CNBC Video - Michelle Caruson Cabrera reports from Greece.
The country that invented drama and democracy is not disappointing the world on either front. Greek Prime Minister George Papandreou on Monday called for two high- stakes votes.
The first asks parliament to say by the end of this week whether it has confidence in his leadership. The second is a referendum in which Greek voters would approve or reject, possibly by year’s end, Europe’s latest debt-crisis workout.
The move blindsided European leaders on the eve of a global summit and rocked lawmakers in Papandreou’s party, some of whom are now calling for him to step down. The next day, stocks tumbled worldwide, the euro declined and Italian bonds plunged.
No doubt, Papandreou’s gambit is extremely risky. He has only a three-seat parliamentary majority. And the referendum, if rejected, could push Greece into default and out of the European Union and the single currency. A doomsday scenario could follow, including financial market mayhem, soaring sovereign borrowing costs and cascading bank failures. Europe and the U.S. could fall back into recession.
Still, it was the right thing to do. Greek citizens deserve a say on one of the most important matters in their lifetimes. Perhaps more important, the move could finally force Europe into the full reckoning required to solve its two-year-old sovereign- debt crisis.
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