For a while there, it looked like calm was being restored to the markets. European Union leaders brokered the second bailout for Greece in a deal that cut Greek bond levels in half (while averting an outright default), and the put together a $1.4 trillion rescue fund for members of the monetary union.
Less than a week later, however, the bloom is off the rose. Greek Prime Minister Papandreou dropped a bombshell last night, calling for a referendum to let the Greek people decide on the latest bailout deal. While that may prolong the PM’s political career, it faces almost certain defeat among the electorate who are not eager to shoulder a greater burden than they have already.