Debt crisis: Eurozone faces day of anti-austerity strikes
Another day in Europe with new strikes and protests. People are pissed off, but still seem to fail understanding, you can’t life beyond your means. Austerity bites hard. From The Telegraph.
General strikes in Spain and Portugal will spearhead a “European Day of Action and Solidarity” called by unions in the region.
Unions in Greece and Italy also planned work stoppages and demonstrations against austerity policies, which labour leaders blame for prolonging and worsening the continent’s economic crisis.
For Spain, the eurozone’s fourth-largest economy where one in four workers is unemployed in a deep recession, it is the second general strike in eight months in protest against draconian budget cuts.
Spain’s main CCOO and UGT unions have urged people to rally under slogans such as “They are taking away our future!”, deploying pickets during the night at airports, bus and railway stations.
Activists alerted social networks of an evening rally outside the parliament in Madrid. (Full article here)
Are Cameron’s Economic Policies Working?
Guest post by Azizonomics.
Britain has returned to growth:
But compared even to the USA — which has huge problems of its own — Britain is still mired in the depths of a depression:
An Olympic bounce does not constitute a recovery. As I noted in March, in every respect Britain is under-performing the United States — in GDP and in unemployment. Although Cameron and Osborne keep claiming that they are deficit hawks who want to cut the government deficit, the deficit keeps climbing, at an even faster pace than the United States.
Defenders of Cameron’s policies might claim that we are going through a necessary structural adjustment, and that lowered GDP and elevated unemployment is necessary for a time. I agree that a structural adjustment was necessary after the financial crisis of 2008, but I see little evidence of such a thing. The over-leveraged and corrupt financial sector is still dominated by the same large players as it was before. True, many unsustainable high street firms have gone out of business, but the most unsustainable firms that had to be bailed out — the banks and financial firms who have caused the financial crisis — have avoided liquidation. The real story here is not a structural adjustment but the slow bleeding out of the welfare state via deep and reaching cuts.
Nothing is Fixed
We hate to break it to you. Spain is not fixed, despite Draghi and Rajoy claiming so. IBEX is in free fall mode, yields pushing the 6% barrier, people feeling the austerity pinch, and now the latest, getting hammared by the police. Spain, everything under the sun….From Mail online.
Anti-austerity demonstrators clashed with riot police in Madrid last night.
More than 1,000 officers blocked off access to the parliament building after protesters vowed to ‘occupy Congress’ in the heart of the Spanish capital.
Police baton-charged the crowd and there were reports that protesters were being beaten by officers.
Full pictures here, and video showing the austerity beating here.
Merkel – Same same but different?
Merkel, the Iron lady has been showing more softness over the past weeks. Has the Eurozone crisis made her mor humble, or is this just another political trick? Spiegel reports,
On the outside, the new Angela Merkel looks like the old one. She still wears her usual blazer — a camel-colored one on this particular Wednesday. Her striking amber necklace has resurfaced. Her hair? Always the same. Still, something has changed since the German chancellor returned from her summer vacation. And it was apparent on Wednesday, as she stood together with Italian Prime Minister Mario Monti on the first floor of the Chancellery in Berlin.
Austerity Brain Drain
The Trader wrote (and warned) about the Spanish economic implosion while the mainstream media was focusing on the Greek drama last year. With the economic collapse, despite the recent IBEX rally, austerity is now hitting across the board. Many Spaniards see moving abroad as the only possible option out of the austerity misery. This is a dangerous path for a great country. More on the subject from El Pais.
Eskilstuna is an attractive town around 120 kilometers west of the Swedish capital of Stockholm, the headquarters of car maker Volvo, and the home of Abba singer Frida Lyngstad, the brunette. Soon it will be the home of pediatrician Jorge Sotoca and opthalmologist Mercedes López, a Spanish couple both aged 32. Next February they will begin working at Eskilstuna’s hospital, which has a catchment area of 400,000 people. They have already arranged nursery care for their one-year-old baby.
