"Two interconnected events on Tuesday cast into sharp relief the problems Europe faces and their potential solutions.
Greek Prime Minister George Papandreou announced late Monday that he will bring the ongoing Greek bailout and austerity programs to a referendum in the near future, dramatically accelerating the unfolding of the European debt crisis. Meanwhile on Tuesday, former head of the Bank of Italy Mario Draghi took over the presidency of the European Central Bank (ECB).
It is not yet certain a referendum will take place in Greece. First there will be a parliamentary vote of confidence in Papandreou’s leadership. Papandreou’s narrow and tenuous majority makes it entirely possible that the Greek government will collapse before a referendum can be organized.
“As Europe’s debt woes swell, the ECB has increasingly been introduced as the only entity able to stave off complete dissolution of the euro.”
Additionally, until the date for and text of the referendum are finalized, it is difficult to project how Greek voters will respond. Polling data shows that while 73 percent of Greeks favor eurozone membership, 59 percent oppose the bailout deal reached Oct. 27, in which a large tranche of Greek sovereign debt is written down by half, Greek banks are recapitalized and Greece is sequestered from debt markets through the remainder of the decade."