Greece Undermines the Bailout Deal by Announcing a Referendum

by Marilou Long on November 1, 2011

in Banks,Credit Crisis,Debt,Foreign Markets

Do you remember that old

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Monty Python skit “Nobody expects the Spanish Inquisition”? Today’s phrase for the turmoil in global markets is “Nobody expects the Greek referendum”. European leaders are understandingly stunned by Papandreou’s announcement today of a referendum on the austerity measures that his government has agreed to in order to restructure their sovereign debt. There will be parliamentary debate this week, but the vote may be put off until December or January. Unless the Greek government reverses course on this decision, the markets will remain volatile for the foreseeable future.

We will be closely watching Italian and Spanish yield spreads for a tell on the outcome of this debate.

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