November 1, 2011 by staff
Greece Referendum, The Greek Prime Minister George Papandreou, to the calls of his own party to resign on Tuesday after members launched the nation euro zone at risk by holding a referendum on a rescue package agreed last week.
A legislator Socialist party leader George Papandreou quit while two others said that Greece needed a national unity government followed by early elections, the opposition also demanded.
The leaders of France and Germany was quick to limit the damage to the euro area in general and European politicians expressed disbelief at the announcement that took everyone by surprise – as Finance Minister Papandreou himself.
“It’s hard to see what the referendum is to be treated. We are being saved or not? Is that the question?” asked the Swedish Foreign Minister Carl Bildt.
Business executives in Greece expressed his despair at how the country was being run and the markets speculate on whether Italy will be the euro zone country with falling into a debt crisis.
Jean-Claude Juncker, who chairs meetings of euro zone finance ministers, refused to rule out a Greek debt moratorium.
“Greek Prime Minister has taken this decision without consulting his colleagues across Europe,” he said in Luxembourg.
Asked if a Greek “no” would mean the collapse of Greece, Juncker said: “I can not exclude that this would be the case, but it depends on how exactly the question asked and what exactly is the Greek people to vote.”
Papandreou, PASOK party which has suffered several defections, as it pushes the waves of the austerity measures in Parliament, while protesters rally in the streets, said it needed more broad political support of the budget cuts and structural reforms required by international lenders.
But his problems deepened dramatically after his announcement on Monday. A cabinet meeting was due out Tuesday afternoon.
Milena legislator Apostolaki PASOK parliamentary group leaving on Tuesday, which reduces the strength of only 152 seats Papandreou of 300 members before a vote of confidence.
“It is my duty to resist this misguided policy choice that is divided in an effort to replace the popular mandate and threatens the viability of the country,” wrote Apostolaki in a letter to the President of Parliament.
“These are crucial moments and citizens must be represented by MPs of their choice. … So I’m going independent.”
Vasso Papandreou PASOK fellow legislator demanded a new government to ensure that Greece receive EUR 130 million rescue deal agreed at a summit of the euro area last week.
“I call on the President to call on political leaders in order to form a national unity government to protect the aid package was decided on October 27 and call elections immediately,” said Papandreou.
Papandreou did not even inform his finance minister, Evangelos Venizelos, who was to announce the best referendum on EU aid, a Greek government official said.
“Venizelos had no idea about the referendum. All he knew was the vote of confidence,” the official told Reuters on condition of anonymity.
“They must be crazy”
French President Nicolas Sarkozy, German Chancellor Angela Merkel called on Tuesday, his office said, while emotions were high in Greece itself the idea of ??referendum.
“They have to be crazy … this is no way to run a country,” said the CEO of one of the largest companies in Greece, speaking on condition of anonymity.
In other parts of the Eurozone, politicians complained of Athens was trying to wriggle out of the rescue package, not so much worried about the fate of Greece and the possible dire consequences for full monetary union referendum.
Ireland, which was a ransom, attacked the idea of ??Papandreou.
“Last week summit was to address the uncertainty in the euro area … and this grenade thrown in just a few days later,” said Minister of European Affairs, Lucinda Creighton.
“Legitimately it will be very upset about it,” he told Reuters.
Greek opposition calls for early elections and the financial markets, which had calmed down after euro zone leaders agreed on the Greek bailout Secondly, Papandreou bomb badly.
The bank stocks plunged, investors fled to the safety of German bonds and borrowing costs rose Italians, despite the efforts of the European Central Bank. Investors speculated that Italy could follow a similar path.
A German parliamentarian suggested height of the euro area in Athens to be drifting, cutting their lifeline and allow aid to the nation to pay its massive debt.
“This sounds like someone is trying to escape from what was agreed – a strange thing to do,” said Rainer Bruederle, a leading coalition of Merkel.
Bruederle, parliamentary floor leader of the Free Democrats and a former German finance minister, said he was upset by the announcement of Papandreou.
Europe should consider turning off the flow of money that is kept afloat Greece, told Deutschlandfunk radio.
“You can only do one thing: to prepare for the eventuality that there is a state of insolvency in Greece and does not meet the agreements, then the point is reached where the money off,” he said.
In markets, the players ran for safer investments, hitting actions and punishing the euro.
“The referendum is a bad idea with bad timing. The post-summit meeting is over,” said Lionel Jardin, head of institutional sales at Capital Assya in Paris.
The FTSEurofirst 300 index of top European shares fell nearly four percent, due not only to the possibility of a disorderly default Greek, but attempts to chaos surrounding the euro zone to stop the debt crisis spread to economies important, such as Italy.
Euro zone banks exposed to Greece and Europe’s largest economies with problems, have suffered particularly. The French Societe Generale shares fell 17 percent and Credit Agricole fell almost 12.5 percent.
Andrew Lim, bankinganlyst at Espirito Santo in London, said that a Greek “no” could cause a “default drive”, forcing banks to take losses of about 75 percent of Greek sovereign bonds and the increase threat of systemic risk.
“If we have a defect difficult to Greece, to aggravate the situation in Italy and Spain. It only increases the problem of Italy is on the same road, and that is the real risk,” said Lim.
Investors sold bonds issued by Italy and Spain – two large economies with debt problems, it would be much more difficult to rescue Greece, one of the youngest members of the eurozone.
Traders said led the ECB to intervene and buy bonds in both countries means Italian borrowing costs peaked at three months around 6.26 percent.
In currency markets, the euro fell more than one percent against the dollar and the yen. “The referendum is a real curve Greek. Nobody saw it coming and injected a large amount of uncertainty,” said Steven Saywell, head of currency strategy at BNP Paribas.
In Athens, the leader of the conservative opposition calls for early elections. “Elections are a national necessity,” said Conservative leader Antonis Samaras told reporters.
Germans in the streets of Berlin expressed exasperation with the euro project.
“The only thing I understand is that the Greeks continue making problems.’d Be better off without the euro,” said Bert Kuehn as he delivered a bakery rolls.
Analysts said the latest poll showed that most Greeks had a negative view of the rescue operation.
The renewed uncertainty is likely to be an embarrassment to the leaders of the G20 meeting in France this week trying to convince China to pull the euro zone a financial lifeline.
Greece is about to receive an 8 million tranche in mid-November, but is likely to run out in January, at the time of the referendum, leaving the government without funds if there is “no.”
A survey carried out on Saturday showed that nearly 60 percent of Greeks saw the agreement on the bailout package as a negative or negative, probably.
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