A fire at an overcrowded refugee camp on the Greek island of Lesbos has sparked riots. The charred remains of an Afghan women were found after the blaze.
Over 13,000 people are crammed into the compound, which has only facilities for 3,000.
“The situation was totally out of control,” said the local police chief, Vasillis Rodopoulos, describing the riot. “Their behaviour was very aggressive, they wouldn’t let the fire engines pass to put out the blaze, and for the first time they were shouting: kill police.”
Riots have increased calls for refugees to be moved to the mainland.
Many islands in the Mediterranean close to Turkey has seen a sharpe rise in migrants desperate to reach Europe.
Germany’s finance minister Wolfgang Schaeuble, has admitted for the first time that Greece will need another bailout. Germany had been reluctant to publicly say this ahead of the countries elections in September. Any new bailout will be very unpopular in Germany.
However, it is believed that a third bailout will be considerably smaller than the previous two the country has received.
There were strikes and anti-austerity rallies across Europe on Wednesday. General Strikes were called in Spain and Italy. Rallies were also held in France and Greece. The protests in Spain ended as police fired rubber bullets, in violent clashes between protesters and police. In Italy at least 17 police officers were injured as protests in Rome, Milan and Turin turned violent.
Lawmakers in Greece were able to push through a bill worth 13.5bn-euro ($17.3bn). The bill includes tax hikes and pension cuts. These are needed before Greece can secure the next instalment of their bailout money from the EU/IMF.
The latest austerity bill was passed by only three votes, and has seen violent protests in Athens as a result.
The saga of austerity, recession and bailouts continues in Greece. Today the nation has been brought to a standstill as the unions call a 48 hour General Strike. The strike is ahead of a crucial vote on more austerity measures, the package would see a further €18bn of cuts and reforms. The measures are required if Greece is to receive the next instalment of bailout money. Greek prime minister Antonis Samaras is under massive pressure to carry the vote through parliament. He has only a slim majority, and politicians are deeply divided over the issue.
The EU is concerned that Antonis Samaras ruling coalition could fall apart, as a collapse in government would most likely see the far left and far right make major gains – both sides are opposed to the EU/IMF imposed austerity conditions.
The far right, Golden Dawn party, has capitalised on the problems in Greece, making huge gains across the country. In some areas where crime is out of control the Golden Dawn lead groups patrol the streets and attack migrants, who they see as the problem. The overstretched police have failed to stop the attacks.
Once prosperous areas of Athens are now “no go” areas as gangs take control and crime increases. Residents are now looking to the Golden Dawn to protect them.
This week leaders from across Europe have been meeting to discuss the continued crisis across the eurozone. The talks have centred around increasing integration of the eurozone banking sector. The talks have been hailed as a success by French President Francois Hollande, and other European leaders, after agreement was reached as to increasing integration of the banking system. The Single Supervisory Mechanism (SSM) will be put it place by January 1st 2013, and will make it possible for the new European Stability Mechanism to be used recapitalise European banks, without increasing sovereign debt. The SSM is thought to be the first step towards a full banking union across the eurozone.
This is particularly important for Spain, who’s banks are still a major cause for concern, and many hope they will be able to hold out until the SSM is in place.
Germany has voiced concerns over the speed of banking integration, warning that the road map for the setting up of the SSM may not be long enough, due to the complex legal issues that have to be worked through.
The UK is also uneasy about the prospect of a full banking union within the eurozone. Although Britain are not part of the euro, the City of London by far has the largest banking sector in Europe, and it is feared that in any future decisions about financial regulation the UK will be outvoted.
However, the Summit was overshadowed by the continuing chaos in Greece, with fresh anti-austerity protests, in which a man died. Greece could run out of money by the end of November. The EU are awaiting a key report from the “troika” of international lenders – the ECB, European Commission and International Monetary Fund. The findings of the report will be key in deciding whether or not to give Greece any more money.
