Did anyone expect that the latest deal to rescue the eurozone would collapse quite so quickly and quite so spectacularly? Greek Prime Minister George Papandreou, in a surprise both to the world and to his own party (and his own finance minister), announced last night that instead of simply accepting the recently concluded deal, he would allow the public to vote on it in a referendum. Since the public is distinctly unlikely to approve the agreement, pandemonium immediately broke out. Papandreou commands only a slim majority in parliament, and already two members of his party have resigned and several more are threatening to do the same, which would bring down the government. Stock markets have tanked all over the world, and emergency meetings are now the order of the day. Papandreou is holding one as I write this, and Nicolas Sarkozy and Angela Merkel will be meeting tomorrow in Cannes.
What happens next is anyone's guess. "It's all over. The government is about to collapse," one anonymous Greek official told the Guardian. This in turn would mean that Greece has simply reached the end of its austerity rope, unwilling to cut any further in order to appease the French and Germans. Britain's shadow chancellor seems to have poured a bit of fuel on the fire, suggesting that Greece's referendum was a good idea, a notion that isn't likely to make the (non-euro using) UK any more popular than it already isn't in the hallways of Paris and Berlin.
If the Greek government falls, and a new government demands a better deal, it's unclear what will happen next. It could be a prelude to Greece exiting the euro in a decidedly non-orderly way, and if that happens there's no telling if the euro will survive. Stay tuned.