Greece to hold European debt deal referendum

Lord Beria3 · Post by **Lord Beria3** » 31 Oct 2011, 20:17

http://www.guardian.co.uk/business/2011 ... referendum

Greece will hold a referendum on a new European debt deal reached last week.

"This will be the referendum: the citizen will be called upon to say a big yes or a big no to the new loan arrangement," the troubled country's prime minister George Papandreou announced to Socialist members of the Greek parliament.

"This is a supreme act of democracy and of patriotism for the people to make their own decision … We have a duty to promote the role and the responsibility of the citizen.

This is a massive new development! The chances are that the Greeks will vote no, and what happens to the eurozone deal then?

How will the Germans/Brussels react to the potential rejection by the people? A clash between democracy and the financial/political class is emerging.

Lord Beria3 · Post by **Lord Beria3** » 31 Oct 2011, 20:25

http://www.nytimes.com/interactive/2010 ... marsh.html

Check this graph out! A bomb waiting to explode indeed!

http://www.bloomberg.com/news/2011-10-3 ... hanan.html

The European nations are linked in a network of debts, as Bill Marsh recently illustrated in the New York Times with a beautiful piece of graphic art. Greece and Italy are prominent; Ireland, Portugal and Spain lurk ominously nearby. France and Germany seem exposed, too, as does the U.S.

The image is like a complex wiring diagram for a ticking debt bomb. Yet what it shows may be less important than what it leaves out: a largely invisible network of ties among institutions around the world, which could ultimately cause global financial chaos.

This hidden network has been created by institutions that buy and sell unregulated credit-default swaps. These are essentially insurance contracts on bonds; in the event of a default on the bond, the seller of the swap promises to pay the buyer the bond’s value.

Credit-default swaps are mostly arranged “over-the-counter,” not traded on any exchange or recorded by any central information repository. This explains why Marsh’s map couldn’t show the links they create.

But these undisclosed ties matter a lot. They were the primary reason the U.S. government needed to intervene in 2008 to prevent the collapse of insurance giant American International Group Inc. Ignoring the looming trouble with subprime mortgages, AIG had blithely sold CDS contracts insuring mortgage-backed securities to Goldman Sachs Group Inc., Societe Generale SA, Deutsche Bank AG and other firms. Suddenly, AIG was potentially on the hook for almost half a trillion dollars in payments. Through CDS contracts, AIG’s failure could have spread distress throughout the global financial system.

This, along with Peak Oil is the elephant in the room. Derivatives are one of the most dangerious things in our global economy as Portillo has warned about for over a year now on This Week.

The danger is that a Greek vote of no, will lead to the collapse of the deal, Greece formally defaulting, triggering a CDS event, and contagion spreading to Italy and Spain very quickly.

At that point, the ECB will HAVE to monetise (e.g. print money) to save the system over the opposition of the Germans. Or, the entire bond/banking markets of key European states will go into collapse.

UndercoverElephant · Post by **UndercoverElephant** » 31 Oct 2011, 21:24

Yes, this is an extra-ordinary turn of events. It sends a torpedo heading for the whole "deal" they cobbled together, not that it was ever going to be adequate anyway. And you've pretty much got to bet on the result being "no." I'd vote no.

Snail · Post by **Snail** » 31 Oct 2011, 21:38

What a strange time for a referendum. Very strange. I wonder why now. Internal politics, China, USA, Germany, Banks, Greece trying to get a better deal? Can't believe Greece is suddenly trying to stand up for itself. A way out of the Euro for Greece? The end of the Euro?

60% of Greece view the deal in the negative.
http://www.msnbc.msn.com/id/43451145/ns ... q73WYIglBl

Lots of

snow hope · Post by **snow hope** » 31 Oct 2011, 21:39

This all goes to show just how incredibly intertwined investments and debts at a sovereign level have become. And it certainly clarifies the real risk of cantagion occurring!

No date has been set for the referendum yet. In fact it states in the linked article that the referendum will be held some weeks after the details of the deal have been agreed. If the detail takes a few weeks to agree and of course it would seem likely that other sovereign powers will not be keen on an early referendum, due to the possiblity of a non-acceptance, I would imagine it could be well be into 2012 before any referendum were actually held.

Nevertheless this focuses my mind and how one mitigates the economic crash that will likely occur as a result of a NO vote. I think it prudent to build up a reserve of cash outside of the banking institutions should the worst occur. This might be in the form of coins, notes and even some different currencies, and if you are able to, then it would seem sensible to consider some silver and gold coins. It sounds crazy, but this is what may be required if the worst happens.......

I will post elsewhere my thoughts on trying to hold some value in your pension pot if you have one.

Hmmmmm

UndercoverElephant · Post by **UndercoverElephant** » 31 Oct 2011, 22:09

Snail wrote:What a strange time for a referendum. Very strange. I wonder why now. Internal politics, China, USA, Germany, Banks, Greece trying to get a better deal? Can't believe Greece is suddenly trying to stand up for itself. A way out of the Euro for Greece? The end of the Euro?

Internal politics. The Euro won't die just yet.

2 As and a B · Post by **2 As and a B** » 01 Nov 2011, 07:20

There was always going to be a crisis with the Euro. Both proponents and opponents knew this. The former hoped that the crisis would further their aim of political union (via adding fiscal union to monetary union). The latter feared complete union.

