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Greece plans referendum on austerity measures

Puppycow

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Anxieties Stir as Greece Plans Referendum on Latest Europe Aid Deal

ATHENS — In a surprise move that jolted Europe and put his political future in play, Prime Minister George A. Papandreou announced Monday that his government would hold a referendum on a new aid package for Greece, putting austerity measures — and potentially membership in the euro zone — to a popular vote for the first time.

The vote on the austerity package introduces a note of uncertainty in what had seemed to be a done deal, threatening the comprehensive agreement reached by European leaders last week to shore up the euro zone. A rejection by the voters would also be likely to be treated as a vote of no confidence in the government and lead to early elections.
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So, what's the over-under on Greece still using the euro as its currency a year from now?
 
Well, apparently the Greeks aren't keen to leave the Euro but I suspect that this referendum has a dual purpose:

1. If they can convince people to vote for the austerity measures then it will be harder to justify social unrest and protest about them in the future. In other words, get the people on board rather than having them feel like they've been railroaded.

2. The threat of a no vote, or some variation in the wording of the referendum which could be seen as attempting to renegotiate the bail out, could put the Greek government in a stronger position with regard to the terms of the bailout, basically saying "Hey, we're all in this together, but we're not prepared to suffer to the extent which you want, so agree an alternative or we'll bring the whole lot down". Only in Greek.
 
it should be suprise if there was no referendum. welcome to democracy.
 
A few casualties to ensue from this "crisis". Some European leaders are going to have to come to the conclusion that they can either shore up the Euro or win their next domestic election. I doubt both are possible, especially not in Germany or France.
 
Maybe the best solution is for them to quit the euro. But it would be a bit strange given the significant debt-write offs they have recieved.
 
DC said:
it should be suprise if there was no referendum. welcome to democracy.
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This is debatable. I've thought an argument could be made that referendums are quite undemocratic, as the elected elite pick and chose what policies they think they can trust the electorate with. Having a referendum on one policy brings up the question of why you can't decide on another one.

I've often wanted representatives to just do the job they are elected to do, rather than avoid responsibility by asking the people. Should Bush have consulted the American people on whether to implement the surge in Iraq in 2006? Should Cameron consulte the British on whether to keep interest rates low or raise them by .3%?
 
uk_dave said:
2. The threat of a no vote, or some variation in the wording of the referendum which could be seen as attempting to renegotiate the bail out, could put the Greek government in a stronger position with regard to the terms of the bailout, basically saying "Hey, we're all in this together, but we're not prepared to suffer to the extent which you want, so agree an alternative or we'll bring the whole lot down". Only in Greek.
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When you're begging for other people's money you don't get to negotiate the terms.

Why should the taxpayers in the rest of the Euro zone suffer so that the Greeks who caused their own problems don't have to face up to them? If I'm a German I have no sympathy for Greeks living well beyond their means with my money.

Greeks made their own bed, sooner or later they'll have to lie in it. Closing their eyes and pretending this isn't happening won't make things any better, in fact it will only get far worse than it will be under the austerity measures.
 
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WildCat said:
OK, they quit the Euro. Then what?

1. Quit Euro.
2. ?
3. Profit!

What exactly happens in Step 2?
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I've heard various "commentators" and wizards* use what happened to the Argentinian economy at the end of the last century as an example of what might/will/could happen.



*A.K.A. Economists
 
Darat said:
I've heard various "commentators" and wizards* use what happened to the Argentinian economy at the end of the last century as an example of what might/will/could happen.



*A.K.A. Economists
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Exactly, and the affects on the Argentinian people were quite extreme, much more so than the austerity measures the Greeks are protesting.

They can suffer a little, or they can suffer a lot. Unfortunately, a large segment of the Greek population thinks they can get out of this pain-free, and that simply is not going to happen in this universe.
 
WildCat said:
OK, they quit the Euro. Then what?

1. Quit Euro.
2. ?
3. Profit!

What exactly happens in Step 2?
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The rest of the EU stops having to support their debt, and Greece isn't required to keep borrowing heavily and cooking their books in order to meet the EU requirements.
 
excaza said:
The rest of the EU stops having to support their debt, and Greece isn't required to keep borrowing heavily and cooking their books in order to meet the EU requirements.
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So all these workers protesting about pay and benefit cuts, what happens when Greece stops borrowing money with which to pay them?
 
WildCat said:
So all these workers protesting about pay and benefit cuts, what happens when Greece stops borrowing money with which to pay them?
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The government defaults, like it's going to do anyway. And then they move on.
 
Darat said:
They would print their new Drachma notes and pay with that.
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Which will put them right where Argentina was in the height of their crisis, hyperinflation and all.

I hope Greece is self-sufficient in food production, at least Argentina had that going for them. Going to be hard to import food and oil using the drachma.
 
excaza said:
Sure.
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Sure what?

How does Greece "move on"? The only possible way to do that is... austerity measures. Which much of the population opposes.

It really doesn't matter what currency they use, Greeks will have to choose between different degrees of pain. The populace doesn't appear to recognize that that is their only choice.
 
WildCat said:
Sure what?

How does Greece "move on"? The only possible way to do that is... austerity measures. Which much of the population opposes.

It really doesn't matter what currency they use, Greeks will have to choose between different degrees of pain. The populace doesn't appear to recognize that that is their only choice.
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I'm not disagreeing with you.
 
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