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Protests Rage in Greece Over Prospect of More Austerity

The finishing touches are being put on the plan to bail out Greece for a second time. Greece’s creditors would need to agree to a delayed repayment schedule, which would be a form of default euphemistically referred to as “restructuring.” This would come in the form of a swap, where creditors would turn in quicker-maturing debt in exchange for debt with a longer time horizon. Officials trying to broker this deal face trouble convincing credit rating agencies that this doesn’t represent a default on Greek debt or a “credit event,” which would trigger certain credit default swap contracts.

Another major hurdle to all of this is the European Central Bank, which has rejected debt restructuring in the recent past. They apparently still reject it. If they don’t participate, then the span between Eurozone leaders’ unwillingness to float Greece money and the creditors’ (mostly European banks) unwillingness to take haircuts could prove too great to reach any deal at all.

But while talks continue on an ultimate solution, it’s pretty likely the Greek people would have to again suffer with another round of austerity. Creditors would need inducements to accept this deal, and they would almost certainly come out of the hide of the Greek public, in the form of the banks assuming greater control over austerity measures and government operations, which could be a real violation of the country’s sovereignty. And this has led to another set of protests in Athens from an austerity-weary public.

ATHENS — Thousands of Greeks took to the streets of Athens late Sunday on the 12th consecutive day of protests against the government’s draconian austerity measures.

Over 50,000 people, according to police estimates, thronged the capital’s central Syntagma square for a peaceful demonstration responding to calls for gatherings across Europe. Some 3,000 people also gathered in Greece’s second largest city, Thessaloniki, according to the police.

“Thieves, thieves,” the crowd chanted waiving Greek flags, but also flags from Spain, Portugal, Tunisia and Argentina.

“You got the disease we got the solution. Revolution,” one banner proclaimed.

These protests have grown over the past week, as the threat of another solution imposed on the country becomes greater. Anger at the EU, the IMF and the ECB is building. At this point, I would say anything is possible.

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David Dayen

David Dayen