European markets fall as Greek debt crisis claims first politician's career

European markets tumbled on Monday, with the euro dropping to a four-year low against the dollar, amid continuing concerns that a $140 billion bailout package arranged for a heavily indebted Greek government is deferring, rather than solving, a European credit crisis.

The crisis in Greece claimed its first political victim on Monday, when a deputy minister was forced to resign over revelations that her husband had cheated the tax authorities of 5.5 million euros ($6.6 million).

Greece is scheduled to receive its first slice of the bailout cash on Tuesday – money it needs to pay about €9 billion ($10.8 billion) in government bonds that come due on Wednesday. While Greek Prime Minister George Papandreou insisted that all the money would be repaid, his government has also been hinting it won't take full responsibility for the spending and borrowing that left Greece in this position.

Greece understated its level of debt for years before Mr. Panadreou's government came to power and the Greek parliament is looking into whether Goldman Sachs helped a former government hide the country's true financial condition from investors and its own people. In an interview with CNN over the weekend, Papandreou hinted that the country may sue some of its investment bankers. “In the financial sector, I hear the words fraud and lack of financial transparency... I wouldn't rule out that [legal action] may be a recourse also,” he said.

Greek voters have been deeply unhappy with the bailout, organized by the International Monetary Fund and wealthier European nations at the cost of a sharp reduction in government spending. The general feeling among the protesters has been that average Greeks are being asked to suffer through an austerity package that was made necessary by the sins of corrupt officials and wealthy tax-dodgers.

There have been riots in Athens and a national strike has been called for this Thursday that has Greek police officials fearing more violence. The last strike, on May 5, led to widespread battles between demonstrators and riot police in front of the country’s Parliament and the deaths of three bank employees caught in a blazing office building.

That backdrop, which makes international investors doubtful that Greece will manage to both follow through on its promised spending cuts and find a way to increase domestic growth to an extent it could pay its debts, has left George Papakonstantinou with one of the toughest jobs in the country.

'Social balancing act'

“We need to bring back consumer confidence and foreign investment but the second part is a social balancing act that we have to do,” said Mr. Papakonstantinou, Greece’s economy minister. “We need to restore a sense of justice by going after tax dodgers and conspicuous consumption that you see from people you know are not paying their full share in taxes.”

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