The Greek gamble

I don't believe anyone foresaw the decision of the Greek government to hold a referendum on the terms of the euro bailout and the effect they will have on Greece. The choice facing the Greeks is between harsh austerity imposed from outside and a convulsion in the economy of Greece.  Long term, the latter is probably the better of the two.  The problem for the Greek government is that by promising a referendum it has lost what little control it has of events, but so have the IMF, EU and leaders of governments of nations within the eurozone. 

The Greek government's decision may have been motivated by a belief that it will secure much improved bailout terms to put to the electorate.  Such a belief may be misguided, but even if better terms were to be offered, the Greeks might still vote for leaving the euro.  Anti-EU and anti - German sentiment is running high.  Indeed there is conjecture as I right that the Greek government may fall as it has a paper-thin majority in the Greek parliament. http://www.bbc.co.uk/news/world-europe-15538809

The markets have reacted as they always do to uncertainty.  Grim times ahead.  Below, a number of pertinent articles:

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100012986/revenge-of-the-sovereign-nation/   A 'must read'.


http://blogs.telegraph.co.uk/finance/jeremywarner/100012942/new-ecb-chief-must-act-as-europe-again-stares-into-the-abyss/

http://www.telegraph.co.uk/finance/financialcrisis/8862209/Fitch-statement-on-the-Greek-referendum-full-text.html

http://blogs.telegraph.co.uk/news/janetdaley/100114670/shock-greek-people-get-a-say-in-their-own-future/

http://www.bbc.co.uk/news/business-15537557  Peston
http://www.bbc.co.uk/news/world-europe-15531306  Hewitt

http://www.spiegel.de/international/europe/0,1518,795176,00.html 'EU shocked and furious as Greek Referendum Plan.

UPDATES:  http://www.bbc.co.uk/news/world-europe-15538809
http://www.telegraph.co.uk/finance/financialcrisis/8863693/Global-markets-plunge-with-Greek-government-on-brink-of-collapse.html

http://www.telegraph.co.uk/news/worldnews/europe/eu/8863865/Greece-on-brink-of-collapse-in-euro-crisis.html