EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2

The Greek prime minister George Papandreou is facing a showdown with EU
leaders later after his cabinet backed plans for a referendum on the Eurozone
bailout.


French president Nicholas Sarkozy, who will host the meeting, and German
chancellor Angela Merkel are both said to be furious at the development.

The Greek cabinet backed Mr Papandreou's shock call for a referendum on the
European economic rescue plan despite heavy falls on the financial markets.

After a lengthy meeting, Greek government spokesman Elias Mossialos said:
"The referendum will take place as soon as possible, right after the basics of
the bailout deal are formulated."

Whether an act of unprecedented brinkmanship or sly political
play, Mr Papandreou’s surprise decision has already begun to
backfire.

Greek journalist Anthee Carasavva


Some ministers leaving the seven-hour talks said they had expressed
reservations about the referendum but decided to support the government ahead of
a key confidence vote expected in parliament on Friday.

Mr Papandreou told his ministers that putting the issue to the Greek people
was the only way to safeguard the proposed debt-and-loan deal.

"We will not implement any programme by force, but only with the consent of
the Greek people," he said.


Is the referendum a suicidal political move?









"This is our democratic tradition and we demand that it is also
respected abroad."

A referendum, he said, "will be a clear mandate, and a clear message within
and outside of Greece, about our European course and our participation in the
euro," he said, according to a text of his speech to the meeting issued by his
office.

Mr Papandreou has been summoned to emergency talks on the bailout on
Wednesday before a G20 summit in Cannes.

Greek journalist Anthee Carassava said: "The Greek prime minister was facing
his own domestic pressure and that is obviously what he is going to be telling
them, that this is not an easy task to bring on additional austerity measures
and more pain to Greeks.

"I think he is going to reach out and try and make them understand what made
him announce this sudden decision."

French President Nicholas Sarkozy, who will host the meeting in Cannes, said
news of the referendum had "surprised all of Europe".


French President Nicolas Sarkozy said the announcement
'surprised all of Europe'


"Giving the people a say is always legitimate, but the solidarity of
all countries of the eurozone cannot work unless each one consents to the
necessary efforts."

Greece's general price index plunged to close down 6.92% the day after Mr
Papandreou's announcement.

In Germany the Dax index, the major stock market average, lost 5%, while the
French stock market closed down 5.4%, the Italian 6.7% and London 2.2%.

Speaking on Jeff Randall Live, Constantine Michalos, the head of the Athens
Chamber of Commerce, said Mr Papandreou's referendum call was a "suicidal move"
that had sent the markets "completely in the doldrums".

"He came out of the blue with this referendum idea, which he hadn't
communicated even to his closest cabinet ministers… or with the major leaders of
the European Union," he said.

"The euro has been threatened. And of course the credibility factor
concerning Greece - which has been a problematic issue for months now as a
result of the debt crisis - has worsened even more."

The debt deal agreed by European leaders last Thursday in Brussels would see
banks accept a 50% writedown - higher than the 40% they had originally
offered.

It was also agreed that the 440bn euro (£386bn) bailout fund will be
increased to around 1trn euro (£876bn).

Breaking News........the EFSF is delaying its sale of bonds meant to increase the Fund. This is a very important decision . Could be the declining value
of the Euro, the Greek drama, the thought of trying to ringfence Italy and Spain or the decision to allow Greece to default and leave the EU.

Apparently the delay in issuing the EFSF Bonds is because of Markets conditions.

Ireland is worried because it has E4.3 Billion Bonds due for redemption this month and was relying on the EFSF funding this.

Papandreou will meet with not just Merkl and Sarkozy but IMF boss La Garde and the new ECB Boss. University Economics Professor Danny Blanchflower
says Papandreou has played his Ace card. He knows the Debt burden will never be repaid and is saying to Merkl and Sarkozy , if my Country defaults, you
come down with me, so maybe hoping to renegotiate payment. He knows the Greek people will keep on striking to make the situation worse, but if they vote against the deal in a referendum Greece defaults, if they vote for staying in the Euro they must accept responsibility for the Debt.

