Thursday, May 06, 2010

Protests Resume In Greece Following Government Approval Of Austerity Budget; UPDATE: US Stocks Down Sharply

The Greek government adopted the austerity budget that is hoped to nurse the country back to fiscal solvency, but the Greek unions have again taken to the streets warning that this is a war against them.
Demonstrators, banging drums and shouting anti-government slogans through loudspeakers, unfurled a giant black banner outside parliament. More than 30,000 demonstrators filled downtown streets, chanting "They declared war. Now fight back."

The protest followed violent street protests on Wednesday that left three people dead after a bank was firebombed.

In parliament, lawmakers voted 172-121 to approve the cuts that will slash pensions and civil servants' pay and further hike consumer taxes.

Prime Minister George Papandreou expelled three Socialist deputies who dissented in the vote, reducing the party's number of seats to 157 in the 300-member parliament.

"We have done what was necessary, not what was easy," Finance Minister George Papaconstantinou said after the vote. "Without these measures, we'd be thrown into the deepest recession this country has ever known."

The minister said Greece would default on debt payments this month unless it received the bailout loans from the International Monetary Fund and 15 euro-zone countries who had remained divided for months on how to aid Athens.

"Today things are simple. Either we vote and implement the deal, or we condemn Greece to bankruptcy," Papandreou told parliament before the vote.

"Some people want that, and are speculating (on it), and hope that it will happen," he said, referring to speculative attacks that have been blamed for raising Greece's borrowing costs to unsustainable levels. "We, I, will not allow that. We will not allow speculation against our country, and bankruptcy to happen."
This comes following a deadly day of riots in Greece, where three people were killed, including a pregnant woman.

In response to the situation in Greece, the US stock markets are tanking in a big way, down more than 8% in heavy trading:
Problems with Greek debt are about to spread to other countries and could infect the US unless the nation tackles its own mounting problems, Pimco’s Mohamed El-Erian told CNBC.

Riots erupted in Greece again on Thursday night to protest austerity measures.

About an hour or so after El-Erian spoke, global stocks sold off sharply with major US averages shedding more than 3 percent.

Speaking as Greek austerity measures won enough votes to be approved by parliament, El-Erian offered a stern warning about the potential of the crisis to escalate into something resembling, though not duplicating, the 2008-09 financial crisis.

“We’ve seen a crisis start in a country—Greece—become regional, impact the whole of the Euro zone and is on the verge of truly going global,” said El-Erian, CEO of the world’s biggest bond fund. He said the debt is a “transmission mechanism to go from country to region to global. So we should take this very seriously.”
Those 3% drops were optimistic as the latest figures show drops more than twice that. The DJIA dropped more than 900 points, but is now down about 450.

No comments: