Greek Premier Vows December Vote on Debt Deal

Europe Markets Drop on News of Greek Referendum


Lawmakers rebelled against Prime Minister George Papandreou’s surprise call for a popular referendum on a new debt deal to lenders, raising fears that Greece could be headed for default.


www.nytimes.com/2011/11/02/world/europe/...?partner=rss&emc=rss

what does this mean for the world markets

The Federal Reserve held off on taking any more measures to goose the economy, even as conditions suggest that the US is far from in the clear on growth and as the global markets rumble.

While many investors expect the central bank to embark on easing action within the next year, the Open Market Committee said it would keep its targeted funds rate near zero and proceed with its efforts to drive down long-term interest rates.The committee, in a 9-1 vote, said economic conditions actually have improved somewhat and the outlook for inflation has eased as commodity prices have dropped.

Greek Premier Vows December Vote on Debt Deal


The Greek cabinet said it would support a proposal by Prime Minister George A. Papandreou that threatens Greece’s adherence to a deal with foreign lenders.


www.nytimes.com/2011/11/03/world/europe/...?partner=rss&emc=rss

BRUSSELS (AP) — European leaders have struggled mightily to keep Greece in the eurozone, despite the drag that its economic weakness places on their growth. The reason is this: If Greece abandons the euro, the chaos it would wreak on the global economy can hardly be overstated.
A Greek exit from the euro would almost certainly cause the country to default completely on its debts. A bankrupt Greece would be unable to pay pensions and salaries, and there would be a run on banks, causing them to collapse as people lined up to withdraw euros before the currency changed to drachmas.

Greeks owing money in euros but being paid in drachmas — essentially, a huge currency devaluation — would find their debts suddenly too large to pay, and would go bankrupt themselves. In a country where street violence accompanies even minor civil servant demonstrations, that's a volatile mix.