In response to protests against the country’s massive budget cuts, protesters set fire to a bank in Athens, Greece, which killed three and injured several more. Protesters used paving stones and Molotov cocktails to attack police, who eventually responded with tear gas.
The fire brigade said the bodies were found in the wreckage of a Marfin Bank branch, on the route of the march in the city center.
An estimated 100,000 people took to the streets during nationwide strikes to protest austerity measures imposed as a condition of bailout loans from the International Monetary Fund and other eurozone governments to keep heavily indebted Greece from defaulting on its debts.
Heavily indebted is an understatement. Greece’s financial troubles have been well publicized and the most recent edition of The Economist puts its budget deficit at 13.6% and its debt equal to 115% of GDP, with a prediction that it will reach 149% of GDP by 2014. Striking numbers to say the least.
Graph courtesy of Economist.com
Further complicating the country’s debt crisis is the fact that most of its citizens refuse to “endure the cuts in wages and services needed to make the economy competitive.” But those cuts in salaries and pensions and increases in consumer tax are necessary to keep Greece from all-out bankruptcy, which some see as not far off.
And Greece’s financial troubles are effecting already-troubled countries such as Portugal, Spain and Ireland. To get into the intricacies of the financial problems those countries face would take up seven pages of this blog. But the troubles are not isolated to just the euro-zone. It was announced today that Canada’s dollar dropped to a one-month low on concern Greece’s debt crisis is spreading.
“Continued developments in Greece are leading to risk aversion in other markets,” said Matthew Perrier, Toronto-based director of foreign exchange at Bank of Montreal, the nation’s fourth-largest lender. That’s driving the Canadian dollar lower, according to Perrier.
The EU, obviously, is working to calm fears, insisting that what’s happening within Greece is a “unique case.” Even with words meant to calm, Spanish and Portuguese bonds and stocks have fallen this week “on fears that they may likewise have trouble repaying their debt and that the eurozone would have to extend even larger bailouts to them.” As of now, the IMF is granting Greece a $144 billion bailout package. But will it cure the crisis?
Let’s hope The Economist is wrong when they said “Greece looks bust.”
UPDATE: Stocks on Wall Street plunged in response to the Greek debt crisis and the chaos it has spawned. As the New York Times states:
In a matter of minutes, the Dow Jones industrial average tumbled about 565 points, losing almost 1,000 points on the day. The Standard & Poor’s 500-stock index and the Nasdaq followed suit. Computer programs intensified the selloff as market fell through some limits.
It was the biggest intraday loss since the market crash of 1987 for the Dow Jones.
The selloff didn’t last long, however. Almost as quickly as the indices sank, they rebounded — at least somewhat. As of 3 p.m., the Dow was down 461.54, the S&P was down 50.56 and the Nasdaq was down 108.90.
Neo-Liberalism, and the Greek tragedy.
May 6, 2010 by politicalsnapshots.wordpress.com
Neo-liberalism, and the Greek tragedy.
The country that gave the world the three most important tragedians, Aeschylus, Sophocles and Euripides is facing a major economic tragedy. While economists the world over have differing views on the root cause of Greece’s economic problem, as a non economist, I have been immensely concerned with anarcho-capitalism, (an economic system that destroys government regulation of the economy, and creates economic anarchy within the global economic system).
The conscious deregulation of the economy that started during the Reagan administration in the U.S. reached its climax during President George W. Bush’s tenure and has brought the global economic chaos the world is in at the moment. Their bankrupt economic theory of the market policing itself, has proven to be as hollow as their dreams of making trillions of dollars without manufacturing anything. (Capitalism without ethics, June, 2009 PSS.WP).
Sadly, Greek is another glaring example of the failure of neo-liberalism. Developing countries beware neo-liberalism is here to destroy you, not to save you. And those politicians that still praise the virtues of neo-liberalism, as Ashley St.Claire would say, they are either dim-witted or have a personal agenda that would personally benefit them at the expense of the interest of their countries.
Neo-liberalism is what Susan Strange calls “Casino Capitalism”. She is one of the first to have for seen the dangers of anarcho-capitalism. She has linked “casino-capitalism”, in to a number of trends among which are: government’s deregulation of the economy, (based on the fallacy that, the market and the banks would regulate themselves), and commercial banks turning in to investment banks. Susan Strange’s work is an essential contribution in de bunking the dominant doctrine of neo-liberalism.
Recently, the EU and the IMF have agreed to extend $147 billion dollars rescue under a three year agreement. This “rescue” plan actually is intended to rescue French and German banks that are holding a large share of Greece’s bonds. Moreover, the “rescue” is meant to temporarily stop a widening debt crisis in Europe which might include Portugal, Spain and Italy. In all this, the Greeks will be burdened with more debt, and are required to take harsh budget cuts.
In order to comply with the EU and IMF’s “rescue” plan, the Greek government will cut public-sector workers’ pay by 20%, raise the retirement age, increase sales tax to 23%, increase the price of tobacco products, alcohol and gas by 10%, increase taxes on property and businesses, etc. etc. Even if all this drastic measures are instituted according to plan, the actions taken actually would increase Greece’s debt and shrink its economy by 4%. How about a big applause to neo-liberalism?
Focusing only on dollars and cents, what usually is left out is any discussion of the impact of neo-liberalism’s creation of political instabilities around the globe. The main crime of neo-liberalism is its unparalleled focus on greed some would say debauchery and social injustice.
I only hope, the violence in Greece would quickly recede before it destroys a country that is the root of European civilization.
Professor Mekonen Haddis.