Political Crisis Adds to Greek Economic Problems

BBC News – Greece’s Papandreou in crisis talks over bailout revolt.

The PM surprised everyone by calling for a popular referendum on the rescue and the austerity reforms. There is no certainty that the referendum will yield a YES vote.  It is a gamble of the PM which, if it pays off, would reinforce his position considerably to undertake the reforms demanded by the ECB and the EFSF in exchange for the loans and debt reduction.

But if the Greek people vote no, the rescue package is dead and it becomes difficult to predict what the outcome would then be.

The opposition and some members of his own party are balking at the move. European leaders were taken by surprise and the markets plummeted. Greek MP’s are now calling for a vote of confidence (which depending on each’s position, it is truly a vote of non-confidence.)

If the Greek government falls, will the new government call off the referendum? That could lead to even wider protests, even a revolution.