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Greeks Riot as Parliament Approves Budget Cuts to Avoid Debt Default

Posted on | June 30, 2011 | 16 Comments

Financial markets breathed a sigh of relief Wednesday after the Greek parliament approved an austerity plan needed to avert default on the nation’s debt:

The Dow Jones Industrial Average rose 72.73 points, or 0.60%, to 12261.42, capping the blue-chip measure’s biggest three-day gain since March. . . .
Stocks have swung up and down for weeks on worries that Greece poses a contagion risk to European banks and other heavily indebted euro-zone countries. The passage of unpopular austerity measures Wednesday was seen as paving the way for the heavily indebted country to get another round of aid, staving off a default. It was also viewed as moving the euro zone closer to containing its debt crisis.

The New York Times reports:

Greek lawmakers voted on Wednesday to sharply reduce government spending and sell off an array of national assets, staving off default on the country’s debt and easing, for the moment, a crisis among countries that use the euro. . . .
[C]ritics said they doubted that Europe had done more than postpone a day of reckoning for the euro, with Ireland, Portugal and Spain, as well as Greece, all struggling with slow or negative growth and rising debts.
The passage of the measures, a difficult and possibly debilitating feat for a Socialist Party elected on a social welfare platform, ensures that Greece’s foreign lenders will unlock the next installment of $17 billion in aid that the country needs to meet its debt obligations through August.

While the Greek vote was cheered by financial leaders — who had warned of a possible global financial meltdown if the austerity measures had not passed — the approval of the budget-cutting plan by the Greek parliament sparked a third day of riots in the streets of Athens.

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Category: Economics, Europe, Greece

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