Dow slumped 297.05 points, or 2.48 percent on news that the Greek bailout plan to save the Euro might fall apart.

The European bailout plan required big cuts in Greek spending. Greek Prime Minister Papandreou said they would hold a referendum on the bailout because of those required harsh austerity measures. Investors feared the Greek people might not go along with “harsh austerity” as evidenced by recent violent protests and nation wide strikes.

Business Insider reports:

“Basically, the referendum threatened to unwind all of the progress made to resolve the eurozone debt crisis. Fitch chimed in early this morning to say that the referendum increased the risk of a “disorderly sovereign default.” European markets closed near their lows. European banks plummeted.”

CNBC reports:

“If you lost money in September and made some gains in October, it’s time to head for the hills and take your gains,” said Brian Battle, vice president of trading at Performance Trust Capital Partners, citing continued uncertainties ahead in the euro zone.

“Last week, we rallied on the plan that Europe had been figured out, but there was high execution risk,” said Battle. “Within four days, that’s falling apart with Greece holding a referendum. The weak link in the global financial architecture is the banking system—the health of the banking system is in question again.”

The announcement of a referendum in Greece shook global markets and led to heavy falls in euro zone banks.

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