Austerity and violence as Greece questions itself

To see a country truly on the brink of financial ruin, look no further than Greece.

On Wednesday, its Parliament cut public services and raised taxes to fend off bankruptcy and probably spare the world another mass economic meltdown, at least for now.

CBS News correspondent Mark Phillips reports that as parliament did what it could politically, protesters turned Athens into a war zone.

The images of Wednesday's riots are not what a failing country that depends on the tourist trade wants the world to see. But that is what the center of Athens looked like again Wednesday, a series of raging battles flowing back and forth through the capital's main square.

Greeks riot as lawmakers pass austerity measures
Long-term questions over Greece's debt

There were volleys of rocks and pieces of marble chipped off buildings and hurled at police. The police fired back with volleys of tear gas and stun grenades. The skirmishing went on all day.

The Greek parliament voted to cut back public spending by another $40 billion, raise taxes and sell off about $70 billion in state-owned companies - conditions demanded by the European Union and the IMF before Greece is given another massive bail-out loan it can't afford to pay back.

"I'm an economist, this debt is not serviceable. The markets know it. That's why the spreads are where they are. (Government officials just) want to gain time," said Yannis Mavros, a protester.

Analysts say that extra time is for Greece not to recover but to manage a more orderly default on its debts. The violent protesters may represent the extremes of public opinion, but there's plenty of anger in a country where youth unemployment is already running at 40 percent in some areas, and the public debt is larger than the national economy.

Some protesters say that a country of ten million people being $350 billion in debt is impossible to pay back especially with an economy that is only rife with sun, tourism, a few vegetables and olive oil.

The confrontations between police and protesters have become almost ritualized as the anger hangs in the air like the tear gas. They've not just become angry though, they've also become futile.

Despite the protests, Greece's Minnesota-born Prime Minister, George Papandreou, managed to get his austerity measures through parliament.

Still, Greece is cracking, economically and socially. The bigger worry here is that a collapse will trigger another economic earthquake with shocks felt around the world.

Passing austerity measures in parliament is one thing, making them work in the real world is another and there's real doubt the Greeks can deliver. There are more votes scheduled in parliament on Thursday to decide how and where to cut back, and there's a fear of more violence on the streets.

  • Mark Phillips

    Mark Phillips is CBS News senior foreign correspondent, based in London.