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Wave of anger blankets Athens as Greece weighs new austerity measures

Tens of thousands of protesters crossed police lines as Greece's parliament prepared to vote on new austerity measures to avoid what could be a devastating default.

By Staff writer / June 15, 2011

Demonstrators throw rocks near the Greek parliament in Athens, on June 15. Tens of thousands of grassroot activists and unionists converged on Athens' central Syntagma (Constitution) Square Wednesday ahead of a proposed new austerity budget.

John Kolesidis/Reuters

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Young Greek protesters in Athens are confronting police outside parliament ahead of a proposed new austerity budget, even as European leaders meeting in Brussels last night remain divided on how to finance a second Greece bailout.

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The some 20,000 protesters – many of whom refer to themselves as "indignants" – crossed police lines, angry about what they perceive as a future riddled with debt and high unemployment.

Protestors want to stop an austerity package of $40 billion in cuts whose approval is required for the next installment of last year's 160 billion bailout. Greece slipped toward bankruptcy in spring 2010 after revealing it had falsified its financial position. Athens has since received $53 billion in bailout funds, following a contentious debate in Europe, particularly in Germany, which initially opposed a bailout.

Yet Greece now desperately needs a second cash infusion. Last night, Jean-Claude Juncker, head of the eurozone finance ministers, set a June 20 deadline to complete a bailout package for Greece, even as analysts say that the longer the Greek crisis remains unresolved, the more words like “default” and “restructuring” threaten to undermine the Greek position and cause market panic that could ripple even into US holdings.

What European officials are said to want is a restructuring of Greek finances – but without quite calling it a restructuring. That Greece, a founding member of the eurozone, would default, or even be rated as a “selective default” in industry terminology, is seen as uncharted territory.

“The best scenario is you don’t talk about restructuring and you do it quickly over a weekend,” says Sony Kapoor, director of “Re-define,” a Brussels think tank. “The worst is you talk about restructuring a lot and then do nothing. That’s sort of where we are. For Greece, today, it cannot honor its obligations. Most of the damage has already been inflicted.”

Greece holds some $400 billion in bond debt. Of this, $123 billion matures and must be paid off by 2014. Standard and Poor’s this week dropped Greece’s rating from B to triple C, the lowest in the world. (Moody’s rating agency today threatened to downgraded three French banks on their exposure to Greece. France has $14 billion bank exposure to Greece; Germany has $21 billion.)

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