Italian Banks have seen their shares hammered 20% down in just one week and the Italians are angry at the way Merkl and Sarkozy have handled this
crisis. Berlesconi is to hold an emergency meeting with them ahead of the G20 meeting.

Unemployment in Germany unexpectedly rose for the first time in 2 years.

Berlesconi calls Cabinet meeting to confirm austerity measures before G 20 meeting, he is expected to sign a Decree to reform Italian Economics.

Ragnusa from Guido Carlo University says ECB must act quickly to avoid meltdown.

Merkl and Sarcozy say there will be no change to the offer made to Greece, but to give you some idea of the huge burden Greece faces, their 2 yr
bond pays interest of 96.7% and 10 yr bond 25.47% , add to this the World recession, how is Greece ever going to repay these debts? Greece should have
been allowed to default over 18 months ago and Sarkozy and Merkl taken a chance that the Euro would survive.As it is, this crisis has been so badly
handled that Investors will be wary.

The general opinion seems to be the Greek Population does not want a Referendum , Merkel and Sarcozy say they are withholding the E8 Billion due
to be paid this month until the result of the Referendum is known. Austria says chuck Greece out. The referendom will probably take place at the end
of this month.

The Greek Communist Party oppose the Referendum, a Female MP says the question should be, "do you want to die or be killed"? When questioned by
Peter Snow about the rich never paying Taxes and taking their money out of the Country she shrugged her shoulders and said despite 50% reductions in earnings, 6 more Taxes have been added.

I RECKON THERE WILL QUITE A FEW PAGES DEVOTED TO THE G20/EURO CRISIS IN MY NEWSPAPER TOMORROW.

Ah democracy – Ancient Greek for “rule of the people”. It has a
habit of intruding on the grand European project every now and then.

Think back to the French “no” vote for the European constitution six years
ago, or Slovakia’s brief rejection of plans to beef up the European Financial
Stability Facility which took down the Government (the former-PM, Iveta
Radicova, is now reportedly considering quitting politics entirely). In one
sense, the Greek decision to hold a referendum on the latest bail-out package
for its economy is merely more of the same.

The difference this time around is that Brussels may not have the luxury of
doing what it usually does: rephrasing the question, putting it to the public
again and hoping for a different answer. With the financial markets seeking
blood, the very fate of the euro could depend on the Greek referendum. The
dynamics of this are complex, and for more on them see my
colleague Alistair Bunkall’s Q&A.

However, the episode begs the question: is the euro incompatible with
democracy? It doesn’t enjoy universal support within its member states – in
fact, the latest eurobarometer survey (run by the Commission itself), found that
only 34% of the euro member population supported – strongly or otherwise – euro
membership. That compares to 45% who are against euro membership (with 21% not
professing a preference either way). Nor was there comprehensive support for the
single currency in its heartland, Germany; indeed, if there were a referendum
over euro membership before it was introduced, Berlin would have rejected
it.

But leaving aside the question of democratic support for the single currency,
there’s also a deeper question over whether economic structures like the
eurozone can actually support fully-functioning democracies. To see why,
consider what Harvard economist Dani Rodrik calls the political economic
“trilemma”. History has shown, he says that you cannot simultaneously have
democracy, national determination and economic globalisation – you can choose
two of the three but not all three.



The euro area, like the gold standard, involves a combination of deep
economic globalisation (consider the free market, where goods and capital can
flow freely) and the maintenance of countries’ individual identities (Germans
are still Germans, Greeks are still Greeks). History has shown that this can
only be achieved by suborning democracy, for a simple reason: usually democracy
would demand that countries follow public demand. But sharing a currency, or
indeed being part of a “golden straitjacket”, as the Gold Standard was called,
means ignoring domestic interests in favour of the broader interests of your
economically-intertwined neighbours. Which means that when times get tough, you
have to impose austerity on your people rather than exporting it to your
neighbours through inflation or capital controls.

The Gold Standard which, as I’ve indicated, is, in economic terms, almost
identical to the euro, collapsed when its member states allowed their people to
vote, and those people, understandably, rejected the notion that they should
suffer on behalf of their neighbours. The euro can survive, but only if its
members forget about democracy as we know it, or forget their national identity.
Anything else is unsustainable.

