Playing poker with Greeks

The EUReferendum Boss and I were having an internet chat about the Greek referendum. It was not along the rather predictable eurosceptic lines of "waa-waa-waa, the Greeks are having a referendum, why can't we", because I, for one, do not think the situations are similar. For one thing, the Greeks are not having an IN/OUT referendum. The notion that any referendum is the solution to all our problems is a little hard to support.

What, I asked, would happen if the Greeks did vote against whatever the latest package might be? Would the rest of the eurozone, non-eurozone EU and the IMF then say "oh fine, you can't have any more money"? The Boss pointed out quite sensibly that the result will be whatever their PM, George Papandreou wants. Ah yes, but do we know what he wants? Does he want the package to be accepted or rejected? Which will give him a stronger hand in dealing with the rest of the colleagues?

The Boss thought that "Papa" is not a person he would like to play poker with as the man might be indulging in bluff, double-bluff or triple-bluff. In my view one should NEVER play poker with Greeks, particularly with Greek politicians though, to be fair, they do lose from time to time.

Bloomberg's latest take on the story is that

Stocks sank, while a surge in German bunds sent yields down the most on record, as Greek Prime Minister George Papandreou’s plan to hold a referendum on Europe’s bailout fueled concern the debt crisis will worsen. The Dollar Index extended its biggest two-day rally in three years.

A mixed picture and, in any case, immediate reactions to events in the stock market are not always the best guide to what will happen next. Though I doubt that a Greek referendum is seen quite in the sort apocalyptic light that certain eurosceptics prefer, there is no question that the situation, as a whole, is more than worrying and all those stocks and bonds are yo-yoing. (I am not sure whether Janet Dailey is a eurosceptic or just somebody who does not really like what is happening but I have news for her: the Greeks will have a say in their future when they start running their own economy.)

Greece’s referendum poses a threat to financial stability in the euro region and increases the risk of a “disorderly” default, Fitch Ratings said. Papandreou’s grip on power weakened before a confidence vote on Nov. 4 as six senior members of the ruling party called on the prime minister to step down, state-run Athens News Agency reported, without citing anyone.

Indeed, a number of economists and analysts (far too many to link to) have been saying for some time that an orderly default on the part of Greece would be the most sensible move, as some kind of default is bound to happen.

We have to wonder what the question will be. Will the Greeks be told very firmly that they are welcome to vote no to the latest package but that will mean, as the great Daniel Hannan have us believe:

a rejection of the bailout, obviously, which would imply an immediate default on Greece's remaining debt. This, in turn, would mean leaving the euro: with no more Brussels cash, Athens would need to devalue and print drachmas simply to meet payroll.

One can never quite predict the future in politics but I am prepared to lay odds on them not being told anything of the kind. In fact, they will, almost certainly, be told that these conditions are completely unnecessary, imposed on them by the wicked Germans whose duty it is to keep the non-productive and heavily indebted Greek economy going, and that if they vote no they will be able to get a better deal.

It seems quite likely that Prime Minister George Papandreou's (are all Greek politicians called Papandreou?) calculation is not dissimilar. It's not the threat of the referendum that is his best weapon but an actual no vote. He can then go back to the negotiating table and point out that if the colleagues want to keep the euro then they have to help him to pacify the people who have just voted against the agreement. Or, alternatively, it is possible that Prime Minister Papandreou is going to ensure a yes vote, quietly promising the voters a better deal if they behave themselves and then going back to the colleagues to point out how hard he has worked on their behalf and could they not help him by giving a bit more. Either way, it will not be the Greek people who will decide on their future and, even if the crisis is somehow postponed, it will happen at some time soon and no referendum, no riots, no screaming abuse at Chancellor Merkel will make it anything else. A whole nation stuck in petulant adolescence is not a pretty sight.

There may be other alternatives in Prime Minister Papandreou's mind but, not being a Greek politician, I cannot discern them at this stage. However, it seems to me that all these bluffs can be called by the simple expedient of accepting the referendum at its face value and telling the Greeks that they can, indeed, decide on their future though it will not be very bright. But as every parent knows, it is not enough to issue threats, you have to fulfil them.

AND ANOTHER THING: Bruno Waterfield posted around 13.55 [scroll down]:

One reason why there will not be a Greek referendum: a referendum bill must be passed by three-fifths of the Greek parliament and the government's majority has gone or as good as.

Will the whole idea be history by tomorrow as Mr Waterfield added later?