Four Greek Cabinet Ministers Resign Over Austerity Plan; Police and Protesters Clash in Athens; Greece in Chaos; PIMCO CEO Weighs In; Greek Lawmaker Wants Out of Euro; Europe Freeze Continues
RICHARD QUEST, HOST: A stone's throw from Ground Zero, the Greek prime minister tonight warns bankruptcy is not an option. For many, the pill is too bitter to swallow. Four government ministers have resigned in Athens. Also tonight, the big bad bonuses. What chief executives have to say about their pay packet. It may be Friday. I'm Richard Quest, and I still mean business. Good evening. Tonight, Greece's prime minister says there's no room in the government for anyone who opposes the austerity agreement reached yesterday. The country's deputy foreign minister and all four cabinet ministers from the Laos Party have now resigned, as Europe's demand for deeper cuts has pushed the Greek government to breaking point.</s>LUCAS PAPADEMOS, PRIME MINISTER OF GREECE (through translator): The priority is whatever is necessary to approve the new economic program and credit agreements. Any other developments would be destructive. It's logical that whoever disagrees and doesn't vote for the new program cannot stay within the government.</s>QUEST: The turmoil in Greece is spilling onto the streets. Today, violent clashes started outside the Greek parliament. Protesters through stones and fire bombs whilst the police retaliated with stun grenades and teargas. Friday marked the start of a two-day strike by workers from Greece's two main unions which, together, represent half the Greek workforce. In Athens tonight for CNN, our Senior Correspondent Matthew Chance joins me now. Matthew, so the agreement that they thought had been reached is not going to hold, or at least looks like it. How much chaos, what's the feeling in the Greek capital tonight?</s>MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, of course, that bailout deal is subject to parliamentary approval. The vote is expected to come at some time this weekend, so wait and see how that turns out. In terms of the mood on the streets of Athens and elsewhere in the country, people clearly very angry, indeed. We've seen thousands of people throughout the course of this day, as you mentioned, clashing with riot police in the main square here in the center of Athens. You get a sense, Richard, that people are just fed up. Fed up with the two years or so of austerity cuts that they've already had to endure. People have seen their incomes fall off a cliff. They've seen job losses, they've seen public services eroded. And there's just a general sense, here, that these austerity measures, more of which are now being demanded by the European Commission, the European Central Bank, and the IMF, are not going to make the matters -- any better. They're going to make that recession even worse. We've just had some very interesting unemployment figures that have come out within the past few days here in Greece, 20.9 percent for the entire country, obviously extremely high. But even that doesn't tell the higher -- the whole picture, because if you look at the age group between 16 and 24, that figure rises to 48 percent, and it's that age group that we're seeing throwing the petrol bombs, throwing the rocks and stones at the police in the main square of Athens throughout the course of the day, Richard.</s>QUEST: And the view from Athens -- on the Germans, Angela Merkel, the eurozone -- we've heard on this program in recent days politicians being vitriolic against eurozone partners. What are you hearing there?</s>CHANCE: There's a great deal of animosity, resentment, a sense of national humiliation as well, about what the eurozone, led by the Germans, is wanting the Greeks to do. Because as well as make these very difficult, painful cuts to the country's public services and average minimum wage and things like that, they're also asking for what they call the strong political commitment from the political leaders in Greece to push through these austerity measures. They want written guarantees from Greece's political leadership that they will follow through on these commitments, and that's perceived as a sort of national humiliation stacked on top of the humiliating cuts this country has already had to make. But nevertheless, the prime minister of the country, Lucas Papademos, making it quite clear that he does not believe a default in Greece is an option, that he wants to push through these measures in the country's parliament at whatever cost. He's also made the point, as we've reported, that any government minister that does not agree with the bailout deal that is being demanded by Brussels has no place in government, and already we've seen four senior figures, senior ministers in the Greek coalition resign from office. And so, there's going to be a big reshuffle in order to get these measures through, Richard.