ATHENS, Greece, June 16 (UPI) -- Greece was on the brink of collapse amid a Cabinet overhaul, pitched street battles, tumbling stock markets and European leaders not wanting to keep it solvent.
The euro currency plummeted and Asian stock indexes were down Thursday morning as European exchanges opened and Greek Prime Minister George Papandreou began reshuffling his Cabinet ahead of a promised vote of confidence in Parliament.
Riot police in Athens were prepared to again battle tens of thousands of demonstrators protesting the latest austerity measures -- amounting to $40 billion in new taxes and spending cuts, along with a $71 billion privatization plan.
Many protesters in central Athens' Syntagma Square, or Constitution Square -- the rallies' focus because is across from the Greek Parliament -- said Wednesday they no longer trust the Greek government. They also expressed frustration the radical austerity measures had done nothing to improve the economy.
"We didn't create the debt -- they created the debt," public school French teacher Lina Pantazi told The New York Times as she wore a surgical mask and sunglasses to protect herself against tear gas police fired on the crowds.
The proposed government spending cuts, intended to get new loans from the International Monetary Fund and the European Union, are on top of already-deep cuts imposed last year after a $159 billion rescue that failed to resolve the crisis.
Without an agreed bailout, Greece could run out of money next month, The Wall Street Journal said.
A Greek default could spark a "contagion" across Europe, the European Central Bank said, inflicting major damage to giant French and German banks while causing Greek banks to implode, the British newspaper The Guardian reported.
Moody's Investors Service Wednesday put the credit ratings of three top French banks on review for a possible downgrade because of their exposure to Greek debt.
The default contagion could also spread to big U.S. banks, U.S. economists said.
European governments, ECB and the European Commission were gridlocked over how to respond to the debt emergency.
Germany, the biggest economy in the 17-member eurozone, argued for no new bailout without Greece's private creditors being forced to suffer losses on their loans.
Otherwise, European taxpayers would shoulder the costs while the international banks across Europe, the United States and elsewhere pocketed the proceeds, Germany said, receiving Netherlands, Austrian and Finnish support.
