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Markets Droop on (More!) Greek Political Risk

Just what we need: more political risk in Greece. The euro drooped, along with the U.S. stock market, about 2pm ET when the Greek Prime Minister announced: 1) a referendum on the new European aid agreement, and 2) a vote of confidence on the government in the Greek parliament.

When will the referendum happen? Not clear, but presumably in the next few weeks — but since we still do not have a final agreement with the EU, it's easy to see that it could stretch into December.

You can imagine the horse trading that is going to happen. There is a huge number of people who will lodge a protest vote against the government — unless party officials of all stripes control them. How to do that? Opposition parties might urge their constituents to vote in favor of approving the EU deal — but only in exchange for a new government.

No wonder the euro dropped.

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