Is Greece finally getting serious about fiscal crisis?

Rick Moran
It would seem that the showdown brewing in the Greek parliament over the latest "austerity" measures is causing some real soul searching in the Greek government.

Reuters:

Much of Greece will be shut down by a 48-hour general strike called to coincide with the vote on Thursday. Union leaders hope to sink the package of pay cuts, tax hikes and public sector layoffs by undermining the resolve of the ruling PASOK party.

At least two deputies have threatened to vote against part of the package. Nevertheless, the government's slender majority will probably hold up.

Venizelos, a bull-necked political veteran drafted in by Prime Minister George Papandreou in June this year to keep the party in line, said there was no alternative to the measures, which the government says are needed to fend off bankruptcy.

"This is a fight for our existence... we will do anything," he told lawmakers in parliament.

Inspectors from the European Union, the International Monetary Fund and the European Central Bank left Athens on Tuesday, indicating they would recommend releasing an 8 billion euro tranche of aid that Greece needs to keep paying its bills past mid-November.

But they warned that Greece, in deep recession and choking on a public debt equivalent to some 162 percent of gross domestic product, was slipping behind on its targets and needed to lift efforts to cut costs and reform its stricken economy.

Weaning people from government will not be easy - not in a country where 20% of the workforce is employed by government at one level or another. The resistance from unions is fierce - they are calling for a 48 hour general strike to protest the cuts - and the average Greek citizen will bear the brunt of the government's painful cutbacks.

It still may not be enough to stave off default. But it gives Greece a fighting chance to survive until the reforms kick in and hopefully increase economic activity. What Greece - and the entire world - needs right now is economic growth. Whether the reforms being voted on will accomplish that end will tell the tale of Greece and perhaps the rest of us as well.


It would seem that the showdown brewing in the Greek parliament over the latest "austerity" measures is causing some real soul searching in the Greek government.

Reuters:

Much of Greece will be shut down by a 48-hour general strike called to coincide with the vote on Thursday. Union leaders hope to sink the package of pay cuts, tax hikes and public sector layoffs by undermining the resolve of the ruling PASOK party.

At least two deputies have threatened to vote against part of the package. Nevertheless, the government's slender majority will probably hold up.

Venizelos, a bull-necked political veteran drafted in by Prime Minister George Papandreou in June this year to keep the party in line, said there was no alternative to the measures, which the government says are needed to fend off bankruptcy.

"This is a fight for our existence... we will do anything," he told lawmakers in parliament.

Inspectors from the European Union, the International Monetary Fund and the European Central Bank left Athens on Tuesday, indicating they would recommend releasing an 8 billion euro tranche of aid that Greece needs to keep paying its bills past mid-November.

But they warned that Greece, in deep recession and choking on a public debt equivalent to some 162 percent of gross domestic product, was slipping behind on its targets and needed to lift efforts to cut costs and reform its stricken economy.

Weaning people from government will not be easy - not in a country where 20% of the workforce is employed by government at one level or another. The resistance from unions is fierce - they are calling for a 48 hour general strike to protest the cuts - and the average Greek citizen will bear the brunt of the government's painful cutbacks.

It still may not be enough to stave off default. But it gives Greece a fighting chance to survive until the reforms kick in and hopefully increase economic activity. What Greece - and the entire world - needs right now is economic growth. Whether the reforms being voted on will accomplish that end will tell the tale of Greece and perhaps the rest of us as well.