Dangers lurk beyond Greek parliament vote

Greek financial woes far from over

Global markets rallied Wednesday after Greece's parliament backed sweeping austerity measures to avoid bankruptcy. But Greece's plan is a stop gap measure at best, eco

The austerity package includes a five-year, $40 billion plan to trim spending through increasing taxes, cutting wages for public sector employees, and raising the country's minimum retirement to 65 from 61.

The parliament's approval, amid another day of violent anti-government protests in Athens, was seen as crucial for $17 billion in bailout loans aimed at staving off default this summer.

While the news propelled European stock exchanges up 1.5% or more and helped the Dow Jones industrial average gain 73 points to 12,261, the austerity plan, which faces another parliament vote today, does little to solve Greece's long-term financial woes.

"Whatever measures Greece enacts, there is no way the country can pay its debts in full, so it comes down to how much of the pain is shared with creditors and banks," says Cornell University economist Eswar Prasad.

Also key: Greece's ability to lower its deficit by selling $71 billion in state-owned interests, IHS Global Insight economist Diego Iscaro says.

He notes that Greece has yet to reap any benefits from privatization and doubts the country will meet its year-end goal to raise $5 billion.

"There are many question marks over how these assets are going to be privatized," Iscaro says. "Given Greece's high debt levels, falling tax revenues and an economy that's still quite weak, this is a country that still faces a lot of challenges.More