Greece's Parliament is expected to take a confidence vote on the country's political leadership at around 5 p.m. EDT Tuesday. The vote will not only decide the fate of Greek Prime Minister George Papandreou; it will influence the fate of the European Union and the U.S. economic recovery.
If Papandreou gets voted out of office, Greece will be significantly less likely to implement the austerity measures that European financial ministers are demanding by July 3. If Greece does not authorize the required budget cuts, it could fail to secure bailout funding from Europe and face default. A default by Greece has the potential to trigger a chain reaction of European bank failures and government defaults, which would pose a threat to American banks' willingness to lend.
It seems more likely that Greece will be able to force through budget cuts in time to receive new bailout funding from Europe if Papandreou is able to stay in office. His new financial minister recently has taken a harder line on the budget to demonstrate the country's determination to meet Europe's demands.
Check back here for further updates on the situation in Greece.
06/21/2011 7:39 PM EDT
Police Fire Tear Gas On Protesters
The vote of confidence still did not calm the streets of Athens, as police fired tear gas to disperse crowds of protesters, according to BBC News.
06/21/2011 7:36 PM EDT
Relief, Tinged With Anxiety
Investors and other stakeholders briefly celebrated after George Papandreou's government won a vote of confidence on Tuesday, before agonizing again about the ultimate test for the Greek government: passing new austerity measures by the July 3 deadline in order to receive a bailout from Europe and avoid default.
Papandreou's thin margin of victory -- only five votes out of 300 -- highlights the challenges that Papandreou will face as he tries to corral a majority vote for widely unpopular measures to slash the budget by raising taxes, selling state assets, and cutting social services.
"This is the feel-good moment, but they still have to pass the austerity package and implement it. And the Greek government's performance in the past does not leave me too optimistic that these deficit targets can be met," Brian Dolan, chief strategist at Forex.com, told Reuters.
The euro briefly rose against the dollar immediately after the vote of confidence -- only to slump again as the remaining difficulties ahead became more apparent.
In the same fashion, Nour Al-Hammoury, chief Middle East markets strategist at Markets.com, tweeted exuberantly, "YES - GREECE GOVERNMENT WINS VOTE OF CONFIDENCE."
Five minutes later, Al-Hammoury added, "careful here, its not about the confidence, its all about the austerity plan next Tuesday #Greece." (As reported earlier, the austerity plan actually will come to a vote next Thursday, on June 30.)
Business Insider deputy editor Joseph Weisenthaltried to have the last word. "That was fun folks, eager to do this again on June 30 for the austerity vote, and then on August 1 for the US debt ceiling vote," he wrote on Twitter.Greece was not the only European political entity to receive trenchant criticism for disunity on Tuesday. U.S. Treasury Secretary Timothy Geithner called for more unified leadership from the European Union before Greece's vote of confidence on Tuesday, in a critique that seemed to be aimed at France and Germany.
"I think it is very hard for people who invest in Europe—within Europe and outside Europe—to understand what [Europe's] strategy is when you have so many people talking," Geithner said, according to the Wall Street Journal. "The simple rule of crisis management is you want to have a simple, clear, unified declarative strategy."
For further news and analysis of the Greek debt crisis tonight, please refer to these articles and blogs:
A live-blog by The Guardian in London.
An article by The New York Times: "Greek Parliament Passes Critical Confidence Vote."
An article by Reuters: "Greek government survives vote as protesters chant insults."
An article by Bloomberg News: "Papandreou Wins Confidence Vote, Raising Rescue Chances."
A historical look at the Greek debt crisis by The New York Times.
06/21/2011 6:23 PM EDT
Greek Parliament Will Vote On New Austerity Package On June 30
The Greek government won the vote of confidence with the support of only 52 percent of Parliament, according to Reuters. 155 members of Parliament voted for the current leadership, 143 voted against them, and two abstained.
Greek Prime Minister George Papandreou will submit a new package of budget cuts to Parliament on June 30 -- three days before the July 3 deadline set by European financial leaders for Greece to qualify for a second round of bailout funding, according to Euronews journalist Jose Miguel Sardo and Business Insider deputy editor Joseph Weisenthal.
06/21/2011 6:00 PM EDT
GREEK GOVERNMENT WINS VOTE OF CONFIDENCE
Greek Prime Minister George Papandreou has won the vote of confidence in the Greek Parliament, Reuters reports.
06/21/2011 6:00 PM EDT
Greek Prime Minister Seeks To Blame Opposition for Disunity
Greek Prime Minister George Papandreou appeared to try to place the blame for the current debt crisis on the opposition, blaming "the political class" for Europe's recent ultimatum to Greece: implement steeper budget cuts in the next two weeks or risk defaulting.
“If we give up in the middle of the road, history will judge us harshly,” Papandreou said as a three-day debate in Parliament drew to a close today. “The impression the political class in this country gives is that it hasn’t understood the seriousness of the crisis.”