Ed Conway sky News

GREEK REFERUNDUM POSSIBLY TO BE HELD ON 4 DECEMBER

IMO from what I have listened to from Sarkozy and Merkel - they want the referendum to be an in/out of Eurozone.

Which is ultimately not allowing Greece to choose what they have a referendum about! This is tantamount to a threat.

IMO France and Germany are scared! Greece could bring this farcical EU down about their ears.

But Greece won't want to leave because they need the support of the Eurozone. It's a catch 22. I knew this would happen - they dare not allow any of the Members to have a referendum unless they agree on what terms. They must know the Greeks think the bail out is unfair - they are paying a high price if they let the bail out continue. I wish the Greeks good luck and they should go it alone.

Merkel and Sarkozy are the bullies in the Club!

Papandreou is right - he is allowing his people to have at least the chance to decide.

Merkel and Sarkozy are running sacred and are looking to their own interests and are showing their true colours.

I know that the bullying will work and Greece will ultimately bow to the pressure from the "Big Two" ugh don't I just hate bullies.

I just wish that the people of Member Countries should be allowed without threat to decide what they really want. It's no good saying they will not be able to survive without the Eurozone and because they are tied hand and foot by the Treaties they have signed they don't have room for manoeuvre. Oh how I wish it would all implode and we all disband from the EU.

Hi Angelique, I think if Greece defaults the EU will implode, Italy, Spain, Portugal, Belgium Ireland all have problems and the rest of the World would think twice about investing in the Euro or buying bonds when 50% has been written off.Where are they going to get the money to keep all these Countries
afloat when the World is likely to be heading for a double dip recession. ?

Even if Greece decides to stay in the EU, who could trust it"s people to try to maintain an austerity plan when they already strike on the a few measures
brought in? How can the Government collect taxes, especially from the rich?

I think this might be behind Panpandreou"s thinking for having a Referendum, "If you want to stay in the EU, you MUST accept the measures taken to repay the loans."

Greek Vote On Bailout Plan Due Within Weeks

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11:50pm UK, Wednesday November 02, 2011


Greece's prime minister has said he is confident his people will vote to
accept an EU bailout plan in a referendum which is now set to be held as early
as December 4.


George Papandreou was speaking after emergency talks with French president
Nicolas Sarkozy and German chancellor Angela Merkel.

The pair said they wanted to help Greece, and for it to remain a member of
the EU, but the question for the country was now whether it wanted to remain in
the eurozone.

Mr Papendreou stressed he was expecting a "positive outcome", adding: "I
believe the Greek people want us to be a strong partner in Europe."

The French and German leaders summoned Mr Papandreou for talks in Cannes on
the eve of a G20 summit of major world economies after he called the surprise
referendum on the rescue plan deal reached last week.


George Papandreou faces up to Angela Merkel and Nicolas
Sarkozy



Mr Papandreou, speaking after the meeting, told reporters it was "important
that the Greek people make decisions on these important developments - it's
their democratic right".

He said he believed the vote could be held on December 4.

The agreement reached by European leaders last Thursday in Brussels will see
banks accept a 50% writedown of Greece's debt - higher than the 40% they had
originally offered.

It was also agreed that the 440bn euro (£386bn) bailout fund will be
increased to around 1trn euro (£876bn).

