(Petros Giannakouris ~ Associated Press)
As governing Socialist party lawmakers in Athens revolted and European leaders watched anxiously, the ripples reached Wall Street, where investors unloaded stocks and euros because of fear that the Greek turmoil would unleash protracted financial chaos across the globe.
Market reaction was brutal, particularly in Europe, with the Athens exchange down a massive 6.92 percent on worries the turmoil could bring down the government. France's bourse closed down 5.38 percent, while Italy's main index slumped 6.7 percent.
The backlash against Prime Minister George Papandreou's risky gamble to announce a referendum was swift. The premier came under criticism from across Europe, within Greece and from his own Socialist party, which has been clinging to an ever-shrinking parliamentary majority.
Papandreou convened his ministers late Tuesday, with government deputy spokesman Angelos Tolkas insisting the premier was sticking to his position.
"The government is not falling, the government has made a choice which has drawn a rabid reaction, to ask all of society what kind of a country it wants in the future," Tolkas said as the Cabinet meeting entered its third hour.
Finance Minister Evangelos Venizelos -- who apparently had been unaware of Papandreou's decision in advance -- was unable to make the meeting after being hospitalized early Tuesday with stomach pains. He was to remain in the clinic overnight.
While Papandreou didn't set a date for the referendum, ministers indicated it could be held early next year. Papandreou also called for a vote of confidence in his government, to be held midnight Friday.
"This announcement surprised all of Europe," said a clearly annoyed French President Nicolas Sarkozy, who has been scrambling to save face for Europe before he hosts leaders of the Group of 20 major world economies later this week. "Giving the people a say is always legitimate, but the solidarity of all countries of the eurozone cannot work unless each one consents to the necessary efforts."
French lawmaker Christian Estrosi was even more direct.
"It seems to me totally irresponsible on the part of the Greek prime minister," he said on France-Info radio. "I have the impression that a wind of panic is blowing on him and his party, and I want to tell the Greek government that when you are in a situation of crisis, and others want to help you, it is insulting to try to save your skin instead of assuming your responsibilities."
Governments have already fallen in Portugal and Ireland, two other European nations that had to accept bailouts.
The main opposition conservatives called for Papandreou's resignation.
"In his attempt to save himself, Mr. Papandreou set a divisive, blackmailing dilemma that endangers our future and our position in Europe," New Democracy party leader Antonis Samaras said.
Sarkozy and German Chancellor Angela Merkel, who have been at the forefront of Europe's wrangling to contain its debt crisis, discussed the issue and agreed to convene leading European institutions for more emergency talks today in Cannes, which Papandreou will also attend.