From World Socialist Web Site: http://wsws.org/articles/2011/jul2011/pers-j16.shtml
16 July 2011
Just two weeks ago, the Greek parliament passed a fresh round of austerity measures which will have a devastating impact on the living conditions of Greek workers. The parliamentary vote was preceded by a propaganda campaign by the finance houses, banks and leading European politicians, declaring that the new austerity measures were the only way to assuage the money markets and stabilize the euro.
Since then, the European debt crisis has only intensified. In line with the pattern throughout the crisis, the new round of social cuts and privatizations has been seized on as a benchmark to demand even more brutal attacks on the living standards of the working class in Greece, across Europe and internationally.
One week after the passage of the Greek austerity package, Moody's downgraded Portuguese government bonds to junk status. A few days later a combined assault by hedge funds and rating agencies forced up the interest rate on Italian government bonds and precipitated a near-panic over that country’s sovereign debt.
This move by the financial markets was in response to reports that the austerity program agreed by the Italian government might be watered down in the course of its passage through parliament. Responding to the market offensive, the Italian finance minister announced he was doubling the total of spending cuts to be carried out over the next three-and-a-half years. Within days, a sweeping austerity package for Europe's third largest economy had been passed.
At the start of this week, European finance ministers met in emergency session to discuss means to pacify the markets. In a major concession, they agreed to reverse their existing policy and make available the resources of the European Union bailout fund to directly buy up Greek debt.
The markets reacted to this concession with a renewed offensive. On Tuesday, Moody's downgraded Ireland's debt to junk status, and on Wednesday, Fitch Ratings downgraded Greek sovereign debt, declaring that default by Greece was "a real possibility."
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