Sovereign debt has been always recognized as danger for a possible economic apocalyptic, and many economists instantly alarmed countries over unfettered budget deficits and increasing sovereign debt. But its gravity is relative and closely linked to potential of economy of the respective countries. For instance, the sovereign debt of US is over 90 percent of its GDP, but still federal treasury bonds is rated AAA.
But the story is quite different in Europe. Euro zone from the very start of 2008, financial crisis and following global economic depression was not convenient with increasing public spending, which is the source of increasing level of sovereign debt. Euro countries largely held "tightening economic belt" measure to meet mounting concerns about their budget deficits and subsequent sovereign debt, which was not supported by US before emergence of G.O.P. dominated-Parliament after 2010 mid-term election.
Euro zone's concern is rightly realized in now crisis-riddled countries like Greece. Its total debt is around five hundred billion dollars, which is not that large in comparison to more 13 trillion dollars of sovereign US debt but extremely large in comparison to its GDP. Remarkable part of this staggering number is foreign debt, i.e. from Euro countries, Japan and International Monetary Fund (IMF). Now there are true concern that Greece is unable to remain committed to liabilities and refund its matured debts unless helped by Euro fellows and IMF, while they both push for strict economic austerity plan. Both have clearly voiced that the country would not receive fresh loans unless it approves and implements far comprehensive and far stricter austerity plans.
The Greek Parliament has voted for government austerity plan on Wednesday, June 29. But people are angry about such a plan; they deem that it can terribly affect their living standard. The protesters, who oppose the approval of the law, have reacted violently and clashed with anti-Riot police forces in Athens, the riots on Tuesday, June 28 have been a part of the same disapproval by the people. And public transportation services like buses, trains, ships and airlines have come into a standstill due to 48 hour-long boycott held by protestors.
But government and MP's are left with no other choice but to stick with the plan because without passing such a law, it wouldn't be able to receive any loans from IMF and some of Euro fellows, the thing which will prove consequential and tragic for country's struggling economy. As the Prime Minister, George Papandreous, clearly said that the economic austerity is the only option ahead of his country and asked Parliament to vote in favor.