Make no mistake about it, the decision to hold a “referendum” is a decision to turn down the deal altogether. The referendum will never be held. It is scheduled for January and the current deal, which is not even a worked out deal, won’t be on the table by then. It’s already not on the table. The opposition leader is already opposed to the referendum, there are months more of market volatility to come, the other EU powers will get skittish about the deal, how is the conscientious Slovakia supposed to feel, and how many other factors do I need to cite? And how can the Greeks decide how the referendum will be worded?
This is a way to back out of everything, under the guise of “democracy” and ex post blame the speculators and the rest of Europe. But why? Here is one on the mark take on the matter:
A plan being developed to help reduce Greece’s debts — and prevent it from becoming the first euro-zone country to default on its debts — will fall hardest on the country’s banks and the national pension system. They would face tens of billions of dollars in losses on investments in Greek government bonds.
According to data from the European Banking Authority, major Greek banks hold about $70 billion
in Greek bonds, more than one-fourth of the total held by private investors worldwide. Greece’s national pension system has about $30 billion at risk, according to local bank and corporate officials.
Even as Greece benefits from emergency debt relief included in the new bailout plan approved by European leaders last week, the Greek government will have to borrow even more money to shore up its financial system and replenish the pension fund. Greek bankers say they doubt they could come up with the money on their own.
In other words, the deal would make the country totally bankrupt. Greek voters already feel blackmailed. A good rule of thumb is that if a very unpopular government holds a referendum on something — anything — that government will lose. Seriously now, which way do you expect the Greek bus drivers to vote?
Did I mention that the Italian ten-year yield was up to 6.31%?