Greece – The Domino Effect

European officials have so far failed to agree on a rescue plan for debt-ridden Greece. Prime Minister George Papandreou will name a new Greek government and call a vote of confidence in parliament as he seeks to pressure opposition lawmakers to back an austerity plan aimed at securing a new bailout.

Papandreou sought to reassert his authority in a televised address last night hours after police used tear gas to break up protests in central Athens and media reported that he was in talks to step down in favor of a unity government. A crowd of 8,000 protestors remained outside Parliament late into the evening, according to police.

The European Central Bank said yesterday the threat of the Greek debt crisis spilling over into the banking sector is the biggest risk to the region’s financial stability.

“Greece could have a contagion effect,” ECB Vice President Vitor Constancio said at a briefing in Frankfurt yesterday, when presenting the bank’s semi-annual Financial Stability Review.
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