Greece may hold referendum on Eurozone membership

[D.Turtle]

But why should 'integration' mean 'integration, even those dogshit countries with literally nothing to add but problems'? Sure, I can see the idealism of a unified Europe, but if the choice was between a unified economically viable half of Europe, and throwing years of growth down a hole to save a country run by criminals, why choose this option?

Well, at this time its mostly a situation of them already being in the Euro zone, and nobody wanting to set the precedent of throwing some countries out again.

Can you talk about what EU reforms are being worked on that are expected to fix any of these issues? If there was a plan (ie 'buy time at massive cost to evil countries like Germany to fix a problem') that's a lot less retarded than 'MUST HAVE GREECE IN EU FOR... SOME... REASON, BURN ALL MONEY'. Is this expected to be like dealing with the integration of East Germany, a mid-term burden that's ultimately worth it?

Well, there is obviously no complete agreement of how much integration, etc there should be. There is a very large group of politicians who have a unified Europe as a very long term goal.

Currently, because of the crisis, the focus is mostly on more closely aligning financial and economic policy - things like taxes, regulation, fiscal responsibility, maybe retirement age, etc. How exactly this will work, the role of the EU, etc. is still in flux.

I don't know if its the best way to handle the crisis - Paul Krugman in particular is extremely critical of the EU - but in order to understand the reaction to the crisis, is that the Euro is seen as more than just something done to get economic advantages, but rather seen as an important step in integrating Europe. The whole thing is steeped in a lot of politics and not just pure economics.

[K. A. Pital]

The banks are taking losses. There is already an agreed 21% "haircut" (partial default) and there is talk of increasing that up to 50%.

I heard about it. And yes, that's effectively a default. Excellent.

[bobalot]

The banks are taking losses. There is already an agreed 21% "haircut" (partial default) and there is talk of increasing that up to 50%.

I heard about it. And yes, that's effectively a default. Excellent.

A partial default. I have always been annoyed ever since the start of this crisis at the claim that investors (i.e. the big institutions) have to be bailed out 100%. For every person or government that borrowed too much, there was a lender that lent too much. They should both share the burden of this economic failure.

I was just correcting Stargilder's claim before he leapt into further economic doomerism and EU conspiracies.

[Stark]

I don't know if its the best way to handle the crisis - Paul Krugman in particular is extremely critical of the EU - but in order to understand the reaction to the crisis, is that the Euro is seen as more than just something done to get economic advantages, but rather seen as an important step in integrating Europe. The whole thing is steeped in a lot of politics and not just pure economics.

I don't mean to be rude snipping the rest of your post, but this is what I'm curious about. While it's more than just economics, mishandling an economic crisis (like numerous defaults, countries lying about their performance, etc) could easily set back the idealistic goal or make it unachievable.

I guess I don't understand why 'save broken-ass economies run by morons full of people who don't want to be saved' seems to be more important than the EU being a viable organisation that doesn't give money away to criminals or banks.

[D.Turtle]

I don't mean to be rude snipping the rest of your post, but this is what I'm curious about. While it's more than just economics, mishandling an economic crisis (like numerous defaults, countries lying about their performance, etc) could easily set back the idealistic goal or make it unachievable.

I guess I don't understand why 'save broken-ass economies run by morons full of people who don't want to be saved' seems to be more important than the EU being a viable organisation that doesn't give money away to criminals or banks.

The way to understand the history of the EU (and the Euro which arose out of it) is to understand that it is mainly a political organisation created to achieve political goals. Economic benefits are only a part of that.

Or better, economic benefits and integration were used as a way to achieve the political goals. Thats why you had things like getting former dictatorships into the EU as fast as possible (Portugal, Spain, and Greece for example). Thats why there was rapid growth to the east after the fall of the Soviet Union. The European Union was used (and still is) as an enticement to get countries on the periphery to democratize. Basically, in order to get into the EU (and get lots of economic benefits) countries had to fulfill quite a list of political reforms, etc. This policy was extremely effective at achieving peace in most of Europe. When one considers the history before that, the EU can be seen as a humongous benefit to everyone.

