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Greek prime minister George Papandreou pulled a second major surprise move in two days. Yesterday he rattled the markets with a bombshell voter referendum proposal on the EU bailout (see EU Deal Unravels from Many Sides; Italy, France Bond Spreads Hit Record High vs. Germany; Bund Yield Drops Most on Record; All Out Bond Crisis).
Greece Replaces Top Brass in Army, Navy, Air Force in Surprise Move
Today in another surprise move, Greece Replaces Top Brass in Army, Navy, Air Force
Is Papandreou Preparing for a Military Coup or Afraid of One?In a surprise move, on Tuesday evening the defence minister replaced the country’s top brass.An extraordinary meeting of the Government Council of Foreign Affairs and Defence (Kysea), which comprises the prime minister and other key cabinet members, accepted Defence Minister Panos Beglitis' proposal that the following changes be made to army, navy and air force and the general staff:
- General Ioannis Giagkos, chief of the Greek National Defence General Staff, to be replaced by Lieutenant General Michalis Kostarakos
- Lieutenant General Fragkos Fragkoulis, chief of the Greek Army General Staff, to be replaced by lieutenant general Konstantinos Zazias
- Lieutenant General Vasilios Klokozas, chief of the Greek Air Force, to be replaced by air marshal Antonis Tsantirakis
- Vice-Admiral Dimitrios Elefsiniotis, chief of the Greek Navy General Staff, to be replaced by Rear-Admiral Kosmas Christidis
It is understood that the personnel changes took many members of the government and of the armed forces by surprise.
I can only think of two reasons for this latest surprise announcement.
- Papandreou or the Defense Minister is Preparing for a Military Coup (to stay in power if he does not survive the vote of confidence)
- Papandreou or the Defense Minister is Afraid of a Military Coup
Take your pick. It's one or the other but it could be both.
The stock market rallied in a spurt around 12:30 Central when a Dow Jones Newswires reported that a Greek Socialist Party official said the plan to have voters approve the rescue is “basically dead.”
Then, about an hour before the close came news from a Greek government spokesman that the referendum was back on and the S&P slid back towards the lows of the day.
Finally, in a bit late buying the S&P surged 12 points to close down about 35 points, roughly 2.8%.
S&P 500 Futures, 3-Minute Chart
The question is: Who is an control? Better yet, is anyone in control?
One thing we know is Papandreou's call for a vote of confidence is on. We also know his fragile coalition holds an extremely slim 3 margin majority in Parliament.
I believe on these announcements, he will lose that vote of confidence. If so, we do not know who will replace him. If the call for voter referendum is not binding, then it is likely the next Greek parliament or prime minister will cancel it.
There are a lot of open questions here in regards to both the vote of confidence and the voter referendum, yet I see them posed nowhere else. Is there a Greek constitutional expert around?
Meanwhile Merkel and Sarkozy will meet in Cannes November 3 to discuss the Greek crisis in yet another EU 20-member summit.
If the referendum is on, the EU is no longer in control of a Greek default. More specifically, the EU was never in control, it only appeared that way.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Mike Shedlock
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Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.
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