Papandreou reverses position:no referendum, confidence vote takes place this evening

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.

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About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
This entry was posted in austerity, business cycles, classical economics, deficit hysteria, deficits and debt, European debt crisis, European financial stability fund, Greek sovereign debt crisis, J.M.Keynes, monetary policy, quantitative easing, treasury view, Uncategorized, unemployment and tagged . Bookmark the permalink.

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