AMY GOODMAN: As we’ve reported police have been firing tear gas in running battles with youth in Athens where a 48-hour general strike is underway. Union leaders called the strike to protest deep budget cuts demanded by international lenders as the price for more financial aid. The Greek parliament right now deciding on a package of spending cuts taxing increases, privatizations agreed to as part of a massive bailout aimed at averting the Euro Zone’s first default. Thousands of protesters gathering outside Parliament in the capital where public transport is ground to a halt. Without a new plan in place, the European Union and International Monetary Fund say they’ll withhold 12 billion euros of loans which Greece needs to repay debts due in mid July. Meanwhile the French Finance Minister Christine Lagarde has been named the new chief of the International Monetary fund. She received backing from the United States and Europe and key emerging market nations including China, India and Brazil. She begins her five-year term on July 5th. Lagarde is the first woman to head the IMFin first public comments following her appointment, she urged Greek politicians to unite to avoid a debt default.

[translated from French]

CHRISTINE LAGARDE: I have a message to get through concerning Greece. It’s an appeal to the Greek political opposition to join in a national agreement with the party that is currently in power. It’s about the destiny of a country, of it’s security and I think one has to put big and small political differences aside in the service of a country to get over these small matters.

AMY GOODMAN: For more on the Greek crisis and the appointment of Christine Lagarde as the IMF chief, we go to Washington, D.C. to talk to Mark Weisbrot, an economist and co-director of the Center for Economic Policy Research. He’s been writing on the situation in Greece and IMF policies for the Guardian and in other publications. Mark, talk about what we’re seeing right now. It was expected the vote would have taken place, but with the massive protests in the streets, shutting down Athens, it has not yet happened. Though the latest news is that one of the opposition politicians Elsa Papademetriou has said she intends to vote with the Government increasing the chances of victory for the government’s push for the austerity plan.

MARK WEISBROT: Well the vote may pass, but it’s not going to be the end of this struggle at all because as you can say, the people in the streets are really the constraint. The creditors are trying to squeeze as much as they can out of Greece, and they’re making the economy worse. There’s hardly any disagreement among economists about that. That this package if it passes will make things worse. They’ve already laid-off 10% of the government work force and now this package will call for another 20% of the labor force, the federal labor force, to be laid off and another 12% of GDP over the next three years in budget cuts, which would be like $1.70 trillion in the U.S., budget cuts and tax increases. So this is going to worsen the recession unless some totally unforeseen events were to happen. There is going to be a default. That’s the opinion of the markets and most economists and the question is, what’s it going to be like? When are they going to stop punishing Greece and allow the economy to grow and employment to return? That’s the big questions.

AMY GOODMAN: What if the parliament just voted no today? Certainly the mainstream media in the United States, it is an absolute given they have to vote yes. CNN, through the morning the news anchors are saying, “They must do this.”

MARK WEISBROT: Yes, I saw that show. It is amazing how they report as though there’s no choice. There is always a choice. There’s going to be a default right up the road, so they could default now and they could refuse to accept these conditions and they might be better off for that, especially, if the result of what’s going to play out is years of recession and high unemployment. You know, Argentina had this choice after 3.5 years in the late 90’s of following the IMF recipes and the economy worsening and at the end of 2001, they did default on their debt and they broke the link with the dollar, their currency with the dollar and they did quite well. The economy shrank sharply for just one quarter and then it grew 63% over the next six years and they pulled 11 or 12 million people out of poverty. So, that was a different scenario and that’s also an alternative for Greece.

AMY GOODMAN: Can you talk also about, and there is of course is a connection between the appointment of Christine Lagarde as the IMF chief replacing Dominique Strauss-Kahn who is facing sexual assault charges here in New York. She is the French finance minister. Talk about what she represents and what this means for Greece, Europe, and the rest of the world.

MARK WEISBROT: Well you can see she is already saying, you have to accept this. You don’t see anything coming from her that would provide any light at the end of the tunnel for Greece or Ireland or Portugal or Spain. All of these countries are being subject to these, what economists call “pro-cyclical” policies that make it difficult or impossible for their economies to recover and I think she’s going to continue that. In fairness to her, you could say, well, she doesn’t really run, she doesn’t make policy for the IMF because it is run by an executive board and a board of governors and that’s the G7 countries, the United States and Europe. And that’s something I think Americans should know too here because you know everybody is acting as though the U.S. is just a bystander here, but in fact our government is heavily involved because they’re the major voice within the IMF and the IMF, as you know, is right on the front lines here in Greece and these other countries.

AMY GOODMAN: What about the international banks like Goldman Sachs? How did Greece get in this situation?

MARK WEISBROT: Well they all contributed to it of course as they did in the whole crisis. All these countries got in to this situation because of the financial crisis and the recession of 2008, 2009. None of them would be in this situation if it weren’t for this and Greece’s crisis has been made worse by the policies that they’ve adopted and of course these policies are being adopted because this is what the creditors want. The banks and of course their allies in the European Central Bank and the IMF and the European Commission.

AMY GOODMAN: Finally, what the debt means in the United States and what the deficit is that we are dealing with here, can you fit this into this global picture and what you think needs to be done, Mark Weisbrot?

MARK WEISBROT: Well it’s kind of the opposite of what you see in a lot of these editorials that say the United States is like Greece, and we’re living beyond our means and we have to cut back, too. The real lesson from what you’re seeing in Europe and in Greece and Portugal, which just signed an agreement that commits them to two years of recession, you know, is that if you do these policies, which some people here want to do, especially, the House Republican leadership, if you actually try to cut spending and raise taxes during a recession, you are going to get much higher unemployment and a much worse economy. That’s the real lesson that you can learn, that people should learn from what’s happening in Europe.