</s>QUEST: Matthew Chance, who is Athens for us tonight. Matthew, thank you. The pain of Greece's knock back is playing out on the markets. I want to show you first, before we go any further, I just want to show you this one. We'll come back to it in a minute. This shows, really, Athens had performed quite well during the course of the week, but now as the sentiment turns very, very sour, it takes that down. We'll come back to it in a moment. The euro against the dollar. The big picture, it has been up 2 percent on the year to date, and the euro was trading at an eight-month high against the US currency. But now, with the events of the last 24 hours, once again, it's come back. And that has spilled over into these equity markets, which are down, now, for the whole week. The big losses were the banks, Commerzbank, Societe Generale down 7 percent. These are the banks, particularly those like Societe, Piraeus Bank, they are the ones that will take an absolute clobbering when you take the haircuts and the default, if it happens. And New York is also down. New York is down more than 130 points. So, two of the markets open and doing business and to discuss this now, PIMCO's chief executive, Mohamed El-Erian, wrote in the "Financial Times" that the Greek agreement stands little chance of placing the country on the path to growth, higher employment, and stability. Mohamed El-Erian joins me now from Newport Beach in California. Good to see you this evening, Mohamed, thank you for joining us. The first question has to be, what were the eurozone thinking when they basically pulled the rug out from under the Greek prime minister and the agreement?</s>MOHAMED EL-ERIAN, CEO, PIMCO: Basically, Richard, what you're seeing is that there is no common analysis or understanding of what's going on. So, each side is pursuing their own agenda. In the case of the European countries, they are saying, look, Greece, you've made promises in the past, you haven't delivered, and we're not just going to accept promises again. We want two other things. We want implementation and we want political parties to sign. So, the Europeans are pushing and pushing the Greeks. The problem is the approach itself will not lead to what you need, and what you need is growth, medium-term debt sustainability, and attracting new capital into investments. And that's not going to result from what is being discussed.</s>QUEST: But have they basically, in this humiliating response to Greece, have they basically cut Greece off? They are now prepared, as indeed -- look. With the exception of the stock market tonight, the markets do seem to be basically coming to a view of, if it defaults, it defaults, and we'll deal with it then.</s>EL-ERIAN: Yes, I think there's two things going on. I think in the case of Greece, they are pushing it towards social and political fragmentation that will make it very hard to implement a package. I think more generally, over the last five months since October, the Europeans have been pivoting, first quietly, and now openly. Before, it was about rescuing the periphery. Today, it's about refounding, to use the words of President Sarkozy, refounding the core. And they want to strengthen the core, build the firewalls, and let the periphery go.</s>QUEST: That's pretty dramatic. You're basically saying that everyone now is -- whatever they say publicly, they are resigned to the fact that this -- this Greece might go bankrupt, it might get messy, and they'll have to just deal with that as and when it happens.</s>EL-ERIAN: Yes. It's the only way to explain what happened yesterday in Brussels. Yesterday, the European ministers humiliated Greece in a very open way. They said, we no longer give you the benefit of the doubt. They made it very clear --</s>QUEST:  OK --  EL-ERIAN: -- that where they stand.</s>QUEST: One question that's been troubling me through the course of the day and watching the events. Are we at that sort of situation that in five years time, when Greece has been through civil war and riot and the whole thing has collapsed, we will look back and say with the historians, and they'll say, ah, if you want to know when the mistake happened, it's when they pushed too far. When they decided to do this. Would you agree that we're at a turning point?</s>EL-ERIAN: I agree we're at a turning point. I hope it's more like what happened in Argentina in December of 2001. In Argentina in 2001, society said, "We can no longer take it." At that point, Argentina pivoted, including an overhaul, a resetting, in economic, financial, institutional terms. And that allowed Argentina, albeit in a messy way, to get out of a straightjacket and get back to a path that promised more growth and more jobs. Hopefully, that's what's going to happen, because the alternative would be absolutely awful, Richard.</s>QUEST: Mohamed El-Erian joins us from Newport in California. Have a good weekend, many thanks, indeed, for joining us. Coming up next, QUEST MEANS BUSINESS continues. When the going gets tough, the tough get going. Greek MP Liana Kanelli says staying in the euro would be a disaster.</s>QUEST: She wants out.