The Euro was (and is) seen as the next step in this process, moving closer together the economic and monetary policies of the various countries involved in it. Ironically enough, it got its big push that lead to its implementation by the French demanding its implementation in return for accepting German reunification.
The idea was, that with the Euro implemented, these further steps would be taken. However, since France and Germany came to be in a bit of a slump, the rules regarding the Euro were undermined, opening the doors for other smaller countries also ignoring the rules.

In addition, at the same time the EU was mostly busy with reforming itself in order to deal with its rapid growth after the fall of the Soviet Union. All of this meant, that at the most critical time - right after introducing the Euro - nothing really happened with regards to moving economic and monetary policies closer together.

Now, viewing that entire, long, and successful history - throwing somebody out of the Euro is an extremely, extremely huge step. It would basically end the movement towards a unified Europe altogether, as it would put in place a two-class system by force (as opposed to the mostly voluntary way certain countries aren't in the Eurozone). It would basically draw a line in the sand as to how much cooperation and integration will be achieved in the future.

Thats why politicians - especially those politicians who have long dreamed of a "United States of Europe" - are willing to do whatever it takes to save other countries. However, and this is key, they are not just giving out money for free. That money is dependent on certain reforms being passed, milestones being reached (or progress towards those milestones being made, or at least a willingness to try and reach those milestones), and so on. In addition, there is a lot of talk - and movement - being made towards making up for the lost time with regards to moving closer together economic and monetary policies.

So its mostly a race against time, growing political dissatisfaction, protests, stubbornness, etc as to whether these reforms can pass and take effect quickly enough.

I think I'll leave it at that for now. A lot more can be said - but I think it somewhat correctly describes the view towards this crisis from a pro-Euro/EU politician's viewpoint.

[Stark]

How people would see ejecting someone is a political problem. Are you saying you think that not trying to 'save' bad states (by throwing money away) would put a cap on how far integration could proceed?

It sounds like you believe decision-makers see this as a critical point for the concept of the EU, and that if they can't get through it, the EU is doomed anyway.

[D.Turtle]

How people would see ejecting someone is a political problem. Are you saying you think that not trying to 'save' bad states (by throwing money away) would put a cap on how far integration could proceed?

It sounds like you believe decision-makers see this as a critical point for the concept of the EU, and that if they can't get through it, the EU is doomed anyway.

Basically yes, this is my impression.

There is a succinct quote by Chancellor Merkel that summarizes this view:
"If the Euro fails, Europe fails."

[Big Orange]

The Euro was (and is) seen as the next step in this process, moving closer together the economic and monetary policies of the various countries involved in it. Ironically enough, it got its big push that lead to its implementation by the French demanding its implementation in return for accepting German reunification.
The idea was, that with the Euro implemented, these further steps would be taken. However, since France and Germany came to be in a bit of a slump, the rules regarding the Euro were undermined, opening the doors for other smaller countries also ignoring the rules.

Pushing the Euro on the relatively impoverished, more opportunistic smaller countries (who had politicians, businessmen, and bankers who thought they couldn't run out of Euros) in order to help further the intergration of the EU members seemed to be (IMHO) putting the cart before the horse and the Franco-German banks got too cocky as well. And Greece supposedly always had currency that was prone to inflation and shouldn't have joined the Euro many years too soon.

And here's what's happening in Greece on a street level with no go areas in Athens, far-left and far-right political movements growing, and impoverished locals getting mean toards outsiders:

Greece is slipping into the abyss

As the economic crisis worsens, the very fabric of society in Athens is being ripped apart as the Greeks lose their good humour and generosity.

Greek grannies are as ubiquitous and iconic as Greek cats. Dressed immaculately in widow’s black, and with their grey hair neatly styled, they are proud figures. They are treated with respect by even the most rebellious youths, and acknowledged by all as the head of the fiercely maternal family groups that bind Greek society together.

The old lady I saw on the street in Athens this week was typical, except in one shocking respect. She was begging. Beggars are normal here these days, but almost all are immigrants or drug users. This was different. The image of this proud woman sitting on a plastic crate outside the supermarket with her hands out has stayed in my mind. If a symbol is needed to illustrate the unravelling of Greek society, then this is it.

