Protest against education and health care spending cuts in Madrid on April 29, 2012
The populist reaction to bankster-led austerity in Europe is reaching a boiling point now, as elections near in several countries (Greece, France) and there is no way for politicians to spin the record levels of unemployment and ubiquitous conditions of credit/economic contraction that now exist. A full quarter of the adult populations in Greece and Spain are unemployed, the other peripheral nations are fast approaching that same critical territory and even the “core” nations have officially re-entered what the pundits call “recession”. Perhaps the most disappointing thing about all of these realizations is that they are only happening now.
What if the Europeans had listened to the numerous analysts who were screaming at them YEARS ago that propping up the monetary union and the European banking system through systemic austerity programs was a recipe for economic disaster? We hear that type of thing a lot, don’t we? “If only” they had done this, “if only” they had done that. Yet, we always end up in this last minute, fourth down situation in which the next play offered up is going to absolutely WILD and with little chance of success. That’s not to say the populist movements won’t succeed, but only that a lot of different things have to go right for them to abandon the current suicidal austerity regimes and exit the Union in a peaceful and relatively orderly way.
It is a very stressful and disappointing situation to be in, but I believe we will at least find out soon what the last play of this Eurocratic game from Hell will be. If not the last play, then one of the plays leading up to the last play. We cannot say for certain what the outcome of these plays will be, but we can be sure that it will be a messy one for almost all Europeans involved, and that’s what really leaves me feeling crushed with disappointment today. On the other hand, it is still uplifting to see the European protesters in action, fighting for their rights until the bitter end, whatever end that may be. Here’s Patrick Donahue for Bloomberg:
A recession in Spain and forecasts of rising unemployment in the 17-nation euro area are amplifying criticism of the German-led austerity agenda in election campaigns this week in France and Greece.
With Spain’s largest unions leading marches involving thousands of protesters in 55 cities yesterday, Prime Minister Mariano Rajoy’s government battled to prevent Spain from becoming the next country to seek a bailout. In France, where the presidential-election runoff is set for May 6, Socialist frontrunner Francois Hollande pushed back against German Chancellor Angela Merkel’s focus on deficit reduction.
Watching Spain now is exactly like watching Ireland around October 2010 before Ireland was forced into its bailout,” Megan Greene, a senior economist at Roubini Global Economics LLC, told Bloomberg Television’s “Street Smart” on April 27. “The government can’t win no matter what it does.”
Spain’s economy shrank in the first quarter as the nation officially entered its second recession since 2009. Gross domestic product contracted 0.3 percent. Joblessness in the euro area probably to rose to 10.9 percent last month, the highest since 1997, according to economists surveyed by Bloomberg.
As Spanish joblessness reached almost one in four of the working-age population, Hollande demanded that euro-area leaders move to promoting growth from cutting budgets, as agreed by 25 European governments in the so-called fiscal pact. Merkel drew the line at re-opening talks on the fiscal treaty, though she said growth could be boosted with labor-market reform and European Union funding.
A war of words erupted last week between Hollande, who decried Germany’s fiscal-focused leadership in the two-year-old financial crisis, and Merkel, who said that the turmoil can’t be resolved without cutting debt. Polls show that Hollande is likely to succeed Nicolas Sarkozy as France’s next president after winning the first round of voting April 22.
“You, the French people, are going to vote to give Europe a new focus on growth, on progress, on the future,” Hollande told 17,000 supporters yesterday in Paris. “The head of the ECB can also see that some government heads also understand that austerity alone won’t help cut debt. They are starting to hear what we are saying,” he said.
Greece will also hold elections on May 6, with polls indicating no party will win enough votes for a parliamentary majority. The lack of a clear mandate could complicate Greek bailout efforts, since the new government must spell out to global creditors in June how it will make fresh budget cuts.
Spain figured at the center of last week’s debate, with borrowing costs climbing after Standard & Poor’s cut the kingdom’s sovereign credit rating for the second time this year, to BBB+ from A, on concern about further fiscal tightening and the country’s banks.
Roubini’s Greene said that concerns on Spanish debt were self-sustaining as markets gyrated from worries about the effects of more austerity to a lack of budget discipline. She predicted Spain would seek bailout aid early next year [I predict sooner].