Spanish Protests Escalate as Budget Cuts Draw Blood

It’s been fashionable to dismiss protests in austerity-victim countries as noise. And to date, that view has been correct.

But Spain lurched relatively suddenly into the acute distress of 24% unemployment. Thursday, the Spanish bank bailout terms were clarified, and as we’d thought early on, and as Delusional Economics explained, the terms have the new bank bailout debt as being added to existing Spanish borrowing levels. Spanish bond yields rose, but Mr. Market shrugged that off all of one day. Valencia sought assistance Friday under the rescue package approved the day before. Investors freaked out at the proof that Spain was imploding faster than they thought.

The protests may constitute another crisis front. It’s one thing to drive Greece into penury and social decay pour décourager les autres. As horrific and deplorable as that is, the Eurozone can live with that. Having an economy as large as Spain come apart is not a viable outcome. Notice that this escalation in the number of people protesting comes before the officials start wiping out bank preference shares. As we’ve recounted, banks duped depositors into buying these instruments, presenting them as being completely safe but offering more yield. And it happened on a widespread basis: Reuters reported that 62% of the preference shares are held by depositors at the same banks. So if you aren’t convinced that the current level of Spanish protests are meaningful, be warned: you ain’t seen nuthin’ yet.

From Aljazeera:

Update: The Guardian also sees the protests against the latest round of budget cuts, passed in connection with the Eurozone bank rescue, as a sea change. It estimates 100,000 people turned out nationwide, 50,000 in Madrid.

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  1. yzyer

    A paradigm shift is underway in Spain.

    In 2015 we will not be talking about 52% unemployment of people 18-27 in Spain anymore.

    That much is certain.

    1. Mike S.

      we’re too busy buying iPads and wringing our hands about a lone nutcase gunning down strangers in movie theater in Colorado to begin understanding – or, more importantly, admitting – the systemic corruption of the ruling class.

      the GOP is nomiating Romney for crying out loud. the embodiment of financial predation is headling the ticket.
      what more can be said?

      I know some very, very sharp cookies who live their lives in abject denial over egregious fraud, exploitation of the working and, increasingly, professional classes, as well as the co-optation of the political process in the US. Some of the smartest folks I’ve ever met have said some of the stupidest things I’ve ever heard b/c they, and the country as a whole, prefer to operate in near total denial of reality.

      People are going to be dying in the streets en mass before things will change in the USofA.

      1. Mike S.

        shit, I replied to the wrong comment, ’twas meant for F libertarians’ missive below, sorry, yzyer

      2. Brooklin Bridge

        Speaking of people in denial of reality, do you think Obama is any better than Romney in terms of being a predator?

        You might tell that to the thousands of people who have been illegally thrown out of their homes by the banks that Obama has given a complete free pass to. He has done NOTHING for those people. Even Regan put away over 1000 bankers after the Savings and Loan fiasco. Obama -> 0.

        Or tell that to the 16 year old American citizen who got killed by one of Obama’s warrant-less “predator” drones, or to hundreds upon hundreds of innocent by-standers in Afghanistan and Pakistan (and Yemen, to name one other).

          1. Brooklin Bridge

            What bunk. How do you tell a dead person how much worse it might have been had it been Romney that pulled the trigger from six thousand miles away instead of Obama?

            There is all this, “OMG Romney would be so much worse” bullshit, but never, ever, EVER, and concrete examples of just how he would be so much, “OMG worse”.

            They are both identical. They both work for exactly the same people and for exactly the same reasons.

          2. Nathanael

            Eh. They’re not identical, it’s untrue to say they’re identical, they’re very different, but neither of them is *acceptable*.

            It’s like the difference between Garfield and Hancock in 1852.

      3. cassandra pony

        I completely agree! As I have been saying for the last few years! Yes, everyone I know is in denial. It’s been really hard to watch and not say anything because they will never get it until it’s too late.

