mr. papandreou said only in and a more stable environment can elections be called. he said, in the elections before could endanger creases chances of securing the next installment of their bailout money. the big question is whether george papandreou is simply buying time. if he ends to ratify this deal, then call elections which he aims to run in and win or is he aiming to get this debt deal ratified and then make a dignified exit? it is simply too early to tell. george papandreou is an extremely unpredictable prime minister. >> does it really matter if he is the next prime minister and in charge of the coalition government? >> i think it only matters in terms of the broad consensus that he had asked for from the opposition. the opposition party has said that they would not be happy with george papandreou as leader. if he were to try to fight on, i think that he would face a lot of problems in trying to get this broad consensus. if he said my time is up, i am now leaving, potentially there could be this consensus that could be a more broad and national unity governm

mr. papandreou. then we can discuss a unity government. also worth noting that samaras and papandreou were college roommates in amherst in the united states, shared a dorm room and were in the political scene there. another option jim bolden eluded to here, if you have a caretaker government, lucas papademos, from 2002 to 2010 he served as the vice president of the european central bank along with juan claude trichet. he's built up a lot of credibility. when he was a banker, he worked to bring greece below the threshold. it was the first time they had the criteria of 3% of up the olymcs and tram systems, they spent a lot of money between 2002 and 2010 and that's when the budget deficit ran out of control and led to this crisis we see today, nina. it's not clear if papandreou survives for the sake of keeping greece into the euro or not. the market reaction so far is one of relief that the referendum is not going to happen. >> and when politicians take the helm, so much of it is dependent on the economic cycle and luck there, john, isn't it?

mr. papandreou has done. he said that this is a lesson that if you are going to enact big austerity measures, you have to carry your people with you. >> i think so. this is also the big problem for the whole of europe and the u.s. and others hugely indebted countries that must bring down their debt. the problem is that they need to make wholehearted structural changes to their economy, their political systems, and social way of life. within greece, that is proving to be very difficult to manage. we have seen that same problem in italy. there are many europeans who feel that they have not been spoken to truthfully by their politicians over a couple of decades now. politicians have known this moment was coming and yet they continue to pretend to their populations that changes were not needed. i think there is a big disconnect between society and the elite, the politicians. >> this is so fascinating that this is the same conversation we have had over in europe and in the u.s.. they probably have other things to

mr. papandreou's party under a different leader?t is just too early yet to tell. >> a new coalition, a unity government, that would only last until february. a new government could come and and reneged on the deal. >> yes, in theory, but if there is a broad consensus in the coalition government that could last until february, there would be an understanding that that would be carried through into a majority government or a one- party government. there would be a lot of pressure from the euro zone partners to maintain the bailout package. angela merkel and nicolas sarkozy have made it pretty clear that greece will not continue to receive bailout money from the first two bailouts negotiated after the last 18 months unless it sticks to the terms of this latest package. the pressure on a greased to stay the course is immense. this country -- on the greece to stay the course is immense. businesses are closing, there is a lot of hostility on the street. there is also be understanding if greece were to renege on the latest package, the mon

mr. papandreou seems to be rowing back on his plan for referendum. we also know that a confidence vote in the prime minister is still to be held tomorrow in the parliament building just behind me. earlier in the day, it was thought that he would lose that vote because three of his mp's threatened to vote against him. now it seems that he is rowing against the threat. he is hoping for more broad political support here. mr. papandreou's future is very uncertain and it is unclear who will be leading greece in the next 24 hours let alone the next few months. >> this confusion being felt all over europe. do the greeks care about that? >> they do. one leading commentator has called george papandreou the lord of chaos. people i were speaking to on the streets of athens were frustrated and embarrassed that streets is once again at the eye of the storm. the plans for the referendum have caused such anger and in other european capitals. greece is riding a wave of financial and political instability. people are wary of austerity and they are against the plan ne

mr. papandreou goes. >> president obama looking rather frowny. how embarrassing was it for the eurozone countries? >> imagine that you have a family dinner and you have varied your squabbles and the guests arrived. they start making problem again is -- problems again. that was mr. papandreou. he was deeply embarrassed and probably more angry than anything else. the chinese and the americans are saying, what have we walked into here? >> thanks a lot. ok, monica, banks caught up. >> let's talk about that. the few decisions that have been made, moving to shore up the banking system. there are new requirements on 29 banks that they consider too big to fail. including germany's deutsche bank will have to increase capital by 2016. a there will be new procedures if they have financial difficulty. the effort to avoid any more taxpayers sponsoring the bailout. that attack on the u.s. economy showing -- the u.s. economy showing improviement. it was the first positive improvement in the last three months. economists had hoped for more growth. recovery is no