The Athens I knew 20 years ago has changed radically. I used to tell British friends that despite its chaos, it was a very civilised city. When I moved here, you didn’t have homeless people sleeping on the streets, there was little crime and the sick and needy were looked after. That civility is vanishing fast. With economic doom becoming ever more likely, it sometimes feels as if the fabric of society is being ripped asunder.

Muggings used to be a rarity; not any more. Walk down the main streets of central Athens at night and you will see people sleeping rough. The other day I had to deal with a young man who had passed out on my doorstep. He may have been drunk, but in these crisis-stricken days, it is just as likely that he was high on crack cocaine, now selling for 5 euros a hit. I wasn’t going to risk disturbing him – I had my children with me.

My area of central Athens is a relatively “bad” location, but there are much worse places. The neighbourhood of Psirri borders the popular tourist attractions. Ten years ago, Psirri was rejuvenated. Bars and cafes opened, old buildings were restored. A live jazz club opened that was an instant hit. The club is gone now, and most of the shops are closed. The area became so dangerous that people simply stopped going there. Now it’s riddled with drugs. People shoot up on the street and accost anyone foolish enough to stray through the area for money. And all of this takes place a short walk from the Acropolis.

Many friends have headed to the suburbs – but they aren’t as safe as they were. Last week, an elderly couple in a decent neighbourhood were held hostage in their home by men carrying AK-47 assault rifles. They took their cash and credit cards and then stole the couple’s car.

These changes to Athens didn’t happen overnight, but have occurred astonishingly fast. A perfect storm has been created, with the financial meltdown which threatens to bring down Greece and the rest of the EU, combining with social breakdown and that ''other’’ crisis – immigration.

Despite the turmoil, illegal immigration isn’t slowing. An Afghan refugee doesn’t care if Greece is in trouble, he only intends staying long enough to find a way to get to the promised lands of Germany, Britain or Scandinavia. But many illegals don’t make it any further. Before the crisis this didn’t matter too much. There was work on building sites and in the fields. Manual labour that Greeks have become used to paying someone else to do. But most of this work has gone, too.

Five years ago, I met Mahjid, a Pakistani with legal status in Greece. He’s lived here for 15 years, ran a successful building business and sent enough money home to keep his family happy. He even captained a fledgling cricket team. Now he hasn’t worked for six months and is leaving for Germany. The Bangladeshi in my local shop keeps asking me why I haven’t gone back to Britain. He thinks I am mad. “Even the Albanians are leaving!” he tells me. If Britain thinks the Greek crisis won’t have an impact there, it is wrong.

The luckiest immigrants do make it to the promised lands, but many fail. Trapped, they rent mattresses on crammed floors from unscrupulous landlords for 12 hours a day and hang around the few open spaces Athens has to offer. One such space was a local square, which has the largest Orthodox church in the Balkans. The immigrants used to congregate here, but suffered too many attacks. Now three foot high letters are written on the ground in front of the church spelling “Foreigners Out.” Nobody will remove it. Greek reaction ranges from pity and patience, to anger and racism. The neo-Nazi “Golden Dawn” party has its headquarters nearby – while they haven’t made it to parliament yet, the dangerous mixture of increasing immigration and falling living standards ensures their growing popularity.

The immigrants are a constant reminder of how desperate things can get. I don’t bother recycling tin cans any more. The bin outside my apartment is gone through five or six times a day. Some people are looking for food, but most are metal scavengers. A small army operates all over Athens. We used to take unwanted clothes to charity shops but I can’t see the point now. If I leave anything outside the door it will be gone in minutes.

The description of Britain as a nation of shopkeepers could equally apply to Greece; except those small family businesses are closing in their thousands. Walk along a central Athens street and up to half the shops will have a small sign in the window with red writing saying “for sale” or “for rent”. Every sign represents another family for whom life has just been turned upside down.

I wrote before the summer about the difficulties of daily life. Back then, the frequent strikes were frustrating, but could be lived with. People said: “Wait until after the summer, then we are really going to see how tough it gets.” They were right.

The Greek granny begging, the daily assault course of strikes and the hopeless plight of immigrants are only the visible signs of growing despair. It is in the family homes that the full impact is being felt. Greeks can appear loud and gregarious, but their family life is intensely private. You never admit to difficulties within the family. Protesters may have grabbed headlines, but they didn’t speak for many of the decent, hard working Greeks. These people are suffering with quiet dignity, and it’s taking its toll.

