Greece faces general strike, more cuts planned
Workers across Greece walked off the job Tuesday at the start of a 48-hour general strike as lawmakers debate a new round of austerity reforms, which must be passed if the country is to get crucial bailout funds.
More than 5,000 police were to guard Athens' city center, as thousands of protesters hold a rally outside Parliament, chanting anti-austerity slogans. Another demonstration is scheduled to start later in the morning.
Unions are angry at a new euro28 billion ($40 billion) austerity program that would slap taxes on minimum wage earners and other struggling Greeks. The planned measures come on top of other spending cuts and tax hikes, which have contributed to the rise in the unemployment rate to over 16 percent.
Cops Fire Tear Gas At Greece Austerity Rally
Police in Athens have fired tear gas after clashing with protesters throwing sticks and bottles as a two-day strike against austerity measures got under way.
The skirmish comes as MPs are asked to help pass tough proposals demanded by the EU and the International Monetry Fund (IMF) in order to receive another bailout.
The Greek parliament needs to agree to 28 billion euros (£25bn) of spending cuts and economic reforms by the end of this month.
Only then will European finance ministers give the country 12 billion euros (£10.7bn) - the fifth and final installment of the original 110 billion euro (£98bn) bailout agreed in May last year.
Furthermore, unions say the measures merely slap taxes on minimum wage earners.
Meanwhile, governor of the Bank of England Mervyn King has said concerns over Greece defaulting are sufficient enough to have prompted the consideration of contingency plans for the UK banking sector.
'Massive participation': General strike hits Greece as austerity vote looms
Deep in deficit and unable to borrow on financial markets, Greece depends on international support to keep going. A default would spread contagion around the 17-nation single currency area and cause a deep shock to the global economy.
The package and an additional implementation law must be passed in parliamentary votes Wednesday and Thursday so the European Union and the International Monetary Fund release the next installment of Greece's euro110 billion ($156 billion) bailout loan.
Without the next euro12 billion installment, Greece faces the prospect next month of becoming the first eurozone country to default on its debts — a potentially disastrous event that could drag down European banks and affect other financially troubled European countries.
Theodoros Pangalos, the outspoken deputy prime minister, criticized financial experts who have suggested Greece might be forced to abandon the euro and return to its old currency, the drachma.
"A return to the drachma would mean that the next day banks would be surrounded by people trying to get their money out. The army would have to use tanks to protect (the banks) because there wouldn't be enough police to do it," Pangalos said in a weekend interview with the Spanish daily El Mundo.
"There would be riots everywhere, shops would have empty shelves and people would be jumping out of windows ... It would also be disastrous for the entire economy of Europe."
We'll be watching Wednesday very closely as this is when the vote takes place. The status of the EU may be hanging in the balance, so this is a very important day prophetically. As seen below, the status of Greece could have an enormous impact on the EU and how their future shapes up.