Referendum: Epic bailout fail

Wookster

So Papandreou is now going to have a referendum on the bailout package.

It seems almost certain that Greece will reject the package which will mean the end of formal support for its beleaguered banks and economy.

http://www.telegraph.co.uk/finance/financialcrisis/8861161/Greece-to-hold-referendum-on-EU-debt-deal.html

Jeremy Warner has, as usual, a good commentary on it here: http://blogs.telegraph.co.uk/finance/jeremywarner/100012911/greece-must-vote-no-to-the-bailout-terms/

Particularly his last sentence:

Things are about to get really interesting.

ManAtHome

The weasels missed their chance many years ago to hire a publicist to distance themselves from politicians...

MrRee_2

Anyone for some very, very, very cheap Greek properties?

Because you will be able to buy some crackers for nothing ...... dip yer bread!

Mr_Mumble

The referendum question(s) will be key to whether this passes or not. Yes, the Greeks hate the austerity but they overwhelmingly want to remain in the EU and a good sized majority within the Euro.

Also, the austerity measures would be harsher if there was an uncontrolled default in Greece. Greece still has a primary deficit (i.e. even if the Greeks had no debt burden after defaulting on their obligations they would still have a deficit and need to cut more).

Personally I believe a hard default would be better for the Greek people in the long run (horrible initial economic consequences but reasonably quick rebound) but the short term impact would be greater than a voluntary default (where at least a decade of austerity lies ahead and the structural problems may still not be addressed, however, spending wouldn't be reduced quite so much initially).

artha

He is either mad or very shrewd. I can't work out which applies at the moment.

John_Pierpoint

MrRee wrote: »

Anyone for some very, very, very cheap Greek properties?

Because you will be able to buy some crackers for nothing ...... dip yer bread!

Is this true - I remember when Greece joint "the community", it retained existing laws that could stop "foreigners" buying Greek real estate.

"Citoyen" do we now have a "Common Market" in real estate inside the "European Union" ?

http://en.wikisource.org/wiki/Declaration_of_the_Rights_of_Man_and_of_the_Citizen

pqrdef

Wookster wrote: »

It seems almost certain that Greece will reject the package which will mean the end of formal support for its beleaguered banks and economy.

It means the troika's bluff will be called. The money will still be there. It's not dependent on austerity measures in any direct way, only by notions of moral hazard.

So can the troika afford to let its bluff be called? Can it afford not to?

Really bad idea in the first place, attaching conditions to the money that weren't likely to be met and didn't have to be insisted on.

vivatifosi

pqrdef wrote: »

So can the troika afford to let its bluff be called? Can it afford not to?

I'm not convinced it will act as one, initially at least. It could be bluff calling, it could equally be divide and rule. Interesting times indeed Wookster.

ETA: the IMF has often taken a 'my way or the highway' approach to its borrowers, will it be different this time? The EU is dependent on China for some of the money if Sarzoky's begging bowl approach is anything to go by. And what's in it for China? Rescuing what will in the short term at least be a basket-case economy in a volatile backwater of Europe with a relatively small market. Is Greece's hand really that strong?

wotsthat

artha wrote: »

He is either mad or very shrewd. I can't work out which applies at the moment.

Very shrewd. Greece has no intention of paying back it's debts so he'll personally take the credit for helping to wheelbarrow loads of money into Greece.

The 'people' will decide not to pay it back.

I'm afraid another posters catchphrase seems apt here - liars and thieves.

MacMickster

Papandreou has obviously come to the conclusion that a full default and exit from the Euro is a better long-term solution to Greece's problems than rule by Germany with them dictating Greek fiscal policy for the benefit of the Germans.

The short-term consequences of this course of action will be horrific for Greece however, so he doesn't want to be seen to make this decision. Instead he will pretend to support the opposite but let the Greek people make the decision for him through the referendum in January.

Look forward to markets in turmoil for the next few months and don't book a Greek holiday for next summer. The social unrest that we are likely to see in Greece when the country defaults is likely to make the Tottenham riots look like a children's tea party.

Heyman_2

The only time politicians go to a referendum is -

a) When they can be fairly certain what the result will be, and
b) When that result will be in their interests, despite their public assertions to the contrary

A 'no' will allow Papandreou to go back to the EU and say - 'what can I do, the people have said no?'

Still, we all know that the EU doesn't stand for a 'no' on referendums so I'm sure they'll find a way round it.