Greece approves spending cuts, tax hikes

Smoke and tear gas billows around the Greek Parliament in Athens while protestors continue to clash with riot police on June 29, 2011.

Kai Ryssdal: We're here in the Rocky Mountains this week for the Aspen Ideas Festival. A chance to take a break from the everyday rush of events and think -- in the final analysis -- about how to make things better.

Before we get to that, though, the news of the day forces us to take a detour from the wide open spaces and fresh air of Colorado, and remember our etymology.

Because it is in times of crisis that we realize our debt to the Greek language. The very word "crisis" is derived from the Greek. So too "drama," "climax," "pandemonium," "chaos" and "tragedy." All of which have come into play over the past few weeks as worries over Greek government debt have grown.

Here, though, is another word of Greek origin: "catharsis." That seems to be the dominant mood in Berlin and Paris today, because the parliament in Athens has finally approved an austerity package, and with it a way to avoid -- again from the Greek -- "catastrophe."

From the European Desk in London, Marketplace's Stephen Beard reports.


Stephen Beard: Today's vote gives the go-ahead for a package of tax hikes, public spending cuts and privatizations. Without them, the European Union and the IMF would have denied Greece the next chunk of its bailout money.

Jan Randolph of IHS Global Insight says Greece has staved off default and disaster -- at least for now.

Jan Randolph: The way now is clear for the release for the next lump of money which will keep Greece afloat until about September. So we have a short-term breathing space, basically, a sigh of relief for a few months until the next possible cliffhanger.

But another cliffhanger seems a certainty. Eighty percent of the Greek public opposes the austerity package, so do the opposition parties, so in fact do most members of the ruling party. Holger Schmieding is with the German bank Berenberg.

Holger Schmieding: So in the implementation of what the Greek parliament has passed over the last two days lies still a few significant hurdles.

Who, for example, will want to buy state-owned companies packed with hostile workers? And how do you raise more tax revenue in a country that seems allergic to paying tax? Eurozone economist Megan Greene predicts another crisis -- soon.

Megan Greene: Come September, when the EU, the ECB and the IMF descend on Athens for their quarterly review of how Greece is doing on implementing all the terms of a bailout, they're going to have a very hard time coming up with positive things to say.

And that'll mean more ultimatums in the fall, with Greece once again teetering on the brink. At least the politicians, and the protesters, can spend the rest of the summer on the beach.

In London, I'm Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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