Thursday, November 3, 2011

Papandreou Calls Off the Referendum

Was this the intent of his gamble? To frighten the opposition into backing the plan? If so, it worked. Now, to make the plan work.

As for France, Sarkozy's intent to run for re-election on a platform of "I saved Europe" is once again operational.

1 comment:

Mitch Guthman said...

I am not sure what is actually happening but I don’t think he’s scared the opposition in supporting the Merkel-Sarko rescue plan. I think it depends on what the calls for a government of national unity mean right now in the context of Greek politics. Unified to do what, exactly? Support the plan or walk away like Argentina? And if he either won't or can't form a government of national unity and his government falls, as seems far more likely today than before the referendum was announced, what then?

The fundamental problem for Sarkozy and Merkel seems to be that the Greek are figuring out that they themselves will probably be significantly less screwed (and for a shorter period of time) if they default and leave the Euro than if they go along with the rescue plan. I personally think that Greece has far less at stake than the banks in Europe and the United States who have speculated wildly (to the tune of perhaps trillions of dollars) on Greek debt. So it’s really a not of how much and for how long are the Greeks will to suffer to atone for their sins as what suffering they are willing to endure to save the taxpayers in Germany, France and the United States. Since it looks increasingly like the answer is “not much”, I hope that Merkel and Sarkozy have a backup plan that involves canceling naked credit insurance and issuing Eurobonds to prop up the governments and banks throughout the eurozone.