Gathering Clouds Over Greece from the CFR

Gathering Clouds Over Greece

Greek Prime Minister George Papandreou is set to announce a broad cabinet overhaul (FT) in an effort to avert a political crisis and garner support for a new round of austerity measures, required by the EU and IMF as a condition for the €110 billion financial aid package Greece received last year.

However, top lawmakers in Papandreou's ruling Socialist Party resigned in protest (Reuters) Thursday amid nationwide strikes and violent anti-austerity demonstrations in Athens, complicating the prime minister's efforts to form a new government and build enough momentum to pass an austerity package that includes €28 billion (DeutscheWelle) in spending cuts and tax hikes.

The upheaval comes as the EU debates the terms of a second Greek bailout (DerSpiegel), which could run upwards of €120 billion. Germany is demanding that any further financial aid for Greece require private bondholders to take losses, a position that is at odds with that of the European Central Bank.

Meanwhile, world stock markets fell sharply (Guardian)Thursday as investors speculated on the likeliness of a Greek debt default.