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Saturday
Apr272013

Spain Loses Faith, But Rediscovers Reality

Contributed by Don Quijones, a freelance writer and translator based in Barcelona, Spain. His blog, Raging Bull-Shit, is a modest attempt to challenge some of the wishful thinking and scrub away the lathers of soft soap peddled by our political and business leaders and their loyal mainstream media.

The reputation of the economics profession was dealt a heavy blow this week when it was discovered that much of the data used to support the findings of Kenneth Rogoff and Carmen Reinhart’s 900-page book This Time It’s Different – an apologia for economic austerity that since its publication in 2009 had formed an essential intellectual basis for the Troika’s austerity drive — had been heavily manipulated. It was, as Heidi Moore wrote in The Guardian, a stark reminder of the fact that while economists might spit out cold, hard numbers, it doesn’t mean they produce the cold, hard truth.

Not that news of the scandal was enough to put off Mariano Rajoy’s government (admittedly, with the Troika’s gun cocked and pointed at its temple) from announcing a further round of austerity measures on Friday 26th April — just one day after yet another eruption of violent clashes between protestors and riot police in Madrid’s Plaza Neptuno.

The new reforms include a two-year extension to what was supposedly meant to be a temporary, short-term hike in sales tax as well as a further increase in taxes on businesses — measures which, as any self-respecting economist (of which there are admittedly few) would tell you, are not exactly going to help the nation’s struggling and debt-laden companies generate jobs for the more than six million unemployed.

Indeed, the new tax rise could not have come at a worst time, following hot on the heels of the worst quarter for Spanish business closures since the crisis began. And with companies’ tax burden set to rise further, it is a trend that seems likely to continue, if not accelerate — especially in light of the fact that the current government appears to have all but thrown in the towel on the economy, admitting that the recession will likely continue until 2016.

Crisis Obsession and Fatigue

But Spain’s problems are not only economic in nature — they are also psychological. For well over three years now “La crisis” has been the nation’s number one topic of conversation, dominating both elevator small talk and dinner-time debate.

In fact, you can bet what little remains of your life savings that up and down the country right now there are hundreds of thousands of Spaniards discussing how royally fu**ed (if you’ll excuse the pun) they are. Countless others meanwhile struggle to lift themselves out of the depression and uncomfortable numbness resulting from acute crisis fatigue.

Such a bipolar collective mood is hardly surprising. After all, few countries have fallen from grace in such spectacular fashion as modern-day Spain. To recap, in just the last three years alone:

  • The economy has entered terminal decline and, with it, many people’s job opportunities have gone permanently AWOL.
  • A ruthless program of public-spending cuts and privatisation has been rushed through into legislation against the explicit wishes of the people;
  • The country’s banks have intentionally robbed hundreds of thousands of their own customers of their life savings;
  • Its local, regional and national governments have proven to be dens of treasonous and woefully inept thieves and liars;
  • Its royal family, seemingly dissatisfied with its multi-million euro budget, has been caught embezzling funds from the public purse.

Even on the football field, one of the last remaining sources of national pride, the country’s fortunes have taken a dramatic turn for the worse following Barcelona and Real Madrid’s recent mauling at the hands (or should I say, feet) of Germany’s Bayern Munich and Borussia Dortmund.

But it’s not just national institutions that have lost credibility here in Spain. According to Eurobarometer’s latest survey on the levels of public trust in the EU, Spaniards are also fast losing faith in the European dream.

From Most Europhile to Most Euroskeptic in Five Short Years

While euroskepticism appears to be on the rise in all six of the countries surveyed (the U.K., Spain, France, Italy, Germany and Poland), it is Spain, once a bastion of pro-EU sentiment, that saw the most dramatic increase in public distrust in the EU, from 23 percent in 2007 to 72 percent today. In one of the most dramatic turnarounds this century — and one that merits far greater attention in the continent’s press — Spain is supposedly now more euroskeptic than even the U.K.

There can be no overstating the importance of such a sea change in public opinion. It is as if the youngest democracy in Western Europe has finally lost its youthful innocence. After the betrayal of so many hopes and promises, reality is finally dawning on the people that neither democracy nor EU membership are quite the panacea they were cracked up to be.

Indeed, in what must be a first, the staunchly pro-Europe El Pais published an article from the Screwdriver blog (in Spanish) that explores, in a balanced, mature, and non-alarmist way, the potential ramifications of Spain’s exit from the euro.  The article’s author, Antonio Estella, an expert in European Union law, underscores the fact that since adopting the euro in 2001, Spain has become Europe’s most unequal country in terms of income distribution.

While potentially highly damaging in the short run, leaving the euro and reinstating the peseta is probably the Spanish economy’s only way out of its current predicament, the article concludes.

Not that Rajoy’s government seems remotely inclined to consider such a proposal. On the contrary, just two days before the publication of Estella’s article, Rajoy all but handed what remains of the country’s national independence on a plate to Brussels, saying that all EU countries must agree to give up some degree of sovereignty for the “greater good”.

As I wrote in my recent article “Europe’s Stark Choice: Revolution or Resignation“, the continued survival and expansion of the European superstate supersedes all other concerns in Europe, whether moral, political, social or economic.

But the eurocrats and their suppliant servants in national government may find it more difficult than they originally envisaged to bulldoze banking, fiscal and eventually political union into reality, especially with euroskeptic fever on the rise throughout the continent, including even in Germany, the ECB’s paymaster-in-chief.

Perhaps if it had shown itself just a little more sympathetic to the needs of the continent’s working and middle classes rather than favoring the interests of the “markets” and financial institutions at every turn, or, for that matter, perhaps if it had listened to the pained voice of the quiet majority rather than trampling all over democratic principles and conventions, then the EU might not be seeing the tide turn so quickly against it.

That said, the fact that growing ranks of Europeans are finally beginning to see through the EU’s cloak of utopian unity to its ruthless, heartless, technocratic core may well represent the last remaining glimmer of hope for real meaningful change in the fast-declining “old continent”. Contributed by Don Quijones.

Also by Don Quijones: Lies, Damned Lies & Sadistics: The IMF’s Role as Bankster Enforcer

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