Why is Greece turning down the “bailout”

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%?


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