There's no doubt that Greece is a corrupt plutocracy/democracy. I feel some sympathy for the average Greek citizen. Imagine they will want to do an Iceland, plus get back the Drachma.
I'd imagine Greek citizens won't accept a withdrawal of this referendum, now that it's been made and confirmed by their cabinet. Greece is in a weak position to get through to Feb 2012. Watch the Euro hacks/bureaucrats and bankers apply great pressure on the exact referendum wording, to try and subvert this democratic process.
I think the whole exercise has been instructive and highlighted:
Politicians are prepared to leverage up capital in a triple or nothing structure.
Bankster insurance offered via sovereign debt CDO's could be worthless via a devious "voluntary haircut" definition. A full default by Greece, initiated by referendum, wouldn't be so easy to slither out from.
Confirmed China's rise. The self centered Sarkozy trots off, cap-in-hand, to Hu Jintao. Imagine he'll be having a right royal hissy fit about ..... now.
This video was produced month ago on clauses in the proposed new European debt treaty (European Stability Mechanism). It appears they proposed removing the rights of ALL bodies that should oversee them, including all democratic governments and the courts. http://www.youtube.com/watch?v=5CZr17HLH5U&feature=player_embedded#%21
Currently, bankers will write-off 50% of their Greek loans (which are around 50% of Greek debt), so total Greek debt would reduce by 25%, before adding the new debt back in. When that's done, total debt will be similar to what it is now, presumably at a lower wgted ave interest rate. But debt to solve your debt problem is no solution.
The solution is for Greece is to default in full and survive the aftermath. Like Argentina, they will fairly quickly find their feet again. This creates a precedent for a European country, but given the immediate chaos it will cause to Greece, I wonder how many others would try it?
If little Greece can topple the system by defaulting, it highlights how unstable many debt loads are. Must be getting towards the end of the road that lets "developed" countries consume more than they produce, and making up the difference by borrowing.