  2. F Libertarians!

    More suffering is guaranteed as long as people fail to assert their economic and political rights. Sadly, it seems that people (in particular Americans) are too willing to accept and endure immense amounts of needless suffering before taking action. That guarantees more pain to be felt in America. Wake up, Americans, especially the unions which are presently funneling their members’ union dues to corrupt Democrats who are going to sell out to rich campaign donors instead of doing what really needs to be done – running their own members as candidates in the next election!!!!

    1. LeonovaBalletRusse

      FL, Americans are too afraid of death to resist/revolt and “invite death” from the .99% Agents of the .01% Master Class. They are still waiting to be “raptured up.”

    2. Iowan 786

      Reminds me of a joke I heard a while back. There’s a banker, a union guy, and a poor person sitting around a table. There are a hundred beans on the table, and the banker has 99 of them in front of him, with one left in the center of the table. The banker says to the poor person, “That union thug has your bean.”

      1. rotter

        Perfect description of the divide and conquer propaganda strategy as its alwasy been deployed against usnions and the poor in america

      1. K Ackermann

        That’s alright, we don’t have any other rights, either. You think the constitution means something? Tell that to the interred citizens of WWII, and all those thread upon today.

        The constitution is worth zero where the rubber meets the road.

        You want to sit and protest quietly? They will mace your face without consequence.

        Not until we are willing to snap necks will anything change. We’ve tried everything else.

      2. rotter

        You really should look to the libertarian right-wingnut sector of society for an answer to that question. They are the ones who have created a religion out of property rights, and im sure they could give you an answer. Be warned, however, they are full of shit.

  3. Maju

    I do not think that the protests held elsewhere are “just noise” and certainly not in Greece. How fast we forget how Athens was burning only months ago and how Greece has held for more than a whole year massive protests (massively supported general strikes, occupations of companies and government facilities, rallies and riots).

    Actually the case of Spain may be more “noise” like, or so would like the people protesting… who’d hope that the authorities in Madrid or Brussels would listen to their massive cry. However as the public spending cuts are spiralling with no horizon is sight, while the money is given to the banksters, the citizens will be forced to keep this kind of level of uprising. What else can they do? Resign to die on a sidewalk? Walk low-headed to the gates of Auschwitz to be culled like sheep?

    There are spontaneous protest every single day in Madrid. It has been that way for the last two weeks or so. And let’s not forget that last year there were massive permanent occupations of the city centers for months.

    However there is no serious left-wing opposition I can spot: it’s all very disorganized.

    1. Nathanael

      Spain is the country where anarchists managed to field an army.

      I would, therefore, not be over-pessimistic about the “disorganization” of the opposition in Spain. The lack of organization may be misleading.

      1. Maju

        But that was long ago (there was another such anarchist country: Ukraine, look up Makhno in Wikipedia or something).

        Today the CNT, even together with the breakaway unions CGT and SO, only seem able to rally so many people. I’d say that CGT is the strongest one but they don’t feel confident to challenge the mainstream unions too much.

        Before the civil war, the CNT had three million affiliates. After fascism, it has a few thousands. Fascism destroyed CNT. Other parties and unions made a comeback but CNT didn’t: revolution, much more anarchism, was totally off the radar of the Spaniards of the 1970s or 1980s, much less of the euphoria decades of 1990s. and 2000s.

        They committed many errors out of ideological extremism like boycotting the NATO referendum just because it was a referendum and the CNT rejects all kind of state and voting. People could not understand that anymore.

        CGT is more pragmatic but has yet to be able to rally the working class or even a sizable fraction of it.

      1. LeonovaBalletRusse

        thelone, this new “law” will work perfectly with armed drones in the Homeland.

      2. MontanaMaven

        Whoa! No right to protest. What was the justification for this? i.e. propaganda points? Good question to ask when these jerks call asking for support and money. This is very very disturbing. So was the Wall Street Journal front page article about the FBI wanting to look through a telecom company’s (probably Credo) phone records and the company fighting back which is rare.

    1. Maju

      100K? No! 800K only in Madrid, 400K in Barcelona, etc., etc.

      Essentially half Spain (and oppressed nations, excepted Basques who go on our own rhythm) went outon Friday and many also do every day in unorganized “Tweeter” protests.

      I know you’re being sarcastic but get your figures right, please.

