Despite fierce social reactions, the Greek Parliament approved the austerity package, which was agreed with the country’s international creditors, so that it can continue receiving vital bailout loans.

The next loan installment of €31.5 billion, out of a total of €240 billion, is already five months overdue and without it, Prime Minister Antonis Samaras has said that Greece will run out of cash by mid-November.

The measures, which were voted last night by a razor-thin margin in a stormy parliamentary session, once again tested the already fragile three-party government coalition, which in theory enjoyed a confortable majority of 176 MPs.

While Samaras insisted that without the bailout, the country would face "catastrophe", the Democratic Left, which is the junior partner in the coalition, refused to vote in favor of the new package.

"We will abstain from voting in favour of the austerity programme because we disagree fully with the labour reforms that are also included in the package," said Dimitris Hadzisokratis, the party’s economics spokesperson.

The second biggest coalition party, the socialist PASOK, also faced a revolt by seven of its backbenchers, who were immediately expelled from the party’s ranks.

Demonstrations

Meanwhile, more than 100,000 angry protestors staged a rally outside Parliament on Wednesday to oppose the new welfare cuts and tax increases, which include raising the retirement age by two years to 67, as well as a radical overhaul to the labour market.

Braving a downpour and chanting "Fight! They’re drinking our blood", protestors held banners with slogans like: "It’s them or us!" and "End this disaster!"

Demonstrators also expressed their frustration about legislative amendments which would facilitate even more lay-offs at a time when unemployment has already reached 25 per cent and a five-year recession means there are few job prospects.

Some also held aloft huge Italian, Portuguese and Spanish flags as a mark of solidarity with other nations enduring austerity measures.

The demonstrations turned violent when a handful of protestors attempted to enter the parliament and threw stones and Molotov cocktails. The police responded with tear gas and water cannons.

Meanwhile, inside the chamber, the session was briefly interrupted when parliament workers went on strike and opposition lawmakers walked out of the chamber in protest.

Before the vote, the country was once again brought to a standstill on Tuesday and Wednesday, in what has been called “the mother of all strikes” by the country’s national trade unions.

“We’re calling on every lawmaker in parliament, without exception, and we’re telling them that 100 per cent of workers in the public sector are saying that they should not vote for these measures,” said Ilias Iliopoulos, head of public sector union ADEDY, which called the strike with private sector union GSEE.

The unions warned that further cutbacks would further reduce consumer and government spending, driving even more retailers out of business.

"To vote for the measures ... will deal the coup de grâce to an exhausted and battered society," union official Vassilis Korkidis said Wednesday.

"In effect, the package will starve the market of the last reserves of liquidity that could have allowed businesses to maintain even minimal activity."

The strike, which is the third in the past two months, saw the majority of the country’s labour force – including school teachers, hospital doctors, public sector employees, taxi drivers and air-traffic controllers – stage a major walk-out.

Public transport also came to a standstill and ships remained docked.

On Monday, Greek journalists also went on strike over the government’s last-minute decision to include their healthcare funds in a national scheme, a transition, which will result in many of their social security benefits being axed.

From recession to depression

In the meantime, the European Commission in Brussels published its regular “Autumn Economic Forecast”, which confirmed the Greek economy has exceeded “normal” recession trends and is now well into “depression” territory.

According to the report: “The contraction is expected to extend into 2013, a sixth year of recession, and its main drivers remain broadly unchanged. First, household disposable income keeps shrinking in response to rising unemployment and downward wage adjustment in both the private and public sectors.

“Second, savings measures introduced to contain the fiscal imbalances reinforce the contraction of domestic demand.

“Third, investment activity remains heavily subdued due to restrained access to credit and the uncertainties that remain after the political tensions around the double elections in spring 2012.

“In addition, exports dynamics affected by weakening external demand are insufficient to counter recessionary pressures in Greece”.

In a press conference following the release of the Forecast, Commission Vice President Olli Rehn, admitted that Greek public debt levels are becoming increasingly unsustainable and called for further measures to reduce the burden.

For most economists, administering further austerity measures to a country already on the brink of social implosion is the economic equivalent of shooting one’s leg.

But there is little reason to expect that the Eurozone will change its stance.

In a speech yesterday at the European Parliament in Brussels, German Chancellor Angela Merkel insisted that the root of Greece’s woes are to be found not in the Adjustment Program, but in public finance mismanagement and low competitiveness.