I disagree with the Communists, Greece is not heading back to the Middle Ages, but the country still faces a long and arduous road ahead. This is the point that George Soros underscored on CNN's Fareed Zakaria GPS when he said that a Greek bailout won't rid Europe of danger:
Greece's prime minister appealed for calm amid widespread rioting and looting in Athens before lawmakers approved harsh austerity measures needed to keep the debt-ridden country financially afloat.
Lucas Papademos says vandalism and destruction "have no place in a democracy and will not be tolerated."
At least 15 businesses were set ablaze and dozens of shops looted across central Athens in violence after more than 100,000 people demonstrated outside parliament. Dozens of people have been injured and police detained more than 20 suspected rioters.
Papademos said Greece doesn't have the luxury for protests "at these crucial times."
Carrying flags and banners, protestors set bonfires in front of parliament, while a row of riot police tried to block crowds from surging into the government buildings.
At least one three-storey building was entirely consumed by flames while other storefronts -- including an empty movie theatre and bank -- burned as well. There were no reports of people trapped inside.
The violence occurred as lawmakers began a historic vote to slash minimum wages, a bill that may put one in five civil servants out of work. Greek officials say the tough measures are needed to keep the country's finances afloat and assure Greece's position in the eurozone.
The austerity measures are needed to secure a US$171 billion bailout from the European Union and International Monetary Fund. The legislation also approves a bond swap deal to write off half the country's privately held debt.
Tensions escalated in Athens when some of the protestors attacked police with firebombs, fireworks and chunks of marble smashed from the fronts of luxury hotels and department stores. Police responded by firing tear gas into the crowd.
Athens' historic downtown, meanwhile, was strewn with rubble and terrified onlookers sought refuge in hotel lobbies and restaurants.
The violence underscores the unease many Greeks have about stringent austerity measures ordered by fellow Europeans. In order to qualify for bailout money, it must first show creditors it's prepared to undertake massive public sector reforms.
The bill also authorizes private sector wage cuts, pension reductions and civil service layoffs.
Finance Minister Evangelos Venizelos said the cuts were needed if Greece is to survive its financial crisis.
"There are very few such moments in the history of a nation," he said. "Our country has an acute issue of survival."
German Finance Minister Wolfgang Schaeuble was quoted as telling the Welt am Sonntag newspaper Sunday that Greece "cannot be a bottomless pit."
"That's why the Greeks must finally put a bottom in," he added. "Then we can put something in too."
Leftist parties and the small rightist LAOS -- a former junior coalition partner -- had vowed to vote against the new austerity measures.
"You are not trying to save Greece, but a handful of industrialists," Communist Party spokesman Thanassis Pafilis said before the vote.
"And you disgracefully blame the struggling people who created the wealth we have. You are trying to send them back to the Middle Ages. We will not allow it."
Billionaire investor George Soros predicted weak growth and lingering political tension that could shatter Europe’s economic union even if Greece agrees to austerity measures.
“Right now the European Union and particularly the heavily indebted countries face a lost decade,” Soros said. “It might actually be longer than a decade because Japan that had a similar situation with the real estate boom and the banking crisis has had now 25 years of no growth,” Soros said.
“That will create tensions within the European Union, which could destroy the European Union,” he said. “And that’s a real danger.”
Soros spoke in an interview taped on Feb. 9 for CNN’s “Fareed Zakaria GPS,” scheduled to air today.
A package of budget, wage and pension cuts that Greece’s parliment could adopt as soon as tomorrow is “not necessarily going to work in the long run,” Soros said. “But it will certainly buy you another six months of quiet on the Greek front.”
“Greece is a sick situation” that has been “mishandled” by European authorities and “will continue to be an irritant and a problem for Europe,” Soros said. The European Union, once a desirable objective, has become “more of an imposition,” he said.
The interim government of Greek Prime Minister Lucas Papademos Feb.10 approved budget cuts needed to secure a second package of aid from euro-zone finance ministers, preparing the way for a ratification vote in parliament today.
Signs of Revival
In the U.S., the economy “shows some signs of revival,” thanks in part to the emergence of shale gas and oil and years of low-wage growth, which have lowered manufacturing costs, Soros said.
President Barack Obama, who has done a “mixed job”, deserves a second term, Soros said.
“The problems that he inherited, because he came in immediately after a financial crisis, were bigger than any president could have immediately remedied,” Soros said. “So, whoever gets elected now has a much better chance of being successful than Obama had.”
He endorsed Obama’s “Buffett rule,” named after fellow billionaire Warren Buffett, to require those earning more than $1 million a year to be taxed at a minimum rate of 30 percent.
“The big boom, the super bubble, really resulted in a great increase in inequity. Now we have the after-effect where you have slow growth one way or the other,” Soros said.
“If you could have better distribution of income, then the average American would actually be better off as a result. But that is totally politically unacceptable.”
Soros said he would pay more in taxes under the plan.
“My tax bill would go up a lot if you had a minimum tax. But I’m willing to pay that because I think if everybody who made as much money as I do gave as much as I do, I wouldn’t advocate it,” Soros said. “I think the free riders should also pay.”
Soros is a very smart man. Just like the bond king, Bill Gross, he too understands the bigger picture, how fragile capitalism is right now and how social tensions can boil over fast in Europe and elsewhere.
The Germans got their way but they are dreaming if they think this is the end. My money is on Soros -- it always has been -- and he will be proven right for taking Germany to task. I'll be blunt, if Germany doesn't get its act in gear and back up a eurobond market, eurozone is finished.
I'm tired of hearing German ministers tell Greece "it needs to do its own homework". How about Germany wake up and start tackling this debt crisis in a more serious and forceful way? And to all those who are demanding more austerity all around the world, have a look at what's going on in Greece because that's going to be our future if austerity lunatics get their way.
Many have asked me how markets will react on Monday. Too early to tell. They might sell the news or buy it up with a vengeance. I remain long risk assets for now and believe any dip should be bought hard. Longer term, we'll see how this all plays out. It could get a lot worse, especially if Germany stays the course.
Below, CNN reports on the Greek vote and rioting in Athens. I also embedded a clip on what George Soros thinks of the state of the U.S. economy. He spoke exclusively to CNN's Fareed Zakaria.