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Summer of Rage: Greece in Turmoil

June 16, 2011


Protesters face riot police during an anti-austerity demonstration near parliament in the centre of Athens. With the Greek government facing collapse, Europe is warned of financial chaos. Photograph: Panagiotis Tzamaros/AFP/Getty

This is what I been writing about since the first of the year. I am afraid we have arrived at a pivotal point in global history; Economic stabilization is the key to preventing a full meltdown of the EU and Europe, and perhaps avoid a global economic calamity.

To understand what is going on, here are a few articles:

Guardian UKGreek Crisis Sends World Markets into Turmoil
Guardian UKEurope Warned of Financial Chaos Over Greek Debt Crisis

The Greek government was on the brink of collapse after pitched battles on the streets of Athens on Wednesday, sending world stocks tumbling as EU leaders squabbled over whether and how to launch a second attempt to keep Greece from insolvency.

George Papandreou, the socialist prime minister, appeared to admit defeat by offering to dissolve his government and form a national unity coalition, but admitted his efforts to negotiate with the opposition conservatives had failed.

“Tomorrow I will form a new government, and then I will ask for a vote of confidence,” Papandreou said on state television. The move followed intense but fruitless negotiations with the conservative New Democracy party to engineer a consensus behind the savage public spending cuts deemed necessary and a wholesale privatisation programme.

The opposition had called for Papandreou’s resignation and a renegotiation of the bailout terms with the EU, the European Central Bank and the International Monetary Fund as the price for its assent to a national coalition.

Earlier, riot police had battled with tens of thousands of protesters in the capital against the radical austerity measures being imposed to try to secure a second bailout in a year, running to tens of billions of euros.

EU governments, the ECB, and the European Commission were gridlocked over how to respond to the debt emergency, which pushed Greece closer to sovereign default, possibly triggering a fresh European banking crisis.

A sense of siege descended on Brussels as the Greek drama appeared to be heading towards a denouement. The ECB warned that a Greek default could spark “contagion” across Europe, causing Greek banks to implode and inflicting major damage on the big banks in France and Germany.

“It looks like a week of chaos,” said a European official in Brussels. Senior diplomats in Brussels said that an emergency meeting of the 17 eurozone finance ministers on Tuesday had failed to bridge the differences over how to construct a second bailout in a year for Greece, running to almost €100bn. In May last year the EU and the IMF put together a €110bn bailout for Greece, the first in a single currency country. That experiment has failed. Ireland and Portugal have since also needed to be rescued from national insolvency.

“The euro area faces a very challenging situation that comes mostly from the interconnection of the sovereign debt crisis and the situation of the banking sector,” the ECB said. “Greece could have a contagion effect,” added Vitor Constancio, an ECB vice-president.

The Perfect Storm May Threaten Global Economyclick here

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