Greek referendum throws debt deal into question

Greek Prime Minister George Papandreou called for a national referendum on the bail-out deal, a surprise move that shocked European leaders and caused stock markets to drop dramatically. The bail-out deal took months to hammer out, and a rejection by voters could lead the country to crash out on the euro and cause uncontrolled damage to the financial system in Europe and around the world. Papandreou’s announcement caused one lawmaker to defect from his party, leaving him with a majority of two in Parliament.

The hard-fought deal would allow Greece to write off as much as 50% of debts to banks, and would help keep other European nations stable. A survey conducted revealed, however, that nearly 60% of people in Greece opposed the debt deal. If the public votes “no”, the agreement with banks to write off a percentage of the debt could unravel.