2012, here we come.... (#27)

Does anyone really think that Merkel and Sarko had no idea Papandreou would go rogue (i.e. to the people) after the Brussels get-together last week?

And why is it so surprising, that the nation which invented democracy should think it appropriate that some sort of popular consultation could take place before surrendering much of its sovereign control over its economic fate for the next several years.

Papadreou's gamble does now appear to have backfired, but one can understand the original motivation: transform a Hobson's choice cobbled together by foreign technocrats into something at least resembling a local political Catch-22.

For the Greeks, who might be forgiven for caring less about what now happens to the wider world economy, there's an extended period of economic pain ahead. In the short term at least, the pain would probably be greater if they were permitted the option of disorderly default and a return to the Drachma.

Papandreou may have hoped that his government could play upon popular terror of that greater pain, turning the plebiscite into something of a formality, and covering the collective backsides of Greece's political elite with a democratic mandate for the barber-shop approach to bond-holders.

Or, maybe he wanted to leave the door open for the full meltdown 'solution', which would at least leave the Greeks in charge of their own destiny once again — first in the queue as far as the euro exit sequence goes, and perhaps not that much worse off than everyone else once the impact of this decision has run its course.