The following live news analysis and updates appeared on Twitter:
"Papandreou is laying all the blame squarely at the door of previous government. Will not help with national unity required by EU/IMF." - Lorcan Roche Kelly, chief Europe strategist at Trend Macrolytics
"The Hellenic Parliament has 300 seats; Papandreou needs simple majority of 151 to stay; PASOK has 155 seats." - Daily FX (PASOK is the Socialist Party, which Greek Prime Minister George Papandreou leads.)
"#Papandreou's government could get majority 155 votes on 300 mp's. Gov reshuffle, nomination of new Finance min helped to gather socialists." - Euronews journalist Jose Miguel Sardo
"#Papandreou knows that is speech is being covered by international media. His speech was addressed not only to greeks but to #EU." - Sardo
"The balance of the #Eurozone also lays in the hands of greek mp's. Opposition though will still push for early elections. #Greece." - Sardo
"Big issue is to know if winning today's confidence vote will allow #Papandreou to have same support to new austerity pack the 30th #Greece." - Sardo
06/21/2011 5:32 PM EDT
Greek Prime Minister Ends Speech With Declaration: "I Started This Fight And I Will Not Step Out"
Greek Prime Minister George Papandreou has finished his 35-minute speech, and the confidence vote has now begun.
During his speech, Papandreou implored Parliament for unity under his leadership. According to Euronews journalist Jose Miguel Sardo, he said the following:
"We still stand on our feet, with great sacrifices. There is light at end of the tunnel."
"Brazil has managed. Argentina has managed. Why would we not be able to manage the current economic situation?"
"I started this fight and I will not step out. Our objectives remain the same, looking for a more fair society."
06/21/2011 5:15 PM EDT
Greek Prime Minister to Parliament: "We Can Promise Better Management"
Greek Prime Minister George Papandreou is delivering his final speech to Parliament in advance of the confidence vote.
According to Euronews journalist Jose Miguel Sardo's Twitter feed, Papandreou has said the following:
"It's a great responsibility to keep on fighting when things are getting tough ... We cannot promise that there will more money for social services, but we can promise better management."
"The Greek people are asking to change political system, but unfortunately the decisions are made through this system ... I am asking all the powers to carry on, without thinking in terms of political costs or temporary popularity."
"Things have to be clear: the international banking system that let the bubble burst encourages tax evasion through tax havens."
"We cannot promise that a lot of people will be hired by the state. That's over."
"I've asked the vote of confidence to the Parliament with specific targets, so we can save the Greek economy."
"The last thing that the country needs is elections."
06/21/2011 5:08 PM EDT
Unemployment Rate For Young Greeks At More Than 40 Percent
A recently posted BBC News video analyzing the situation in Greece features one startling statistic: More than 40 percent of young people in Greece are unemployed.
Barbara Sarrigianopoulous, a 23-year-old unemployed college graduate, told BBC News, "I've been looking for a job since last year. I never found anything yet, and I really need to earn some money so that I can leave the country."
A Greek economist in the video explained that Greeks agreed to swallow the bitter pill of budget cuts 18 months ago and have seen the economy only get worse, so now Greeks are protesting European demands to swallow an even larger dose of the same medicine.
It remains to be seen whether Parliament will side with Greek protestors or European financial leaders at today's confidence vote.
06/21/2011 4:54 PM EDT
Greek Protestors Besiege Parliament
As the Greek Parliament prepared to vote on the fate of the current political leadership at midnight local time, 5 p.m. EDT, more than 20,000 Greek protestors besieged Parliament, Reuters reports.
Chanting slogans against political leaders, the protesters aimed green laser lights at the Parliament building and into policemen's eyes.
"I believe we should go bankrupt and get over with it. These measures are slowly killing us," Efi Koloverou, a 22-year-old student, told Reuters. "We want competent people to take over."
06/21/2011 4:42 PM EDT
Stock Prices Rise Around the World As Investors Expect Good News
Investors around the world seem optimistic about the approach of Greece’s confidence vote, in an apparent bet that current Prime Minister George Papandreou will stay in power.
Global stocks rose Tuesday as confidence grew that Greece will be able to avoid an imminent default on its debt, according to Reuters. Many investors expect that if Papandreou stays in power, he will be able to implement the budget cuts necessary for receiving a new round of bailout funding from Europe.
The Dow Jones Industrial Average rose nearly one percent on Tuesday, and the S&P 500 rose 1.34 percent. European stock markets trended strongly upward in unison: the FTSE 100 in Britain rose 1.44 percent; the DAX in Germany rose 1.89 percent; the CAC 40 in France rose 2.04 percent; the FTSE Eurofirst 300 rose 1.46 percent.
The euro, which would be in existential danger if Greece defaults, also rose in value against the dollar.
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