Greeks protest against rescue, call for jobs

Greek police have fired tear gas at protestors attempting to block off access to the parliament in Athens, as over 20,000 angry demonstrators tried to prevent MPs from voting on new austerity measures needed to secure more bailout cash.

Demonstrators around Syntagma Square in Athens responded by throwing stones, firebombs in violent clashes with police at the Greek parliament. The crowd is chanting "resign, resign". 


RT's correspondent Sara Firth was reporting from the epicenter of the clashes in downtown Athens, where tear gas was fired.

During her live report on air new clashes broke out, and new shots of tear gas were fired, affecting the RT crew.

The situation aggravated, with crowds getting more aggressive, they continued moving toward the parliament.

Thousands are taking part in a general strike against the cutbacks, which the country has to pass to continue receiving funding from 110-billion-euro international bailout that is preventing Greece from defaulting on its debts.

European finance chiefs are hammering out the details of this rescue plan at the moment, trying to prevent the first sovereign default in the European Union.

Protesters say proposals for new austerity measures are completely unreasonable.

Opinions on whether Greece is going to default vary widely. Some people are saying it is fantasy to imagine that will be allowed to happen. Others believe now it is a question of when and not if. 

The anger had really been building for a year. The economic conditions in Greece are incredibly tough, there is a huge number of unemployed, about 16 per cent of the Greek workforce.

Many people are asking when the IMF, the European Central Bank, and the EU, which provided the initial bailout of 110 billion euros, are going to look past the bailout and move on to plan B. Because for some it looks quite unrealistic that Greece can manage another bailout package and repay the loan.

Journalist Stylianos Chrysostomidis, who was at the scene during his interview with RT, described current in the country as “war”.  

“It is a war with helicopters, with motorbikes, with Molotov [cocktails] and chemical stuff.”

The protests outside the parliament building have already been compared to the Arab Spring uprisings. And what is interesting is that now these protests are happening in countries with established democracy like Greece and Spain.

Economic analyst and international lawyer Nick Skrekas says that Greeks are very disappointed, and many of those who gathered in the streets would like to see new regime in the country. 

“I think there are many that would like to see completely new political system with fresh faces, and no one is holding to powerful interests inside and outside the country. There are some parallels which can be drawn with the Arab Spring,”he added.

Many people consider Greece the birthplace of democracy, but what people are seeing is the widening in the gap between what the government is implementing and what the electorate is calling for.

“In the 30–35 years of proper parliamentary democracy in Greece there has never been a government facing such a crisis of legitimacy,” says one of the protesters. ”It’s an open political crisis here. The government is trying to govern, but the people refuse to be governed in this way.”

When you have literally millions of people taking to the streets and protesting against some measures and the government is still pushing ahead with them, at that point you do not really have democracy anymore.

And the message of the protesters is very clear: They are out of jobs, they are out of pocket and they are out of patience.

Meanwhile, British MEP Nigel Farage does not think that another 10 billion euros should be used to bail out Greece a year after it was last done. 

“There is always an alternative. A Greek default and the return of the drachma would mean a very substantial devaluation for Greece, and it would mean many of these banks taking serious hits, and it would question the ability of the European Central Bank itself. It is better sometimes in life to face up to the fact that you have done something that is wrong. It is fundamentally out of kilter that the Greek and German economies can ever be together in an economic and monetary union," Farage said. "All we are doing is pouring good money after bad. It is time to face the reality and take the hit,” he added.

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The Likelihood of a US Default

After 6 straight weeks of losses, it looks like the US stock market is ready for a winning week. The Dow rose 123 points. Oil stayed below $100. But the yield on the 10-year T-note rose above 300 basis points.

And here's the latest from The Financial Times:

"S&P cuts Greece's rating one step closer to default."

Want to earn a nice yield on your money? Buy a Greek 10-year bond. It will pay you 17% interest. For a while.

But wait. You say you can't trust the Greeks? You say they're not good for the money?

"The Greek political landscape is ingrained with vested interests, endemic kleptocracy and bribery," writes John Sfakianakis, chief economist of Banque Saudi Fransi.

Unemployment is around 20%. People dodge taxes. Government workers don't show up for work. Households spend too much. And the government is going into debt so deeply and so rapidly it can't possibly get out.

Hey... It's just like the US! No, the US is worse, says Bill Gross. CNBC:

When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco's Bill Gross told CNBC Monday. Much of the public focus is on the nation's public debt, which is $14.3 trillion. But that doesn't include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.

The government also is on the hook for other debts such as the programs related to the bailout of the financial system following the crisis of 2008 and 2009, government figures show.

Taken together, Gross puts the total at "nearly $100 trillion," that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won't find a solution overnight.

"To think that we can reduce that within the space of a year or two is not a realistic assumption," Gross said in a live interview. "That's much more than Greece, that's much more than almost any other developed country. We've got a problem and we have to get after it quickly."

How do you like that? He didn't even mention the fact that Americans can't sell their houses to Germans or turn their country into a retirement home for sun-deprived Scandinavians.

But wait, if the US debt situation is as bad or worse than Greece's, how come the yield on US 10-year notes isn't 17% too?

Therein may lay an even bigger opportunity. What if Mr. Market were making a mistake?

Everybody knows that Greece always defaults on its debt. It's been in default, one way or another, for about half of its life - ever since it gained independence in 1828.

But the USA? If you can't trust the US to pay up, who can you trust?

So, investors may feel secure lending money to the US...even though the fundamentals are little different from those of Greece. They may think: "the US never defaults."

And yet, if there's one thing we can learn from financial history it is that nobody is immune from financial errors. Everyone gets greedy and stupid from time to time. And no paper currency lives forever.

Right now, you can earn 17% on Greek debt or 3% or US debt. We'll make a prediction that you can take to the bank: that spread will narrow.

The inflation rate in America is a matter of debate. But even the US government's own number crunchers put it at about 5% for the first quarter of this year. That makes the real return on US 10-year notes a MINUS 2%.

How long will investors content themselves with a negative return? Maybe for a while. But not forever. They usually want a real return of about 3%, with no threat of default. A safe return, in other words.

And when they realize that the inflation rate in the US is really 5%...and that the return on US debt is NOT safe...they're going to want a higher interest yield.

Say 5%. Or 7%. Or 10%.

Then, all hell is going to break loose.

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