mr. papandreou's party are strongly opposed. finally, the details of the bailout agreed in brussels last week. a greek government spokesman says the deal will have to be clear before the greek people can vote on whether to accept it or reject it. >>> even if papandreou manages to keep his job after that confidence vote, the referendum could prus a no vote on the debt deal. a little earlier our max foster asked harvard economics professor ken rogoff what might physical if that happen follow if that happens. >> it's clearly in bankruptcy already, but it might really catalyze into something more disorderly very, very fast as opposed to over another year or two. it's hard to know what direction it will go. certainly there's a distinct possibility that over the longer term greece will end up out of the euro back on the drogma. >> what impact would that have on europe and the rest of the world? >> you know, the big question is where is the firewall? where is germany going to draw the line? are they going to protect italy and spain in

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 ce

followed so far doesn't lead to a solution on the contrary it makes things worse and for me what mr papandreou is doing with organizing this referendum is preparing the exit of greece from the euro zone the only thing they know for sure is that the model will be worse then today in the day after will be even worse than tomorrow so to a certain extent mr papandreou is asking a question to which he already knows the answer the answer will probably be no which will be the end of the rescue packages and which unavoidably will mean that the only option left for greece is an exit from the euro zone. and with greece up to its neck in economic and political strife another crisis could be just around the corner. the existing a mood of desperation caused by austerity cuts pushes some greeks to make immigrants their scapegoats. we q leaks founder julian assange may find himself on the swedish soil very soon after losing his battle against extradition from britain there he'll have to answer sexual misconduct allegations which he denies and describes as politically motivated ortiz laura smith was at london

mr. papandreou also shocked some of his own party, although his cabinet has come out in support. this from keith doyle. >> athnents early hours of this morning, and after a seven-hour meeting, the greek cabinet unanimously backed its prime minister, who yesterday shocked an infuriated european leaders. george papandreou announced a delicate deal that was put together just last week by the rest of the eurozone to save greece and the euro from crisis will now be voted on by the greek people in a referendum. the rescue package would halve greece's debt to banks, but it owes so much that its people would still face years of economic hardship. in holding a referendum, the greek prime minister is effectively asking his people to vote for tough times within the euro or possibly even tougher times outside it. in a statement, the prime minister said the referendum will be a clear mandate and a clear message in and outside greece on a european course and participation in the euro. the financial markets and europe's leaders had hoped the deal was done and a crisis averted. not now. the impl

what mr papandreou is doing with organizing this referendum preparing the exit of greece from the euro zone so you say he's actually preparing the exit for for greece from the eurozone up at the you know what one question would be no way in the e.u. is any government borrowed so much money what about trying to pay some of that back . well i think they just can't afford to do it at the moment their economy isn't so bad a shape that they can the only thing they know for sure is that the morrow will be worse than today in the day after will be even worse than tomorrow so by dropping out of the eurozone what. will. arrive that is that of course have to create their own currency again that currency will go down substantially views of the euro the dollar and other major currencies and that will give the greek economy again a perspective through increased exports on growth and that is what the greek economy needs that the only thing that can save them from a real disaster also from the society point of view because. you noticed also that in the last twenty four hours two or three generals wer

be worse then today in the day after will be even worse than tomorrow so to a certain extent mr mr papandreou is asking a question to which he already knows the answer and the answer will probably be no which will be the end of the rescue packages and which unavoidably will mean that the only option left for greece is an exit from the euro zone. with greece up to its neck in economic and political strife another crisis could be just around the corner the existing a mood of desperation caused by austerity cuts pushes some greeks to make immigrants scapegoats. so i don't let's turn our attention now to libya where the new prime minister says making sure the rights are respected is a top priority it comes after a string of war crime allegations claiming the fight is a torturing people he wants for on the side of could death the more insight into the situation i'm now joined live from washington by former cia intelligence officer michael scheuer good to see you thank you for coming on the program today or the world of media was abuzz with stories about the atrocities of the cadets the regime now

