Greek Protests Intensify, But So Is Pressure on Europe's Banks
Violent protests in Greece have added to tensions over the debt crisis affecting Europe.
Tens of thousands of people marched in Athens Wednesday to protest the government's latest proposals for budget cuts. The deep spending cuts have been demanded by the nation's creditors.
Many government workers and union activists oppose the measures, which include plans to cut thirty thousand government jobs. Greece also wants to cut wages for government workers and increase taxes.
Socialist Prime Minister George Papandreou has struggled to win support from his own party to pass the unpopular legislation. And public anger has been widespread. The two largest labor unions in Greece have called for another strike on October nineteenth.
This week, the Greek government announced that it would not meet the deficit reduction targets it had promised its lenders. This increased doubts that Greece will be able to pay its creditors. And it has European bankers worried. Many European banks hold Greek debt securities.
Finance Ministers from countries using the euro met in Luxembourg early this week to discuss issues including the Greek debt crisis. European Union Monetary Affairs Commissioner Olli Rehn said it is important to examine the measures that Greece has in place.
OLLI REHN: ""It seems that Greece is likely to miss the target this year, next year and concrete measures agreed to so far are going a long way to meet all the fiscal targets. As I said, it is essential now that we will assess the measures, we will review the figures."
Olli Rehn says it is too early to tell if Greece will be able to meet its deficit reduction targets. European finance ministers put off a decision on whether to provide an eleven billion dollar loan to Greece that is part of a rescue plan agreed to last year.
The Greek debt crisis has already severely hurt the French-Belgian bank Dexia. The bank has lost more than four hundred million dollars because of Greek debt. But those losses could increase if Greece fails to pay on its debts in the coming months.
Dexia is one of Belgium's biggest lenders. Now French and Belgian officials are discussing how to split the bank up and create a so called "bad bank" that would hold its worst assets.
Dexia is not alone. Two big banks in France, BNP Paribas and Societe Generale, have reported losses of more than one billion dollars.
On Thursday, the European Central Bank said it would offer new emergency loans to Europe's banks to help them deal with losses from Greek debt.