The German Chancellor Angela Merkel has been visiting Athens today, for the first time in three years. She comes at a time when Greece is looking for the next €31.5bn tranche of aid. Without the aid Greece will run out of money by the end of November. Recent figures show Greece has been in recession for 5 years, it’s economy has shrunk by 22%, and youth unemployment is currently at 55%.
Mrs Merkel was met with angry protestors and required 6,000 police officers to protect her. Greeks, and the Greek media, greeted her with Nazi insults.
Both the EU and IMF have been insistent that Greece steps up austerity measures in order to receive the money. However, Mrs Merkel came to Athens with a softer tone than Athens has previously heard.
There has been mounting pressure on Germany not to allow Greece to default, thus forcing her out of the eurozone. If Greece were to exit, then Spain would likely follow, and the euro would break up. Also tougher austerity measures could result in the collapse of the pro-Europe ruling coalition. If the Greek government collapses it would likely be replaced by either a far-right or far-left alternative. That could destabilise the entire region, affecting the Balkan region and Turkey, something no one wants to see.
It is likely Greece will receive the next instalment of money, however the €31.5bn will only keep Greece afloat a few more months. And as time passes both Spain and Portugal are edging closer to requiring more bailouts.
PIMCO (the world’s largest bond fund) chief, Mr Gross, said that the United States must cut spending or raise taxes by 11pc of gross domestic product GDP over the next five to ten years, in order to preserve it’s role as a financial safe haven.
If we continue to close our eyes to existing 8pc of GDP deficits, which when including Social Security, Medicaid and Medicare liabilities compose an average estimated 11pc annual ‘fiscal gap,’ then we will begin to resemble Greece before the turn of the next decade,”
The warning comes after Moody’s has also warned the US that if it fails to control debt, then it will loose it’s AAA rating.
As the debt crisis continues in Europe, many of the same arguments are being made within the eurozone countries as to the best way forward. Italy and Spain are both edging closer to needing a bailout; and it will not be long before Greece will be requiring another bailout package.
However, the arguments between growth and austerity continue. Germany are reluctant to continue to pay the bills, without the proper checks in place. But will Spain and Italy be prepared to sign away political autonomy?
Now George Soros has said “Germany must back growth or leave the euro”. To back growth means Germany continues to bailout and lend more money – increasing indebtedness. Germany has made it clear it desires growth, but not by creating more debt.
However, if Germany were to leave the euro it would enable the Euro to devalue and ease the economic pain in the struggling nations.
The President of the European Central Bank, Mario Draghi, had promised that the ECB would do “whatever it takes” to save the Euro.
However, after the latest round of talks his promises sound rather shallow.
Instead of a firm plan of action, yet again difficult decisions have been postponed. Draghi has hinted that the ECB will buy up Spanish and Italian bonds on a scale not yet seen, though no concrete plans have been announced. Draghi’s “whatever possible” at present is three teams of ECB experts looking at what can be done.
In the meantime: Spain, Greece and Italy are quickly running out of time.
Now economists are looking closely at the French economy; France numbers are pointing towards the same outcome as Greece. France currently has an eye wateringly high debt to GDP ratio: 86.1% of GDP (146% if ECB liabilities and bank guarantees are included). Although the UK and America have similar levels of indebtedness they have the mechanisms to do something about it. They also have far more political will to change the socialist policies causing the problem.
In France there is no political will at present, to change the labor laws, and encourage free enterprise. Since coming to power in May, Francois Hollande has already reduced the pension age, increased taxation on the wealthy, increased public spending, and increased the money governments are to pay to the EU. He has also opted out of EU regulations to cap nations budget deficits.
If France continues on this present course the economic death spiral seen in Greece will come to France some time soon.
WASHINGTON (AP) — A slim victory for the main conservative party in an election in Greece should relax fears that a country will stop using the euro for the first time and possibly unleash global financial turmoil.
But when it comes to Greek politics – and European economic policy – it’s never that easy. So the bumpy ride for financial markets isn’t over yet.