      1. Capo Regime

        Good for the Spaniards! If its 800k in Madrid and 400 K in Barcelona that would equate population wise to over 5 million protesting in U.S.–will never happen. The spaniards got screwed and are now awake. Have to love a people with spirit and who are aware of their situation. Meanwhile back in U.S.A can;t wait for the election to get going! Maybe John Gray was rigth–the U.S. has really ceased being a european type country (western) and is post western/european and is really more like Brazil with Nukes.

        1. LeonovaBalletRusse

          CR, with either PuppetPrez of the Siamese Trojan Horse, expect:

          “Barbet Schroeder’s GENERAL IDI AMIN DADA [A Self Portrait]” (1974 Le Figaro Mara Films TV Roncontre, Criterion Collection 2002, ISBN 0-78002-507-5).

      2. Yves Smith Post author


        It looks like Guardian, which means the MSM, is really underreporting the scale of the protests, that’s where the 100K figure came from.

        If you have sources that provide figures like the ones you are saying, I’d like to point them out. The MSM underreporting alone is expected but this scale would be really noteworthy.

        1. Maju

          Público ( said:

          “Las manifestaciones de Madrid y Barcelona fueron las más numerosas, con 800.000 y 400.000 asistentes cada una, según los sindicatos. La delegación del Gobierno en la capital, que lidera la conservadora Cristina Cifuentes, rebajó esta cifra a 40.000 personas”.

          What, in synthesis, means that the unions said 800,000 and the government claimed just 40,000. But you just have to look at the pictures to realize that hundreds of thousands is a realistic figure. These figures are only in Madrid, I insist.

          Nowadays the popular tend to be more realistic about assistance figures, although no doubt they “round up”. In the past I’ve counted/estimated demo assistance myself more than once and that’s my impression at least.

          The total figures, considering that nearly every major town held their own protest (70,000 here, 300,000 there…) is surely of some 2.5 million, which is also roughly the number of public servants (2.6 million), all of which are very angry (and they are not the only ones). An estimate of 2-3 million for Friday protests in all Spain makes sense. You can argue down to 1-2 million but not to 100,000, sincerely.

          And, as I said, there have been spontaneous demos, specially in Madrid, every single day since two weeks ago. Marches to Congress, cutting for hours the main streets to vehicles…

          In many senses is like the Puerta del Sol protests of a year ago but without such a permanent position and with somewhat different sociological composition (less importance of youth, more of adult workers).

        2. Bobito

          I don’t know about the 800k, but I’ve lived in Madrid some time now, and seen a goodly number of protests, and Madrilinians like to get in the street, and this was one of the biggest there’s been in a while. Busload after busload of people.

        3. Nathanael

          Still not large enough to be the sign that things are going to blow this week. Well, to be more accurate, that’s enough protestors in Madrid (10% of the population, with military and police joining the protests) but not enough in the rest of Spain.

          However, the protests just keep getting larger and the government just keeps giving people more reason to protest. So it’ll blow sooner rather than later.

  4. Eric377

    No government wants to have the scale of public dissatisfaction currently being expressed in Spain. Like Romney and his tax returns, the alternative approach is probably worse. Say they decide to not backstop the banks? Is that going to leave the Spanish Treasury flush to resume prior social spending? Well, provided they do nothing for the dupes who took equity in banks thinking they were like deposits. And do nothing for the creditors who will take huge losses, like insurance companies and pension funds. And settle the deposit insurance claims at 33% against current law. Then Spain will certainly recover quickly. Honestly, I do think they should cut the banks loose and muddle through this, but there is no happy ending around the corner whichever way Spain moves.

    1. Ned Ludd

      What if Spain left the euro and switched to the Argentine peso? I realize the present government would never do this and is in fact very hostile to Argentina. But, hypothetically, if the Spanish government re-denominated all Spanish debt from euros to pesos, the 20-30% (unofficial) Argentina inflation rate would quickly shrink the real size of private debt.

      In fact, Greece could do this, too. However, it would be more of a natural fit for Spain since they already have plenty of cultural and economic ties to Argentina – and a shared animosity toward Britain.

