With the world standing on its heels waiting to see what will come of the Eurozone’s debt-crisis, this week truly played out like the a Greek drama, which is one of the many world contributions Greece is known for, with some added Halloween elements.
The supposed “treat” would come from President Sarkozy and Chancellor Angela Merkel (along with other EU leaders and finance ministers) who have proposed a 130 billion-euro ($180 billion) bailout package for the heavily indebted country of Greece. Weeks ago everything seemed to be moving along as planned, as Greek Prime Minister George Papandreou agreed with the bailout package, especially after countless summits and meetings with European leaders. The “trick”, however, came unexpectedly when Papandreou came out with an announcement on Monday, October 31, stating that he would propose a referendum on the issue. Leaving the decision and the weight of the European financial system potentially in the hands of the Greek people. “We trust citizens, we believe in their judgment, we believe in their decision,” he told ruling Socialist party deputies in Athens.
The originator of democracy showed its true colors by leaving it up to the “people”, but world markets seemed to have a different opinion. Even Papandreou’s Socialist party, seems to disagree with the referendum. One lawmaker resigned as other cabinet members openly disagreed with the proposal, calling for elections. According to many market experts, the mere thought of a “No” on the bailout could potentially cause a huge liquidity issue for the European Central Banks and could single-handily dismantle the Eurozone.
Thursday, November 3rd, in a true Greek Drama fashion, Prime Minister Papandreou decided to step down and hand his power to the negotiated coalition government. Papandreou made a deal with cabinet members to win the confidence vote on Friday. Sources later said that he stated that calling the referendum on Monday on the EU deal was a mistake.
“He was told that he must leave calmly in order to save his party,” one source told Reuters on condition of anonymity. “He agreed to step down. It was very civilized, with no acrimony.”
– Justin Garcia
Article submitted by: Justin Garcia of the Capital Markets Lab (CML). To learn more about the Capital Markets Lab (CML) please visit https://business.fiu.edu/capital-markets-lab/.