Overwhelming "No" Vote; The Way Forward; Congratulations!

Four polls said the Greek referendum was supposed to be "Knife Edge" close.

Instead, Greece Heads for Decisive No Vote.

With 85 per cent of votes counted, the No camp had won 61.5 per cent and was leading in every region of the country, a remarkable political exploit by Greek prime minister Alexis Tsipras. But it is also likely to plunge Greece deeper into turmoil as it tries to prevent the collapse of a financial system that is rapidly running out of cash.

“As of tomorrow, with this brave ‘No’ vote, we will call on our partners to find common ground,” said Yannis Varoufakis, Greek finance minister.

But the response from Berlin was scathing. Sigmar Gabriel, deputy German chancellor, said Mr Tsipras had “torn down the last bridges on which Greece and Europe could have moved towards a compromise”.

“With the rejection of the rules of the euro zone ... negotiations about a programme worth billions are barely conceivable,” he told Tagesspiegel newspaper.

In Athens’ Syntagma square, No supporters were jubilant at the scale of their victory.

“Now we will be free from the Troika, from Mrs Merkel, from them all. This is the right result,” said Irma, a 45 year old civil servant. “I love my freedom. I do not want to keep having that taken away.”

Congratulations!

The fact that all four poll showed 'no' winning was the clue as to which way this would break.

Also, and as I commented earlier, Greeks had virtually nothing to gain by voting 'yes' after German finance minister Wolfgang Schäuble commented that further negotiations would be on a "completely new basis and under difficult economic conditions" even if Greeks voted 'yes'.

Congratulations are in order. Greece voted against further Troika servitude.

The Way Forward

The good news stops with the revolt against servitude. The way forward requires three items, all of which seem rather unlikely with Tsipras and the radical left in charge.

1. Reduced public service sector
2. Free market reforms (pensions, work rules, ease in firing, ease in starting a business, retirement age, etc.)
3. Fair, flat tax system

The only way Greece can quickly recover is if it takes steps along those lines. It's possible, but I highly doubt Greece will come close to doing what needs to be done.

Should Greece fail, expect some to gloat "I told you so".

They will be right for the wrong reason. Without a doubt Greece can recover much faster outside the shackles of Troika servitude.

Unfortunately, there is little reason to believe they will take the necessary steps. At least they have a chance. They had no chance under Troika servitude.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com