ATHENS, Greece — Greek lawmakers approved drastic austerity cuts Thursday needed to secure international rescue loans worth $140 billion, and clashes briefly erupted in the streets outside parliament, forcing police to use tear gas.
In New York, the Dow Jones industrials fell 347 points, partly on fears that Greece’s debt problems could stall the global economic recovery. The Dow at one point plummeted to a loss of 1,000 points, but there were reports that the sudden drop was caused by a trader who mistyped an order to sell a large block of stock.
The new clashes in Athens came a day after violent protests left three people dead after a bank was firebombed in Athens.
Greek lawmakers voted 172-121 to approve the austerity measures — worth about $38.18 billion through 2012 — that will slash pensions and civil servants’ pay and further hike consumer taxes.
The rescue loans are aimed at containing the debt crisis and keeping Greece’s troubles from spreading to other countries with vulnerable state finances such as Portugal and Spain. The money will come from the International Monetary Fund and the 15 other governments whose countries use the euro.
Fears of Greek default have undermined the euro, and while the current package should keep Greece from immediate bankruptcy, its long-term prospects are unclear. The country’s growth prospects are weak, and the population’s willingness to accept cutbacks may wane, leading some economists to predict an eventual debt restructuring somewhere down the road.
