Wednesday, June 8, 2011

Greece Readies Austerity Push

Wall Street Journal
June 8, 2011

Greek Prime Minister George Papandreou will seek cabinet approval Thursday for a new austerity crackdown, despite increasing popular resistance and signs of wavering support inside his own party.

The new spending cuts and a planned acceleration in the sale of state assets, which could cost thousands more jobs, were set by the European Union and International Monetary Fund as a condition for more aid.

The latest moves are turning up the heat on Greece's politics as Athens complies with conditions set for a second bailout, set to include banks voluntarily offering to extend the maturities on the Greek bonds they own.

The specter of political risk amplifies concerns voiced by the European Central Bank, which warned that rescheduling Greek debt is fraught with danger and could cause investor flight that would shake the European banking system.

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