Premier George Papandreou after coming under heavy pressure from European leaders and the perhaps temporary desertion of several of his Parliamentary colleagues  reversed his position on holding a referendum. In exchange, he may have persuaded some of the opposition party politicians in the Greek parliament to support the bailout package and possibly even create a coalition government of national unity. However, some opposition leaders are opposed to Papandreou remaining the Prime Minister.The vote of confidence  apparently takes place at 10 pm GMT this evening. S0 we on the east coast of North America should know the outcome at our supper hour.

The ECB has begun to buy the sovereign debt of Italy and other countries which is a good move that should help ease the pressure on interest rates and cause the speculators to be more prudent.

One of the monetarist German members of the European Central Bank, Jurgen Stark has stressed that the move is only a temporary measure and that he was generally opposed to it, because of its positive impact upon easing the burden of high interest rates that put pressure on countries like Italy to clean up their act. This is akin to telling countries suffering from an influenza epidemic that even though you possess a life saving vaccine, it is better for them to suffer through the illness without resort to this treatment, so if they emerge from the illness through their own means they would somehow be better people. Not exactly a progressive sentiment.

Italy and other countries should , of course , undertake necessary reforms of their tax and expenditure systems, but it is foolish not to use all the modern means at the disposal of banking and governmental institutions to improve the lives of citizens. Like millions of others, I await the results of tonight’s Greek parliamentary vote. Whatever else it may accomplish it has , at least , made much more transparent the nature and potential contribution of central banking and sensible debt management to managing the business cycle.