It may not sound like the end of the world to lose 250 euros a month from your pay, but it is when the salary is only 1,000 euros. Salaries are going in one direction, while prices are going in the other. VAT has had a 10 point hike and the cost of milk rises by the week. We are no longer talking about lifestyles being altered: people are struggling to put food on the table. And that’s before they get hit by emergency property taxes. If you don’t pay them your electricity will be cut off, as the state is using the electricity company to collect the tax.

Looming over the day-to-day difficulties is the threat of losing your job, especially a state one, that used to mean a job for life: 30,000 jobs are to be axed immediately. The days of the gold-plated state jobs are numbered.

I spoke to a friend who runs a psychiatric hospital. He acknowledged that depression is rife. “We are all depressed now,” he said. “It’s just a question of degree. Some people make the problem worse with drugs or alcohol.”

Suicide figures are difficult to pin down, partly because the Orthodox Church says that it is a sin and refuses to bury anyone who has taken their own life. But if the Hellenic Statistical Authority can be believed, the first five months of 2011 saw a 40 per cent rise, while help lines report a massive increase in calls.

Good humour and generosity were once a Greek trademark. But that’s all gone. People are depressed, scared and exhausted by the relentless pressure of heavier cuts and taxes.

Every Greek granny remembers the hardships and suffering of the war and its aftermath. Hundreds of thousands of civilians died from starvation. The civil war that followed and the brutal military dictatorship that lasted until 1974 are recent events. Greeks were led to believe that those nightmarish times were over, that the future would be better.

But we are only at the start of this crisis. What will happen next year when unemployment doubles and people lose their homes? The Communist calls for revolution don’t look nearly as far-fetched as they did six months ago. While civil war doesn’t look likely, a return to the military days must be a possibility. If the Greek people reject their entire political system and the state falls apart, what will be left? The great danger is that the people are being pushed so far that the unthinkable becomes possible.

The Telegraph

[K. A. Pital]

The Communist calls for revolution don’t look nearly as far-fetched as they did six months ago. While civil war doesn’t look likely, a return to the military days must be a possibility. If the Greek people reject their entire political system and the state falls apart, what will be left? The great danger is that the people are being pushed so far that the unthinkable becomes possible.

These words are music to my ears. Yes, fearmonger and cry, your Omelas is about to be destroyed, unexpectingly, like a shock, like a thunder that wakes the ignorant in the deep night that falls on Europe. The objective laws of the development of the system that you chose - you chose, you built, you erected every day with your every breath, and let us not kid ourselves, the system you were enthusiastic bricks of - have pushed you, people of Greece, to the brink where "unthinkable" becomes possible. Instead of solving problems, the strong and mighty inside and outside your nation pacified and placated you with cheap credits, covering themselves with bribes and cheap credit until the whole house of cards collapsed. Let fear and chaos make politicians tremble, let the very foundations of the system shake.

Twenty years of Greece's membership in the EMU gave it nothing but social disintegration, neoliberal recipes, complete destruction of society. The time has come to set the record straight.

[ComradeClaus]

^-Here's what I advocate:

Basically, Greece can not & will not reform or pay back EU money loaned to them.

You know what happens if you don't pay a bank? They take your house, your car & all your other shit.

So Greece should be expelled from the EU & have ALL it's govt property confiscated. (military equip, which becomes NATO property, govt office furnishings, etc) except for police & medical resources.

Plus Turkey should be given the rest of Cyprus & the right to annex as mjuch of Greece as they wish. At least they'd be better leaders of the Greek people

And they should be made an EU member too.

It'd teach the other deadbeat EU members a lesson on not shaping up.

[D.Turtle]

Pushing the Euro on the relatively impoverished, more opportunistic smaller countries (who had politicians, businessmen, and bankers who thought they couldn't run out of Euros) in order to help further the intergration of the EU members seemed to be (IMHO) putting the cart before the horse and the Franco-German banks got too cocky as well. And Greece supposedly always had currency that was prone to inflation and shouldn't have joined the Euro many years too soon.

Oh it definitely was putting the cart before the horse. However, the EU has a history of doing that: taking big steps, and then working out all the details afterwards.

