Greece debt crisis: referendum promised on EU deal

[dipsydoodle]

Source: BBC News

Greece will hold a referendum on a new European Union aid package intended to resolve the country's debt crisis, Prime Minister George Papandreou says.

Mr Papandreou said a vote of no-confidence would also be held on the deal - but no dates were set.

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"The command of the Greek people will bind us", he is quoted as saying by the AFP news agency.

An opinion poll published on Saturday by a newspaper, To Vima, suggested that the majority of people in Greece viewed the EU bailout package in a negative light.



Read more: http://www.bbc.co.uk/news/world-europe-15526719

[tama]

1. Good nt

[dipsydoodle]

2. Greece debt crisis: Markets dive on Greek referendums into turmoil

European markets have fallen following Monday's announcement of a Greek referendum on the latest aid package to solve its debt crisis.

Eurozone leaders agreed a 100bn-euro (£86bn; $140bn) loan to Athens and a 50% debt write-off last week.

But the announcement of a referendum has cast doubt on whether the deal will be able to go ahead.

http://www.bbc.co.uk/news/business-15533940

[Nye Bevan]

3. "The Economist": The Greeks have 4 options:

1. Raise taxes. The population seems to be against that, with the property tax being particularly unpopular. The man on the Athens omnibus might well be in favour of raising taxes on the rich, or on companies, but it does not seem as if this strategy will be pursued with sufficient vigour, or will raise enough money.

2. Cut public spending. Public sector workers are against that option.

3. Borrow money from their EU neighbours. The neighbours are willing to hand over the money but only on condition of further austerity. This the Greeks also dislike.

4. Default outright. The result will probably be even more painful austerity. Cut off from the financial markets, the Greeks will have to balance the budget overnight. They may also need to rescue their banks, a capital-intensive process. Leaving the euro might also involve a rescue of the corporate sector, which would find its revenues in (devalued) drachma and its debts in euros.

Although there is a risk that voters will reject option 3, it may be that politicians will use fear of option 4 to pull opinion around. If the Greeks designed their own menu, one would guess that it would be for the EU to lend them money, without imposing the austerity conditions. But the Germans have to satisfy their own voters; democracy cuts both ways.

http://www.economist.com/blogs/buttonwood/2011/11/greek-referendum