Greek Riots Paralyze Athens

The city of Athens has been shocked by a violent outbreak of Greek riots in which 3 are left dead as protesters and police clash. 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’ll likely need to get their house in order.

Greek riots after protests of austerity measures

Sunday, Prime Minister George Papandreoun proposed a spending bill that would tighten the nation’s belt, and it led to agitated protests and the later Greek riots. The credit rating of Greece has been downgraded in the wake of the collapse of financial markets and spending deficits. The proposed spending budget would yield savings of 30 billion Euros through 2010. As outlined by MarketWatch, the cuts would amount to about 11 percent of Greek gross domestic product.

What gets cut?

Pensions and public employees account for about 75% of public spending in Greece. You will find more public employees proportionally in Greece than most other European nations. As well as cuts to wages and pensions, an increased value added tax on consumer goods like alcohol and cigarettes is also incorporated.

The Pending Bailout

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. Germany is one of the chief contributors, and Chancellor Angela Merkel has pledged 22 billion Euros. She has been hesitant, and believes an instant bailout would wasted if reform is not in place first. The bailout is unpopular in Germany, despite the assurances of Axel Weber, President of the Bundesbank (Germany’s central bank) that it will halt contamination of other European markets.

Strikes preceded Greek riots

After the Prime Minister announced his proposed spending budget revisions, which are expected to effortlessly pass as his party (Socialist) holds a 160-seat majority, a nationwide general strike started in protest of the cuts, according to the Wall Street Journal. Ferry services and schools stopped, shopkeepers closed their doors and massive amounts of people took to the streets to protest. Hospitals ran on the barest minimum staff, and all flights in or out of Greece were grounded. A lot more protests will likely take place.

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