>> this is the "journal" on dw- tv. our hdlines -- leaders of france and germany called another emergency summit after the greek prime minister called a surprise referendum on last week's euro zone -- eurozone debt deal. >> plummeting confidence in the eurozone. >> ordered to pay millions in back taxes. >> it has been another turbulent day for the eurozone as eu

leaders scramble to deal with greece's shop decision to hold a referendum on the bailout plan -- shock decision to hold a referendum on the bailout plan. the bailout plan was the only way of solving greece's the problem. the leaders of germany and france have scheduled an emergency meeting with the greek prime minister on wednesday, ahead of the economic summit. another day, another emergency summit to shore up the road. french president nicholas sarkozy says the accord struck at the summit last week, as we said, is the only possible way to solve greece's debt problems. what is the german government's for pas -- governor's response? -- what is the german government's response? >> the main reaction is the calling of this hastily- scheduled emergency meeting tomorrow. that was decided by a phone call between chancellor angela merkel

and french president sarkozy. the announcement of the meeting is quite interesting. the wording -- it does not actually make direct reference to the referendum that the greek president plans -- a prime minister plans to hold. in fact, it simply says -- that the greek prime minister plans to hold. it in fact says that they are determined to implement the decisions of last week's summit. they want to set steps for seeing those c carri out as soon as possible. apparently, the same message was convnveyedy the georgian foreien minister -- german foreign minister in a counterpart -- in a phone call with his greek counterpart. they're trying to persuade the greek prime minister to not go ahead with his plan to hold the referendum. >> the latest crisis has done europe's political leadership. we are convinced they have reached a deal -- they were

convinced they had reached a deal. everything is up in the air again. prime minister george papandreou told his cabinet he intends to go through with the referendum and predicts his government will survive a confidence vote on friday. >> the greek cabinet members, on their way to an emergency meeting with george papandreou, most shocked by his decision to hold a referendum on the latest european bailout. support for the prime minister is plummeting, even among his fellow party members. >> the country is on the verge of bankruptcy. i call on the president to take responsibility and call a meeting of party leaders with the goal of forming a government of national unity. >> during a meeting with the president, the conservative express -- conservatives express their dismay and call for early elections. >> for george papandreou to save

himself, he has posed a divisive dilemma, a black man in -- blackmailing dilemma, one that puts our future and the future europe in danger. eurozon the government has failed and now wants to put the blame on the people. there can be no good outcome to this referendum. we are finished, whether we vote in favor of the bailout or return to the drachma. >> papandreou h hopeso convince his ministers and fellow party members to support the referendum, but the defection of one socialist deputy on tuesday whittle the party's majority in the 300-seat legislature to just a few seats. >> what has the reaction been in brussels for the need for another emergency summit to save

greece and save the euro? >> they reckon there is a need for the summit now that what has happeneded hasappened. there is an amalgam of shock and amazement. nobody saw this coming. they have been trying to second- guess this crisis every step of predicted this would happen. it adds more confusion. if there is a referendum down the road, maybe in january, who is to say how that will affect decisions that are taken now? markets are going haywire. there is anger, frustration. if the greeks want a referendum, that is democracy at work. nobody will be caught out in bus -- out in brussels publicly attacking the principles of democracy. >> there is frustration with what mr. papandreou is doing. could the political class simply go, okay, great, fine, you're

out? >> i am sure, privately, they would love to, most of them. they cannot do that. what would that say to the public? the prime minister offers a vote on the -- on something they are very concerned about. i do not think that is on the cards. secretly, i am sure they would love to do that. there'll be effigies of mr. papandreou with pins sticking in him, i am sure. but they will just have to let him get on with it. they are horrified. >> all joking aside, the markets it is really hard. >> they're not amused at all. the stocks have not reacted well. we have a major sell-off. the dax is down by more than 6% -- was down by more than 6% at 1 point. the banks are bracing themselves for bigger losses if greece was to leave the euro zone -- wahre tabelle eurozone -- to leave the

eurozone. >> banks have agreed to a 50% write-down of great debt. insolvency could mean for growing 80% or more -- of greek thdebt, but in some say could mean -- in solvency could mean for giving 80% or more. european central bank, which has bought up billions in the greek government bonds, would use -- lose some 22.5 billion euros, according to nomura. there remains plenty at stake for greece itself, which has already stretched to the elements. the country would -- to the limits. the country would lose out on a portion of the rescue funds. greek bank could have to forgo a 50 billion euros they are owed. that would cause a credit crunch. employers would be hard-pressed

to pay their staff. unemployment would continue to grow. some economists also fear that greek bankruptcy could trigger a domino effect that would bring down other members like italy and spain. some fear that could trigger the end of the euro. other experts say could mark a beginning -- new beginning. >> the greeks reject the a government -- the government sterity program. how will thiplay out? i talked to someone from the frankfurt school of financial mananageme. >> i think the majority of the greek people will, at the end of the day, agree, at least the referendum, and support the papandreou government, because the people know if greece fails in this referendum, then probably greece has to drop out from the eurozone, which very much will decrease the leading standard -- the living standard

