Greek Riots Shock Athens

The city of Athens has been stunned by the Greek riots which have broken out and left 3 dead in the melee. 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. Greece will have to get their house in order before any instant money from a bailout could be made available.

Greek riots after protests of austerity measures

The Greek riots began after a Sunday announcement by Prime Minister George Papandreoun which outlined a spending bill aimed at tightening the nation’s belt. Financial turmoil and growing deficits led to unrest and to the credit rating of Greece being downgraded. The proposed spending agenda would cut 30 billion Euros over the next few years. 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.

The Pending Bailout

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. Over 22 billion Euro has been pledged by Germany and Chancellor Merkel alone. However, she has been hesitant, saying that immediate 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

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, 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 were barely able to operate, and no flights went in or out of the country before the Greek riots began. More protests will likely take place.

Citations

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