Spania er bedt om å redusere underskuddet på statsbudsjettet fra 8 til 4,4 prosent. Det betyr nye nedskjæringer i et land der arbeidsledigheten er på 20 prosent.
Hvor lenge vil latinerne finne seg i at nord kjører deres økonomier i grøfta? Arbeidsledigheten i Tyskland er 5.5 %.
Ambrose Evans-Pritchard kaller politikerne i nord “fiskale kalvinister”. Det er kommet inn en ny konservativ regjering i Spania. Vil spanierne finne seg i å bli diktert fra Berlin og Brussel?
Though he swept into office as an apostle of orthodoxy, Mariano Rajoy has since delved into Madrid’s ghastly accounts and concluded that it would be “suicidal” to try to slash the budget deficit from 8pc of GDP to 4.4pc of GDP this year, as demanded by Europe’s fiscal Calvinists.
Such a policy would require a further €40bn or €50bn of cuts and accelerate the downward spiral already underway, beyond the 1.7pc contraction expected this year by the International Monetary Fund.
The unemployment rate would rise to well over 25pc with six million out of work by the end of the year, equivalent to 30pc under the old definition used in the last jobless crisis in the early 1990s.
A study by BBVA of 173 cases of fiscal squeezes in OECD countries over the last thirty years concluded that demands on Spain are almost unprecedented. They found only four such cases, and three were offset by devaluations. The fourth was Ireland in 2009. The country crashed into slump, culminating in a 54pc fall in Dublin house prices.
Noe av tilliten mellom latinske land og nord er ved å gå fløyten. Man tror ikke lenger på de fine ordene.
Josep Borrell, ex-president of the European Parliament and the voice of Spain’s pro-European establishment, said such debt-deflation risks pushing the banking system over the edge. “To cut the deficit almost four points in one year would be a true depressionary shock for an anaemic economy, made worse by the requirement for banks to mark their real estate losses to market prices.”
“We have reached the point where ‘taxes kill taxation’. The therapy is turning fatal and is starting to take on a highly political tone. Sixty years after the end of the war, Germany is again coming to be seen as an overbearing enemy, and an atmosphere of hostility is building up in a Continent divided between a rich and flourishing North and a South in danger of being reduced to a protectorate. If we carry on like this we are going to destroy the European project,” he said.
Fattigdom uten like
A report last week by the Caritas wing of the Catholic Church warned that “there are more poor people than last year, and they are poorer. After four years of hardship, poverty is more widespread, more intense, and more chronic” than at any time in recent memory, with a gap between rich and poor that “threatens to polarize society”. The poverty rate has risen to 21.8pc (38pc in Extremadura), the third worst in the EU after Romania and Latvia.
While the Greeks may or may not put up with ever-escalating EU demands -- most recently talk of parachuting 160 German tax collectors into the country -- any such treatment of Spain would set off the sort of ‘levantamiento’ faced by Buonaparte in 1808, and the scale of damage to the European banking system would be catastrophic even for Germany.
Eurosonen har fungert som en dumphuske: lave renter for å stimulere tysk økonomi gjorde at de latinske land ble oversvømmet av billige lån, og renten i Spania har vært negativ.
Når det samme sterke Tyskland nekter å føre en kontra-syklisk politikk er det å forråde solidariteten innen EU. Det kan straffe seg.
Ultimately, politics will decide the matter, and Mr Rajoy is not alone in Europe. He has a champion in Italy’s Mario Monti, de facto leader of the Latin bloc and increasingly the man in whom the US, Japan, the IMF, and the rest of the world, are investing their hopes. As Mr Borrell put it, he is the only European statesmen with enough credibility to confront Angela Merkel “face to face”.
Mr Monti’s joint letter with twelve EU states last week calling for an end to self-defeating contraction marks a key moment in this crisis. If Francois Hollande is elected French president in May, the shift in Europe’s balance of power will be complete. Germany will lose its stifling grip on EU policy machinery. The EMU bloc will start to tilt towards reflation at long last.
Whether it can come soon enough to avert a social explosion across Europe’s arc of depression remains to be seen. Nor can such stimulus overcome the fundamental flaws of EMU since Germany is at an entirely place in the deform structure, with unemployment at 20-year lows of 5.5pc.
What is needed to save the South must endanger the North. Germany would overheat, pushing its inflation to 4pc or 5pc until Bild Zeitung erupts in Teutonic fury. It is impossible to reconcile the conflicting imperatives.
My guess is that Germany’s refusal to countenance any form of EU subsidies, debt-pooling, or fiscal union -- other than policing the budgets of captive states -- has definitively broken the EMU spell. Latin nations by increasingly regard talk euro of solidarity as humbug. It has been a nasty shock. The era of national economic rearmament in Europe has begun.
Det er noe uhyggelig over krisen som utfolder seg i Europa.
Spanish revolt brews as national economic rearmament begins in Europe
Spain’s new prime minister has looked into the abyss and recoiled.