In Greece, default looming large again

The Greek prime minister has said that, without key international rescue loans, the debt-ridden country might default on its sovereign debt in March. "Without the agreement with the troika (the Eropean Union, the International Monetary Fund, and the European Central Bank) and the resulting funding, Greece faces an immediate danger of disorderly default in March," Lucas Papademos told union leaders and employers' federations in Athens on Wednesday. He urged defiant union leaders to accept further income reductions targeting workforces. Papademos said decisions the country could make before a planned mid-January visit by debt inspectors from troika would determine whether the country can hold onto the euro or it should return to its pre-2002 currency, the drachma. The international inspectors will review reviewing the progress of Athens' deficit-cutting plans to decide whether it should be presented with a next tranche of aid money, EUR eight billion (USD 11 billion), before the country goes bankrupt. Greece's debt stands at EUR 340 billion (USD 440 billion) -- a sum, which equals around EUR 31,000 debt per person in the country of 11 million people. The country has the highest debt burden in proportion to the size of its economy in the entire 17-nation eurozone. The country has so far received its first batchof international bailout equaling EUR 110 billion (USD 142 billion), which was agreed on back in May 2010. It expects to receive a second such rescue package amounting to EUR 130 billion (USD 169 billion) in order to keep its economy afloat and avoid bankruptcy. The second allocation of bailout funds, which was approved by EU leaders in October, 2011, will be provided contingent on Greece taking stricter measures towards cutting its huge deficit and overhauling its economy. The Greek parliament passed its latest round of austerity measures, which include cuts in public sector salaries and pensions as well as tax rises, in early December following the formation of an interim government led by Papademos. However, the country's biggest labor union, the GSEE, has asserted that it would not accept any further income losses, saying the Greeks had suffered enough over two years of harsh austerity measures. Many Greek public sector employees, including pharmacists, doctors, and industry workers, have held massive strikes to protest against the cost-cutting measures and liberalization policies pursued by the cash-strapped government. Europe plunged into a deep financial crisis in early 2010. Insolvency now also threatens heavily-debt-crippled countries such as Portugal, Italy, Ireland, and Spain.