In the case of the Euro however, this didn't really happen. So its a frantic race to catch up and do all the work that should have been done years ago.

Of course, there are also a lot of people saying that the Euro was a very bad idea from the very start, and that there is no way of actually making it work properly.

Obviously those voices are being ignored by most politicians in favor of the Euro.

[Narkis]

These words are music to my ears. Yes, fearmonger and cry, your Omelas is about to be destroyed, unexpectingly, like a shock, like a thunder that wakes the ignorant in the deep night that falls on Europe. The objective laws of the development of the system that you chose - you chose, you built, you erected every day with your every breath, and let us not kid ourselves, the system you were enthusiastic bricks of - have pushed you, people of Greece, to the brink where "unthinkable" becomes possible. Instead of solving problems, the strong and mighty inside and outside your nation pacified and placated you with cheap credits, covering themselves with bribes and cheap credit until the whole house of cards collapsed. Let fear and chaos make politicians tremble, let the very foundations of the system shake.

Twenty years of Greece's membership in the EMU gave it nothing but social disintegration, neoliberal recipes, complete destruction of society. The time has come to set the record straight.

I fear a return to the Junta is far more likely if unrest becomes widespread enough. There are still elements of the armed forces who admire the Colonels, and would be more than willing to emulate them. I just don't know how many they are, and what would the rest of the army do then.

^-Here's what I advocate:

Basically, Greece can not & will not reform or pay back EU money loaned to them.

You know what happens if you don't pay a bank? They take your house, your car & all your other shit.

So Greece should be expelled from the EU & have ALL it's govt property confiscated. (military equip, which becomes NATO property, govt office furnishings, etc) except for police & medical resources.

Plus Turkey should be given the rest of Cyprus & the right to annex as mjuch of Greece as they wish. At least they'd be better leaders of the Greek people

And they should be made an EU member too.

It'd teach the other deadbeat EU members a lesson on not shaping up.

I can see why you got your title. It's very apt.

[Thanas]

There will be a lot of wailing and teeth gnashing and in the end most of it will turn out to be overblown, like those claiming a complete collapse of society.

[K. A. Pital]

I fear a return to the Junta is far more likely if unrest becomes widespread enough.

Well crap. Although recently Cameron said that "human rights" have served their purpose, I can easily see the current power turning into the Junta; no need to "return" to it via a coup.

[mr friendly guy]

Now, viewing that entire, long, and successful history - throwing somebody out of the Euro is an extremely, extremely huge step. It would basically end the movement towards a unified Europe altogether, as it would put in place a two-class system by force (as opposed to the mostly voluntary way certain countries aren't in the Eurozone). It would basically draw a line in the sand as to how much cooperation and integration will be achieved in the future.

As a non European, I can't imagine a country, say Switzerland with their legendary neutrality wanting to join the EU. So why should it matter if the EU is Europe minus Switzerland and Greece? Especially as it moves to welcome some Balkan states into its club.

[D.Turtle]

As a non European, I can't imagine a country, say Switzerland with their legendary neutrality wanting to join the EU. So why should it matter if the EU is Europe minus Switzerland and Greece? Especially as it moves to welcome some Balkan states into its club.

First of all, no matter what happens, Greece will not be kicked out of the EU. The worst that could happen is that they leave (or get kicked out of) the Euro-zone.

Second, the problem is that Greece is already in the Euro-zone and the EU. There is a huge difference between not being in (or not wanting to be in) the club and being kicked out of the club.

[mr friendly guy]

As a non European, I can't imagine a country, say Switzerland with their legendary neutrality wanting to join the EU. So why should it matter if the EU is Europe minus Switzerland and Greece? Especially as it moves to welcome some Balkan states into its club.

First of all, no matter what happens, Greece will not be kicked out of the EU. The worst that could happen is that they leave (or get kicked out of) the Euro-zone.

Second, the problem is that Greece is already in the Euro-zone and the EU. There is a huge difference between not being in (or not wanting to be in) the club and being kicked out of the club.

Oh I doubt Greece will be kicked out, but you misunderstand what I was trying to say. I am trying to approach this from the POV of someone who dreams of a "unified Europe", but is also somewhat pragmatic. That is unification because it has some advantages whether it be economic, geopolitical etc, rather than unification for its own sake. If being unified I tend to think it means all European states or as many of them as possible. My point is that all European states unifying seems unlikely especially with a country like Switzerland. Thus the next step is as many as possible.

