Wednesday, June 15, 2011

Violent protest in Athens and other signs of economic doom

Three headlines in today's news do not bear well for the 'first world' as we know it --

Greek Prime Minister George Papandreou offered to step down late Wednesday after protests against austerity cuts and government bailout in downtown Athens turned violent, as demonstrators demolished walls and threw bricks and furniture and officers in riot gear struggled to regain control of the city's main square.

Meanwhile, US Federal Reserve Chief Ben Bernake warned that the US must raise its debt ceiling if it wants to avert economic disaster. According to Bernake:
"Failing to raise the debt limit would require the federal government to delay or renege on payments for obligations already entered into."
"Even a short suspension of payments on principal or interest on the treasury's debt obligations would cause severe disruptions in financial markets and the payments system."
In addition, Mr Bernanke said US government debt risked being downgraded, creating fundamental doubts about the nation's creditworthiness. Long-term damage to the "special role" of the dollar and of treasury securities in global markets was also possible, he said.
Instead of allowing a default, Democrats and Republicans needed to develop a credible long-range plan to rein in the nation's budget deficit, Mr Bernanke added. An increase of $2.5 trillion would allow the government to operate until early 2013. (BBC)
And according to Reuters, the economic prospects of the "rich-world" have darkened in the wake of a US slowdown and fiscal problems in Europe.

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