All happy countries are happy in the same way, one might say, echoing da man, but each unhappy country is unique. That is probably the simplest way to summarise the eurozone crisis, which has now centred on Spain, with the promise of an €100 billion “rescue” — not, of course, a bailout — of its troubled banking system.
The deal had sharemarkets surging and right-wing Spanish prime minister Mariano Rajoy crowing that the deal had “saved the euro”. His government had earlier put out the line that the country was getting a better deal than had Greece or Ireland. When it became clear that this was stirring up anger in those countries — and thus re-imperilling the euro — the line was quickly changed: Spain had imposed its own deficit reduction targets, and therefore had no need of external requirements to do so.
Rajoy is correct in that matter — the Spanish deficit is coming down from close to 10% to near 3%, as the banking system is pumped with liquidity. The move is yet another variation on socialising the losses and privatising the profits — the process hidden by the fact that the EU is doing one bit, the country itself the other. The losers are the poor — including many people and groups that the previous Jose Zapatero government had lifted out of desperate poverty for the first time in the country’s history.
Flinging them back into substantial poverty is not something the Rajoy government is overly concerned about — the very poor tend to be too busy simply surviving to have much time for organised political resistance. But Rajoy’s imposed austerity budgeting has other victims — in particular the young, the unemployment rate for whom has headed above 35%, and shows no sign of climbing down any time soon.
We are so accustomed to these high figures of unemployment being bandied about that it’s easy to get blase about them. But it’s worth stepping back from that figure and contemplating it for a few minutes. One young person in three — unskilled, trained, graduate — has no job, in many cases not for a few months, but for years at a time. Most likely another 10% are underemployed, with part-time and casual employment keeping them out of the statistics.
For many, the material circumstances of this are not as dire as they might be elsewhere — many more adult children live at home, and there’s less stigma attached to it, across southern Europe (one reason welfare is based more strongly on pensions that help support a family, rather than on individual benefits).
But that in turn is part of the real disaster of the situation — that nearly one half of the country’s rising generation have had their lives put on hold, and are told that growth, when it returns (Spain’s economy is forecast to contract by 1.7% this year), will be modest and far from a full recovery. Held safe from starvation and homelessness, they thus have ample time to watch their lives pass them by, to see opportunity slip by — or to see it become a lottery of terrifying unfairness, where the person beside you gets on the job ladder, while you are excluded, and so on.
That situation makes Spain’s predicament, more than any other in Europe, a generational one — and thus gives it a political-existential cast. The young suffered deprivation of opportunity in Greece and Ireland too — but there the suffering was far more universally spread, generating political solidarity and resistance (Greece), or passive assumption of collective guilt (Ireland).
That’s especially so, because the bank “rescue” is designed not merely to stop the economy from faltering — and protect against a run, in the event that anti-memorandum left party Syriza wins the Greek elections this Sunday — but also to stave off any real inquiry into how the cajas, the small Spanish savings banks, became so over-leveraged during the Spanish property bubble that more than a dozen came to the brink of collapse almost simultaneously. Many such regionally focused banks were run through networks of political patronage, their boards filled with people unable to give informed oversight, and staffed by executives awarding themselves salary rises and huge perks, based on a turnover inflated by bad loans.
Since both major parties participated in handing out this patronage, they’re both eager to keep it sealed. But it is, of course, the ultimate insider-outsider scam — well-connected middle-aged people screwing up the rising generation’s prospects for some cheap skim off the top.
It’s that distinctive character to the Spanish crisis that suggests to me that it won’t go the same way as Greece, Italy or Ireland — that, with a couple more clicks of the wheel, there will be a “Spanish spring” of sorts, with different demands and methods to the “Arab Spring”, but something of the same spirit. Such moments turn, as Paul Mason has noted, on the young, and especially young graduates — and young unemployed graduates. Prepared by studies to have a role in society, and a meaningful individual life, the denial of such is a unique wound. Their life, its course, its prospects, presents itself to them in an insistent fashion — more so than for the unskilled who, no less human, nevertheless find the meaning of life in different ways.