Follow all the latest updates from our correspondents on the
negotiations

Tim Marshall....Sky News 2nd November

Demos (the people) Kratus (rule) = Democracy.
The equation
above is the fall back position for the Greek Prime Minister after
reneging on his face to face agreement with Eurozone partners this week.
In Brussels George Papandreou said ‘ I agree’. He then flew home to Athens and said to the people ‘Actually, you choose’.
It could be argued that this was democracy in its purest form, or it could be politics at its most cynical and reckless.
Traditionally,
and theoretically, in democracies the people elect the leaders who then
make decisions based on the will of the people. However, in reality, as
there is rarely one will, the leaders take the decisions and at the
next election take the consequences.
On foreign policy, If they
were frequently to go home and offer referenda, other leaders wouldn’t
trust them, and there would be a danger of political paralysis.
This
is one reason why Chancellor Merkel and President Sarkozy feel
betrayed. On the other hand, given that these are momentous times for
the Greek nation, it can be argued it is only right and proper that they
get to vote this time on this issue.
Some analysts believe
Papandreou was not thinking of democracy, only of his own political
survival. He knows the Brussels deal is deeply unpopular in Greece and
that he could have been brought down if he’d kept his promise to his
European partners. To avoid his government collapsing, he played the
democracy card.
If you take that view then the Prime Minister has
behaved recklessly given the turmoil he has caused in the markets and
the potential knock on effects across the continent. A deal designed to save the currency of 17 nations may have been scuppered to save the Government of one.
There
are further complications: What about the democratic rights of the
people of other Eurozone countries? Their elected leaders backed the
Euro bail out deal and their voters eventually may pay part of that bail
out with their money.
If the Germans and Slovenian voters have
had their retirement ages raised in order to help pay for the economic
crisis we are all in, why shouldn’t the Greeks, who voluntarily
sacrificed a degree of sovereignty by joining the Euro accept the
austerity measures inherent in the bail out package?
Back comes
the argument – it wasn’t the people who got us into this mess, it was
the banks, so why should the people suffer? And then the ball is again
batted to the other court; ‘You lived beyond your means for decades, and
elected politicians who joined you in turning a blind eye to that and
then turned to the banks for help.’
And so it goes on, as does the
blame game. Is it the fault of the governments, the banks, or the
people? Whatever your view it is clear there is a crisis of confidence
in the banks, the governments, capitalism, the Euro, and possibly even
in the EU.

Panda wrote:Hi Angelique, I think if Greece defaults the EU will implode, Italy, Spain, Portugal, Belgium Ireland all have problems and the rest of the World would think twice about investing in the Euro or buying bonds when 50% has been written off.Where are they going to get the money to keep all these Countries
afloat when the World is likely to be heading for a double dip recession. ?

Even if Greece decides to stay in the EU, who could trust it"s people to try to maintain an austerity plan when they already strike on the a few measures
brought in? How can the Government collect taxes, especially from the rich?

I think this might be behind Panpandreou"s thinking for having a Referendum, "If you want to stay in the EU, you MUST accept the measures taken to repay the loans."

Well put Panda

I heard yesterday that the doctors and dentists were fiddling their taxes and only declaring tiny amounts of pay. One dentist had only declared income (in a year) of 250 euros.

What with that and the fact that Greece since it joined euro doubled the public sector and massively increased pay increases way above Germany, France etc it is no wonder the Greeks are in trouble.

This referendum is crazy though - as would only be held after Greece had defaulted and remember they are due another tranche of 8 billion euros (loan) soon - who is going to let them have that now?

Angela Merkel has made it very clear , the Referendum will revolve around nothing less than "does Greece want to be in the EU, yes or no".
Papandreou says he is confident the Greek population will want to remain in the Union.

He may add that if the Population agrees, they accept auisterity measures.......I would if I was him.

Venizelos, the Greek Finance Minister has discharged himslef from Hospital to attend Parliament , says there shouldn"t be a referendum.

Sarkozy has cut off aid until the Referendum.

Draghi, the new President of the ECB has a major decision to make. A Commerzbank spokesman says the ECB needs to make a rate cut , but that it will
not be made immediately. He says 2 Directors of the ECB have resigned over the way this crisis has been handled. One interesting observation he made
was the ECB issuing Bonds as a lender of last resort . The Buyer chooses which Country"s bond to purchase not the EU as in the US Treasury and
British Treasury which makes the system unfair.

A Russian Spokesman says the G20 needs to concentrate on growth......presumably not on the EU!!!

French Bank BNP income down 72%.

gillyspot wrote:

Panda wrote:Hi Angelique, I think if Greece defaults the EU will implode, Italy, Spain, Portugal, Belgium Ireland all have problems and the rest of the World would think twice about investing in the Euro or buying bonds when 50% has been written off.Where are they going to get the money to keep all these Countries
afloat when the World is likely to be heading for a double dip recession. ?

