Thousands of residents took to the streets today in Greece claiming that the austerity measures imposed by their government were “draconian.” But the Greek government countered, arguing the austerity programs and labor reforms are necessary to cut their budget by an estimated 11.5 billion euros and help their debt crisis The amount the international community insists is needed to ensure international support for Greece.
Greece’s new coalition government, which was instituted in June of this year, has struggled in the last several months to deal with Greece’s overwhelming debt load and impending economic crisis. The cuts have resulted in severe salary cuts for many workers. Other workers continue to be unemployed. Additionally, the price of basic foods has also risen.
The Wednesday protests and following riots occurred when Greeks marched on the street and clashed with the Athens police. What started as a non-violent protest escalated when the protesters began throwing Molotov cocktails in the square next to the Greek parliament building in Athens. According to the police spokesman the police countered the attack by attempting to contain the violence by spraying tear gas.
The government claims there may have been as many as 25,000 protesters, most of them peaceful, representing unions and other labor groups. Several protesters noted they are frustrated with the elections and the government’s efforts claiming that in general the feeling of many in the crowd is that they have lost hope.
Most acknowledge that even with the government imposed austerity cuts the Greek workers continue to suffer. Many argue that other measures may be needed to stimulate the economy and speed up growth. They may be right, it is estimated that currently over 50% of Greece’s young workers continue to be unemployed.
The clash seems to be in a distant country, but the United States has reason to be concerned about the plight of Greece and Spain, who has also had protests in recent weeks. If Greece defaults on its debt there is little doubt this could impact the global market. If difficulties in the eurozone continue there are predictions that this could also negatively impact Italy and Spain who continue to also have high debt and unemployment rates.
Impact of Greece’s debt on the U.S.
An article in USA Today published late last year outlined the potential threat to multinational companies, exporters and investors if European health declines. The greatest threat was that our banks are “tethered” to those in Europe with our financial institutions (specifically Bank of America, JPMorgan Chase, Morgan Stanley, Wells Fargo and Goldman Sachs) having billions of dollars invested in loans to some of the most endangered nations such as Greece, Portugal, Ireland, Italy and Spain.
Additionally, the article mentioned exports to Europe which are one of the United State’s largest trading partners. Although Germany and Great Britain are our largest trading partners there is some exposure if our exports to Spain and Greece were to decline.
Investments by U.S. companies could be the greatest risk if Europe has difficulties. For instance, according to the article more than half the sales of American-owned foreign affiliates are in Europe. Some companies such as General Motors and Ford have already been affected. For these companies, if there is a decline in the prosperity in Europe that means less money for the companies to reinvest in the U.S. to build new and better cars and better factories or to create more jobs.
What can the U.S. do to help with Greece’s debt crisis? Unfortunately, it can also be argued that America’s influence over European countries has also waned, especially given our own tepid economy and high deficits. It may be time for the Europeans to fix the problems themselves. It is clear that the United States may not be much help.
Latest posts by Beth (see all)
- Chapter 7 bankruptcy how to avoid filing a second time? - April 24, 2017
- Chapter 7 bankruptcy how do they determine if I can file? - April 19, 2017
- Receiving Supplemental Security Income can I file for bankruptcy? - April 12, 2017