In a tight vote Greece’s legislature approved a plan of austerity that will enable the debt-riddled country to receive the next tranche of bailout funds and avoid a default, for now.
Amid clashes between protestors and police outside government buildings, the Greek Parliament passed Prime Minister George Papandreou’s package of budget cuts and taxes, a positive development but merely a first step. While the deal buys a bit more time for Greece to sort out its issues, it does little to address the fact that the country is not growing anywhere near fast enough to repay bondholders without receiving aid from the EU, IMF and ECB for the foreseeable future.
The final tally showed 155 votes for the austerity program, 138 against and 7 abstentions.
Yesterday, Bank of America Merrill Lynch currency strategist Paresh Upadhyaya compared the goings-on in Greece to the movie Groundhog Day, his way of arguing that the issues are going to be revisited time and time again.
European leaders certainly do not seem to have the stomach for a Greek restructuring, largely because their own banks are at risk. France has expressed a willingness for its banks to roll over their Greek debt holdings, and Germany is also coming around to the idea.
Markets in Europe were higher, with German and U.K. indexes up better than 1% after the Greek vote, though the agreement was likely largely priced in. It remains to be seen what will happen Thursday, when lawmakers are due to vote on the implementation of the package. The euro, which briefly weakened against the dollar on word that a member of Papandreou’s had voted against the deal, firmed up to $1.4413 from $1.4371 late Tuesday.
In: World News
Tags: greece, athens, protesters, soclialism fail, economy, police, protesters, tear gas
Location: Athens, Attica, Greece (load item map)
Marked as: approved, featured
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