mr. papandreou's place.as apparently said to the opposition i have one condition and that is that you must stick to the terms of the bailout in their entirety. otherwise, i won't step down. if you agree with that, agree to a national unity government we can name a new leader and i will step aside and we believe that might happen if there's an agreement reached tonight we could have a new government by tomorrow. >> and diana, what are citizens saying about papandreou's possible resignation? >> people have been very uncertain what to think. because things have flip flopped so much even over the last week, previously the positions yesterday, actually this morning, the positions of the opposition and of the ruling party were as follows -- the opposition said we want snap elections and we want to sort of cherrypick the terms of the bailout and papandreou's party said we want elections further down the line implement the bailout before elections are do. opinion polls said most people believe that it was right to h

mr. papandreou is still the prime minister of greece. i am sure that is debated hotly as we speak. it is an on-going drama and more like a farce. >> thank you, ashley webster. thank you my friend. >> one thing is clear. there is no leader leading us out of the economic mess. when ronald reagan was president everyone knew who was in charge. that's what we need right now. art, the reality was in the midpoint of his presidency he was hardly that. he grew to become that and who said barack obama can't. >> he has to change pretty quickly. he has to start leading and recognize what creates jobs employees you don't create jobs by raising taxs and deficit spending. when mark zandy said 15 percent unemployment that is nonsense . the reason we have worst recovery and unemployment is because of the stim tim spending and barack obama has to reverse. i had a lovely conversation four or five months ago austin golsbee. we talked about how he could get it back on track and he could. barack obama is a fine, fine person and i really think he is an american success story but he's just wrong. >> when

mr. papandreou that there had been a commitment on both parties that they will move ahead with ratifying the latest bailout package for greece which basically involves a 50% reduction in greek debt. that is extremely important. without the bailout package, greece would not get the next installment of their international loans. that is what they need in order to stave off bankruptcy and avoid default. this could spread throughout the global economy. this will be an extremely difficult task of whether whoever takes the post because austerity means more social unrest here. it has reached the boiling point but the austerity and the cost- cutting is likely to fan the flames in the three or four months to come. >> not so much a political back- and-forth but rather a poisoned chalice. social unrest is hardly isolated to greece and italy. here in the u.s., we have the occupy wall street movement. in the u.k., some 5000 students marched through central london to protest against increased university fees. >> this is what the police were hoping that have been avoided, narrow streets jammed packed w

mr. papandreou's position is that it showed that 80% of greeks were in support of the euro. they do not want the country to move out of the common currency and back into the drachma. probably the referendum would have the kind of a question that would directly or indirectly lead to that, the dilemma between staying in the euro-zone are moving out. -- or moving out. probably there is some chance for the government to succeed and get some more legitimacy to move on with these very, very difficult and harsh reforms. as you said yourself earlier in the peace, this is a very difficult bet. >> as you say, eight days the government some legitimacy, if the referendum succeeds. what happens if it should fail? >> if it fails, the most obvious thing will be for elections to be called. i cannot see any way out of it, and nobody else sees any way out of bed. even the government doesn't know what will happen if the referendum does fail. see howy, we will things develop. and we do not have the outcome of the referendum. to be quite honest, because of all the discussion could be quite acade

mr. papandreou should quit today, as soon as possible. >> reporter: but opposition leaders want to secure bailout funds before kicking him out. >> once these conditions have been met, elections must be held at the earliest possible convenience. >> reporter: if greece's rescue plan doesn't go through, the country could go bankrupt within weeks. now even if the government survives this confidence vote, government sources says papandreou will with the opposition party and then stand down. >> susan mcginnis in washington, thank you. >>> on the cbs "moneywatch" a rebound for asian stock markets. drew levinson is here in new york with that and so much more. good morning, drew. >> good morning to you, betty. >> reporter: asian markets jumped today after the greek prime minister backed off his plan to put the eu bailout to a national vote. japan's nikkei was up almost 2% and hong kong's hang seng shot up more than 3%. today, wall street tries to keep its own rally going. thursday, stocks saw big gains. the dow jumped 208 points and the nasdaq up nearly 58. wall street is not expecting much from t

mr papandreou did not expect to be told by nicolas sarkozy that if the greek people vote against the bailout, they will not get a penny from the eurozone. >> is up to us to decide whether or not there should be a referendum. all we're saying is that we cannot spend and commit european taxpayer money, german, french taxpayer money. we can only commit the money if the rules unanimously adopted in brussels at the summit on the 27 of october are respected to the electorate if that is not the case, the imf will not disperse aid. >> angela merkel could not hide her anger. she was adamant that the best offer from -- that the best offer for greece was on the table. the greek prime minister agreed it was a good deal for his country but in the greek people would need to make sacrifices for years to come. that is why he proposed a referendum on the bailout. >> i thought it was important that the greek people make a decision of these important developments. it is their democratic right. the greek people are mature and wise to make the decision that is to the benefit of the greek people and the c