Given the problem with Greece, and the EU already targeting several other nations to join the EU (ie the Balkan states), doesn't this mean that a) even without Greece the dream of "European unification" is closer (several new members minus letting go of one) b) letting go off Greece might lessen some of the problems for the Eurozone (although not for Greece since its debt is in Euros) c) Greece can always be readmitted later after its made the necessary reforms decades later.

EDIT - obviously this hypothetical relies on there being a legal means to expel Greece. But my point is even if theoretically Greece is expelled right now I can't see it necessary ending the dream of a unified Europe in the future, for the reasons stated.

[Skgoa]

The entire point of "European unification" is to create and ensure common prosperity, stability, peace, etc., in a direct reaction to the world wars and the stand-off between east and west for the rest of that century. And this was an astonishing success, resulting in the longest period of peace in Europe ever. Countries like Switzerland or Norway don't matter that much, since it's very unlikely they will go to war with the rest of Europe. One has to keep in mind that the EU ist not a nation state. It is an alliance of 27 nation states that have signed contracts enumerating their close cooperation on certain issues. Already, there are pushes to include the states that border the mediterranian. BTW both Norway and Iceland might fully join the EU relatively soon and Switzerland has joined several of the "EU" treaties.

[Big Orange]

The entire point of "European unification" is to create and ensure common prosperity, stability, peace, etc., in a direct reaction to the world wars and the stand-off between east and west for the rest of that century. And this was an astonishing success, resulting in the longest period of peace in Europe ever.

But the EU in the last decade started to hit snags when it too quickly absorbed the A8 countries and allowed unsuitable countries like Greece to abopt the Euro (under the auspices of a huge criminal banking syndicate). And while steadily more grotesque amounts of money are getting funnelled into the banks to prop up the Euro currency, the EU considers a 75% cut in the funding of food aid to 18 million of its poorest citizens.

[Teebs]

And while steadily more grotesque amounts of money are getting funnelled into the banks to prop up the Euro currency, the EU considers a 75% cut in the funding of food aid to 18 million of its poorest citizens.

I'm not really sure you read that article properly. It says the reduction in food aid is for legal reasons to do with changes in the Common Agricultural Policy's subsidies regime, not budgetary ones, so it's hardly fair to link it to the debt crisis.

Anyway it's hardly appropriate for the EU to be handing out food aid. It's something that's much better done by the member states along the principles of subsidiarity (things in the EU should be done at the lowest sensible level).

[Skgoa]

The entire point of "European unification" is to create and ensure common prosperity, stability, peace, etc., in a direct reaction to the world wars and the stand-off between east and west for the rest of that century. And this was an astonishing success, resulting in the longest period of peace in Europe ever.

But the EU in the last decade started to hit snags when it too quickly absorbed the A8 countries and allowed unsuitable countries like Greece to abopt the Euro (under the auspices of a huge criminal banking syndicate).

Really? Whining aside, has the situation not improved in all of Europe?

[aerius]

But the EU in the last decade started to hit snags when it too quickly absorbed the A8 countries and allowed unsuitable countries like Greece to abopt the Euro (under the auspices of a huge criminal banking syndicate).

Really? Whining aside, has the situation not improved in all of Europe?

The more important question is whether the improvement is sustainable over the long run.
If it is, great, if it isn't then you're going to have some problems. Serious problems.

[Colonel Olrik]

But the EU in the last decade started to hit snags when it too quickly absorbed the A8 countries and allowed unsuitable countries like Greece to abopt the Euro (under the auspices of a huge criminal banking syndicate).

Really? Whining aside, has the situation not improved in all of Europe?

The more important question is whether the improvement is sustainable over the long run.
If it is, great, if it isn't then you're going to have some problems. Serious problems.

It is, as long as enough people are willing and capable to leave their home countries and migrate within the E.U. The difficulty in doing this (mostly because of the language, but it's also a question of attitude) is, I think, one of the biggest issues here.

