Despite riots, Greece votes for austerity

The prime minister of Greece survived a "no confidence" vote on Tuesday, which means that despite the riots in the streets, the Greek government will drastically cut its budget to get bailout loans.

It was a narrow victory for the government but a defeat for thousands of protesters outside. They feel devastated with government plans to go ahead with punishing austerity measures that are going to hurt.

However, that's the price of heading off a financial meltdown that could go global. European banks and governments are willing to lend Greece the billions it needs to pay its creditors next month, but only if the Greek government moves first with radical cuts and adjustments.

CBS News correspondent Elizabeth Palmer reports that it's a risky move. A year ago, riots broke out when lenders forced Greece to introduce tax hikes on income and fuel, and pension cuts of 20 percent.

This time the government's is set to sell inefficient state companies into private hands cutting thousands of jobs in an economy that's already shrinking.

One in three young people can't find work and overall unemployment is around 20 percent.

Pericles Danopoulo lost his job a year ago. He was an accountant. Now he's an activist. He's raising two kids on a social security payment of under 700 dollars a month.

Danupoulo says that when his kids ask him why he doesn't have a job, he tells them the truth.

"They understand that it's a difficult situation for all of us," Danopoulo says.

But what Greeks don't understand is how they ran up $400 billion in debt. Partly it was due to generous social benefits that let them retire on average at 53 years old.

Most Greeks, however, prefer to blame the debt on corruption by politicians and business tycoons.

Their anger is palpable, with some saying they will fight the austerity measures until the bitter end, and it's shaping up to be quite the fight.

Already some unions have organized rolling power blackouts, and there are calls for a nationwide general strike.

The massive debt in Greece is owned by European and some U.S. banks. If those banks were to lose some of the billions of dollars they lent to the Greeks, that could freeze up the world's credit market similar to the crisis that followed the Lehman Brothers collapse back in 2008.

  • Elizabeth Palmer

    Elizabeth Palmer has been a CBS News correspondent since August 2000. She has been based in London since late 2003, after having been based in Moscow (2000-03). Palmer reports primarily for the "CBS Evening News."