Fear of "contagion" spreads across Europe as Greek parliament passes austerity bill (+ analysis and background); High turnout reported in British election; Australia and India talk free trade; US turns to Pakistan for help in bomber case; and more
Top of the Agenda: Euro Drops Amid Greek Violence
The euro dropped to fifteen-month lows (FT) over fears that contagion from the Greek fiscal crisis would spread to other eurozone countries and threaten the global economic recovery. Riots in Athens, where three people died, highlighted the social and political implications of severe budget cuts needed to tackle unwieldy deficits. Meanwhile, investors paid significantly higher yields on a 2.4 billion euro sale of five-year Spanish bonds.
Analysts warned that if Greece's social unrest transformed into a longer spate of violence, it could intensify financial market jitters and undermine the government's resolve (NYT) to implement austerity measures.
Greece's parliament passed (WSJ) the three-year, 30 billion euro package of austerity measures after an all day debate.
Analysis:
In the Guardian, Joseph Stiglitz says Europe must implement a fiscal framework if the euro is to survive, since the monetary union currently has no way of helping countries with severe problems.
CFR's Benn Steil argues in the Financial News that blaming the euro for Greece's woes is misguided.
CFR's Sebastian Mallaby says that the eurozone's twin temptations--to borrow too much and to raise wages too much (Washpost)--always threatened the cohesion of the currency union. If Greece is rescued from its follies, these temptations will become stronger.
Background:
This CFR Backgrounder offers fiscal profiles of Greece, Portugal, Spain, Ireland, and Italy.
PACIFIC RIM: Thai PM Rejects Negotiations with Protesters
Thai Prime Minister Abhisit Vejjajiva rejected calls by anti-government protestors (FT) to negotiate the terms of his "reconciliation road-map" and clarify when he intended to dissolve parliament.
Australia: Australia and India are negotiating a trade deal (SMH) that could increase Australia's GDP by $45 billion in the next twenty years and decrease its reliance on China.
ELSEWHERE:
Pakistan Help Requested for NY Bomb
High Turnout in British General Election
This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org.