Stocks Tumble Amid Speculation Greek Vote Could Derail Debt Agreement

By Jon E. Dougherty at 1 Nov 2011

(Newsroom America) -- Stock markets and the euro tumbled Tuesday following a call by Greek Prime Minister George Papandreou for a referendum and a parliamentary confidence vote in what some believe could derail Europe's attempt to address that country's worsening debt crisis.

If rejected by voters, Papandreou's gambit risks throwing Greece into default, a real prospect, say analysts, after his popularity has faded dramatically amid the implementation of austerity measures, cuts to social programs and spending, all of which have combined to create a raft of social unrest.

Reports said one opinion poll published Oct. 29 showed that most Greeks believe the agreement on a new bailout package, coupled with a debt write-down, are bad deals for the country.

German and Italian bonds and yields fell on Papandreou's announcement, as the euro slipped another 1 percent to $1.3718 after falling 2 percent on Monday. U.S. futures declined as well as bank shares.

European leaders complained that Greece was attempting to get out of a 130-billion euro agreement reached just last week, not so much because of what it could mean in terms of a default for Athens but more in terms of concern about the future of the entire currency union if the referendum rejected that deal.

"The summit last week was to deal with the uncertainty in the euro zone...and this grenade is thrown in just a few short days later," European affairs minister Lucinda Creighton told Reuters. "Legitimately there is going to be a lot of annoyance about it."

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