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Athens protests turn violent

February 16th, 2012

 

Protesters in Athens, Greece damaged 153 small businesses on Sunday, and destroyed 45 of them, reported the National Confederation of Greek Commerce.

The protests were in response to the government’s attempts to identify exactly where it will make an additional €325 million in cuts from its budget.

The cuts are necessary to secure the €130 million bailout plan that will prevent Greece from defaulting.

Jean-Claude Juncker, president of the Eurogroup, which politically controls the euro, said in a press conference last week that there would be “no disbursement without implementation.”  The deal, while supported by the Greek Parliament, is still pending, because there has yet to be a specific plan put into place regarding where the spending cuts will come from.

Two government officials, speaking anonymously, told a reporter from Reuters that while there has not been a final decision, cutting the defense budget by another €125 million, in addition to the €300 million that were cut on Sunday, is being discussed.

The public’s fears over the proposed spending cuts, the €14.5 billion debt payment due on March 20, an unemployment rate hovering around 21 percent, and a shrinking GDP, culminated in a riot that ended with 67 people being arrested and 106 injured police officers.

The concern over a possible Greek default extends well beyond the country’s borders.  Twelve European countries have received a downgrade in their credit rating from Moody’s, a U.S.-based credit rating agency, including France, the U.K. and Austria, who have been changed to a negative rating.   Moody’s cites the euro area crisis as the reason for the downgrade.

To European dismay, it may actually be in Greece’s best interests to default.

Defaulting and declaring bankruptcy could actually revitalize the country.  Monday, Luc Frieden, the finance minister of Luxembourg, said in Washington, “It might be something which would allow Greece also to get a new start … to create an economy that can create jobs.”

There are fears that a Greek bankruptcy would lead them to turn away from the euro, which some do not believe the eurozone could withstand.

In June, President Obama said that a Greek default would be disastrous.

This statement was predicated on the fact that Europe would spiral out of control if Greece defaulted. German Finance Minister Wolfgang Schaeuble responded to the claim with, “we are better prepared than we were two years ago.”

The United States is not immune to the economic woes of the euro. The Dow Jones dropped 19 points at noon Tuesday, followed by Bank of America’s 2.4 percent drop shortly after. The Standard and Poor’s 500 and the Nasdaq also fell.

The next meeting for the Eurogroup was scheduled for Wednesday, but was called off by Junker.

Junker said that the group had still not received all of the information that was necessary from the government of Greece on how it plans to save the 325 million pounds.

The group leaders will instead teleconference on Wednesday, with the hope of meeting on Monday and making a final decision on the bailout plan.