Greek Riots Paralyze Athens

The recent Greek riots have rocked the city of Athens, leaving 3 dead within the clash between police and protesters. Proposed spending cuts to rein in Greek government spending ahead of a much needed bailout touched off the protests and rioting. Before Greece can get any bailout quick cash, they will likely need to get their house in order.

Austerity measures prompt Greek riots

The Greek riots came after a proposed spending bill from Prime Minister Papandreoun which would drastically cut the nation’s spending. The credit rating of Greece has been downgraded in the wake of the collapse of financial markets and spending deficits. The proposed budget would yield savings of 30 billion Euros through 2010. The budget cuts would amount to about 11 percent of Greek GDP, according to MarketWatch.

What could be affected?

Almost 3 fourths of public spending in Greece is on pensions and public sector wages. More people are employed in the public sector in Greece than by most other European governments. Additional taxes would be placed on consumer goods and wages and pensions would either be frozen or reduced.

Bailouts

To keep Greece solvent as a nation, a bailout package of over 110 billion Euro is being put together by the International Monetary Fund and various European Union nations. One of the biggest contributors is Germany, and Angela Merkel, the Chancellor, has put up over 22 billion Euro. However, she has been hesitant, saying that immediate aid would have gone to waste before reforms were made. Despite the unpopularity of the bailout among the German public, the President of the Bundesbank (Germany’s Federal Reserve), Axel Weber, assured the bailout would halt further damage.

Greek riots preceded by strikes

A nationwide strike and protests broke out following the Prime Minister announced the proposals, which is expected to pass due to his party (Socialist) holding a majority, as outlined by the Wall Street Journal. No ferries ran, schools closed, shopkeepers locked their doors, lawyers and doctors all took to the streets in protest. Hospitals ran on the barest minimum staff, and all flights in or out of Greece were grounded. A lot more protests are due to go on.

Article resources

MarketWatch

http://www.marketwatch.com/story/greeks-go-on-strike-against-austerity-measures-2010-05-05

Wall Street Journal

http://online.wsj.com/article/SB10001424052748703961104575225472577513414.html?mod=fox_australian