Thread: Strike closes down most of Greece

Strike closes down most of Greece

By Nikolia Apostolou and Dimitris Bounias, Special for USA TODAY

Wednesday, october 5, 2011

ATHENS – Thousands of Greek workers shut down schools, hospitals and museums Wednesday to protest spending cuts that the government says are needed to prevent a bankruptcy that could roil global financial markets.

"Take the memorandum and leave!" chanted 13,000 demonstrators in Athens' who were referring to the cuts Greece agreed to make so it could get an emergency loan from the International Monetary Fund and European creditors.

Greece announced it would begin implementing parts of the agreement such as putting some state workers on partial pay and suspending 30,000 state employees, as well as the imposition of a new property tax. Greece says it has enough money to pay pensions, salaries and bondholders only until mid-November.

Finance Minister Evangelos Venizelos insisted Greece would not default on its loans and urged citizens to pay their taxes, something Greeks often do not do, and support the government effort.

But marchers who were largely from Greece's two largest unions representing state workers and private workers say the bailout will not make matters better for ordinary people.

"I don't see anything changing even if there's a memorandum," said Zeta Papadopoulou, 30, a photographer.

People affiliated with the Communist Party marched into the central Syntagma Square, carrying red flags and chanting: "No sacrifice for the bosses!" Others waved banners stating, "The rich must pay!" Most private workers did not join the protests.

Air-traffic controllers left work, forcing the cancellation of dozens of flights. Getting around was difficult since ferry services, bus and train lines were not running at full capacity. The Athens Acropolis and major museums were closed.

Minister of Internal Affairs Charis Kastanidis announced that the government will hold a referendum to ask the citizens what should be done to solve the fiscal problems. For years, Greece's politicians have developed a clientele relationship with the electorate, trading votes for guarantees of permanent employment by the state.

The IMF said Greece's attempt to face up to its overspending and bloated public sector is "more than overdue" but that it should be careful not to wreck its economy in the process.

Some economists said the bailout will do little over the long-term if Greece does not rein in spending.

"If the public sector isn't minimized, surplus won't be created and the deficit hole will remain," said Theodoros Pelagidis, professor of economics at the University of Piraeus.

The conditions set for the loans — tax hikes, budget cuts, liberalization of state controls on the market and privatization of state-owned enterprises — have the potential to transform the country's over-regulated economy, say conomists say. But many Greeks are worrying about the near future.

"I wasn't demonstrating today; I don't anymore," said Pantelis Liakopoulos, 36, a video editor. "From the moment the austerity measures have been passed, there's nothing to demonstrate about. It's like begging."


http://www.usatoday.com/money/world/sto ... 50666828/1

Greece has weeks left before bankruptcy

By ELENA BECATOROS and MENELAOS HADJICOSTIS

ATHENS, Greece

Greece has enough money to pay pensions, salaries and bondholders through mid-November, the finance minister said Tuesday, as global markets sank on worries that a messy default could bring down European banks and trigger another global recession.

The Athens Stock Exchange general index tumbled to close down 6.3 percent while the main Europe markets fell almost 3 percent. The turmoil endangered French-Belgian bank Dexia, whose shares plunged as much as 40 percent, on worries about its exposure to Greek bonds.

Greece had previously said it would start running out of money in mid-October if it didn't get the next euro8 billion ($11 billion) installment of the euro110 billion rescue package it has been relying on since May 2010.

Finance Minister Evangelos Venizelos sought to reassure Greeks and investors that the country can hold on a little longer while its rescue creditors decide whether to give it more loans. The government can tap contingency reserves to buy the extra time, a ministry official explained.

"Until mid-November it is clear there will be no problem," said Venizelos, upon returning from a eurozone finance ministers' meeting in Luxembourg.

The worry is that a messy default by Greece -- in which sharp losses are imposed with little warning on bondholders, among which are many European banks -- would cause massive losses in the financial sector and trigger a credit crunch. That could stifle loans to the real economy, cause huge uncertainty and push the world economy into another recession.

German Chancellor Angela Merkel discussed the situation in a telephone conversation with Greek Prime Minister George Papandreou Tuesday afternoon, the premier's office said in a statement.

Eurozone ministers have indicated that while Greece would get its next batch of loans, that decision would not be made until later this month, after the international debt inspectors in Athens complete their review of Greece's reforms.

The inspectors from the IMF, European Central Bank and European Commission, collectively known as the troika, had suspended their review for several weeks in September amid concern over delayed implementation of austerity measures and missed targets. They returned to Athens last week, and are continuing negotiations.

The delay had raised the possibility that Greece would run out of money to pay salaries and pensions and possibly bondholders.

To convince the troika that it should get the next bailouts loans, the Greek government announced a series of new measures, including extra taxes on property, and began pushing through plans to suspend tens of thousands of civil servants on reduced pay.

"We're at the worst moment under the worst conditions. We're dependent on the help and lending of our institutional partners," Venizelos said.

"We have to make a super-human effort to win this wager of our times. There was this false sense of a standard of living that we, ourselves created," the minister stressed. "What's important now is to protect the country and to make clear and final decisions."

But the measures have outraged Greeks who over a year and a half have seen their incomes slashed and their living costs climb due to multiple tax hikes. Locked in a recession that is forecast to see the economy contract by 5.5 percent this year, even members of the government have voiced concern and said the public cannot face any more taxes.

Unions have responded with repeated demonstrations and strikes. They have staged occupations of ministry buildings for hours on several occasions, sometimes forcing ministers to reschedule meetings with the troika.

Most economists agree Greece is unlikely to be able to get out of its debt hole through austerity measures alone and many have called for private bondholders -- among which many European banks -- to take sharper losses than currently planned in the second bailout deal.

The view was reinforced this week by figures in the Greek 2012 budget which showed it had missed its deficit reduction targets for this year. The budget gap is expected to reach 8.5 percent of GDP, higher than the original target of 7.8 percent. This could increase further to reach 9 percent if strikes and civil protests delay the implementation of reforms, Venizelos said.

The argument in favor of letting Greece write off more of its debt was underscored by figures predicting that the Greek government would next year post a budget surplus if it were not for the huge amount of interest it is paying on its existing debt.

Some analysts say allowing Greece to cut loose some of that debt, for example by imposing 50 percent losses on private bondholders rather than the 21 percent currently negotiated so far, would be a crucial step to healing the country's crisis.

Eurozone leaders are now assessing how best to protect European banks and other struggling economies from such a move. The European rescue fund is likely to be increased in size after being given new powers to shore up banks and governments in need.

On Tuesday, Venizelos said Greece will issue euro880 million in bonds to Finland as collateral for the country's bailout loans to Athens under the second bailout. Finland had demanded guarantees in exchange for participating in the second package.

Other countries had threatened to demand similar guarantees if Finland got its way, but Venizelos said that no other eurozone states wanted the same collateral deal.

http://www.businessweek.com/ap/financia ... 5IPG80.htm

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