Mario Lopez writes from Madrid: Well there you have it: the Spanish government announces 40 billion euros worth of cuts and the masses simply don’t want to accept it. And they are right, the masses. Because it is a scandal that the EU gives the Spanish banks that have gambled and stolen hundreds of billions a huge bailout while the ordinary people are made to pay for this. In a normal environments all these Eurocrats should be held responsible for bankrupting Europe, along with the money men. Fat chance of this happening of course but it would be great to see European politicians sitting in the dock and receiving long sentences for their vile deeds. Would do wonders for the democracy, you know.
But I digress. For the past three nights demonstrations against the austerity cuts have been going on in Spain. The latest tactic used was to surround the parliament building in Madrid and protest. stay there. Spain used to have the largest number of anarchists in Europe. It appears that their number are on rise again.
Spanish Prime Minister Mariano Rajoy says the new budget cuts, all 40 billions of them, will actually help the Spanish economy to recover. Hard to understand how it will work, as it is basically a cynical ploy to put the burden of recovery on the shoulders of ordinary people. Mr Rajoy is no conservative, of course. He is just doing what the EU is telling him. All in the hope of getting another bailout to help out the bankers. Even though the government says it doesn’t need a bailout.
Rajoy is playing politics as well. Regional elections in Galicia and Euskadi or the Basque Country are due on October 21. The Prime Minister wants to avoid any more bad news before these elections since his party, the Partido Popular, could suffer a hammering. To add to the pressure, Artur Mas, the President of Catalunya, has called elections for November 25. It will be a referendum on self-determination. Catalunya accounts for about a fifth of Spanish Gross Domestic Product. It maintains that if it were an independent state it would be among the top 50 countries in the world. The long term gripe is that it subsidises the weaker parts of Spain. Last week, Rajoy turned down a request for a new fiscal and tax pact. The vote will strengthen the desire of Catalans to retain taxes paid in the region. A bold move would be to decide not to transfer any tax collected to Madrid. Euskadi might follow suit. That would cause a constitutional crisis.
Spain is facing another banking crisis. Mario Draghi, the president of the European Central Bank, talked about spending whatever was needed to save the euro. Brave words but they are merely brave words. Finland, the Netherlands and Germany have made it clear that they will not agree to cover old banking debts. They are the responsibility of the host country. What are old and what are new bad bank debts? This is another way of saying that the foreign banks which are owed billions by Spanish, Greek, Irish, Portuguese and Italian banks will have to face huge losses. The dream of a banking union in which all banks can dip into common funds is over. It is now every country for itself. With the German economy slowing and general elections next year, Angela Merkel has to say ‘Nein’.
Britons should not rejoice at the bad news from across the Channel. British banks are also exposed to bad European debts. A Greek exit from the euro appears inevitable next year. A Spanish bailout is also inevitable. Britain’s chances of recovery are receding by the minute.
A hit US series is about life after the crash when there is no electricity or petrol and everyone gets around on foot or horseback. Is that the future Europe is facing?