in greece. >> the referendum will not take place for months. how can the markets do with this uncertainty for so long -- deal with this uncertainty for so long? >> we have now learned that this crisis will continue until we know if greece will agree with the decisions of the summit in brussels. >> that was a guest speaking to us earlier. last week's bailout scheme for greece managed to calm markets for just a few days. the bailout referendum renewed risks of a greek default. >> the athens stock exchange was not the only one in the red on tuesday. news of the referendum has also sent ock waves across europe and the rest of the world. a selloff of banking stocks

trimmed markets in frankfurt deep into negative territory -- drilled to markets in frankfurt deep into negative territory. what might happen if g greek voters reject the deal? >> effacing know, it is possible greece would have to leave the monetary -- if they same y no, t is possible greece would have to leave the monetary union. these questions are hitting the capital markets. >> the bombshell from over the atlantic's and u.s. markets tumbling. the dow jones industrial average closed lower and did not recover on tuesday. >> also a rock above the damage to the frankfurt stock exchange. -- also a wrapup of the damage to the frankfurt stock exchange. >> people are still speeches and aghast at what they have been hearing from athens -- speechless and aghast at what they have been hearing from

athens. people are still scratching their heads, asking what is going on in greece. a lot of people are downright angry at the prime minister. he is risking a lot, not only for his country, but also for the eurozone and the banks. financial shares were the hardest hit. all of the shares in the dax were on the losing side. people are fearing real consequences for the real economy out there, if you will. banks are the hardest hit. it could have an effect on credit and dampen the economy. >> let's take a quick look at the markets. beginning in frankfurt, where the dax closed down 5%. it had been as much as 6% lower today. another index closed about 5.5%. but the dow jones industrials closed in negative territory, down 2 3/4 of 1%.

the first day on a new job is always daunting and perhaps even more so if your job is to hold the eurozone together. mario draghi has taken the reins of the european central bank, taking over from jean-claude trichet. draghi as indicated the ecb will continue its highly controversial program -- has indicated the ecb will continue its highly controversial program. >> we will have more on that later. israel has hit back against unesco's decision to except palestine as a member -- accept palestine as member. israel is suspending the transfer of tax money to the palestinian authority. a senior palestinian official has condemned the israeli decision and says this will hasten the destruction of the peace process. germany's top human rights

activists has expressed concern over the treatment of a chchines dissident -- activisthas has expressed concern over the treatment of a chinese dissident who best in order to pay over more than 1.5 million euros -- who has been orded to pay over more than 1.5 million euros in back taxes. >> he has not been allowed to give men did it -- give media interviews. because the st. he-- he calls this an injustice. >> i have no idea how they came upith these figures. >> he says he will consult tax experts. he wants the authorities to give them access to this account books that were confiscated. for the time being, he has no

intention of paying the bill. >> this is not a personal tax issue. everyone's safety or innocence has to do with society's safety. i'm not struggling for myself. i'm struggling for the entire country's judicial system. hehe expects he will soon be detained again, but he continues toattract world wide attention. on saturday, an exhibition of his work opened in taiwan, without the artist. >> police in nepal have arrested over 50 tibetanxiles, detained or shouting anti-china protest -- detained for shouting anti- china protests at an exhibition. nepal is home to thousands of tibetan refugees, but has come under pressure from beijing to clamp down on a pro-tibet andd rescue -- protest tibetan gatherings -- pro-tibetan

gatherings. a small crowd protested en vladimir putin's likely return -- protested vladimir putin's likely return to the presidency. catastrophic flooding has affected the lives of 2 million people and left 400 dead. the worst monsoon rains in 50 years have devastated large parts of the central river basin and have displaced thousands in the capital of bangkok. >> the water is still high. the government says the situation was about. for people here, there is little sign of relief. many are becoming desperate. >> the water was stable and seemed to be going down, so we came back. today, it is rising dramatically. now it is almost too late to leave. >> some residents accused the

government of sacrificing their areas in order to keep the main business district tdry. they're demanding that the sluice gates be opened. >> but how about the water condition is. -- look out bad low water condition is -- look how bad the water condition is. >> some people have decided to take the law into their own hands. authorities say this might cause flooding elsewhere. >> a polish airlines boeing 767 has made a dramatic -- 737 hazmat a dramatic emergency landing after its landing gear -- has made a dramatic emergency landing after its landing gear failed to open. the pilot circled for an hour above were saw and dumped fuel before lananding plane -- warsaw

and dumped fuel before landing a plane -- the plane on its fuselage. you are watching the "journal." back in a minute with "in depth."