Even if Greece decides to stay in the EU, who could trust it"s people to try to maintain an austerity plan when they already strike on the a few measures
brought in? How can the Government collect taxes, especially from the rich?

I think this might be behind Panpandreou"s thinking for having a Referendum, "If you want to stay in the EU, you MUST accept the measures taken to repay the loans."

Well put Panda

I heard yesterday that the doctors and dentists were fiddling their taxes and only declaring tiny amounts of pay. One dentist had only declared income (in a year) of 250 euros.

What with that and the fact that Greece since it joined euro doubled the public sector and massively increased pay increases way above Germany, France etc it is no wonder the Greeks are in trouble.

This referendum is crazy though - as would only be held after Greece had defaulted and remember they are due another tranche of 8 billion euros (loan) soon - who is going to let them have that now?

orning gillyspot, I think I have answered some of your queries with my latest post.

While Greece is paying 74% on it"s 10 yr Bond and 24% on the 2 yr while in recession is pie in the sky and it has few assets to sell. Many Greeks are
buying up properties in Central London because prices are good and I"m sure millions of Euros are held in off shore accounts.

The EU is to blame for a lot of this for not monitoring Countries properly, European Banks too for rash lending without collateral, the way things are
going I think the EU will break up and it has lost credibility around the World.

Panda

I agree that Papandreou has used this Referendum to show the Greek people that it would mean the loss of the bail out and that would put them in a difficult position. But what else could he do - this appeases perhaps the people and stops them demonstrating if they feel they have some say over what happens. What I dislike is Merkel and Sarkozy threatening Greece in the manner they have. IMO it is fear of what will happen to themselves. What is it called " self interest"?

If they and the rest of the Members are in this position it's not the people that caused it- it's the fault of the men in charge!

ETA if they accept the austerity measures it will be the poorest people who will suffer the most - they don't earn enough to pay the tax imposed and would have no means of supporting themselves.

Holly Williams, China correspondent





The G20 Summit will showcase a historical shift in power to
the East, with Europe looking to China to rescue it from its financial
woes.


Klaus Regling, the head of the European Financial Stability Facility,
recently visited Beijing to try to persuade the Chinese to put their
money into the European bailout fund.


Thanks to its 30-year boom, and exports that far outstrip what it
imports, China has the world's largest foreign currency reserves –
around U$3trn (£1.9trn).


Over one-third of that is already invested in American treasury
bonds, and it is estimated that China holds another 600bn euro (£517bn)
in euro-denominated debt.


If China does stump up some cash for the fund, it will not be out of
kindness. China buys foreign debt because it has an interest in doing
so: the US and Europe are its two biggest export markets, so by keeping
them afloat it is insuring that its best customers keep on buying.


But China may need some convincing when it comes to the European
bailout. After all, with several European economies in crisis such an
investment would not be without risk.

After
last week's deal, someone went to China and the Chinese had a look and
it and then said: 'No, just come back when you've sorted it out'.

Former Chancellor of the Exchequer Alistair Darling on Sky's Jeff Randall Live











Some believe China will ask for political concessions – like being
recognised as a full market economy, which would give Chinese companies
greater access to Europe, or an end to the arms embargo that the EU
placed on China after the 1989 Tiananmen massacre.


Others think that is unlikely.


"Everything is up for discussion, but the most important thing for
the Chinese Government is whether the investment is safe," said Li
Zhengxin, an editor with Caixin, China's highest-circulation financial
magazine.


"If we can gain some favourable policies or symbolic gestures, that's secondary."


Beijing has continued to buy euro-denominated debt over the last few
months, and will almost certainly take on more. Yet the Chinese
Government clearly does not want to be seen as an easy source of money
for cash-strapped advanced economies.


State-controlled media has said China can't be "a saviour to the Europeans".

Greece's shock decision to put its bailout to a popular vote has cast the entire process into disarray.

Business correspondent Tadhg Enright on the G20 stalemate











China's role as a potential saviour makes negotiating on other issues more difficult.


For several years, policymakers in both the US and the EU have asked
China to allow its currency, the Renminbi, to appreciate in value.


It is widely thought that the currency – which is pegged to the US
dollar – is undervalued, giving Chinese companies an advantage vis-à-vis
their Western competitors.


