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Wall Street panics as Greece protests flare over austerity measures

Greece protests against the government's tough spending cuts broke out in Athens Thursday, was stocks plunged on Wall Street over concerns about tightening credit markets and declining global demand.

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Greek promise

To receive the loan, the Greek government agreed to freeze public sector salaries until 2014, cut state pensions, and raise the average retirement age from 61 to 63. Laws limiting layoffs in the private sector to 2 percent of the workforce are also being scrapped.

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Struggling to service a ballooning national debt, Greece has been locked out of the normal source for government borrowing, the bond market. Investors have been demanding high interest rates that Athens can’t afford to pay.

The hope behind the plans is that market fears can be soothed, as they were by recent belt-tightening by another eurozone member, Ireland.

Seeking to satisfy nervous lenders last year, Ireland raised taxes, slashed government spending, and imposed public sector pay cuts of between 5 and 15 percent.

But a crucial difference in context between the countries underlines the stark reality confronting Greek workers, according to Professor Featherstone.

“In Greece, the talk is of defending hard-won privileges, which might to some outside observers have seemed to be over the top in some ways. But it’s important to remember that they are in a context of a country in which there is very little welfare state, and a corresponding fear of unemployment,” he says. “Unemployment benefits last only in the very short term, perhaps only a few months.”

Few observers have been surprised at the level of anger now being unleashed on Greek streets in response to the austerity plan – described by Greece’s largest umbrella union, GSEE, as “the harshest, most unfair measures ever enacted.”

“The Greek population is of a rather different character to the British population,” says Peter Nolan, a professor of industrial relations at Leeds University.
“Greece had the highest level of general strikes of all southern, northern, and central European countries,” he says, “so the Greek populace will take to the streets very quickly if they feel their way of life is under threat.”

“In the Britain of the ’80s, I think no one really believed [Thatcher] was going to let unemployment soar, that she was not going to prevent the closures of manufacturing of steel works and of course the coal mines. Not only was she not going to do anything [to prevent it], but she was going to actively promote it.”

In March, Britain's Chancellor of the Exchequer warned that the next round of public spending cuts would have to be “tougher and deeper” than those implemented by Thatcher.