Thursday, February 11, 2010

greek workers protest austerity

WaPo | Greek workers shut down schools, grounded flights and walked out of hospitals Wednesday to protest austerity measures as their prime minister headed to a crucial European Union summit with bailout speculation at a fever pitch.

E.U. leaders will wrangle Thursday over how to resolve a Greek debt crisis that has shaken the euro and underscored the interconnectedness of the global economy. U.S. and European markets rose Tuesday on hopes for a rescue plan that might take pressure off several other struggling eurozone nations, including Portugal and Spain.

But German officials said Wednesday that there was no urgent need for a bailout at the moment and that "no decision on such help" is imminent. They also said E.U. rules prohibit them from guaranteeing another country's debts.

Greece has come under intense pressure to slash spending after it revealed a massive and previously undeclared budget shortfall last year that continues to rattle financial markets and undermine the value of the euro. The country's deficit spiraled to above 12 percent of economic output -- more than four times the eurozone limit -- in 2009.

Prime Minister George Papandreou's new government has announced broad spending cuts that will freeze salaries and new hiring, cut bonuses and stipends, and increase the average retirement age by two years to 63. The government also announced new taxes, which it insists will increase the burden on the rich but safeguard the poor.

Papandreou, who was in Paris on Wednesday to meet French President Nicolas Sarkozy, insisted that Athens is not asking for a bailout.