By Greg Peel

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Madman or wily old fox? While it may have seemed that Greek prime minister George Papandreou's intentions on Monday were to uphold the purest tenets of the world's original democracy in taking a vote to the people, irrespective of the global incredulity the suggestion sparked, now it seems like it may have been just a bit of crafty politics.

The Greek government needs the support of the Greek opposition to get the new austerity bill, which is necessary in order for Greece to continue to receive bail-out funds, through parliament. The opposition was immediately dead against the idea of a referendum, so last night Papandreou offered a deal. He would call off the referendum if the opposition guaranteed to pass the bill. They did, so the referendum is off.

All the world can thus now relax. Or can it? Apparently the opposition added a caveat to its compliance, and that is that Papandreou must resign and a snap election be held. Papandreou has not resigned, and instead will carry on with the confidence vote in his leadership tonight. Enough government members were dead against the idea of a referendum to suggest that if that were still Papandreou's intention, he likely would have lost the vote. Now he must himself be confident that his government will be confident in him, given he has both called off the referendum and ensured opposition support for the austerity bill.

Except that the opposition leader stood up in parliament and spat the dummy, calling Papandreou everything under the sun. Has the opposition thus reneged? The Greek finance minister has since turned the tables and made out the opposition to be the bogey man. Perhaps this puts the opposition in a too hard position not to pass the bill.

So the point is, the situation remains fluid. It appears at this stage, nevertheless, that the referendum is off. We know that the Greek opposition supports the European rescue plan otherwise it wouldn't have put up a fight against the referendum. It would be a bit hard them to not now pass the austerity bill because come mid December, if Greece does not receive the next tranche of this year's bail-out fund it will run out of money.

In another shock European development last night, incoming ECB president Mario Draghi immediately stamped his authority by cutting the eurozone cash rate to 1.25% from 1.50%. Two months ago economists were all but pleading with Jean-Claude Trichet to make a cut given the turmoil unfolding, but given lingering inflation Trichet simply refused. Draghi, on the other hand, suggests that the eurozone will be in "mild" recession by the end of the year. He is thus confident that inflation will subside and hence his rate cut will be justified.