We have had austerity, increasing unemployment and a few riots taking place in Europe. With poverty increasing, the situation is heading the wrong way. Are we facing a violent revolution due to austerity measures? From Voxeu.
It is not just the election of François Hollande in France. Adopting contractionary fiscal policies in the teeth of a double-dip recession never made sense. And yet, public debts are high and markets in endemic panic. The solution must be based on a comprehensive analysis of the situation, not on arcane debates on the strength of the “confidence factor”. It ought to combine debt restructuring, front-loaded collective fiscal expansion and long-run unbreakable commitments to fiscal discipline.
As Spain’s finance minister, De Gunidos, comments are crossing the wires; “Budget cuts and economic growth are incompatible”, maybe it is time to recall what austerity really means. More austerity, more misery. From Azizonomics:
I noted yesterday that anything the government gives you, the government can take away, and that dependency on government services — which might be withdrawn — leaves citizens weak and unfree.
One cause for the withdrawal of government that I neglected to mention (intentionally, as I hoped someone would pick it up in comments) was the matter of austerity. While the example I was bouncing my ideas off — of denying treatment to smokers or the obese — remains theoretical, the withdrawal of government services and spending as a result of austerity is very much a reality, especially in Europe.
Spanish economy slipped back into recession in the first quarter of 2012, making the government’s job of meeting the deficit targets even tougher amid the public anger against the deepening austerity and record-high unemployment.
Gross domestic product contracted 0.3 percent quarter-on-quarter in the first quarter, the statistical office INE said Monday. This followed a 0.3 percent fall in the fourth quarter of 2011, which was the first decline in activity since the final three months of 2009.
The country is now in a technical recession, which is commonly defined as two consecutive quarters of economic contraction.
However, the latest result was better than the 0.4 percent decline estimated by the Bank of Spain last week. Economists had expected a 0.5 percent drop.
Annually, the GDP fell 0.4 percent following a 0.3 percent expansion in the previous quarter. Economists had forecast a 0.6 percent fall. Bank of Spain had estimated a 0.5 percent annual fall in GDP. ( full reading here.)
Meanwhile, Mr Rajoy warns of new reforms to be announced every Friday, as the economy is in such a bad shape. Truly extreme measures are needed if the Spanish economy is to be saved. From El Pais.
The Trader has been covering the Spanish economy over the past year. Our readers know we have been extremely bearish on the outlook for the Spanish economy and the stock market. We won’t go on about the state of the Spanish economy here, but we would like to provide objectivity on majority of the topics covered on our site. Therefore, we provide you Banco de Espana’s latest presentation on the Spanish economy, banking sector and much more. Don’t forget it is the “Banco de Espana”…
Full amusing reading here.
The French elections are approaching fast. While the main focus has been on Greece, Italy and SPain, let’s review some facts on France. From Scott Barber of Reuters.
The results of this past weekend’s first round of voting in the French presidential elections may have delivered a warning that the close alliance between France and Germany on strategies for tackling and containing the eurozone crisis may be approaching an end. For the last few years, the team of German Chancellor Angela Merkel and French President Nicolas Sarkozy has been so much in sync that they have become known to all as “Merkozy”. But in first-round voting, Sarkozy became the first French president in half a century to fail to emerge as leader, ceding pride of place to Socialist rival Francois Hollande.
Now the two men will square off in a runoff election scheduled to take place May 6, and it is the one-third of French voters who cast ballots in favor of other parties – including the National Front candidate on the extreme right, Martine Le Pen – who hold the balance of power. To understand the impact of these voters on the outcome, see the interactive graphic, below, which enables you to calculate how many voters who supported candidates that didn’t make it through to the run-off now need to switch their allegiance to Sarkozy in order for him to cling on to his job.