It would have been an understatement to say that Papandreaou's government was hemorrhaging legitimacy and credibility in its final weeks.
The task, then, for the Greek ruling class (and the EU) is to ensure that this massive loss of legitimacy attaches only to Papandreou (and PASOK), and not to the entire Greek state as such. This is the function of the electoral mechanism in Greece. Only 2 years ago, Papandreou and PASOK rode into power, winning in a landslide due to the growing unpopularity of the Right in the context of deep economic crisis. Now, 2 years later, the Right, indeed the very same morons who were rejected when Papandreou took power, stands poised to do the same thing. The consensus seems to be that the current "unity" government in Greece is little more than a face-saving device meant to by time until general elections are held (when, it is expected, the Right will re-gain power due to the (justifiable) unpopularity of PASOK).
What we see here is that the electoral mechanism in Greece, far from giving the Greek people the opportunity to self-govern, is little more than a safety valve for the Greek status quo. When the steam builds up to such an extent that an explosion of social struggle seems on the horizon, the safety valve ensures that some of that pressure is released and dissipated. Thus, when the government looks on the brink of collapse, when it has squandered the confidence of the vast majority of the working population, it does not immediately amount to a loss of confidence in the system as such; it only seems to immediately impugn the sitting government.
In the midst of the rule of any particular government, of course, it is clear that real democracy is non-existent. The government --whether Right or center-Left-- will push through austerity measures meant to protect the assets of the EU ruling classes. They don't care what the population thinks --they'll pursue austerity one way or another. Of course, it behooves a sitting government to at least try to convince the population that austerity is necessary, or to scare them with doomsday talk of what would happen if Greece were to leave the EU. So they'll do that because it's prudent --but when push comes to shove they're going to ram through austerity whether or not the population consents to it.
The media discussion of the appointment of Papademos is interesting. The consensus seems to be that he is, in some thoroughly apolitical sense, the "most qualified" for the job. But who is it that is supposed to be convinced that he is "most qualified"? And what job, for whose benefit, is he supposed to be doing? Papademos was chosen because he would win the backing of the the EU's ruling class (what's euphemistically called "the market") and its political leaders (particularly Sarkozy and Merkel). Hence there has been a "collective sigh of relief" among political elites and ruling class investors. Papandemos's "job" is to find a way to ram through austerity in order to avoid a default so that the profit-seeking investments of the EU ruling classes (in Germany and France in particular) are protected. What are Papademos's qualifications? "Papademos, 64, was seen by many, both inside Greece and internationally, as the best choice to steer Greece through its worst post-war economic crisis due to his technocratic credentials and perceived financial expertise."
So let's take stock of what's been said above. Papandemos applied for a job and won it. His employer is a conglomeration of the EU ruling classes and their political representatives. The description of his office is to find a way to ram through austerity in order to protect the assets of his employer. His (ostensibly non-political) qualifications are that he is a deft technocrat with lots of "financial expertise".
So, democracy doesn't even enter into it. When Papandreou called a referendum on austerity, he was excoriated by business, the business press, and the business-backed politicians alike. The ruling classes panicked (i.e. "markets plummeted"). But now that democracy is off the table, everybody's happy. Now that a technocrat trusted by EU Capital is at the helm, it's all good.
But just imagine: what if the system couldn't simply switch out different ruling class representatives, dumping one as a fall out guy and picking up another who promises "change", when the going gets tough? It's clear that the system would have a far more difficult time legitimating itself. We get to "decide once in three or six years which member of the ruling class is going to misrepresent the people in parliament...", but we don't --if we play by the rules of established electoral procedures-- get to actually decide whether we should be dominated by a ruling class at all. For my part, I'm hoping that the growing extra-electoral political struggles --in the streets, in the public squares, in the universities, in the workplaces, in government ministries-- continue to grow. That's the only hope the Greek people have of conquering for themselves the power to meaningfully self-govern.