Saturday, May 01, 2010

Euro off the hook?

Contrary to the predictions of the doomsayers, it could just be that the Greeks have got away with it, and that the euro is off the hook - for the time being.

The reckoning, though, has yet to come. "Greeks face tax, pensions and pay misery in austerity plan," is what The Times is writing, thus announcing the "austerity package" that is going to have to be swallowed in return for its financial bail-out.

The crisis is given a human face by The Daily Mail and it would be hard not to have sympathy with the people who have been caught up in this. There but for the grace of God go we ... and, even then, it may be our turn soon enough.

As you would expect, the Wall Street Journal gets down to business, telling us that Greece is "very close" to an agreement with its European "partners" and the IMF, having accepted a three-year austerity program which is a precondition for the aid.

The final deal expected to be announced Sunday, by which time the cash buffer will have grown to €120 billion, spread over three years. The package must, however, be accepted by the Greek parliament and, all importantly, by the German legislature (with a possible court challenge in the wings). Despite this, the brief details so far emerging have been enough to quieten the markets. Talk of default is receding.

However, today is May Day and a sharp reaction is expected on the streets of Athens. The Guardian is reporting that the trade unions have pledged to turn traditional the celebrations into "raucous protests." Furthermore, a general strike – the third this year – has been called for Wednesday.

This, I suppose, is going to be the test – whether the deals between the eurozone leaders are going to stand against "popular" dissent, or whether there is enough pressure on the streets to bring the government down and blow the whole thing wide open.