Greek Riots Paralyze AthensSubmitted by ShakiraG on Fri, 05/14/2010 - 05:36
The recent Greek riots have rocked the city of Athens, leaving 3 dead in the clash between police and protesters. The Greek riots have been sparked by drastic spending cuts the government is proposing to curb the growing deficit. Greece will need to get their house in order before any quick cash from a bailout can be made accessible.
Greek riots touched off by austerity measures
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 within the wake of the collapse of financial markets and spending deficits. The proposed spending budget would yield savings of 30 billion Euros through 2010. According to MarketWatch, the cuts would amount to about 11 percent of Greek gross domestic product.
What's getting cut?
Almost three fourths of public spending in Greece is on pensions and public sector wages. Greece employs a lot more individuals publicly than most other European nations. As well as cuts to wages and pensions, an increased value added tax on consumer goods such as alcohol and cigarettes is also included.
In order to keep Greece from becoming insolvent as a nation, a 110 billion Euro Greece bailout is being put together by various European Union nations and the International Monetary Fund. 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 instant aid would have gone to waste before reforms were made. 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 budget revisions, which are expected to very easily pass as his party (Socialist) holds a 160-seat majority, a nationwide general strike began in protest of the cuts, as outlined by the Wall Street Journal. People took to the streets in protest all over the nation as a nationwide general strike began. Hospitals ran on the barest minimum staff, and all flights in or out of Greece were grounded. Further protests are due to take place.
Wall Street Journal