One only has to hear senior businessmen and City figures speak of their admiration for the effectiveness of the government of China to suspect that their commitment to democracy is not absolute. But it is still rather startling to see how the proposal to put the austerity package to a referendum of the Greek people should cause such panic in the markets. The idea that the people might decide has been met with horror.
It is inconsistent too because for most of the time throughout this crisis, market practitioners have complained about the lack of leadership shown by the continent's politicians, and their unwillingness to be honest with the voters and tell them the unpalatable truths about what needs to be done. Yet the Greek government, if it is to have a hope of winning this referendum on the eurozone rescue package, is clearly going to have to do just that.
What the markets should have realised is that the Greek government had little choice, and that either result will be a plus. It has been obvious for months that it could not deliver the required level of austerity as long as the public believed the programme was being dictated from outside, and that resistance might lead to a softer choice.
A referendum forces it to confront the issue. If Greece votes for the package, there must be a heightened chance that the austerity programme and cuts having been accepted by the public will in fact be delivered.
Alternatively if Greece votes against the rescue, it is in effect voting to leave the euro. This would allow it to devalue to a level that restores its competitiveness and resolve its problems in a way most people, if they are honest, think is the only long-term hope for the country anyway.
Neither outcome justifies the markets' panic.
