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This is no return to ancient Greek democracy

There may be nothing new under the sun, but according to the ancient Greeks it is quite the celestial Johnny-come-lately. Long before the sun, long even before the Titans rose and fell, and Zeus slew his father Cronos to seize control of Olympus, there was only Chaos.

The mother of all things is back in charge as the muthah of all financial crises moves closer – thanks to the modern Greeks – to sucking us all into the Abyss (Chaos's firstborn, as you cosmology fans well know). Perhaps by now a semblance of order has re-asserted itself over the mayhem prevailing at the time of writing, with markets in freefall and confusion reigning over Greece's forthcoming referendum on the euro bailout. If so, it won't last long.

The date of that vote is as unclear as any intricate political calculations behind Prime Minister George Papandreou's decision to call it, or even whether he informed the Franco-German neo-axis powers before announcing it. Nor is it obvious what the precise implications for Europe might be, other than perfectly hideous.

Chaotic hardly seems an adequate adjective. The Greeks have unleashed pandemonium, and if there is any hope remaining in Pandora's box this time around, you'd want the Hubble Telescope to locate it. In the frantic quest for an upside, all I can dredge up is gratitude that I took the mediocre redbrick degree in Classics, hence all the tiresome and pretentious allusions, rather than in economics. Now that would have been a waste of time. No professional economist has much clue what's going on, beyond a basic appreciation that we are, as Richard Littlejohn will surely put it, going to Hellas in a handcart.

What is abundantly clear is that all the comparisons between this grumbling nightmare and the approach to war in 1939 were less fanciful than one would have liked, though in the globalised age everything moves faster. There was almost a calendar year between Neville Chamberlain declaring peace for our time and war with Germany. From the moment Angela Merkel and Nicolas Sarkozy waved their Greek bailout paper in Brussels and Mr Papandreou's startling announcement were barely five days.

Why he did so is the source of contention, but we can probably rule out any driving passion to invoke the memory of fifth century BC Athens. Some muscular Eurosceptics will posit that, in offering the plebiscite denied us, Mr Papandreou honours his nation's status as the birthplace of democracy. But politicians tend not to think in such grandiose terms when trying to navigate a course between a rock and hard place. Or, to continue this whirlwind odyssey through half-remembered lectures, between Scylla and Charybdis. The waters may be uncharted, but the menaces to Greece are in plain sight. On one side stand the unforgiving rocks of unending austerity within the eurozone, struggling to tame sovereign debt which remains crippling despite that offer of a 50 per cent haircut. Already suffering horribly and riven by civil unrest, the Greeks do not much fancy a future of penury under German dominion, as the explosion there of Nazi-themed cartoons and graffiti confirms.

On the other side lies the dreaded whirlpool of "disorderly default"... leaving the euro in disgrace, and attempting to return to growth via a devalued drachma, with no protection from the world's second reserve currency. Which is the quicker route to perdition is anyone's guess, but from this remove it looks a bit like offering a terminal patient the choice between a revolver and the hemlock.

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Mr Papandreou, who seems neither a madman nor a nihilist, will not have taken this apparently deranged last throw of the dice without feeling irresistible pressure. Apart from a livid electorate, he is assailed by an opposition so irresponsible in promising cure without pain that it makes Ed Balls look like Stafford Cripps the day his hairshirt returned from Sketchley's with a wire-wool lining. In delegating the decision, he presumably believes this is the only possible way to compel the opposition to face reality and to scare the electorate into accepting that the alternative is worse than the bailout. It is, to put it gently, a monstrous gamble.

It is also playing with fire on behalf of the rest of us, within and outside the eurozone. If Greece goes, as begins to look inevitable, the fall of Italy becomes more imminent... and as with their respective empires long ago, the latter is rather more threatening to the rest of Europe than the former. Perhaps when your liver is being daily devoured by vultures, you can be forgiven for losing sight of any obligation to the world beyond your shores.

It hardly behoves a country that slags the euro off from the sidelines at every turn – to borrow from Mr Sarkozy's trenchant rebuke to David Cameron – to lecture others on the altruistic need to remain in it. But there is a strong sense that, just as with the supremacy of chaos, the Greeks have been here before. Disguised as a white bull, Zeus kidnapped Europa and ravished her. With this referendum, Greece seeks to take Europe hostage and is screwing her in Olympian fashion once again.

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