Thursday, October 20, 2011

Budget savings, Greece in Crisis

Budget savings, Greece Hit Mass StrikePressure leaders to hasten the completion of the debt crisis of Europe, is increasing. The debt crisis in the countries of the European region has not shown signs of settlement. Bailout policy, plans budget cuts to tax increases, more and more unpopular to the public.
The situation also sparked fears of workers and businesses. Pressures for European leaders to accelerate the completion of the debt crisis, is now increasing.
Have not found a bright spot settlement of debt, in recent months, the situation in Europe was also affected hands of speculators such as hedge funds. The hedge fund is a bet between them over the default of a country or company.
In fact, as quoted by Reuters, some government officials in Europe say speculators like hedge funds using credit default swap contracts it to affect defaulted debt in Greece and pressed the euro exchange rate.
In that country, the settlement of the debt crisis has yet to show significant development. If in New York, United States, the economic crisis and unrest over corporate greed and corruption in the business elite sparked massive protests, the situation in Greece is slightly different.
As of yesterday, the country affected by an acute debt crisis that hit strike a grand scale. Not only private sector workers and government, small businesses and medium enterprises (SMEs), are involved in the action that lasted two days.
They strongly opposed the government's plans to re-save the budget. Tightening could mean pay cuts as well decrease the retirees benefits. Not only that, the government also intends to raise taxes to reduce budget deficits.
The government argued that the policy plan to address the acute financial crisis. For two days starting yesterday, the budget savings plan that will be discussed in parliament.
As quoted by Reuters news agency, due to the mass strike, government offices closed. Business activities in the corners of Greece was also suspended. The strike was concentrated around the parliament building.
Not just once, strike in Greece it is often the case. This time, labor strikes and protests it is one of the largest in recent years. Previously, a similar action in June had sparked intense clashes between demonstrators and security forces outside parliament.
Greek citizens angry, although the government also argued that saving is a requirement of the European Union and the International Monetary Fund (IMF) if you want to get more emergency loans. According to BBC news station, it is indispensable Greek loans because the debt ratio has reached 162 percent of gross domestic product (GDP).
Now, the Greek second stage requires emergency loans from the IMF and the EU amounted to U.S. $ 11 billion. If not released, Greece at risk of failing to pay debts and other obligations in November.
Prime Minister of Greece, George Papandreou, is well aware of the situation facing the dilemma of his nation. If savings are not met, Greece will not receive emergency loans. However, other risks, the government faces popular anger if still implement austerity programs.
"We must persevere to face this war as a people, government, and parliament, in order to bring this country to victory," Papandreou said.
Greek finance minister, Evangelos Venizelos, also asked for support, because the parliament prepares to vote on a round of tough to get to the austerity measures. Meanwhile, tens of thousands of protesters continued to gather in a huge mass demonstration outside parliament.
"We are in an uphill battle. But, it is necessary to avoid the final and most crucial point of a crisis," said Venizelos, before the voting.
He also hopes to reach a definitive solution to the substantial completion of the crisis after the EU summit on Sunday. "From now until Sunday we were fighting from a battle to the next battle," he said.
Spread to Spain
Strike settlement of issues related to the debt crisis in Greece the impact can be spread to the euro zone countries. Although not directly related to the action in Greece, the public trust in the European region to overcome the crisis further eroded.
Yesterday, the international ratings agency, Moody's, downgraded even foreign debt of Spain, two levels at once. Moody's lowers debt rating of Spain from the previous A1 to Aa2.
The move was taken after Moody's other ratings agencies, Standard & Poor's and Fitch also downgraded the debt securities that Matador State. Downgrades Spain's debt is estimated sparked fears for the people of Europe who hoped a resolution could be faster problem resolution.
"If Europe can not find a solution to handle this situation, you will see the yield on Spain will continue to rise and they will face problems to pay for it," said analyst exchange and fixed income at MF Global, Jessica Hoversen, as quoted by Reuters on Wednesday , October 19, 2011.
In his explanation, Moody's reasoned, since Spain's debt rating was placed in a status review in late July 2011, it does not look credible resolution to the debt crisis which has increased at this time.
Efforts to return public trust in relation to political conditions and economic growth in Europe is also expected to take a brief no. Debt downgrades Spain is also expected to trigger a concern for the people of Europe who expect a resolution for faster problem resolution.
Debt crisis in Greece that threatens the potential of default can have a major impact to the euro zone countries if it is not immediately anticipated. Therefore, about 60 percent of Greece's debt holders are the three big banks in France. (Sj)

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