But Beijing has allowed the Renminbi to rise by only 4% this year,
and it’s even less likely to be accommodating now that it's being asked
for help. The country's leadership is also annoyed about a US bill that
would impose tariffs on China for "manipulating" its currency.


Finally, the Chinese Government knows that its increasingly nationalistic public takes a dim view of helping out the West.


"It's like a rich man who has wasted all his money coming to a poor
man for help," said He Xingyuan, an unemployed migrant worker in
Beijing.


"We shouldn’t help them."


A man who identified himself only by his surname Han said: "Western countries invaded us in the past.


"We can help them now, but they should give us something in return."

Angelique wrote:Panda

I agree that Papandreou has used this Referendum to show the Greek people that it would mean the loss of the bail out and that would put them in a difficult position. But what else could he do - this appeases perhaps the people and stops them demonstrating if they feel they have some say over what happens. What I dislike is Merkel and Sarkozy threatening Greece in the manner they have. IMO it is fear of what will happen to themselves. What is it called " self interest"?

If they and the rest of the Members are in this position it's not the people that caused it- it's the fault of the men in charge!

ETA if they accept the austerity measures it will be the poorest people who will suffer the most - they don't earn enough to pay the tax imposed and would have no means of supporting themselves.

Morning Angelique,

I think this crisis demonstrates that without a fiscal policy which would be anathema to Germany, these crises will surface because the 17 Countries manage or mismanage in the case of Greece, Italy and Spain , their own Economies . What happens if Greece decides it wants to stay in the Euro ?
It hasn"t got a hope in Hell of meeting its debt repayment , the yield on the 2 yr Bond is now 100%.!!!!!! Will the Greek Government , for so long
allowing its debt to mount up take immediate steps to stop money being transferred off shore, iniiate a Tax regime to collect Taxes, seek out new
Export Business?

Germany and France believed if Greece defaulted the EU would collapse, that was 18 months ago and now the World is in recession which makes matters worse. A Russian delegate of the G20 has made it clear the EU problem should not dominate proceedings, the G20 meeting should be discussing growth.

All Countries in the Euro Zone are contracting except one, I presume Germany, and it is hoped the new President of the ECB, Draghi will cut interest rates .

Gerard LYONS of Standard Chartered Bank says Greece will leave the Euro eventually.

Papandroniou a former Minister was asked if it wouldn"t be easier for Greece to default and start from scratch, as Argentina did a few years ago. He was adamant that this was not the answer and Greece would honour its Debt.

Record unemployment in the Eurozone is hampering EU efforts.

There is a confidence vote in Greece tomorrow and the Finance Minister is at loggerheads with Papandreou.

IT IS BEING SAID THAT THEUK HAS A 70% CHANCE OF RECESSION IF THE EUROZONE CRISIS CONTUINES.

Greek crisis: Papandreou 'to offer to resign'

http://www.bbc.co.uk/news/world-15575198


Greek Prime Minister George Papandreou (2 Nov 2011) Mr Papandreou's referendum plan has failed to win the support of many of his MPs
Mr Papandreou will meet Greek President Karolos Papoulias immediately after an emergency cabinet meeting has finished.

He is expected to offer a coalition government, with former Greek central banker Lucas Papademos at the helm.

Mr Papandreou himself would stand down, the BBC understands.

The Greek government was on the verge of collapse after several ministers said they did not support Mr Papandreou's plan for a referendum on the EU bailout.

The bailout would give the heavily indebted Greek government 130bn euros (£111bn; $178bn) and a 50% write-off of its debts, in return for deeply unpopular austerity measures.

On Thursday, main opposition leader Antonis Samaras of the centre-right New Democracy party called for a government of national unity to safeguard the EU deal.
Shadow over G20

Mr Papandreou had called a vote of confidence for Friday. His Pasok party holds a slim majority, 152 out of 300 seats.

However, he was faced with a parliamentary revolt after several of his MPs withheld their backing. Some called for early elections or a government of national unity instead.

The row threatens to overshadow a meeting of the G20 in Cannes, where leading industrialised nations are to discuss the eurozone debt crisis.