      Also, in the long run, Spain would benefit from being aligned with Mercosur instead of the E.U.

      1. LeonovaBalletRusse

        NL, technically, they could cut out and glom onto any currency-cum-nation they liked, couldn’t they? Doesn’t C.21 technology make ad-hoc re-combinant “financial arrangements” possible?

        1. LeonovaBalletRusse

          I mean, couldn’t France share a currency with the Russians of St. Petersburg, if they could work it out within a frame of New Enlightenment Thinking?

          “RUSSIAN ARK: A Film by ALEXANDER SOKUROV” — with Music Performed by the Mariinsky Theatre Orchestra, Conducted by Valery Gergiev, Original Score by Sergei Yevtushenko (2002 Egolli Tossel Film AktienGesellschaft & Hermitage Bridge Studio; 2003 Wellspring Media Inc.)

          What are geographic borders in light of Lebensraum by force of Bankers?

  5. Jose Guilherme

    The protestors are not reacting against the Euro or the EU, that impose these measures on Spain.

    They just protest against “austerity” as if were some kind of unexplained mechanism coming from another planet.

    Plus, in formally democratic systems the most effective way to achieve change is through the ballot box, by empowering forces that want to implement alternative policies – which, in the Spanish case could only come via a break with the EMU and the EU itself.

    Yet no anti-euro or anti-EU force is visible in the political spectrum. Nay, it’s even the case that the anti-austerity left is probably more pro-Europe than the right-wing now ruthlessly implementing it.

    Let’s face it: the modern Spanish political culture has been completely overtaken by EU/euro ideology. People are not even able to imagine – let alone fight for – a universe outside the political correct, “European” bounds. They may not like austerity, but since they fail to grasp its causes their reaction will fail to bring any real changes in policy.

    Yet the sad fact remains, in Greece as well as Spain: complaining about austerity while accepting the euro is a bit like traveling to the desert to then express dissatisfaction with the dry weather.

    And, as long as people refuse to understand this, no real change will be possible in the periphery of Europe.

    1. scraping_by

      The MSM stories put anti-Euro and anti-EU sentiment squarely in the flake right, whether “nationalist socialist” or “militarist” or “anti-immigration.” The nice middle class people of Europe will have to toughen up about being called racists, storm troopers, Templars, and worse.

      Groundless accusations of being a monster eventually just become noise. Just don’t take the bait.

      1. Bobito

        In Spain we are already governed by the extreme right, in its polite form. The PP is taking advantage of the current situation to restore the halycon days of Franco.

        Just a day ago the minister of justive, Alberto Gallardon (long time mayor of Madrid – since replaced by appointment by the wife of former Spanish president Jose Maria Aznar), proposed banning abortion in the case of a deformed fetus. Only a twisted political perspective could see the week after enormous cutbacks as the opportune moment to make such an announcement.

    2. Bobito

      In Spain, like in most “developed” countries, more than 15% of the population has no vote, because it consists of immigrants. For these people (I among them), democracy is a shibboleth or a farce. We pay our taxes and get no voice in return.

  6. JGordon

    Even if there are no austerity cuts, what are these people going to do? The currency itself is coming apart at the seams–eventually imports and exports to these countries using the Euro just simply (officailly) cease no matter what anyone does–that’s the nature of Peak Resources–and then everyone will have austerity whether they like it or not. Not to mention rapid population declines.

    1. F. Beard

      Go look up Occam’s Razor before you drag your pet peeves into what is simply a money and debt problem. I could claim the problem is tattoos and body piercings and make a somewhat convincing argument but I don’t.

      1. Kunst

        Occam’s Razor: go with the simplest explanation. Yeah, that works a lot of the time, but not always, not necessarily even most of the time. Reality is more complicated than that.

  7. Mark G.

    Rising food prices, drought conditions and more printing from Bernanke may make for an interesting second half, a warm-up for the 2013 meltdown

    1. Dave of Maryland

      Glad you brought it up. 2013 will start with a bang. A big one. There are many, many treaties and agreements that came into effect on January 1 of any given year, among them, the Euro, the union of England, Scotland and Ireland, the 5 boroughs of New York, etc. In every one of these, the Sun was at 10 degrees of Capricorn.

