The stock market rallied in a spurt around 12:30 Central when a Dow Jones Newswires reported that a Greek Socialist Party official said the plan to have voters approve the rescue is “basically dead.”
Then, about an hour before the close came news from a Greek government spokesman that the referendum was back on and the S&P; slid back towards the lows of the day.
Finally, in a bit late buying the S&P; surged 12 points to close down about 35 points, roughly 2.8%.
S&P; 500 Futures, 3-Minute Chart
The question is: Who is an control? Better yet, is anyone in control?
One thing we know is Papandreou’s call for a vote of confidence is on. We also know his fragile coalition holds an extremely slim 3 margin majority in Parliament.
I believe on these announcements, he will lose that vote of confidence. If so, we do not know who will replace him. If the call for voter referendum is not binding, then it is likely the next Greek parliament or prime minister will cancel it.
There are a lot of open questions here in regards to both the vote of confidence and the voter referendum, yet I see them posed nowhere else. Is there a Greek constitutional expert around?
Meanwhile Merkel and Sarkozy will meet in Cannes November 3 to discuss the Greek crisis in yet another EU 20-member summit.
If the referendum is on, the EU is no longer in control of a Greek default. More specifically, the EU was never in control, it only appeared that way.
Mike “Mish” Shedlock
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