American and European markets plunged Tuesday as news of a Greek referendum concerning its debt crisis came to light.
Greek Prime Minister, George Papandreou, shocked the financial world when he called for a national referendum concerning international aid for his country.
The referendum could force Greece off the euro which could severely impact markets around the world.
Early in trading on Tuesday the Dow Jones dropped more than 250 points and French and German markets were down more than four percent.
Papandreou is calling for public backing for the Greek bailout. This could cut the debt in half but there are strings attached to the deal; namely widespread and intensive austerity measures that would likely hit the general Greek population hardest.
The Prime Minister stated that the people would have the final say concerning the approval of the austerity measures, which has caused demonstrations and riots in the streets. The austerity measures are one of the stipulations included in the international bailout plan.
Another concern would be that a vote for the referendum would not take place until Jan. 15. This would leave the international community on edge until then. Konstantinos Michalos, President of the Athens Chamber of Commerce said, "We cannot wait until 15 January…Personally, I do not think we will ever get there."
A survey by Kappa Research for the publication To Vima showed that 70 percent of Greeks wanted to stay in the euro. However, if a “no” vote is reached on the referendum that may not be possible.
International lenders want Greece to raise taxes, sell-off some state owned companies and lay-off thousands of state workers.
The referendum has also shaken the political ground in Greece. Tuesday saw the resignation of Milena Apostolaki, who announced her resignation from the PASOK party. She stated the announcement of the referendum was "a deeply divisive procedure."
The Greek financial situation has far reaching affects. Just before the referendum announcement MF Global, run by former Senator Jon Corzine, filed for bankruptcy. This marks the first American company to fold due to the European crisis.