[Guardsman Bass]

Greece is holding a referendum, but it's not on EU membership. It's on the latest austerity measures:

In the ever surprising, ever ongoing saga that is Europe's debt crisis, few expected it would be a referendum, announced by the country at the centre of the storm, that would supplant all the twists and turns of the drama so far.

But when MPs of Greece's ruling Pasok party gathered in the Athens parliament and heard the announcement by George Papandreou, many could scarcely believe their ears. They thought the prime minister would wax lyrical about Greece's luck in being resuscitated from near economic collapse by last week's decision by the EU and the IMF to write off half of Greece's debt and prop it up with further aid.

Instead, Papandreou, in an act of unprecedented brinkmanship, upped the ante. The deal clinched at the marathon European summit when banks bowed to an ultimatum by Chancellor Angela Merkel, would, Papandreou said, be put to popular vote; for all the doubters who had met the deal with disdain, there was a simple answer: let the people speak.

"Citizens are the source of our strength. Citizens will be called upon to say a big 'yes' or a big 'no' to the new loan arrangement. This is a supreme act of democracy and of patriotism for the people to make their own decision … we've faith in the people. We believe in democratic participation. We're not afraid of it," he said.

With his two-year-old government's popularity at its lowest ever in the wake of relentless austerity, Papandreou clearly hopes that the referendum, expected in January, will allow voters to let off steam.

Hostility to Pasok MPs over wage, pension and benefit cuts is such that many daren't be seen in public. "We can't even leave our homes to go to a taverna any more," said one, insisting on anonymity. "You're called a pig or a traitor for passing measures none of us wanted to pass. It's not a life."

On Friday, Greece's octogenarian Pasok president, Carolos Papoulias, joined those booed when protests prevented a parade commemorating Greece's entry on the allied side in the second world war.

But with so much resting on the deal, it is unclear whether Greece's international creditors see the referendum the same way. Haris Kastinides, the interior minister, said that if the referendum was rejected the bailout accord would "obviously" not be enforced.

Eurozone states spent months over the agreement, which will see private banks and insurers accepting a voluntary 50% loss on Greek government bond holdings – now seen as vital if Athens is to stave off default. As the second bailout for Greece since it was rescued with €110bn in May 2010, Merkel and other leaders had a tough time selling it to their countries and bankers. Within hours of the deal, the French president, Nicolas Sarkozy, conceded it was "an error" that Greece, which clearly cooked the books, was allowed in the eurozone. After the Papandreou announcement the Dow Jones dropped 221.75 points, or 1.81%, to 12,009.36. "This is just the latest twist in the unfolding tragedy," said Sony Kapoor of London thinktank Re-Define. "With an irresponsible opposition that is promising Greek voters the moon, it's very difficult to see how this referendum could be won under the gut-wrenching austerity."

And there was an angry reception from some people in Athens for the referendum, the first since the collapse of military rule in 1974. Across the board, politicians denounced a "dirty trick" to avoid early elections. Many expressed disbelief the prime minister had remembered to put the country's fate "in the hands of the people" after ignoring protests over austerity for two years.

"This is absolutely insane," Antonis Samaras, the conservative opposition leader told the Guardian. "The man is trying to stay in power at any cost … posing the dilemma that Greeks either vote for him to stay in power or they forget Europe … for Greeks to be in Europe is a long-standing strategic position, and he is putting it in jeopardy. We will do whatever it takes to stop such a development."

Top conservatives did not rule out MPs from Samaras' New Democracy party resigning en masse, forcing elections.

Evangelos Venizelos – the finance minister who is also a law professor and Greece's most talented politician – said the referendum was precisely because the opposition were so unsupportive in negotiations with eurozone members. New Democracy has repeatedly called for Greece's bailout terms to be improved arguing that last week's deal will condemn the country to even more austerity and deeper recession. "Greece is living through a drama from which it must be released by asking the people to express its will," he told parliament.

"Do Greeks want to remain in Europe, in the eurozone with the euro in a country that belongs to the developed world, or do they want to return to the 1960s? Do they think it is good to owe €100bn to the banks, or do they not think it's good to live with such debt? Each citizen will make their own decision, with responsibility, in a process that'll give a national sense of relief and recovery."

So much for the "deal".

[Thanas]

Wow. Greece just screwed Europe once more over.

At this point, I'm about to join the "kick them to the curb" crowd.