The news from Greece continues to get worse. As protests and demonstrations against the new austerity measures break out across the country, the euro was shaken yet again as investors worried about Greece.
This time, though, investors aren't worried about the math; the Greek cabinet has agreed to the latest round of spending cuts and the IMF and the major European economies, including the foot-dragging Germans, are all committed to the multi-year, multi-billion euro bailout.
What worries investors now is whether the Greeks will stand for it. Will Greek society resist the imposition of savage cuts in salaries and public services, and will the government's efforts to reform the public administration and improve tax collection (while raising taxes) actually work?
The answer at this point is that nobody knows. On the plus side, the current Greek government is led by the left-wing PASOK party. The trade unions and civil service unions not only support PASOK; in a very real way they are the party. Although the party's leader George Papandreou is something of a Tony Blair style ‘third way' politician who is more comfortable at Davos than in a union hall, the party itself is one of Europe's more old fashioned left wing political groups, where chain-smoking dependency theorists debate the shifting fortunes of the international class war. The protesters are protesting decisions made by their own political leadership; this may help keep a lid on things. If a conservative government had proposed these cuts, Greece would be much nearer to some kind of explosion.