      Pluto will be there, exactly there, in January. Happy New Year!

  8. Ruben

    It looks like the Spanish gov’t is betting all it has on a BCE rescue of its debt to bring the risk premium down as soon as next week. The feeling is that they did all that was asked from them but the risk premium keeps increasing, so it is time for the BCE to step in. The hope is that the Spanish State is too big to let it fail. What can go wrong?

    1. scraping_by

      Since the risk premium is controlled by a handfull of bond traders who have an agenda that excludes the public good, what can go right?

      It might be cheaper just to bribe the traders directly.

    2. Adam K.

      Not connected to your post. Took seriously the list of books you published few weeks ago, was wondering if you had some more and wanted to thank you for the fascinating read…

          1. Ruben

            I don’t recall having posted a list of books. However, I had a conversation here with proximity1 and he posted a list of books in response to an amazingly insighful post of mine.

            You might want to look at the “Stealth Austerity Coming to Spain?” post of June 12 to check if this is right.

  9. Paul Walker

    Most noteworthy is the addition of civil servants including police as demonstrators with members the military considering joining in.

    Rojoy’s legitimacy is evaporating by the moment.

    1. Bobito

      Last week, by taking 1/14 of the annual pay of all public employees (including those on temporary and interim contracts – a large number), Rajoy angered deeply many who voted for him half a year ago.

      If Rajoy is still president of Spain in December, I will be surprised.

      1. Maju

        I think that Rajoy will be President in December 2012 and December 2013 unless there is a real revolution, i.e. unless Moncloa burns with him inside.

        A revolution is possible (considering how angry people is almost everything is possible) but totally unprecedented. Otherwise Rajoy and his PP clique of corrupt bloodsuckers will cling to the privileges of having a parliamentary majority for as long as they can, as Papandreu first, Papademos later and Samaras now have done in Greece.

        And, let’s be realistic: if Rajoy falls and, say, there are new elections… who’s going to replace the instutional parties? Rosa Díez and her populist-fascist UPD? The uncharismatic Cayo Lara and the rather rusty United Left?

        The past is dying quickly in Spain but no alternative of future is still conformed, nor likely to coalesce any time soon (the four+ million votes lost by PSOE in last elections just fragmented into many diverse and incoherent options). And that is a major problem because the hopeless collapse risks becoming a permanent feature of Spain for a decade or more.

        I naturally hope for a revolution but, seriously, first the Working Class must get organized in a single large movement, much larger and “young” than United Left.

        1. Bobito

          When Spain is rescued, a Monti will be picked by the EU overlords to replace Rajoy. I can’t see how it could be otherwise.

          And it sure looks like Spain will be rescued quite soon.

          The alternative – leaving the euro – would certainly mean major political changes.

          1. Maju

            Almunia (former “socialist” minister and current Euro-comissary of something) is the name most mentioned. But forming a concentration government only causes more erosion of the legitimacy of the alleged “democracy”. And you can’t rule just with rubber bullets, you know: you need to brainwash most of the people somehow, make them believe that the regime is the correct one or at the very least the lesser possible evil.

            So I doubt they will do that. It did not work in Greece and it is not likely to work in Spain either. Italy is another story probably.

        2. Nathanael

          Why do you say a revolution is totally unprecedented?

          Most of the history of Spain from the French Revolution until Franco is non-stop revolutions and coups, with short breather periods in between. There are still people alive who remember the Spanish Civil War of 1936-39.

          1. Maju

            No, no. Successful revolutionary processes like in France or even the less radical ones of Italy or Portugal? Nope. That’s why Spain is still a monarchy and not a republic.

            All revolutions have failed in Spain one after the other. That’s the greatest Spanish tragedy. Uprisings many, successful ones, even for a decade or so: not one yet.

            Between 1814 and 1931, Spain was (with a very brief republican parenthesis) a monarchy with intermittent concessions to formal bourgeois democracy (limited voting rights, systematic vote rigging, no agrarian reform). Major revolts? I can think of two or so but failed or violently quelled, inconsequential.

