Until yesterday, George Papandreou cut a weak and desperate figure as Greece’s Prime Minister. It’s arguable how much influence he felt he had over the terms of the “bailout” and associated austerity measures, and back in June he was so unhappy with his situation that he privately offered to step down in favour of a grand coalition.

Listening to the sleek-suited representatives of the IMF and the ECB, it must have felt like Hobson’s choice. Undermine not just the Greek economy but also Europe’s with a default on one hand, or aggravate inequality and hand over control of the Greek economy to the agents of the markets.

Either way, unpopularity looms and the problems grow. But as so often, if you don’t like any of the answers, ask a different question. Or in this case, ask different people the same question: the electorate.

It’s genius, at least potentially. What’s promised is not a messy general election about confidence and personality in amongst these issues, it’s a referendum that will give a clear answer.

There are plenty of reasons for Greeks to say no. Neither option is without pain, of course, and no option could be painless given their predicament. But a No vote rejects the iniquitous voluntary 50% writedown of debt which the hedge funds are rubbing their hands over, as discussed before. It rejects a austerity programme which doesn’t just end some of the ridiculous Greek state inefficiencies but sells off the family silver and slashes the social safety net.

It surely also means Greece gets out of the gilded trap that is the Euro. They did well from it when the books could be cooked and the European Regional Development Fund kept throwing money at their infrastructure, but there can be few who now look into the retrospectoscope and still believe the single currency was in Greece’s long term best interests. The same probably applies to Italy and others – in fact, the economic arguments for diverse economies using a single exchange rate have never seemed convincing – but letting Greece burn won’t let Italy off the hook.

The proper default that would follow would also in part be a liberation rather than the Götterdammerung the market analysts and other siren voices warn about.  It largely worked for Argentina, for instance. A no vote would also be the first substantial stake through the heart of the bailout/injection/recapitalisation myth, as lovingly excoriated by Matt Taibbi *. This initiative might mean the Masters of Risk start to bear their own losses, not palm them off onto taxpayers. It’d be a push-back against the moral hazard the markets have fallen into, a problem both socialists and free-marketeers should be concerned about. (Incidentally, wouldn’t it be great every time a financial analyst appeared on the TV news they had to declare where their interests lay in relation to the story they’re discussing?)

Alternatively, from Papandreou’s point of view, if he gets a yes, at least he has clear support for this ill-advised programme, and both PASOK and the Euro will survive, for now. He was backed deep into a corner and now, either way, with a single bound he’s free. Whatever the result, there will be a substantial price to pay for all the unsustainable borrowing, including a higher rate to pay for future loans no matter how the vote goes, but the Greek people will have democratically chosen their own course. No wonder the chair of the Greek Chamber of Commerce was whining on the radio this morning. This vote means there is a route out, and while he may have felt unable to reject the terms, it’ll be politically impossible for the vultures to ignore the will of the Greek people.

In response to the call of a referendum the markets dived. Of course they did. Banks, hedgies, all those with massive exposure to the CDS markets and relevant derivatives, all of them were expecting another skip-load of taxpayers’ money to be transferred directly to their bottom lines, but now they have been forced to care about the reported 60% popular opposition to the deal. Those companies are worth less this morning because traders realise they may have to cover their own losses. What a radical thought. Bravo sydrofe.

* I will make you read that article if it’s the last thing I do.