mr. papandreou may have not expected to have been told by nicolas sarkozy that if the greek people vote against the bailout, they will not get a penny from the eurozone. >> it is up to us to decide whether there should be a referendum. all we are saying is we cannot commit european taxpayer money, german, french taxpayer money. we can only commit that money if the rules unanimously adopted in brussels at the summit on october 27 are respected to the letter. if that is not the case, they will not disperse a cent. >> angela merkel could hardly hide her anger, and she was adamant the best offer for greece was already on the table. the greek prime minister agreed it was a very big deal for his country, but said it also meant the greek people would have to make huge sacrifices for years to come, and that is why he proposed the referendum on the bailout. >> i felt it was important that the greek people make a decision on these important developments and decisions that we made on october 26. it is their democratic right, and the greek people i believe armature and it wise to make the decision that is

mr. papandreou also surprised many of his own party, although his cabinet has now come out and support. this report. >> there was an air of calm in athens this morning but no hiding the political turmoil in greece. overnight, there has been a marathon seven-hour cabinet meeting. the morning papers reflected the crisis. it is ridiculous what they are doing. they should have asked people before they went to the imf and ask them then to make the sacrifices they are making now. i think the prime minister that a decision is the right one. he had pressure from the european union and everyone needs to take responsibility. >> prime minister george papandreou's plan is controversial. he believes a referendum is the only way to overcome the resistance to the eu debt rescue package. but the idea of spending cuts and tax increases is unpopular, and there is a possibility the greek government could collapse before a referendum is held. with the chinese president on his way to the g-20 summit of global leaders, beijing has pledged support to the european union and efforts to maintain financial stabil

mr. papandreou to resign. it is still not clear whether eventually greece will leave the euro. the president of the european commission has stated it is a possibility. let's go to athens and our correspondent there. >> welcome to athens where yesterday saw one of the most mumultuous days in their history. today promises to be much the same. george papandreou is fighting for his political life. apparently he has said there will be no referendum. already one serblist m.p. threatening to vote against the government in the critical confidence vote said they are back on board as a result of that. will others follow? we don't know. the confidence vote, when it comes, could friendship at a time either a period of what passes for political stability here or could plunge the country into a snap general election. that election, of course, would then be a referendum itself on the bail out plan. greece has never faced quite so much political uncertainty. let's get this report from our european correspondent matthew price. >> greece is now the epicenter of the european crisis. this will hel

mr. papandreou followed some hard-ball tactics played by the french and german leaders. they essentially threatened to kick greece out of the eurozone and to withhold financial aid. and there's a feeling among obama administration officials that that intense pressure really worked. scott, as one senior white house official said to me tonight "everyone is under the bright lights of this summit. it shows the utility of these kinds of meetings." >> pelley: norah, thanks very much. one cornerstone of president obama's plan to jump start the economy is green energy, but today a house panel subpoenaed white house documents concerning solyndra, the failed solar panel maker. the obama administration gave the company more than half a billion dollars, but solyndra filed for bankruptcy and laid off 1,100 workers. taxpayers may have to shell out more to prop up freddie mac, the government-controlled mortgage giant. today freddie mac requested $6 billion in additional aid. that's on top of the $169 billion that taxpayers have already shelled out, rescuing freddie mac and a similar mo

mr papandreou statements also indicated that the referendum was not. an end it itself it was a tool that was going to be considered but this the opposition would take on the twenty seventh of october plan then the referendum became less useful. now the thing that we're going to be hearing from critics over the next couple of days is that the euro backbone or so mostly germany of course and france is basically has basically told greece that it sent listens to its people many people know that if that referendum went ahead that most likely it would be a no vote so we're going to be hearing a lot about that most likely over the next couple of days and with the brics countries they met on this first day of the summit and there of course they discussed the euro. prices even though it doesn't particularly directly a fact they did promise that they would offer money and help the eurozone they haven't agreed. with president medvedev pointed out very clearly without hiding that there is a condition on russia and its partners of the brics giving money to help the