            The brief illusion of a democratic system (republic with full voting rights, freedom of speech, labor unions) between 1931 and 1936 was soon quelled by yet another “espadón” (“big sword”, reference to the ace of swords of the Spanish cards deck). Just that this one was a fascist and Christian fundamentalist, an Iberian Khomeini. There was a revolutionary counter-attempt, mostly led by the anarchists, who stopped the coup in Madrid, Barcelona and San Sebastian… but the anarchists lacked the will to take power and were sidelined by a weakened Republic and an intransigent Stalin which became their only support (while the fascists had full support of Hitler and Mussolini and the calculated indifference of Britain). The current regime is Franco’s reformed successor.

            No palace has burned yet, no autocrat’s head ever rolled. It may still happen but it is indeed unprecedented.

        3. Nathanael

          The tendency of the left-wing revolutions to get crushed by right-wing revolutions is pretty clear historically in Spain, of course. But the sort of right-wingers who crush them are not so much friends of the bankers.

          1. Maju

            Aren’t they? Right wingers are always friends of big money: they just love hierarchies and will obey whoever is in power.

            Incidentally “right-wing revolution” is an oxymoron.

  10. Jackrabbit

    “Convincing” people to give up sovereignty isn’t easy.

    The beatings will continue until moral improves … and the right conclusions have been drawn.

    1. Jackrabbit

      Consider Doyle’s IMF j’accuse: the IMF, headed by Euro elites (and presumably other Euro-headed/oriented institutions) were slow/unwilling to respond as the crisis was building.

      I doubt Doyle would be complaining so loudly (“ashame to have had any association with the Fund at all”!!!) if they merely underestimated the scale of the coming crisis.

      What could justify allowing the crisis to grow? Probably the power of ‘special interests’ that wanted to safeguard (as much as possible) corporate profits & debt repayment?

      But it seems to me that turning a blind eye to the coming disaster could only be justified if there was a ‘higher purpose’. The best candidate, I think, would be accelerated unification.

      Plenty of people have suggested that the real problem that Europe faces is not financial but political. Doyle’s letter indicates that TPTB are using the crisis to accelerate unification… and possibly to influence the ‘terms of trade’, resulting in a stronger central government than would otherwise be the case.

      1. LeonovaBalletRusse

        J, as others have pointed out, he’s the first “rat from the sinking ship.”

        1. Jackrabbit

          first “rat from the sinking ship.”

          Misconstrues what Doyle is saying. He is not complaining about economics or the mission of the IMF. It seems clear that he is complaining about decisions that were made and the governance structure that supported/condoned those decisions.

      2. Ruben

        Debt repayment is the most important thing. To the altar of Debt Obligations almost all other things must be sacrificed. And as of now the most powerful European aparatchiks still don’t see anything worse than defaulting on debt. When and if these aparatchiks see something uglier than default on debt, they will do something about it. Political unification my ass! Pardon me.

        1. Jackrabbit

          Maybe your right. We haven’t seem much statesman-like behavior. It was probably all about the money (repayment).

  11. scraping_by

    Austerity victims – collateral damage or the targets?

    The last section,especially.

    The neoliberals define their theft as “freedom” and spend hours praising freedom. In the antebellum Senate, Senators from Dixie defined slaves as “property” and spent hours defending property.

    Breaking out of the current intellectual and rhetorical rut depends on breaking out of the current acceptable forums. Look for unacceptable reality expressed in unacceptable ways for a long time to come.

  12. Kenneth Alonso

    For many it will always be difficult to live within their means. Spain is an example:
    1. Franco developed an autarkic state largely as a response to being excluded from international discourse following WWII. To quiet the Basque separatists and the Catalonian left, Spain poured money into those regions. Also receiving treatment above that of the norm were Asturian miners. Price and capital controls were firmly in place for decades. Employment was guaranteed.
    2. Following the transition to “democracy”, subsidies were granted to political parties, unions, manufacturers. Energy prices and transportation costs were subsidized. The rigid labor structure was left in place.
    3. Political corruption, found under Franco, exploded in the “democracy.” Tax evasion has remained a problem.
    4. The welfare state was expanded.
    5. With entry into the EU, much industry and agriculture was dismantled. With entry into the Euro, interest rates fell from double digits (hence, the bubble). Private and public borrowing exploded.
    6. Now, without the peseta, internal devaluation and asset deflation follows.
    The protestors are all subsidized groups. If they want the old ways to remain, return to the peseta. Few will want to invest in Spain today.

