Greeks Rebel: Eurozone Bailout Hangs By A thread

The Eurozone bail out cobbled together last week is hanging by a thread and has sent stock markets world wide tumbling as a result.

In view of the vast civil unrest that accompanied the last austerity measures, Greek PM George Papandreou wisely decided to hold a referendum in parliament to get support for the new measures the EU is demanding as part of the current proposal.

And it unfortunately hasn't gone well. Papandreou's socialist Pasok party is shedding support from its own members over the new austerity measures, and it's doubtful whether Papandreou even has a simple majority anymore in the 300-seat parliament. A vote of confidence is planned for Friday, which might even end up with Papandreou being ousted and the country going to early elections.

In view of this, Papandreou announced that Greece would hold a popular referendum in January on whether to adopt the new spending cuts and austerity measures. So far, the polls show that the vast majority of Greeks are against them.

If Greece does not approve the new austerity measures, the EU won't release bail out funds from the EFSF, which means that Greece would default on its sovereign debt. Essentially, a vote against the austerity measures would be a vote against the euro and in favor of bringing back the Greek drachma.

From Greece's personal standpoint, they might actually be better off. Even the current 130-billion-euro bailout and 50-percent write-down on its debt only gets Greece to a debt level of 120% of its gross domestic product(GDP), which is like restructuring your debts down to $2,400 per month when you only have an income of $2,000. And that's the best case scenario.

The country's credit would be shot, but it already is anyway, and at least they could devote what there is of Greece's resources to the country's actual expenses instead of debt service.

The big losers would be the other members of the eurozone ( especially France and Germany) , who would get stuck with the worthless debts from the earlier Greek bailout and would then almost certainly face a whole slew of countries defaulting as the entire rotten structure collapsed.

Since chaos tends to spread,the effect on US and foreign financial markets can hardly be expected to be good.

please donate...it helps me write more gooder!