anything but to congratulate him on that because he was very courageous to take that step and also mr papandreou statements also indicated that the referendum was not. lended itself it was a tool that was going to be considered but this is the opposition would take on the twenty seventh of october plan then the referendum became less useful critics analyzing this in different ways some of them perhaps say that france and germany have basically said you either play by our rules or you get out and resources line is that this is the way to go they don't want to the euro zone a lot of different dates going on euro skeptics saying that you're just moving the problem down the road that eventually greece will have to default bureaucrats saying this is the only way to save the euro was you calling it the beating heart of europe and that we will never let it die. that is going to be what a lot of these leaders are speaking about in these final sessions as the summit comes to an end on this second day with that said emerging economies worried about their voice that they agreed the brics that they would tr

mr. papandreou is unpredictable at best and we're not sure whether he will indeed step down, but we're following it, neil, every step of the way and it should be said. it's a proud country and proud of the rich history, but it's facing a very poor future in every accepts of the word. >> now, there's a sense, that what the greeks tried to cobble together and you're quite right not there together. it could be worse in rome where six times the economy in italy, and bigger, i go abouter worries, right? >> oh, absolutely. you know, the interest thing is, household debt in italy is relatively low and that's what mr. berlusconi keeps saying when he rejected some monetary help from the imf, but their public debt is right around 2 1/2 trillion dollars. it is pay out of control. although mr. berlusconi will tell you that the italian economy is second only to germany and ahead of france and the u.k., but the i mean mf and the rest of the euro zone very worried that italy's debts are starting to pile up, as we know, they're starting to pay a pretty penny knin order to borrow money and, the euro zone will mo

forward on the october twenty sixth twenty seventh summit so there was a certain extent this is mr papandreou is asking a question to which he already knows the answer and the answer will probably be no which will be the end of the rescue packages and which unavoidably will mean that the only option left from greece is an exit from the euro zone so if indeed greece does. the eurozone after all these billions in loans who are set to suffer the most will be the investors the politicians or will it be once again the people who are facing a year of devastating austerity cuts all of them all of them will suffer because so we can compare era i think we are very very close to the situation of our argentina beginning of the twenty first century there will be a huge default through each month all those will of course lose a lot of money politicians will of course lose faith face excuse me in greece and interest of the euro zone and of course the people of greece who already have suffered quite a bit in the last two years will keep on suffering for the coming period but the exit from the euro zone i ca

really pushing in in a way which is similar to what has happened to greece and that in fact bro to mr papandreou to call for a referendum about europe but i just want to ask you about these are rights that hit seven percent today you think we're going to see more of that sort of things i've been saying since what back in one thousand nine hundred nine is it was a blip or is it going to continue. i think we are edging towards a very dangerous area which is that of the spread of the high spread with the german bombs which of course will create an impossible situation in the stock market and in the bond market so if these continue like it is in these hours to grow the spread. the effect of this would be the collapse of the system but this will create a couse in the country instead of a solution where it's going to play out we're going to be six months hence you think. i don't know in six months what happens we should also see we should also see what happens to the other partners in europe within the next six weeks maybe not six months so italy is now used very easily as a scapegoat because of the p

various banks in return for these big government coming so big these big government spending cuts mr papandreou on his cabinet want to put that to the greek people they want a clear mandate for the measures to be put through and they want the greek people to support those measures they say that that's necessary for them to succeed however that sent shock waves throughout international markets there is a fear that the greek people will say no there is a possibility they'll do that and that would make the crisis a lot worse there is a vote on the on the confidence that they greek people have in their government on friday the government may lose that vote. e.u. ministers for their part was trying to ensure that greek does go through greece does go through with this plan they themselves are staring in the face of the possible collapse of this bailout plan that was supposed to put a line under the whole e.u. debt crisis that plan may indeed fail before it's even taken off. tom thank you very much for this indeed let's have a look at the markets it's still very volatile both main bourses have slipped

mr. papandreou took a risky gamble to call forç a referendum it has backfired. will approve the deals, greece's until obligations are fulfilled in the next few months and take the country to elections in march. >> heather: we are looking at images of theç riots happening in the streets there in greece over the past several weeks. what was the reaction there on the streets today as this announcement was made that the prime minister would be stepping down? >> reporter: i have to tell you, greeks are relieved. they are not 100% certain this is going to work out. they are wondering what is going to happen next. okviously, this doesn't mean an end to the uncertainty here. there's going to be an election [ inaudible ] the new government hasn't been finalized. we have to go to election probably around the end of february sometime in march. there's lots of uncertainy. greeks have very, very disappointed last week by the performance of bothç mr. papandreou and -- a lot of people felt the country was shamed by their behavior and they didn't live up to the mark at the cr