Greece’s Papandreou Submits EU’s Deal for a Referendum

Following last week’s EU agreement on a reduction on the Greek debt, it seems that the crisis isn’t averted just yet: the Prime Minister of Greece Papandreou has put the European Union’s debt plan to a public vote by the Greek nation, i.e. referendum.

The referendum plan of Papandreou was backed up by the Greek parliament.  This referendum puts the recent EU plan into risk if the voters will reject it because it could mean a default of Greece on its debt.

Sarkozy and Merkel agreed to convene with Papandreou today, Wednesday November 2nd during the G20 meeting in Cannes, France in order to talk the recent turn of events.

Even if the Greek nation will come to an agreement on the EU debt plan there are still many perils for Greece to pass before getting out of the woods: the unemployment rate is still high at 16.30%, the government budget deficit is in double digits (10.6% in 2010), there is an ongoing contraction in the nation’s GDP (as of Q1 2011 the growth rate reached -5.5%) and there is still a high rate of tax evasion; all these factors don’t look well for the Greek economy managing to repay its debt even after the 50% reduction.

Following this news, the financial markets soon reacted to this news as Forex exchange rates, Stock markets and commodities prices sharply fell yesterday. Currently the European stock markets are bouncing back along with major commodities prices and the Euro to US dollar is also traded up:

Euros to USD exchange rate is currently traded up at 1.3794 a 0.6661% increase as of 10:15*.

Nymex (WTI) crude oil price, short term futures (December 2011 delivery) is traded up by 0.77%, at $92.90 per barrel as of 10:16*.

Gold price, short term futures (December 2011 delivery) is traded at $1,735.50 per t oz. a $23.7 increase or 1.38%, as of 10:06*.

(* GMT)

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