From Edward Hugh on Facebook. It looks like PP’s credibility is falling. What I don’t understand is the continued ‘hard line’ on austerity measures. There is a moral, emotional undercurrent within the demand for austerity, and as we know, emotional responses rarely make sensible policy. A country is not a person. It can take on debt. It isn’t always supposed to be pay as you go. Debt allows the building of infrastructure and finding a cure for caner. Yes, I do agree that the debt is out of control, but having a sensible 50-year plan to solve the problem is the way to go.
Regardless, austerity measures are not working. The situation reminds me of Albert Einstein’s definition of insanity: Doing the same thing over and over again and expecting different results.
An infusion of investment into job-creating industries could provide the synergy to turn the economy around. But no, they are all only concerned about debt. If the euro falls, it will due to bad policy, lack of planning and inept contingency plans. And of course, lack of oversight of the international crime syndicate otherwise know as the financial services industry.
For people on the outside looking in, with each passing day Spain gets to seem more and more like Greece. Now last year’s deficit has again been revised upwards, this time from 8.5% to 8.9%, a number which (if all this means anything anymore) is only 0.3% down on the 9.2% deficit invoiced in 2010. Yet, I am sure the government of Lose Luis Zapatero and Elena Salgado did try and implement cuts, and I am sure only part of the responsibility for the fiasco belongs to the autonomous communities. The latest number only serves to underline the extent of the economic problem facing Spain. Even with this deficit, GDP growth on the year was a tiny 0.3%. Just imagine what it would have been had they cut back to the 6% deficit they promised!
One interesting side detail here is that the three communities whose deficit revision has pushed the number up – Madrid, Valencia, and Castilla & Leon – are all heartland PP regions, where the government has long been in the hands of the Partido Popular, the party running Spain’s current government. Those who remember Elena Salgado’s staunch defence of the “we WILL reach the 6% target” last year may well wonder what good reason there is to expect the administration to be able to comply with this year’s targets.
And another interesting detail is the fact that the region of Madrid is among the “offenders”. The President of this region is none other than Esperanza Aguirre, emblematic figurehead of the PP’s hard right, and also one of the key actors in the Bankia/Caja Madrid affair.
So this brings us to the common thread here. These people are saying one thing and doing another, and this is what is destroying Spain’s credibility before the markets. Years of arrogance, brow beating and bullying of those who maintained that all was not as it was claimed to be in Spain are now bearing their fruit, a complete collapse in market confidence in the country’s institutions. At first most fair minded journalists couldn’t believe that people who seemed so normal and so reasonable could be lying so brazenly. Now they know. As I say, the difference between Greece and Spain is that all the important numbers are known and monitored, whether at the Economy Ministry or the Bank of Spain. They are just not made public. There’s even a verb for this in Spanish, “maquillar”.