Papandreou’s Brilliant Political Maneuver

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This seems like a brilliant political maneuver by the Greek Prime Minister Papandreou: the announcement of a referendum shuffled all the cards in Greece, and Papandreou may not only avoid quitting, but also emerge as the winner.

This is the chain of events and a possible outcome:

  1. Papandreou was under pressure from the people, the opposition party and from his own party.
  2. He calls a referendum to get the people’s support.
  3. This exposes weaker members of his party who want to jump ship.
  4. It also triggers European leaders to reject this move.
  5. With international pressure and chances rising of an election and a government led by the opposition, the opposition led by Samaras changes its mind and now supports the government’s policies so far.
  6. Papandreou now set to talk with the opposition from a better point.
  7. Political pressure now rests on the shoulders of the finance minister and other ruling party dissenters which have been exposed.

Papandreou now has:

  • Support of the people for wanting a referendum.
  • Support of the people for standing up against Europe.
  • A notion that nothing will change if the opposition takes control.
  • Embarrassed opposition.
  • Embarrassed political opponents.
  • Bondholders that fear that things could worsen.

This seems brilliant and Papandreou may enjoy a quiet political scene for a change. For markets it means extreme volatility.

In currency markets, every piece of news concerning the referendum rocks the markets, but major support ant resistance lines are untouched. See more in the euro dollar forecast.

For more on the political situation in Greece, this article by Matina Stevis is a very interesting read and sheds a lot of light on the situation.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

7 Comments

  1. Hi Yohay – I can’t genuinely imagine that this was his initial purpose as he held the rest of the world hostage, sank the value of his currency by spearheading incredible fear and got world political leaders against his lunacy, though locally, he is seen as a triumph.

    Just hearing from several locals I agree, they’ve become somewhat proud of this movement and seem to embrace it / have realized the truism of the entire situation. One way or the other, odd all around, but from an international perspective I think he’ll be seen more as a threat going forward. That was one helluva scare.

  2. Thanks for your comment Steve. I am not sure if anyone knows exactly made him make this surprising move. You’re certainly right that in the international seen he will likely be seen as a threat.
    Yet in many cases, internal politics have the upper hand on international decisions. The same goes for all the headlines in Israel about a strike against Iran. I’ll write about that later…

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