Beware of Greeks playing roulette with their whole economy

The breaking news is that George Papandreou seems to have played Roulette with his nations debts but many in his own party and the rest of the government have prevented him from staking it all on a referendum. Earlier today four of his own cabinet opposed the measure and the Prime Minister will be seeing Greek President Karolos Papoulias to offer his resignation.

The crisis came to a head today after the EU withdrew its bailout offer of a rescue package unless Greece decided immediately whether they were in or out of the Eurozone. Earlier the main opposition leader Antonis Samaras of the New Democracy party called for a coalition goverment to safeguard the EU deal, which wrote off 50% of the debts owed by Greece in return for sharper austerity measures. Some of Papendreou's MPs refused to back his call for a referendum calling instead for a national government or an early election. His slim majority was only 4 in the 300 seat parliament.

So where does this leave us?

Clearly the Greek political leaders are trying to shore up their economy as best they can. Realising that the EU deal may be the best option that they can get at this point. However, the people are still angry about the need for greater austerity measures to enable them to pay back the new deal. However, it looks likely that they will leave the Euro to allow greater flexibility over their own economy to enable them to pay back their debts. But the level of austerity in Greece is likely to last for many years.

One thing that appears to have come from the past week since the Greek package was agreed is that the entire world seems to be at a point where if someone fails to take positive economic action there will be panic. The fact is that in or out of the Eurozone, whether in Europe or not, every economy is getting so entwined with each other that any nervousness or fear of default could be on the point of bringing down a lot more than simple the economy of one relatively minor country. Also if Greece were to leave the Eurozone, there is the question of the lack of mechanism for them to do so, and also the question of whether they would also have to leave the EU. In doing so this may well lead to further issues.

The fact is that when David Cameron says we're all in this together he means not just across the UK, but across Europe and further afield.

Whether a new Greek government can bring about stability quickly is the matter that world leaders at the G20  in Cannes will be watching closely. As the latest events in Greece were happening as the EU deal was being discussed in Cannes.

Note As this is a breaking news story issues may well move on while I am away from my computer this afternoon.