Corvette Forum : DigitalCorvettes.com Corvette Forums banner

1 - 6 of 6 Posts

·
Registered
Joined
·
19,914 Posts
Discussion Starter · #1 ·
Violent Street Protests in Athens Shake Government, Spark Global Market Woes



ATHENS—Greece shook global markets, intensifying fears of a default, as tens of thousands of demonstrators protested a new round of budget-cutting plans and its prime minister offered to step down to try to preserve them.

Protests across the capital sometimes turned violent as Prime Minister George Papandreou sought an agreement with opposition parties on austerity measures demanded as the price of a new bailout by euro-zone nations and the International Monetary Fund.

When his offer to step down in favor of a unity government failed, he instead announced in a late-night televised address that he would reorganize his cabinet Thursday and then call for a vote of confidence in Parliament.

That move could bring down his government in a matter of days. Mr. Papandreou's Socialist party has a Parliament majority of just four, following two defections in recent days. The cabinet shuffle, meanwhile, is likely to claim the head of Finance Minister George Papaconstantinou, the architect of the austerity measures who is widely respected by European officials but has become a key target of Greeks' ire.

The vote is likely to herald a further bout of intense uncertainty in financial markets already rattled by disagreements among the 17 nations that use the euro over terms of a new rescue package. Investors pulled out en masse Wednesday from riskier financial assets. Yields on Greek government bonds leapt to new highs, with two-year paper yielding 29%. Bond yields on other troubled euro-zone economies like Portugal and Ireland also moved higher, and stock markets in the U.S. and Europe sank as fears of contagion picked up. The euro plunged 1.9% against the dollar.

Anxieties also grew about the widening fallout. Moody's Investors Service warned it may downgrade French banks because of their high exposure to Greece, and said it might do the same to other euro-zone banks. The French banks, two with Greek subsidiaries, said any losses would be manageable.

The banks, BNP Paribas SA, Crédit Agricole SA and Société Générale SA, get significant short-term financing from U.S. money-market funds. As of May 31, those three plus another French bank, Natixis SA, had about $91 billion in outstanding debt with the top U.S. funds, about 12% of the funds' total assets, according to Fitch Ratings.

"The risk of a vicious spiral of sovereign and bank-credit downgrades points to growing financial distress as the risk of a disorderly Greek default looms large," said Lena Komileva of Brown Brothers Harriman in London.

Austerity in Europe is causing tremors beyond Greece. Ireland, another recipient of European bailout funds along with Portugal, faces further hefty cuts in public spending and cuts in government employees, Ireland's new Budget Minister Brendan Howlin said Wednesday. In the U.K., outside the euro zone but also facing public spending cuts, major unions said they planned a day of strikes for June 30.

The protests in the Greek capital, said by many present to be among the largest since the crisis began, turned occasionally violent as police fought street battles with dozens of self-styled anarchist youths and sought to disperse crowds with tear gas and pepper spray. Several injuries were reported, including at least four demonstrators and two police officers.

Many said they no longer trusted the government, and expressed frustration that the austerity measures, which the government described Wednesday as the "largest fiscal consolidation in the euro zone," had done nothing to improve the economy.

As scraps between police and protesters raged at close range on narrow side streets west of Syntagma Square, which is flanked by Parliament and is the focus of the protests, riot police also found themselves confronted by a broad spectrum of peaceful demonstrators. Many directed their cries at the International Monetary Fund, which along with Greece's partners in the euro zone is providing money and demanding tough conditions. A frequent shout: "IMF go home."

John Petru, 41 years old, said he had come to block parliamentarians from arriving to debate the budget cuts. "We do not trust them," he said of the politicians. The recession has eaten badly into his cleaning-service business. "Business is down, and prices are up, and we are not sure about anything," he said.

Greeks have already suffered multiple rounds of budget cuts since last year, but they have failed to build confidence in the economy. The budget deficit has turned out to be wider than projected then, with the government failing to cut spending or raise revenues as much as promised. But the biggest gap in its finances has opened up because private investors have refused to buy new Greek government bonds at interest rates the government can afford.

Many protesters said they had gone along with previous budget cuts and wage reductions on the belief that those sacrifices would be enough to right Greece's fortunes. "They have asked us to reduce our wages, to live another standard of life," said Angeliki Kachrimani, a 42-year-old worker for Greece's postal service. She accepted a 15% wage cut; her husband, a history teacher, is unemployed.

Without an agreed bailout, Greece could run out of money next month. Worries that it might not get the cash in time have also been mounting from another direction. Euro-zone governments—slated to provide most of the funds for a second rescue after a €110 billion ($159 billion) package agreed to last year failed to resolve the country's finance crisis—continued their disagreements about how to structure the new deal.

Finance ministers meeting Tuesday night failed to find a solution to how much of a bailout contribution to demand from current private holders of Greek bonds. Germany wants a significant private-sector contribution, but France, supported by the European Central Bank, is strongly against that.

According to two Greek officials, Mr. Papandreou told the four opposition-party leaders Wednesday that he would resign if needed to create a government of national unity—but only if they supported the package of budget cuts and privatizations demanded by other euro-zone governments and the IMF.

"I will continue on the same path. Tomorrow I will form a new government and seek a vote of confidence from Parliament."The main opposition leader, Antonis Samaras, said the question was whether Mr. Papandreou could govern. "If he can, then he shouldn't have asked for our support. If he can't, then he should hold elections."

The Parliament is set to begin debating a five-year, €28 billion austerity program on June 28, and to vote on it on June 30. Combined with an ambitious €50 billion privatization plan, the new measures include a raft of new taxes and spending cuts.

http://online.wsj.com/article/SB10001424052702304186404576386872733780978.html
 

·
Premium Member
Joined
·
4,611 Posts
AFAIC, Greeks can go screw themselves. Bunch of lazy bastards who want to be paid to do nothing. :buhbye:
 
1 - 6 of 6 Posts
Top