    1. F. Beard

      For many it will always be difficult to live within their means. Kenneth Alonso

      It’s more complicated than that because money creation (even unethical “credit”) creates the means by which people live. People say the boom was “an illusion” because it was financed with credit YET real goods and services were produced. Disgustingly, real goods and services are being destroyed because of a mere lack of money in the right hands.

      1. Kenneth Alonso

        Whose hands are the right hands? Presumably those are the elected representatives of the people (public)as well as those businessmen who attempt to maintain or generate employment (private). If real goods produced are unused housing units, subsidized coal, etc., then why lament the destruction of those real goods? Or is it that a lavish welfare state must be maintained when it is unsustainable (no goods produced)? Or must a corrupt government from ruling family to the lowest coucilor in the smallest town be maintained? You are correct in that solutions are not facile.

        1. F. Beard

          Credit creation cheats everyone including, ironically, the banks themselves. The “right hands” therefore are the entire population’s. Steve Keen’s “A Modern Debt Jubilee” would fix everyone from the bottom up including the banks and local and national governments.

          So yes, the solution is easy: Ban further credit creation and bailout the entire population at a rate metered to just replace existing credit debt as it is repaid – in effect replacing debt with real money.

        2. Bobito

          By any reasonable measure, Spain’s “welfare state” is and has been far less “lavish” than that of any other major Western European country.

          Also the percentage of the workforce employed in the public sector and pay in the public sector are far lower in Spain than they are in France, Germany, even Italy. There are fewer teachers, doctors, firemen, etc. per capita in Spain than in those countries, and their salaries are substantially less.

          It seems to me that the states faring the best in the current crisis (France and Germany) are those with the most “lavish” “welfare” systems, and that spend the most in the public sector. This is because the public sector does some things much more fairly and much more efficiently than the private sector, precisely because it is not motivated solely by money.

    2. Jose Guilherme

      The promise the EU (then simply EC) made to Spain back in the 80s was quite simple: join, and you will be permanently guaranteed a high standard of living, the European standard. “Thou shalt live beyond your means”, the good EC spake.

      Absent this promise, Spanish public opinion would probably never have shown a high amount of enthusiasm for the European project.

      And the promise then seemed sincere and quite real, because it was backed by billions of apparently “free” European funding and later on by incredibly low interest rates.

      Now that the situation has changed drastically and for the worse – that the chicken are coming home to roost – perhaps the moment has come for Spaniards to consider whether it’s worth staying inside a project whose trajectory will keep them living well bellow their means for the foreseeable future.

    3. Ruben

      Plausible, but a counter fact is that in spite of corruption and the welfare, the Spanish State was running a primary fiscal surplus up to the current crisis, and an actual budget surplus 2005-2007, so your point 5) does not stand. Can you correct your argument? Otherwise is flawed.

    4. Bobito

      While a lot of what you say is true, it is complete nonsense that “the protesters are all subsidized groups”. The usual suspects show up at the marches to try to take credit for them, but Candido Mendez got booed at one of them last week, and the many thousands in the streets are not there for the most part under any banner. Recent protests have been full of middle aged people who work in offices.

      Your story also neglects the negative impacts of the capital that flowed into Spain, the the price increases in Spain, that followed the euro.

      Said that, it’s no accident that this is occurring in countries that 40 years ago were dictatorships, and quite poor.

      To say folks do not know how to live within their means is unfair. Two income families living five-seven to a 100m^2 apartment who own no car are living within their means. Later, that they are easily cheated by banks, or caught up in the speculative euforia that was the real estate mania – they share some blame for this – but the fault is not principally theirs. Propaganda is effective, and folks come to believe what they are told over and over again by other folks who appear to know more and better.

