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Austerian Panic

Merkel and Sarkozy are in crisis mode and ‘casinos’ around the world are having the vapors after the vicious, underhanded action by the Greek prime minister. The BBC has the gruesome details: Greece’s Papandreou in crisis talks over bailout revolt

Greece’s government is holding an emergency meeting following a day of turmoil triggered by PM George Papandreou’s announcement of a referendum on the proposed EU bailout.

One MP from the governing Pasok party has resigned, cutting Mr Papandreou’s parliament majority to two.

Six other leading party members have called on him to resign.

US and European markets, calmed by last week’s EU bailout plan, have fallen sharply since the announcement.

The Greek government also faces a crucial confidence vote in parliament on Friday.

Apparently asking the people in a democratic country what they think of living in enforced poverty to prevent the greedy bankers from suffering the fate of losers is beyond the pale for the Euro zone.

The banks are panicked by having to actually state their real assets, rather than the ‘creative’ numbers that currently appear on their balance sheets. Their real concern is that this will lead to the Iceland procedure of sending bankers to jail and making the gamblers absorb their own losses.

Papandreou knows that implementing the latest ‘fix’ will just make matters worse, and there are already violent clashes in the streets and a series of strikes. Without the explicit agreement of the Greek people, the current plan won’t work.

2 comments

1 Badtux { 11.01.11 at 11:43 pm }

The hilarious thing is that it appears to be the *conservatives* who are pushing for Greece to get out of the Euro-zone, and the *leftists* who have signed off for austerity time after time. It’s like we’re in bizarro world or something.

– Badtux the Baffled Penguin

2 Bryan { 11.02.11 at 12:26 am }

The leftists are trying to clean up the mess left them, with the austerity the price demanded by Germany and France. The ‘conservatives’ don’t want to pay the taxes that are included and might actually be collected under the new system.

The problem for the prime minister is that the demands coming from the Eurozone keeping getting more and more draconian, so he can’t see any point in continuing to follow the instructions unless this is what the voters really want.

The ‘deal’ that was supposedly struck was on the political side, and the economic side is a work in progress. I think that Papandreou is watching the trend of the economic plan, and decided that it is at variance with what he thought had been agreed to. For example the 50% haircut for the bond holders is now looking to be a good deal less that 50%, so it really won’t help Greece in the long run, and it might destroy the Greek banks.

Greece should have left earlier, rather than damaging its economy for months while the Greek 1% sent its money to other countries.