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Via the BBC: Spain unemployment hits record high
Spain’s unemployment rate soared to a new record of 27.2% of the workforce in the first quarter of 2013, according to official figures.
The total number of unemployed people in Spain has now passed the six million figure, although the rate of the increase has slowed.
The article notes that the unemployment rate was 7.9% i n 2007.
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: Another austerity success story!
That has nothing to do with austerity. Spain was a economic basket case under socialist Zapatero. Unemployment is also increasing in France.
Germany’s unemployment went up too. That’s the problem with the basket case label. Eventually reality hits and the problem is the Euro and the banking sector. France and Germany can lie their way to moral superiority, but they can’t lie their way out of an actual systematic problem. Spain (and Ireland, and Portugal and Italy etc.) had large capital inflows that caused a boom, then came the crash and they can’t deleverage like a normal county with control over their currency. End of story.
@Console:
Spain (and Ireland, and Portugal and Italy etc.) had large capital inflows that caused a boom, then came the crash and they can’t deleverage like a normal county with control over their currency. End of story.
That’s precisely right. The alternatives are that the Germans pay the freight for the euro policies that benefit Germans and particularly German banks or that Spain and Greece must spend considerably less and tax considerably more.
Evidence for your assertion that Spain was a basket case is lacking —
pre-crisis, Spain had a good debt to GDP ratio, low unemployment, and significant capital inflows (in models asserted by people with similar political backgrounds as yours, that is the ultimate seal of good housekeeping) — the problem was the Euro was accepted as a currency and monetary union over a non-optimal area with no fiscal adjustment mechanism built in — and then the crisis hit and the beatings have continued even as morale flags.
The Economist-not a socialist rag- described the EC’s bnailout plan for Spain last year as insufficiente :
EVEN by the standards of euro-zone bail-outs, which are greeted with applause but swiftly fizzle, the rescue of Spain’s banks, announced on June 9th, was a disappointment. Relief in the markets lasted only hours. Yields on Spanish bonds soon started to rise. Within days they had reached their highest point since the introduction of the euro and a level that, if sustained, would tip Spain into insolvency. Ominously, yields also rose on German bonds, the euro area’s haven. Investors are wondering whether the euro itself will survive.
The Eurozone has been trying to put Band-Aids on gun shot wounds, and guess what, the Spanish patient has been getting steadily worse. Pul Krugman nails it here, again:
Part of the answer surely lies in the widespread desire to see economics as a morality play, to make it a tale of excess and its consequences. We lived beyond our means, the story goes, and now we’re paying the inevitable price. Economists can explain ad nauseam that this is wrong, that the reason we have mass unemployment isn’t that we spent too much in the past but that we’re spending too little now, and that this problem can and should be solved. No matter; many people have a visceral sense that we sinned and must seek redemption through suffering — and neither economic argument nor the observation that the people now suffering aren’t at all the same people who sinned during the bubble years makes much of a dent.
Spain, frankly, wasn’t particularly profligate pre -crisis. It just got caught up in a crisis that was not of its own making. That crisis became a disaster because of a systemic problem with the Eurozone and the disaster was made still worse through wrongheaded “austerian” policies. Hard to see a way out of this, but we can start by abandoning austerity.
Evidence for your assertion that Spain was a basket case is lacking
Spain had a good unemployment ratio until the financial crisis, when a huge housing bubble burst. Then things began to sour.I talked with people that lived there(Besides that, sorry, but I can read the Spanish Newspapers). Zapatero became something like Jimmy Carter in 1980, a hugely unpopular Prime Minister. You can´t blame that on austerity, because Zapatero chose to keep the things as they were and the results were also horrible.
It´s true, the Euro created all kinds of imbalances: not only it created capital bubbles, but it also increased the cost of living in Europe, specially in Southern and Eastern Europe. On the other hand, the Euro was not a German idea(It wasn´t the Germans that were saying that the “Country of Plato” should not be kept outside of Europe) and both what people calls “austerity” and “keeping the things are they are” have a horrible track record – in Portugal and Spain Conservatives only came to power after the Socialists failed to improve the situation.
Besides that, the real problem is that the Euro failed to solve the real problem of Europe, the low productivity of the economy in most countries. With the exception of Italy, most of the countries in Southern Europe have(And had for decades) a pretty weak manufacturing sector. Telefonica, one of the few Spanish Companies with a considerable international presence is also known as a telecom company that offer a horrible service.
@Andre Kenji: “Besides that, Austerity has nothing to do with what is happening in the United States. ”
You mean the firing of hundreds of thousands of teachers and other state, local and federal employees in the name of debt reduction is not contributing to our unemployment crisis? Would you mind elaborating on that?
@wr:
You mean the firing of hundreds of thousands of teachers and other state, local and federal employees in the name of debt reduction is not contributing to our unemployment crisis?
1-) No, I pointed out that the debt problem in the United States is much less severe than in Europe. You can make some adjustments to Defense and Social Security, curb Medical Costs(the big problem) and then raise some taxes and the debt is not a problem, even by deficit´s hawks standards and even considering that Americans have a very low level of personal savings.
2-) I know austerity, having lived in a country that faced several austerity packages since I was born. What´s happening in the United States is not austerity. Austerity goes beyond cutting government employees.