To be denied a life, and offered a mere existence, comes to be seen as an annihilation — and it is in the gap between existence and “a life” that politics happens. The Arab Spring was provoked in part not by repressive political structures, which had survived for decades, but by economic torpor kicking on from the 2008 crash — and the failure of gerontocratic governments to do anything about it.
Spain presents itself as the most outstanding example of a fundamental gap between those factors — a one-time backward dictatorship rapidly modernised, a formerly agricultural country, now bustling with light industry, tech and services, a low-growth society now with a trillion dollar GDP. Its rising generation were made an implicit promise, of a life with all the features of the young in advanced northern Europe. Spain was essentially the place where south would meet north, and there would be an integration of European hopes and expectations.
To be shuffled back down into the south again, to realise that your life will be less like your compatriots in Bremen, Groningen or Stockholm and more like your parents’ — and may be worse –makes Spain another “weak link” in the chain by which the euro and the EU are held together, in a different way to Greece, but on the same principle. Perhaps the Rajoy government will manage to persuade the majority of the populace that there are good times ahead, for which it is worth throwing a few people underneath the train. But if he can’t, then Spain may surprise us all.
Just as in the US, UK,Ireland and Greece, those who perpetuated the housing fraud have been bailed out and rewarded yet those who were powerless over these shenanigans, the average punter is called upon to tighten their belt.
Australians might complain about the profits of their heavily regulated banks but they should thank God the financial institutions have never been allowed ot run haywire.
@ Michael De Angelos – +1.
Viva la Revolution! I can’t see the Spaniards putting up with it.
To lament the lot of the poor as this article does is fine and in this context to lament the lot of the Spanish poor is also fine but where does that get us? The system is broken whether in Spain or Greece or wherever. Instead of lamenting and hoping for a new dawn (but not pray a Golden Dawn!) under the current economic system, we all need to think through what should replace this system. Fiddling while the poor – and democracy in Europe – burn simply delays the day when we can come up with a different and fair economic system.
Guy Rundle has a good take on what is going down in Spain. I live in Spain and here we talk of figures nearing 50% (48.56% Jan 2012) for youth (<25) unemployment. All of which adds more weight to Guy’s point about a lost generation. As the Spanish have done in past bad times, those that can, will move north for employment but with a much higher level of education than their grandparents had went they went. With the family culture and the sun they will return when things improve and bring skills and experience home. There are a lot of other factors in Spain’s situation but reader attention, news space, etc. result in this relevant focus here.
Be it Euros or Brass Razoos (the coming Abbott currency) these numbers have to match some real assets out here in the real world. If someone argues that a scrawny three bedroom, brick veneered Fibro bungalow which once cost, forty years ago, $25,ooo is now worth $400,000 then either th asset or the money is overrated.
Those who have their wealth in these Howard-Costello era brass razoos have overplayed their hands.
If responsible governments took these Brassrazoonians aside and pointed out to them that all that asset price inflation was unearned and now you have to wear a return to a more rational number ie what you paid for it thenhow can they complain? The Forex market will go insane but who cares they are only gamblers anyway.
To be short I am sure the baby boomers who bought in at the $15 to $30 thousand price would be quite happy to see their grandchildren get a similar chance as they did.
So quarantine these toxic assets, in the fashion that white blood cells engulf infectious bacteria and the rest of the body politic can and will recover.
The Old Testament Jublee year 7 times 7 years plus one represented the limit on debt. With all debts cancelled in the fiftieth “jubilee” year. The third generation relievedof the deb burden imposed upon them by their grandparents. To do otherwise was to invite slacert and destruction as the writers of the Old Testament recognised in their neighbours and their own history.
So be very clear that inorder to maintain the unearned capital gains largesse todays grandparent owners of toxic, unaffordable, overpriced real estate assets are quite willing to enslave their own and other people’s children.
Yes it is ineed Biblical in scope but those who would like us to believe that momey was invented yesterday go out of their way to obscure the five thousand years of its history.
and so and so on. The father of untruths gets a mention in there I’m sure.