Greece has said its budget deficit will be cut in 2011 and 2012, but it will still miss targets set by the European Union and International Monetary Fund. The announcement has raised fears that drastic steps taken to avert bankruptcy may not be enough.
Meanwhile, in the United States, police arrested more than 700 protestors camped out in New York's financial district over the weekend, demonstrating against what they view as corporate greed and a broken economic system. But the arrests have not deterred the movement, with demonstrations resuming in New York and sympathetic protests taking place in other cities across America, including Los Angeles and Boston.
Greece and Eurozone Woes
Greece's 2011 deficit is projected to be 8.5 percent of GDP, down from 10.5 percent in 2010 but short of the 7.6 percent target. The Greek government, which on Sunday adopted its 2012 draft budget, blamed the shortfall on deepening recession.
GDP is predicted to fall by 5.5 percent this year. Government sources said it was expected to shrink 2 to 2.5 percent next year. Those numbers are in line with recent forecasts by the IMF, but much worse than predictions used to calculate the previous bailout in July, which anticipated Greece posting 0.6 percent growth next year.
The shortfall in the 2011 deficit target means Greece would need almost €2 billion extra just to finance its expenses for this year. It also means additional emergency tax hikes and wage cuts announced in the past two months have not been enough to put Greece's finances back on track.
The figures come as inspectors from the IMF, EU and European Central Bank are in Athens to decide whether Greece should get a key bail-out instalment. Greece needs the €8 billion (US$10.9bn) instalment to avoid going bankrupt next month.
Bankruptcy would put severe pressure on the eurozone, damage European bank finances and possibly have a serious knock-on effect on the world economy.
To persuade the inspectors to release the next tranche of loans, Greece has promised to raise taxes, cut state wages and speed up plans to reduce the number of public sector workers by a fifth by 2015.
On Sunday, Greece approved a measure to put 30,000 civil service staff on partial pay with possible dismissal after a year. But the move illustrates the difficult balancing act Greece faces. Two-thirds of the workers affected are due to retire soon anyway, and the rest are from state firms that are merging or being shut down. This is an attempt by the Greek government to soften the blow, but it also saves less money than the international inspectors would like.
The inspectors are widely expected to give a green light to the release of the next instalment of aid to avoid plunging the eurozone deeper into turmoil. But all eyes will be on their forecasts for 2012-2014. If the inspectors conclude Greece's recession will continue to be worse than predicted, European banks may be forced to take deeper losses.
Eurozone finance ministers are expected to discuss Greece at a meeting on Monday, but will be waiting for the inspectors' report before taking any new decisions.
Greece's economic woes have caused civil strife in the country. The government's austerity measures have proved deeply unpopular. Strikes and demonstrations are continuing in the country, particularly among public sector unions.
Report: Greece to miss budget deficit targets in 2011 and 2012 [BBC News, 2 Oct 2011]
Report: Greece to miss deficit targets despite austerity [Reuters, 2 Oct 2011]
Occupy Wall Street Protests
In New York, over 700 demonstrators were arrested during a confrontation with police on the Brooklyn Bridge. They were arrested after leaving the pedestrian sidewalk and blocking the road. Most were released after receiving a warning.
But the arrests have not dampened the crowd's enthusiasm. The movement calls itself Occupy Wall Street, a criticism of perceived corporate greed and the practices of banking institutions which serve the wealthy at the expense of the rest. The protests began on 17 September, fuelled largely by social media, and have begun to draw widespread attention and similar protests in other US cities.
Hollywood celebrities including director Michael Moore and actress Susan Sarandon have visited protesters to offer encouragement. Powerful labour unions have also offered their support.
Organisers say their protest is inspired in part by the Arab Spring demonstrations in the Middle East.
Report: Arrests don't deter Wall Street protesters [USA Today, 2 Oct 2011]
Analysis: Covering the March, on Foot and in Handcuffs [New York Times, 2 Oct 2011]