Country on the verge of an economic breakdown
from David Ruccio
According to those in charge, Spaniards should have been thrilled. After years of stagnation, the country has in fact been growing.
For example, earlier this year, IMF Chief Economist Olivier Blanchard admired the country’s “virtuous cycle”of confidence, investment, and consumption. For his part, German Finance Minister Wolfgang Schäuble applauded Spain’s “far-reaching reforms” as the reason for one of the highest growth rates in Europe. Meanwhile, the government of Prime Minister Mariano Rajoy was preening: “The contrast in growth is the result of this government’s economic policies. Spain is now a role model,” Economy Minister Luis de Guindos said in April.
Yet, Pedro Almodóvar’s country is actually on the verge of an economic breakdown—which is why the two ruling parties lost so badly in yesterday’s election.
Just as in the United States, the economic recovery in Spain has been fundamentally lopsided, with a tiny minority at the top benefiting from government-imposed austerity policies and everyone else falling further and further behind.
As Tyler Durden recently explained,
Amid all the singing and dancing over Spain’s miraculous recovery and Europe’s renaissance on the back of Draghi’s money-printing machine, it appears – just like in America – that below the glossy veneer of engineered equity and bond prices, all is not well. . .the average wage in Spain has fallen to its lowest level since 2007, according to figures released by the Spanish Ministry of Finance, and after peaking at 19.3 million in 2009, the number of workers is also collapsing. . .
The ministry says the fall was not so much due to salaries being lowered for people at work, but that newly created jobs now offer much lower pay than before the crisis.
However, the crisis has no effect on Spain’s biggest earners as those who earn 10 times the minimum wage saw their salaries continue to grow. The 127,706 people fell in this category earn an average of 148,824 euros in 2014.
The reason for those declining wages and employment is, of course, that unemployment rates—for all workers (25.1 percent, as a three-year average) and, especially, for young workers (53.2 percent, even higher than in Greece)—still remain extremely high.
For years now, the country governed by, first, the Socialist Party and, then, the Popular Party, has been on the verge of an economic breakdown.
And, yesterday, Spaniards responded that the two ruling parties and their European supporters had their chance and squandered it. There was still time last year, earlier this year, even in recent months. “But now it’s too late.”