If Greece votes no, the pan-European state plan would stall and Euro-bloc could break up (amid global financial chaos). If the vote is yes, welcome to the United States of Europe.

Who would have thought that Europeans would have to rely on the Greeks to preserve democracy?

Hands up those who think global financial chaos is going to be avoidable by any means.

DominicJ · Post by **DominicJ** » 01 Nov 2011, 08:28

The Greek plan (which is almost certainly German), is to extract better terms from the EU and banks, however, its likely to, erm, forward fire(?), because no matter how lenient the terms are, even if Germany realises how ****ed they are and acts like a pissed up sailor, even if the banks accept 75% write offs, Greece is likely to reject anything.

At that point, all hell breaks lose in France.

UndercoverElephant · Post by **UndercoverElephant** » 01 Nov 2011, 11:23

2 As and a B wrote:There was always going to be a crisis with the Euro. Both proponents and opponents knew this. The former hoped that the crisis would further their aim of political union (via adding fiscal union to monetary union). The latter feared complete union.

If Greece votes no, the pan-European state plan would stall and Euro-bloc could break up (amid global financial chaos). If the vote is yes, welcome to the United States of Europe.

I don't agree. To get to a US of E would require a lot more votes in a lot more countries. That's part of the problem for the EU here - it only takes one major spanner in the works to break the thing completely, but creating a federal European state requires a long sequence of unlikely "yes" votes.

Hands up those who think global financial chaos is going to be avoidable by any means.

We already have global financial chaos.

DominicJ · Post by **DominicJ** » 01 Nov 2011, 11:53

UE
I was about to say we dont have soup kitchens, but actualy, we do, although they arent quite that widespread, yet.

Peter1010 · Post by **Peter1010** » 01 Nov 2011, 22:53

getting close to a coup d'etat?

In a surprise move, on Tuesday evening the defence minister replaced the country’s top brass.

http://www.athensnews.gr/portal/8/49916

UndercoverElephant · Post by **UndercoverElephant** » 02 Nov 2011, 08:23

bicyclebloke wrote:getting close to a coup d'etat?

In a surprise move, on Tuesday evening the defence minister replaced the country’s top brass.

http://www.athensnews.gr/portal/8/49916

You have got to wonder what the generals would do if they did take over. They aren't known for their knowledge of macro-economics.

biffvernon · Post by **biffvernon** » 02 Nov 2011, 08:27

There's not many people who are known for their knowledge of macro-economics who are connecting energy production with economic growth.

(Not that I'm suggesting the generals could do a better job - they have a much worse track-record.)

DominicJ · Post by **DominicJ** » 02 Nov 2011, 08:42

UE
Depends, some are very good, some are very bad, Pinochet and Franco hardly wrecked their economies, the Colonels Junta of 67 in Greece wasnt an economic disaster either, they pretty much built Greeces tourism sector.

But then of course there are plenty of disasters to balance those.
Its actualy quite interesting to compare Argentina and Chile

The CCP little more than a military dictatorship, admitadly, thats about to collapse in epic fashion, buts its economy is 10x what it was in the 60's as a percentage of world GDP.

Lord Beria3 · Post by **Lord Beria3** » 02 Nov 2011, 18:53

http://www.wsws.org/articles/2011/nov20 ... -n02.shtml

Prime Minister George Papandreou sacked the Greek military high command Tuesday. The move came amid furor on the part of world governments and international financial markets over his proposal to submit a European Union bailout plan that spells years of punishing austerity for Greek workers to a popular referendum.

The Greek defense ministry issued a terse emailed statement that Papandreou had dismissed his chief of national defense, the Greek Army general staff chief, the heads of the Air Force and the Navy, along with 12 other senior officers.

The announcement fueled rumors in Greece of an impending military coup. These fears are founded on an understanding that the drastic cuts in employment, living standards and essential social services that have been demanded by Europe’s ruling elites as the price for a partial relief of the country’s debt burden cannot be imposed by democratic means.

If a coup is threatened, it is undoubtedly not merely a matter of domestic tensions. Rather it would stem from decisions taken in Berlin, Paris, Washington and NATO that the interests of finance capital require a Pinochet-style solution to the problems in imposing the decisions of the EU on a resisting Greek working class.

Fresh from its bloody success in Libya, NATO may well be preparing another exercise in “regime change,” this time in one of its own member states.

World governments have reacted to Papandreou's referendum announcement with unconcealed anger and dismay. French President Nicolas Sarkozy and German Chancellor Angela Merkel have summoned Papandreou to Cannes for emergency talks in advance of the G20 summit there.

The Financial Times of London Tuesday quoted a former PASOK cabinet minister as warning in relation to the Cannes talks, “That could be a dangerous absence on the part of the prime minister.”

Papandreou’s grandfather, Georgios Papandreou, who was also prime minister, was forced out of office and then died under house arrest following a 1967 military coup. That coup brought to power a repressive junta that ruled the country until 1974, implementing wholesale repression, outlawing political parties and unions and carrying out mass arrests and systematic torture

I posted a article a few months ago on CIA warnings on a potential military coup, well it looks like we are very close to a military dictatorship.

Make no mistake, this, if it happens, is a critical moment in the ongoing collapse of the post war international liberal/neoliberal order and the transition to the era of scarcity industrialism.