Is Greece's debt crisis finally exploding?

Anti-austerity protests are turning violent — raising questions over whether the Greek government can save its people from financial catastrophe

Protesters clash with police in Athens
(Image credit: REUTERS/Yannis Behrakis)

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"

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.


Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

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.

"It's all Greek to them"

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.

"Debt-laden Greece mired in anger and humiliation"

Continue reading for free

We hope you're enjoying The Week's refreshingly open-minded journalism.

Subscribed to The Week? Register your account with the same email as your subscription.