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Contagion fears from Greek crisis

Tuesday, May 24, 2011 - 02:15

May 24 - As Greek unions threaten to intensify backlash against Athens' attempt to control the economy, ratings agency Moody's warns a Greek debt default would hurt other vulnerable euro zone states. Penny Tweedie reports.

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Greek headlines read "Plundering of the People " and "Shock and awe for the lives of all Greeks". They follow Greece's decision to make a further six billion euros worth of cuts to shrink its budget hole... And as unions warned of an explosive backlash by workers and the public. The Civil Servants Confederation says the government has failed to handle the crisis properly. SOUNDBITE: Ilias Iliopoulos, General Secretary of Adedy, saying: (Greek) "There is a social explosion coming as long as this policy continues to contain more measures against the people. There will be a public resistance, a public reaction with phenomena that will be uncontrollable." But as the unions anger grows - so do the concerns of economic watchdogs. After Greek politicians held crucial meetings to decide a way forward Moody's warned a Greek debt default would hurt other peripheral euro zone states. It's the third ratings agency to suggest any kind of restructuring would constitute default. Markets have already put pressure on heavily indebted euro zone countries as investors worried about heightened risks in Spain, Italy and Belgium. Citi Index market strategist, Josh Raymond, explained contamination fears were the main problem. SOUNDBITE: Josh Raymond, Market Strategist, Citi Index, saying: (English) "Confusion creates uncertainty in the market and that's why you are seeing stocks soften and the euro severely weaker and as long as there is no resolution in terms of what path Greece is going down in the near term in terms of aid from EU and the IMF but also in the terms of what they are doing as well obviously they came out on Monday with some further austerity - don't think traders and investors are convinced that Greece has a firm hold on the situation. " Greece is proposing a massive privatisation programme. The Public Power Corporation may be put up for sale as may Athens Railway station. Other transport companies and Athen's International Airport are also on the list. As is Greece's Mediterranean port Piraeus - the hub of its extensive ferry network. The Greek government hopes 50 billion euros could be made from the sell-off. Penny Tweedie, Reuters.

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Contagion fears from Greek crisis

Tuesday, May 24, 2011 - 02:15