Euro Debt Deal and the Greek Referendum Freak Show

How much more of this can we be expected to take? The theatre of the absurd enters yet another improbable act with the announcement of a referendum in Greece by George Papandreou to solicit Greek public approval for the austerity measures required for a bailout. I can’t imagine that anyone would vote for reduced services and infrastructure and higher taxes. One must question the motiviation of the Greek PM. I suspect that he’s keenly cognizant of the political SNAFU he’s found himself in at this point in the Euro crisis, and realizes that when the smoke clears and he’s packed into retirement, he’s going to be living among those on whom he inflicted austerity. Its somehow appropriate that the founders of democracy should deploy it in its purest form to undermine their immeidate salvation.

Who is their right mind is going to vote in favour of austerity?

Markets certainly voted with their feet yesterday, with major indices suffering from the effects of a general exodus as the flight to the horribly mis-named “safe haven” assets took them much lower. Today, there appears to be a bit of breath-holding going on so far in the east, but thats not likely to hold when New York and Toronto open shortly. Most fingers are poised on the sell trigger rather than the buy button, is my bet.

And as is becoming the norm in our seriously compromised markets, gold mimicked general markets and tumbled $33, though that was a microscopic loss compared to equities. At the end of the day, the direction of Greece specifically and Europe in general is only positive for gold, and no matter which way things go, after the next crash, which is likely right around the corner as Italian yields break the 7% mark, and Spain looks next.

Though MF Global’s demise is being touted by the mainstream as an isolated incident that involved only private investors’ money, the swiftness with which it fell, and the absolute refusal of anyone to help, is indicative of the prevailing atitude of the big money to “outsider” institutions who don’t have the benefit of political association. The question is, how many MF Global’s are out there, and how many will fall before a general market rout ensues?

James West