Hundreds of Greek hotel workers are on strike in Athens. They are angry about plans that could cut their wages by up to 40 percent.  Hotel worker Koukos Panagiotis says that Greeks' everyday lives are already chaotic and that these cuts will completely destroy them. He pleads with people to remember that 70 percent of the workers in the tourism sector are working five months per year and have to support their families on that income for the rest of the year.

 

Greece is being kept afloat by international loans. In return, Greeks must endure harsh spending cuts and tax increases. 

 

If Greeks decide in their June election that austerity is not worth it, the country could be forced to leave the euro.  Savings would then be converted to the old currency, drachmas, very likely worth much less. 

 

So some Greeks have been taking their money out of banks, often putting it abroad. About a third of bank deposits have been withdrawn during the past two years.

 

Spain also faces a heavy debt burden. There have been noisy protests like in Greece, but here the withdrawal of savings has been less dramatic, less than five percent of deposits during the past year. 

 

But if the pace increases, the effect would be amplified because Spain’s banks are so much bigger than Greece’s. Only now, four years into the financial crisis, is Spain starting to come to terms with how weak its banks are. A bank called Bankia asked for a $23 billion bailout last week.

 

The Spanish prime minister tried to reassure the markets that everything is stable.  But Bankia’s share price has fallen sharply. Financial analyst Enrique Quemada says there is little trust in the banking system.

 

He says that people and investors do not believe Spain will be capable of fulfilling its deficit reduction promises because they have heard Spain say they would hit a budget deficit of six percent, then it was 8.5 percent and then it ended up being 8.9.

 

Chris Roebuck, from London’s Cass Business School, says that lack of trust means there could soon come a moment when bank customers in healthier eurozone countries move their funds elsewhere.

 

"If they see contagion spreading into panic in those countries, they will be asking themselves, 'Could this get to our country?'  They will ask themselves the question, 'What do I think the risk is?'  And if they think the risk of the whole house of cards coming down is high, they are potentially going to tip from a rational to an emotional response straight away,” said Roebuck.

 

Interest rates in the eurozone have hardly ever been lower.  The longer they stay that way, the more savers might decide the meager returns are not worth the risk, and take their money elsewhere.