Papandreou: Banks bet against us

NEW YORK (CNNMoney.com) -- The prime minister of Greece said Sunday that he would not rule out taking legal action against banks that may have preyed on his country's precarious fiscal state.

"You have banks funding hedge funds that are actually then betting against governments," George Papandreou told CNN's Fareed Zakaria. He said his government is investigating potential "negative practices" in the financial sector and called for greater regulation.
Greece is the flash point for a government debt crisis gripping Europe and roiling markets worldwide. Last week, European leaders announced a massive, nearly $1 trillion, rescue package in a bid to contain the crisis by helping the weakest nations.

But Greece is in the most precarious spot. The small southern European nation, weighed down with an outsized debt burden, is tapping billions in emergency loans from the European Union and International Monetary Fund.

The funding will make it possible for the Greek government to redeem $10.7 billion worth of debt coming due this week.

Papandreou told CNN that Greece is committed to closing its fiscal imbalance. The country's budget deficit exceeded 13% of its total economic output last year.

"We are fully aware of our responsibilities and what we must do," Papandreou said.

Greece has set in motion a number of austerity measures, including tax increases and cutbacks in public sector salaries and pension benefits.

"We are ready to make the changes," Papandreou said. "We have made our mistakes. We are living up to this responsibility. But at the same time, give us a chance. We'll show you."