>> welcome back. there is a danger of hyperinflation, which germany experienced in the 1920's. it was a lesson the countryry never forgot. the bundesbank as may sound money policy a priority. mario draghi says that is his approach as well. many are afraid that inflation is the only way out of the eurozone debt crisis. >> mario draghi has earned the reputation of being -- as the head of the central bank of italy, he was often -- with the political elite. >> there are no shortcuts.

the only way out of the debt crisis is for e everyountry to do its homework and to do its part to fulfill its own eurozone agreements. >> people in ititaly listen t what he has to say. like when he took the unusual step of calling on prime minister silvio berlusconi to tackle the country boss public debt and speed up refor -- country's public debt and speed up reforms. even -- acknowledged draghi's management. >> he has won respect for himself and the italian central bank. he did that by maintaining absolute independence from the government. everyone came to realize that they needed to heed the words of this central bank later, who could be tough sometimes -- leader, who could be tough sometimes. >> from 2002 to 2005, he worked for goldman sachs. his critics say it was during

this time that he helped crease embellish it said figures -- that goldman sachs helped greece and lis -- greece embellish its debt figures. he signaled that the ec was ready to buy more bonds -- the ecb was ready to buy more bonds, which seemed out of step with the policy. he is experienced on an international level. he also has a proven record of forging alliances among leading figures. he is a former world bank director. he laid the groundwork for privatizing industry. he gained experience in the private sector.

>> we are joined by a guest from brussels. a look can we expect from mario draghi as the new head of the ecb -- what can we expect from mario draghi as the new head of the ecb? >> mr. trichet and quite a flamboyant -- has been quite flamboyant. for an italian, mr. draghi is less flamboyant. a pragmatist, a man not given to want to be in front of house, shall we say. in that sense, a lot of difference. on substance, not so sure. he mayay be interested in buying out bonds, the toxic sovereign debts that mr. trichet has been reluctant to get involved in, and that will upset germany if he does. he will see things through a cold, analytical eye. >> what are the chances that the ecb will continue to buy up the

eurozone bonds, accumulating more debt? >> mr. trichet had eliminated the bond-buying spree in his time. this was meant to stop very soon. the only thing we can go on right now is that mr. draghi said, about a week ago, that he would continue that methodology of trying to bring markets under control. for germany, that is inflationary. it is not what they want to see. it is not necessarily the way to go. >> let's talk about the greek referendum on the rescue package.e. what is that want to mean for the ecb? >> it is just what an incoming's does not on his first day --

incoming boss does not want on his first day. this has landed and his -- on his in-tray. he wants to get back to the ecb's for values. -- core values. as well throw just another -- and this will throw just another googly at him. is will skew his ability to get the euro back to stability -- and this will skew w his ility to get the euro back to stability. >> the new man at the helm of the ecb is an italian banker. mario draghi's approach could mean higher inflation, say his critics. that is something the ecb has been fighting to avoid. >> frankfurt -- germany's banking capital. much has changed since the 2008

financial crisis rolled across the world. the european central bank has been solid as a rock. the decisions on monetary policy taken here affect 320 million europeans, most of the 1500 staff are economists. their top priority -- to make sure the euro remains a stable currency. this conference room is where european central bankers hold their monthly meetings. the panel includes representatives from all the 17 eu countries that use the euro. they study how much money is in circulation. the economy -- in circulation, how the economy is fairing -- faring. there are signals of dangers for higher inflation. the ecb can raise interest rates to cancel that pressure -- counter that pressure. interest-rate increases make loans more expensive, but make

saving money more attractive. people ultimately spend less, which helps to keep prices steady. that is a policy that germany's own bundesbank used for years. turbulence in the economies, financial markets, and the eurozone debt crisis h have altered the ecb's role. the babank h had to ride to the rescue in emergencies. outgoing ecb chief economist -- the outgoing ecb chief economist, widely expected to become the next president of the bank, said in september that he was resigning in protest of the ecb's changing role. >> our work has become much more intensive. since 2007, we have practically had to monitor markets around the clock to make sure we do not make any mistakes at a critical moment.

>> during his tenure at the helm of the ecb, jean-claude trichet adopted a policy of buying in debt to euro zone -- eurozone country's bonds. there was internal opposition to lending money to risk the candidates. 160 billion euros today. -- to date. the efforts to prop up the country's finances could backfire. >> the ecb was given a clear mandate. we should not mess with that. a central bank becomes overwhelmed, it can no longer fulfill its primary -- when a central bank becomes overwhelmed, it can no longer perform is primary obligations. this is not in line with our duties. >> those duties have become more complex. it will be up to the ecb's new leader to determine what cost --

course it takes in the future. >> that has bebeen o "in depth" at this hour. you are watching dw-tv. please stay tuned. captioned by the national captioning institute --www.ncicap.org--

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