There is shock across the eurozone because George Papandreou has decided to call a referendum over the bailout that was cobbled together a few days ago.
Papandreou is the socialist prime minister elected in Oct 2009 to sort out the mess created by the previous uber corrupt Conservative government who not only cooked the books but spent money they didn't have employing Goldman Sachs, who promptly made even more money arranging new bum loans.
Papandreou has been struggling manfully with the legacy of his idiotic opponents and an angry public who has been asked to pay for the sins of the elite.
He also has to deal with a stroppy German public who have already been through a similar restructuring of their own - The foolish conservative Helmut Kohl had unified Germany with a 1 Deutchmark = 1 Ostmark policy, which led to rapid loss of productivity in the eastern states, plus massive stress on the western states who had to bail them out, and which was only sorted out painfully by the socialist Gerhard Schroeder who led Germany from 1998 to 2005, along with Peer Steinbrück who was the socialist finance minister in the grand coalition from 2005 to 2009. As it happened, joining the euro in 1999 helped them - though the euro was a fairly strong currency it wasn't as strong as the old Deutchmark, especially in the early years, so the Germans got a boost from de-valuation - the very thing they are denying the Greeks. And despite the devaluation boost they got from the euro, they still had a rough old time - from 2000 to 2009 Germany under-performed the UK, US and French economies.
According to the Greek press, the Greek conservative opposition is furious about the referendum, labelling it "irresponsible".
So what is Papandreou up to? In my opinion, he is looking for a way to exit the euro, and to then emulate what Nestor Kirchner managed to do in Argentina.
For those who don't know Argentina's history, the conservative Carlos Menem had pegged the Argentinian peso to the dollar, to acclaim from Wall Street and other banker types. But it ended in tears as the Federal Reserve raised interest rates to cool inflation in the US, which raised the dollar which in turn raised the peso which was pegged to it. Argentina was unable to service it's dollar-denominated debt and had to default - does this story sound familiar? It should because it's the story of the ostmark being pegged to the deutchmark and the drachma being pegged to the euro.
While the Germans gracefully got out of their problems by devaluing under the cover of joining the euro, Argentina had the mother of all defaults, and in raced the IMF to impose draconian spending limits all in the aid of propping up the banksters who had a) urged Argentina to peg their currency to the dollar and then b)lent them money in dollars knowing all the while it would be a disaster.
Kirchner was a socialist and sided with his people against the banksters. He simply told them to take a hike, decided what Argentina could afford to pay without massive unrest, and then defaulted on the rest. Argentina promptly revived and started prospering.
The only option for Greece is to do what Kirchner did - and that needs a referendum and for the voters to say No.
Why the consternation in the rest of Europe? Because a bailout will still have to take place - of the banks, shorn of the "cover" and pretence that they were really bailing out the Greeks. In turn this will accelerate the need to re-regulate the banks and separate retail banking from investment banking - in other words reversing the trend set in course by Margaret Thatcher when she de-regulated in the 1980's, and then exported the idea to the world. (People forget that one of the arguments made by Wall Street when they were pressing for the repeal of Glass-Steagall was that they were ham-strung compared to London where de-regulation meant retail banks could merge with investment banks).
Cue Tory City donors prodding Cameron sharply in the back-side and him responding by de-crying Europe interfering and preventing the banks from bankrupting us all again (he's that silly, he probably believes that the public will side with the banks against the EU, but as usual he is mis-reading the situation).
As for the Greeks - it's awful to default, but it happens to every single nation at some point. Britain defaulted on her debt to the USA in the 1930's. The Americans sort of defaulted in the 1930's by switching from the gold standard to their own paper currency which was worth much less - and they did it again in the 1970's when they switched from Breton Woods to floating currencies. And yet life went on. Germany on the other hand tried to pay her debt in the 1930's and it led to war. De-valuing by joining the euro proved a better way out in the late 1990's.
Whatever. Good on Papandreou for calling his referendum, and I wish him and the Greeks luck.