Their reasons for leaving Spain are simple: “Job insecurity, uncertainty and fear about where Spain is heading, few opportunities for career growth, and the chance to give our daughter a good start in life,” explains Sotoca.
Lutheran Austerity
Merkel will help you, but expect to pay back….NYT on how Luther has influenced the Germans and what a Lutheran bail out package actually looks like.
Consider Luther’s view on charity and the poor. He made the care of the poor an organized, civic obligation by proposing that a common chest be put in every German town; rather than skimp along with the traditional practice of almsgiving to the needy and deserving native poor, Luther proposed that they receive grants, or loans, from the chest. Each recipient would pledge to repay the borrowed amount after a timely recovery and return to self-sufficiency, thereby taking responsibility for both his neighbors and himself. This was love of one’s neighbor through shared civic responsibility, what the Lutherans still call “faith begetting charity.”
Austerity Bites
The situation in Spain has not improved. Apart from the economy in free fall mood, the austerity effects are now spreading to various areas, affecting among other things the health care. From El Pais,
Despite being given more leeway by Brussels, the government has insisted the regions adhere to their target for the year of 1.5 percent of GDP. Catalonia, the region that contributes most to the domestic economy, refused to attend a meeting of the Council for Fiscal Policy on Tuesday to protest the central government’s intransigence on the deficit target, while Andalusia’s representative walked out of the meeting after saying the fiscal goals that had been set for Spain’s biggest region were unreachable.
“One of our priorities is that the liquidity crisis does not affect the public nor other levels of the administration,” the secretary of state for the budget, Marta Fernández Currás, said at a presentation of the figures. Currás said excluding the transfers, the deficit in the first half in fact narrowed to 2.56 percent of GDP from 2.63 percent a year earlier.
And the unintended consequences for people, read below.
Market punishes Spain while Madrid is on “fire”
The fear over Spain returned yesterday. Spain’s risk premium shot to a new record high on Friday after officials in Valencia formally asked the central government for funds to help pay the region’s mounting bills, including the high prices of prescription drugs. Yields soared and spreads exploded to 610 points over the German bund. Ibex collapsed almost 6 %. All this is taking place, while the politicians still live in total denial. From El Pais.
At first, Montoro said that he wasn’t aware that Valencia government officials had announced about an hour earlier that they would be the first region to formally tap into the Regional Liquidity Fund (FLA), a system that was created just over a week ago that allows cash-strapped regions to access financing but under stringent guidelines.
“Valencia is not getting a rescue,” said deputy regional premier José Císcar during his own news conference. “We are tapping into a mechanism of financing that more regions will be using in the coming days, but without any more adjustments.”
After first denying it, Montoro explained that the region will tap into FLA and would indeed “be obligated to follow new conditions. (full article here)
Meanwhile, Madrid is under siege by the anti austerity protesters. Espana, everything under the sun. To be continued, as the big elephant now starts moving. The question is whether Rajoy is “cutting too far and too fast’. Video below.
Spain Threatens Deficit-Troubled Regions
The Spanish government is threatening taking control of budgets in regions that fail to meet with the austerity measures imposed.
Is Spain finally acknowledging the scope of the problems, or is this merely politics?
Video below.
Things are heating up in Madrid as austerity hits the streets
Meanwhile in Madrid things are heating up. From El Pais.
Two days after the central government delegate in Madrid, Cristina Cifuentes, noted that the “black march” organized by protesting miners had been entirely without incident, the denouement of the 430-kilometer journey descended into violence in the center of the capital.
The 200 marchers were joined by thousands of sympathizers and members of the labor unions as they marched from Colón square to the doors of the Industry Ministry along nearby Paseo de la Castellana on Wednesday. Among the newcomers were members of the 15-M protest movement, teachers protesting cuts in education, families and politicians. Also among the throng — which the CCOO and UGT labor union expected to be 25,000 strong, although no official figures were available — were what an Interior Ministry spokesman described as “anti-system groups, armed with bottle rockets and bricks.”
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