Athens saw the arrival on Wednesday of inspectors from the European Union (EU) and the International Monetary Fund (IMF), who came to conduct a review of Greece's efforts to combat its rising debt and determine whether the country will receive the next aid tranche in its rescue package. At the same time, workers in the country struck to protest austerity measures that they say are killing the economy.
Reuters reported that the inspectors will also decide whether to improve the terms of the country's loans or to grant yet more aid to stave off restructuring. Investors are convinced that restructuring is nearly inevitable, with that belief built into the pricing of Greece's bonds and their yield to the extent that debt growth may indeed be unsustainable.
Inspectors found that the streets of Athens were almost empty; strikers had shuttered shops and public services, and even brought flights and shipping to a halt. Hospitals were running on limited staff and transportation around the city was impaired as well. Posters lined the streets that said "We can't take it anymore. The rich and the tax evaders should pay."
Greek citizens facing record unemployment, slashed salaries and pensions and increased taxes have struck repeatedly to protest austerity measures that have plunged the country into a deep recession. The Greek economy contracted by 4.5% in 2010 and is in line to contract a further 3% in 2011. Costas Panagopoulos at ALCO pollsters was quoted in the report saying, "We expect massive protests. People feel they can't make ends meet and at the same time believe that these policies are not effective. This is an explosive mix."
Even voices from the financial world are beginning to warn against additional austerity measures as a way out of Greece's mountain of debt. AdvisorOne reported on Tuesday that Mark Weisbrot from the progressive Center for Economic and Policy Research penned an op-ed appearing in The New York Times that said that an exit from the euro zone might be appropriate for Greece. Diego Iscaro from IHS Global Insight was quoted by Reuters as saying, "More austerity is probably not good for the economy, because it will deepen the recession and we don't know whether it is going to produce results in terms of fiscal consolidation." And Georges Ugeux, chairman and CEO of Galileo Global Advisors, said in a Wednesday opinion piece on the Huffington Post that restructuring debt might ward off a European economic collapse, which could occur in the wake of another crisis in confidence.