Art Under Austerity by Lorna Scott Fox. Returning to Spain, a journalist and critic maps responses to the economic crisis and its historical points of origin. Showing image 1 of 9 Images courtesy of Juan Tiagues What’s Spanish about the economic crisis in Spain? The shocks experienced by Ireland, Greece, and Portugal produce similar images on the news. Angry, bewildered people who had been persuaded they lived in bust-proof economies suddenly faced with losing the essentials for a dignified existence; marches, sometimes riots; impassive government ministers repeating that there is no alternative.
But the national crises have developed in distinctly shaped historical containers, and exacerbate particular sets of problems. In Spain in the 1970s, a hastily constituted democracy threw itself with reckless euphoria into a development model based on tourism, construction, and finance, with the added boost of cheap credit, to become the eighth economy in the world by the late 1990s. Or only if you count the El Centro Niemeyer. Spain’s Unfinished Transition From Dictatorship To Democracy. Contributed by Spaniardfbm, who has a law degree and works as public servant in Seville, Spain.
This is a shorter and edited version of the original article first published on Liberal Villainous. Spain’s economic problems lie neither in the financial sector nor in the budget deficit. They are only symptoms of deeply rooted institutional problems that determine a great variety of issues, from how the budget is composed to who receives a loan from the politically controlled banks (cajas). Neither banks nor public workers have ruined the country, but politicians, a separate class born out of the “Transition” from the Franco dictatorship to democracy. Until Franco’s death in 1975, Spain was governed by a fascist bureaucracy, called “Corporate State.”
These privileges were extended to regional pressure groups—Basque, Navarrese, Catalans, Galicians and Andalusians. Since the arrival of democracy, the Corporate State has covered itself with a democratic umbrella.
Spain’s government and European authorities bent on dismantling welfare state. From Mark Weisbrot MADRID — I have argued for some time now that the recurring crisis in the eurozone is not driven by financial markets’ demands for austerity in a time of recession – as is commonly asserted. Rather, the primary cause of the crisis and its prolongation is the political agenda of the European authorities – led by the European Central Bank and European Commission. These authorities — which if we included the IMF constitute the so-called “Troika” that runs economic policy in the eurozone — want to force political changes, and particularly in the weaker economies, that people in these countries would never vote for. This is becoming more obvious here in Spain, where the government – run by the right-wing Popular Party (PP) – shares the political agenda of the European authorities, perhaps even more than the IMF does.
The government has also mandated huge cuts in health care spending, at 7 billion euros. See article on original website. The politics and economics of Austerity. Next Up Spain: OpenEurope Looks At Spanish Banks' Underprovisioned 20% In Toxic Loans.
Bank of Spain Balance Sheet Shows Spain Deep in Trouble, LTRO is Essentially Useless. CDS rates to protect against default by Spain rose to an all-time high today as Investors brace for more pain in Spain. Spain was firmly back in the spotlight on Friday, after news of a sharp rise in borrowing by the region’s banks from the European Central Bank triggered losses across European stocks, but especially for the IBEX 35 index XX:IBEX -3.58% , which fell more than 3% to a three-year low.The yield on the 10-year government bond in Spain ES:10YR_ESP +0.0004% , which had appeared to get some relief in the latter half of the week, resumed a climb upward, rising 15 basis points to around 5.93%.The cost of insuring Spanish government debt against default using credit-default swaps, or CDS, rose to an all-time high. Massive Jump in Bank of Spain Borrowing from ECB Inquiring minds are digging into Consolidated Balance Sheet of the ECB and by the Bank of Spain, searching for clues about the LTRO program for the entire Eurozone and also for Spain in isolation.
Please consider Spain. Spain's Election is Set to Worsen the Crisis in Europe. For Europe, it turns out that November is the cruelest month: The debt crisis will claim at least three eurozone governments before it is over. Yet, unlike in Greece, where Prime Minister George Papandreou resigned last week, and in Italy, where Prime Minister Silvio Berlusconi stepped down over the weekend, the political crisis upending Spain is toppling the government in slow motion. Facing dwindling public support, an unemployment rate of more than 20 percent, and the increasing cost of Spanish debt, the country's Socialist Prime Minister José Luis Rodríguez Zapatero threw in the towel last July and called for early elections to be held on November 20, four months ahead of schedule. By all accounts, the election is expected to be a landslide.
The current deputy prime minister of the Spanish Socialist Workers' Party (PSOE), Alfredo Pérez Rubalcaba, will face the seemingly perennial candidate of the conservative Popular Party (PP), Mariano Rajoy. To continue reading, please log in.
Marshall Auerback: The Elephant in the Room is Spain, Not Italy. By Marshall Auerback, a portfolio strategist and hedge fund manager. Cross posted from New Economic Perspectives Another day andthe markets remain fixated on whether Greece comes to a “voluntary” arrangement with its creditors. The key word is“voluntary” because the myth of “voluntary compliance has to be sustained so that those deadly credit default swaps avoid being triggered.
But let’s face it: Greece is a pimple. If the rest of the euro zone could cut itlose with a minimum of systemic risk, Athens would have long gone the way of Troy. The more interesting question is: suppose Greece finally does get a deal? Now you could argue that Portugal and Ireland, like Greece, are but small components of the European Union and could well be covered in one form or another via the existing backstops established over the last several months, notably the European Financial Stability Fund (EFSF) and the European Stability Mechanism(ESM). EMU and Spain: Budget deficit % of GDP,1989 to 2008. The Complete Guide To The Oncoming Spanish Debt Crisis That Everyone Is Terrified Of. With the focus firmly on the debt crises in Ireland and Portugal, the real threat is still lurking.
Spain is a massive economy, the 5th biggest in the European Union, and the fourth biggest in the eurozone. By the time and if the sovereign debt crisis spreads to Spain, the eurozone bailout fund now set up to help Greece and Ireland may be too small. Spain, with an economy much larger than Greece, Ireland, or Portugal, may be too big to bail. We've got the details on how it has come to this, why Spain can't escape its situation, and who's exposed to Spain's sovereign debt. During the boom times, it seemed as though Spain was doing well at paying down debt. Spain, unlike Greece, used its period of growth to pay off debts and only had debt of 55% of GDP, which is the Euro zone average, prior to the crisis. This should, theoretically, make servicing its debt easier as it has less.
Source: Index Mundi. Eurozone Screws Spain’s Citizens. Yves here. Delusional Economics discussed earlier how hapless Spanish depositors, who’d been sold bank equity products as deposit equivalents, were at risk of being crammed down en masse. That move appears to be proceeding as planned. NC readers confirmed his earlier take, that this abuse of unsophisticated savers was likely to have serious social and political repercussions. By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness. A draft Memorandum of understanding for the Spanish bank bailout became available overnight (available below). Segregation of impaired assets: Asset Management Company21. There are, however, some very important sections of the document which need highlighting.
The key in a banking crisis is to keep the confidence of depositors. And here is what I said about it: VI. Draft Spain MoU. The Euro Crisis. Europe's Web of Debt NYTimes May 1, 2010.