Angry crowds stormed through Athens on Wednesday, hurling rocks and firebombs to protest deep budget cuts aimed at fixing the country's debt crisis. Prime Minister George Papandreou reshuffled his cabinet, and even offered to quit, in a dramatic attempt to shore up support for the painful economic fixes, which are being imposed by the European Union as the price for a bailout. But with public resistance turning violent, is Greece's financial disaster spinning out of control?
Many investors certainly think so: Stocks are swooning globally over fears that Greece's troubles "might infect the rest of Europe," says Adam Shell at USA Today. If America's trading partners in Europe get hit by "a negative ripple effect," it will only stoke fears of "a double-dip recession at home," which are already growing thanks to weak data on housing, unemployment, and manufacturing.
"Stock market resumes slide as fears intensify"
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Greece can still claw its way back: "Greece is teetering on the edge," says The Economist. "Worse, the austerity measures and reforms that Papandreou has pushed through are not visibly making anything better." But, if you look closely, Greece's economy actually grew a bit in the first quarter of 2011, and the popular tourist destination is managing to draw more visitors this summer than last. If Greece sticks to its recovery plan, it should be a lot better off by next year.
All Greece can do is postpone the inevitable collapse: Greece could face a "social explosion" any day now, says Gavin Hewitt at BBC News. "If the Greek people simply refuse to accept further austerity, then default looms." Even if the government manages to cut public jobs and secure enough new loans to pay the bills, that will only increase the people's misery — and middle-class families are already lining up at soup kitchens. The best Greece can hope for is putting off the disastrous reckoning a few more years.
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