Greek Drama Unfolding at Rapid Speed

Sovereign debt turmoil in Greece accelerated at a rapid pace on Tuesday as a growing chorus of Greek government officials called for Prime Minister George Papandreou to resign.

The calls for Papandreou’s resignation follow his decision earlier today to call for a referendum on the euro zone bailout package.  According to Reuters, “Six senior members of Greece’s ruling PASOK socialists, angered by his decision to call a plebiscite on the 130 billion euro rescue package agreed only last week, said Papandreou should make way for ‘a politically legitimate’ administration.”

The report went on to note that “A leading PASOK lawmaker quit the party, narrowing Papandreou’s already slim parliamentary majority, and two others said Greece needed a government of national unity followed by snap elections, which the opposition also demanded.”

Financial markets across Europe and the U.S. came under heavy selling pressure as the Greek drama unfolded, with equities and cyclical commodities facing steep losses.  The euro currency declined as well, by 0.8%  to 1.3747 against the U.S. dollar this afternoon.

However, U.S. equities came well off their lows this afternoon – with the Dow Jones Industrial Average (DJIA) down 1.6% after earlier falling as much as 2.7% – after reports surfaced that a Socialist Party official in Greece claimed that the referendum is “basically dead.”