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The Greek Referendum

Find in World November 2nd, 2011 - 6,560 views

How many European leaders slapped their brows when they heard the news about the proposed referendum in Greece? I’d hazard a guess at ‘quite a few’.

Having spent ‘hours’ in meetings discussing the way forward for further bail-outs for Greece the Greek Prime Minister decided his public should vote on the matter.

Why? Can you imagine what would have happened here in the UK if the ConDems had allowed us to vote on the austerity measures?

More people would have voted than they did in the elections and there would probably have been a unanimous result of a resounding ‘no’ to cuts. After all, we are all so well informed we know what’s best for the country far better than any highly qualified economists, surely?

So when a country that is going to have to put in place some much tougher measures to avoid bankruptcy suggests the people should vote it’s hardly surprising the rest of the world puts its head in its hands and sighs.

A quote from an article on Interactive Investor puts it quite nicely: 

‘There is no pleasing some people. Not content with borrowing and spending his own country into economic oblivion, Greek Prime Minister George Papandreou single-handedly capsized global stockmarkets on Tuesday.

By giving the Greek people a referendum on the second tranche of bail-out funds from the eurozone, Papandreou has destabilised fragile investor optimism and placed a banana skin under the increasingly shaky domino his country has become’

The whole global debt crisis is no longer being understated as it was in 2009 when everyone was trying to pretend certain problems didn’t exist and global economies would return to prosperity in Q1 of, er, no wait, Q2..? Ah, Next year then…?

I recently received a hand-out at a meeting that showed Barclays Corporate base rate predictions sticking at 0.5% for at least another year.

I’ve also noticed forecasters downgrading their predictions for UK growth to a more pessimistic figure of about 0.3% so that when the news came out that growth was actually a staggering 0.5% the press could put a positive spin on the result – ‘UK Growth Higher then Predicted’!

Previously they’d have released optimistic figures only to be disappointed.

The threat of a ‘double dip’ recession is real but with growth so stagnant will it have much of an impact on consumer confidence that is already low (unless you sell iPads)?

Of course it could be avoided by swift action which is why Mr Papandreou’s decision is seen as a veritable spanner in the works.

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