Mr Papandreou told reporters in Cannes his referendum would in effect be a vote on whether Greece should remain in the euro.

But the European Commission said if Greece left the European single currency, it would have to leave the European Union as well.

"The treaty doesn't foresee an exit from the eurozone without exiting the EU," spokeswoman Karolina Kottova told a briefing in Brussels.

Earlier, the chairman of the group of eurozone countries, Jean-Claude Juncker of Luxembourg, said plans were in place for a Greek exit from the euro.

"We are absolutely prepared for the situation that I have described and do not want to see come about," Mr Juncker told German ZDF television.

Thanks Angelina,

Papandreou said in an interview that he was sure the people would vote to stay in the Union, the Finance Minister iis appalled that a referendum was even
considered. I think Papandreou forsees many strikes when more austerity measures are introduced and the interest on the Bonds are so prohibitive and
a recession so would probably be quite happy to resign.

Breaking News......Referendum has been scrapped.



2:43pm UK, Thursday November 03, 2011





The Greek referendum on the the eurozone bailout plan has
been scrapped, Sky sources say, following a day of political turmoil in
Athens.


Prime Minister George Papandreou has been under pressure to stand
down, as a split emerged in his government over the plans to hold a
public vote on the rescue deal.


According to Sky sources, Mr Papandreou is not intending to quit.


He will instead hold talks with the opposition over their calls for a transitional government and early elections.


"There is no reason to have a referendum if there is consensus
between the two large parties," a spokesperson for the prime minister's
office said.


Mr Papandreou has been holding an emergency meeting with his cabinet,
but a report he was then due to meet the president has been denied by
the presidential office.


Markets across Europe began to rise amid reports of a resignation, as
investors hoped a new Greek leader would approve the eurozone rescue
deal without calling a public vote.






FTSE 100 1-Day Chart







Earlier, the opposition leader called for the formation of a
coalition government and the immediate ratification by parliament of the
new bailout deal.


Conservative leader Antonis Samaras made the demand after several of
Mr Papandreou's own ministers announced they were against the referendum
decision.

















Q&A: Greek Referendum




Why are Greeks voting on the bailout deal? And what will happen if they say no?















A group of around 30 politicians across the ruling party and the
opposition also signed a letter calling for snap elections and the
scrapping of the referendum, according to the news agency Reuters.


"We consider the formation of a unity government necessary to take
over the implementation of national goals and lead the country as soon
as possible and securely to elections," the letter reads.







thinly veiled threat to greece from german chancellor












The
developments come as G20 leaders begin talks in Cannes, where the
future of the eurozone bailout deal is dominating discussion.


The Greek finance minister Evangelos Venizelos this morning exposed
the split within the Greek cabinet after he declared his opposition to
hold a public vote on the bailout deal.


"Greece's position within the euro area is a historic conquest of the country that cannot be put in doubt," he said.


It "cannot depend on a referendum", Mr Venizelos added.


The finance minister said the country's attention should be focused
on quickly getting a crucial £7bn installment of bailout funds, without
which it faces bankruptcy with weeks.


Commenting on the reaction from Mr Venizelos, Sky's economics editor Ed Conway said: "Having previously run against George Papandreou for Prime Minister, he clearly has ambitions beyond his current position.


"And with the government’s coalition extremely narrow – potentially
by a couple of seats or fewer, it’s questionable as to whether it will
survive the day."

Papandreou says the Referendum would have been about the offer , not staying in the Euro, if the Greek Parties agreed to the bail out terms there would be no need for a Referendum.

Draghi, the new ECB President says it is not in the Treaty to lend money and the Bonds will only be sold for a limited period. The ECB should never be seen as a lender of last resort . He foresees a mild recession and cut the interest rat by 25 basis points. Ongoing market tensions are likely to dampen growth.

Fitch the ratings agency says if the problem is confined to Greece and contagion is contained the EU can overcome the current difficulties. However, the worry is that if there is contagion, particularly Italy the problems could be more serious. If Greece defaults in a disorderly way the other Countries will be
weakened. There is enough money in the Eurozone, it"s just not in the right place.!!!