Greek Riots Paralyze Athens

The city of Athens has been shocked by a violent outbreak of Greek riots in which three are left dead as protesters and police clash. The Greek riots are believed to be caused by recent economic measures meant by the Greek government to curb spending and gain a better grip on the country’s spending ahead of a pending bailout. Before Greece can get any bailout instant cash loans, they will likely need to get their house in order.

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 budget deficits and financial turmoil have led to the downgrade of the credit rating of Greece. 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 Greece’s gross domestic product.

What gets cut?

Pensions and public employees account for about 75% of public spending in Greece. There are a lot more public employees proportionally in Greece than most other European nations. Additional taxes would be placed on consumer goods and wages and pensions would either be frozen or reduced.

Bailouts

European Union nations and also the International Monetary Fund are assembling a 110 billion Euro bailout package. 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.

Greek riots started with protests

A nationwide strike and protests broke out after the Prime Minister announced the proposals, which is expected to pass due to his party (Socialist) holding a majority, according to the Wall Street Journal. Individuals took to the streets in protest all over the nation as a nationwide general strike began. Flights in or out of Greece were halted and hospitals were barely able to operate. More protests are due to go on.

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