German Economists on Greek Referendum: 'The Euro Zone Could Face Ruin'
German economists are warning of disastrous potential consequences for Europe if Greek voters reject a referendum on the euro rescue package. The country would go bankrupt, they argue, and it would trigger a domino effect. At the same time, politicians would finally be required to develop a worst-case scenario.
The plausibility of a bankruptcy scenario for Greece didn't disappear for very long at all. This time around, European leaders only managed to quiet things down in the debt crisis for four days before all hell broke loose again. Before the markets began to shudder, even banking executives whose companies are being asked to pay up as part of the bailout had been supportive of the euro rescue package.
Now, however, with the announcement Tuesday by the Greek prime minister that his country may hold a referendum on the bailout, everything has been thrown on its head again. Prime Minister Giorgios Papandreou defended the step, saying it would be "democratic and highly patriotic."
That didn't stop his announcement from unleashing tumult on the markets on Tuesday. European stock markets plunged sharply; Germany's DAX index of blue chip companies lost almost 6 percent of its value, dropping to 5,795 points. But banks were among the biggest losers -- shares at Germany's Deutsche Bank and Commerzbank temporarily fell by 10 percent. The reason is clear: Investors fear that the debt crisis will escalate further if Greek voters reject the austerity measures that are linked to the disbursement of the latest bailout package for the highly indebted euro-zone country.
But what could really happen if Greek voters reject the bailout? And why is Papandreou turning to this extremely risky measure? SPIEGEL ONLINE polled respected German economists for their opinions on Greece's call to pursue a national referendum on the bailout.
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