  13. Hugh

    In good times, everyone is European.

    In bad times, everyone is Spanish, German, Greek, French, etc.

    Both the euro and the European elites prey upon this distinction. European 99%s are victimized by it.

    1. LeonovaBalletRusse

      HS, but since Monday, the “law” says “Occupy” type tactics a felony in U.S.

      See link provided above, earlier in the Comments (not by me, although I replied to the provider of the link).

  14. LeonovaBalletRusse

    YVES, on a list of EU states recently, I saw listed:

    “The Republic of Spain” AND
    “The Kingdom of Spain”

    Can you explain what this means?

    1. Maju

      However in the commemoration of the liberation of Paris, the Spanish Republic (1931-39) has quasi-official recognition in form of distinct banner. Not in vain the first allied tank to enter Paris was the Gernika and not in vain much of the “French” resistance was made in fact by Spanish exiles.

  15. emptyfull

    The drip-drip-drip of this crisis is getting really hard to watch.

    How long before the levees brake? And who will be the ones to drown in the uncontrollable waters that follow? If anybody in charge thinks the coming waves can be neatly controlled, please rethink your hubris! History shows us otherwise.

    To totally mix my metaphores: You ever get the feeling that all the folks in the nice above-deck cabins have ordered the captain to avoid the Scylla at ALL costs…. ?

    Of course for those below deck the elipsis is where the real terror begins.

    1. Nathanael

      Paul Krugman has dubbed the “timing phenomenon” of crises like this, by the name “Dornbusch’s Law”.

      It’s as good a name as any, though I came up with it independently of Dornbusch.

      Crises always take longer than you think they will to develop — and then they happen much faster than you think they will.

      So this will go on, drip-drip-drip, longer than we think that it possibly can, and then one week we will wake up to revolution.

      That’s how it happens.

  16. K Ackermann

    We’re not going to be far behind but this time it has to be different. The Occupy movement was great, and generated some great memes, but we saw how trivially it was put down with violence.

    We need a general strike, and a good way to enhance it would be for everyone to wear camouflage and kaffiyehs wrapped around our our faces, and be armed to the teeth. People would stay home.

    We’ve tried everything else. Violence is terrible, but it works. CNN wouldn’t show a self-immolation, but they sure as hell will show a bunch of burning cops.

    1. emptyfull

      Please. Do not feed at the poisoned trough of populist violence. It will only discredit you with the vast majority of people.

    2. Nathanael

      No, they won’t. You underestimate the level of censorship and bias in the US media.

      Did Soviet State TV show footage of attacks on the NKVD? No, they did not.

  17. Bobito

    Ordinary people in Spain are quite angry. Most of my Saturday trip to the butcher shop was spent discussing the current situation with a good sized bunch of folks – the volume was not always low – one of the butchers and the chicken butcher in the stall next to him both independently proposed shooting all the politicians …

    Unemployment in Spain has been high forever, and folks are used to dealing with it, but what is going on now is another thing. I teach in a university – the autonomous community has cut my pay, the national government has quit 1/14 of my pay, the autonomous government has not brought out various “complements” to my pay it usually does – the real reduction to my annual pay this year is around 15% – on top of this the income tax in my bracket has gone up, the VAT has gone up substantially (it’s more than just 18 to 21 – things like school materials or the barber used to be taxed at a substantially reduced rate and now are taxed at the full rate). My real income will be 20% less this year than it was last year. In purely monetary terms I would do worse, but not so much worse to be on unemployment.
    All this and nothing in return.

    As for the “preferentes” – Spanish banks – like Bankia – convinced their long term account holders – 65 year old ladies with their 10,000 euros of life savings – to convert their savings accounts into preferred stock – nobody read the fine print – because nobody knew it was there and nobody would have understood it anyway – the banks did this knowingly – it was a massive fraud on a wide scale – the banks knew they had tremendous account imbalances due to tremendously overvalued property/mortgages, and they were looking for any source of liquidity they could find. Cheating their long term account holders was an easy fix.

    Now we are all taking pay cuts to save those same banks.

    Folks are pissed.

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