withdraw every last cent on hearing this news - everyone is afraid of being forced out of the euro and being left with a valueless drachma that will immediately be in freefall. Other people have been stockpiling food. It's all going mad.

Twitter saying Greek government is about to collapse.

For asking the will of the Greek people? That's warped.

alex, I'm sorry to hear that. I can't see that this is your PM's fault. Although, he did make a mistake by not saying early on that whatever measures are agreed would be put to the Greek people.

I don't think it is entirely the PM's fault, either, although he certainly has a share of the blame.

But that is the general perception on the street. Just as Cameron is blamed in the UK for whatever, because he is at the helm.

I just heard on the news that the government has now lost its majority, several MPs have resigned/ defected. They are calling for elections to be held as soon as possible. No one seems to know what's going on exactly.

A couple of fellow expats have rung to tell me they are cutting their losses and heading back to the UK!

Poor old Greece.

I haven't quite worked out what the guy's game is but he didn't even tell his Finance Minister that he was going to do this. Maybe he'd rather get kicked out now in a vote of no confidence and be able to say 'I was defending democracy'... than put in place the austerity measures and be sacked by the people for creating more hardship? Maybe he thinks Greece would be better off out of the Euro and is being awkward so that he gets that result?

FGS, the MPs should stick by him for now. No referendum but an election instead?! What kind of craziness is that?

If he loses the referendum, there would be an election, presumably, so maybe what's needed is some patience to see what the Euro package could up with? The Europeans have every reason to try to make it as sweet as they can for the Greeks.

Based on the opinion polls, a referendum would say 'no' to the bail-out/austerity package. Which would mean the EU spent a few months kicking its heels, watching confidence slide further, only to have to go back to the drawing board. I think the time for 'patience' was over several months ago.

I suppose it's democratic craziness. If a government loses support (and falls by whatever the Greek equivalent of a cate of no confidence is) then a new one must be elected. It's putting it to the people, a stance applauded in the OP, just a differing form. I should imagine debt crisis handling will be the main, if not sole, campaign issue.

I think it's brilliant. Force people to think and take responsibility for themselves and what sort of society they want to live in.

Agree, it's brilliant. The greek people can't just complain. They must be part of the solution, something they'll be more likely to do if they don't feel excluded from their own lives by Germany and France.

EdithWeston - yes, the main opposition party has talked of nothing else for weeks, just how much better they would be at handling the debt crisis, but with the usual politician trick of avoiding too many specifics, overusing the word "renegotiate".

The situation would not improve with a new bunch of clowns group of politicians in charge, IMHO.

I think Papandreou is just an idiot who doesn't have a clue gambling with the referendum - he knows he is finished, he has lost too much support to go on, so he is trying to throw a sop to the people. I think the referendum will not go ahead, but he will be able to say "Look, I wanted to offer you all the chance to decide, look how democratic I am, I'm the good guy really, it's everyone else, they wouldn't let me. They forced me to back down." He's just trying to earn back a few brownie points.

Plus, of course, he's probably set up anyway, whatever happens, with Swiss and American bank accounts or whatever.

Good lord - it must be so scary in Greece at the moment alex.

Very worrying for you - especially if Greece exits (or is made to exit) the euro.

Leaving the euro is being talked about more and more. It's been analysed in depth on the TV. Very scary. And people seem to be panicking, they think it's inevitable now, referendum or no.

For the first time, I'm starting to wonder about cutting my losses (we have bought our house here, we have a mortgage, plus a few other things) and going back to the UK. To do what, though? How many other people will be in the same boat? And what about my children?

Tragically amusing - one of my best (greek) friends rang to say she has just been to the supermarket, and lots of people are stocking up on rice and pasta and stuff that keeps, and she sent each one of her 4 children to the tills separately with a couple of packets, because they are limiting the number that any one customer can buy.

Panic sets in!

it had me laughing too, LemonDifficult!

If it gets to Greece leaving the Euro and having the drachma would it be so bad? If Greece is not pegged to the Euro, there is more scope surely for financial manoeuvring.

it's more to do with worry that they won't be able to afford to buy anything with worthless drachmas, I think. There has been a lot of scaremongering.

Last time I was there, I couldn't understand why so much building was going on when things were so bad, until someone explained that everyone had taken their money out of th ebanks and was building instead.

scaryteacher - the thinking goes that a return to the drachma would result in the drachma immediately losing value, plummeting downwards (think of those cases where people took barrows full of cash to buy a loaf of bread). Mind you, I've read a lot of opposing opinions recently, and I am certainly not an economic boffin, so who knows what might happen.

exactly, Maryz.

scary: the drachma would fall, and fall, and fall. The Government wouldn't be able to borrow except at punitive rates. If Greek domestic revenue doesn't cover its costs, then the forest fire of public spending will be appalling.

Non-Greek banks won't just be taking a haircut, it'll be a total loss. That will have a wide impact. And nerves over Italy will intensify, precipitating a deeper Eurozone crisis. Non-Eurozone Europe is bound to be hit by the storm too.

Of course, it might not be as bad as that. But the potential for disaster is there.