By: Barbara Zigah

A single day ahead of a legislative vote in the Greek parliament, which if approved will pave the way for the 5th bailout payment from the E.U./IMF special purpose mission, protestors by the thousands are amassing on the streets of Athens, according to a recent Reuters report. Thus begins a 2-day strike, organized by Greek labor unions, of individuals, including the unemployed, who plan to protest the additional austerity measures which were a precondition to the 5th tranche payment.

Reuters also reports that some 5,000 riot police are likely to be deployed to the streets of Athens in an attempt to protect the Parliament building. Protestors have said that they hope to keep the lawmakers from entering and casting their crucial vote.

The presence of the protestors notwithstanding, the real hindrance to Parliamentary approval comes from several members of the Prime Minister’s own Socialist party who have already voiced their dissension on the new austerity measures.

Greek Bankruptcy on the Horizon

The Greek government is on the brink of bankruptcy, and the success of this latest attempt to prevent a catastrophic default is uncertain. The Greek Prime Minister, George Papandreou yesterday appealed to the Parliamentarians to back the austerity measures. The voting is expected to take place over the course of two days, with an implementation vote scheduled for Thursday.

In spite of the turmoil in Athens, today, investors in the financial markets remain optimistic. Bloomberg reports that 10-year Treasury bond auctions held by the Italian and Spanish governments rose on investor optimism that a Greek debt default will be avoided, and speculation that the Italian government will successful raise some €8 billion from its auctions. Reuters also reported that share prices on the Asian bourses moved higher on investor optimism of a successful vote.

Likewise, the Wall Street Journal reported that positive news on the Greek debt situation plus a rebound in the U.S. equity markets is making it difficult to sell the common currency against the U.S. Dollar.

That collective sentiment was bolstered in part by a unique proposal which was drafted by French insurers and banks. The proposal calls for 50% of the proceeds of matured Greek bonds to be rolled into 30-year year Greek bonds. The European Central Bank acknowledged that the proposal held merit, but cautioned that any such rollover must be on a voluntary basis. Many earlier proposals had been considered faulty, as they would have resulted in a selective default declaration from the various credit ratings agencies.