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Spain Is Doomed: Why Austerity Is Destroying Europe
The Atlantic ^ | Apr 18 2012, 10:00 AM ET | Matthew O'Brien - Matthew O'Brien

Posted on 04/18/2012 7:43:02 AM PDT by ctdonath2

Let's try a thought experiment. Imagine you walked into the bank, told them you were going to be taking pay cuts for the next few years, and then asked for a loan. You'd be laughed out of the office or else pay an interest rate so high that "usurious" wouldn't do it justice. The logic is simple: If you're in debt and your income is shrinking, it's mighty hard to pay back what you already owe.

... Nearly a quarter of Spain's population is unemployed. Half of its youth are out of work. And it's only going to get worse. Spain is supposed to trim its deficit by some 5.5 percent of GDP over the next two years. That's not a recipe for growth. Just ask the IMF, which downgraded its projections for Spain's economy back in January.

What matters for a nation is its GDP. That's a country's equivalent of personal income. If Spain's GDP is set to fall for the foreseeable future -- and it is -- then who would want to lend to Spain?

(Excerpt) Read more at ...

TOPICS: Business/Economy; Foreign Affairs
KEYWORDS: eucrisis; europe; gdp; globaleconomy; imf; socialists; spain; spaincrisis
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To: ctdonath2

If they had been allowed to go bankrupt years ago they would already be bouncing back by now. Moral hazard created by theses endless bailouts is killing Europe.

41 posted on 04/18/2012 9:08:01 AM PDT by nobama012
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To: ctdonath2

“Methinks our leaders are looking at the same future and figure if a crash is inevitable they may as way party their way to it.”

A global economic Barackolypse makes the world government go round.

People starving worldwide will accept it to get to eat.

In the minds of our “leaders”, everyone wins. They get world government, and the people get fed.

42 posted on 04/18/2012 9:25:31 AM PDT by MikeSteelBe (Austrian Hitler was, as the Halfrican Hitler does.)
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To: Proud_texan
Agreed. This article is from the Krugman school of economics.
43 posted on 04/18/2012 9:26:01 AM PDT by mojito
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To: St_Thomas_Aquinas


That aint gonna happen in the short term. In the long term in a capitalist free market society, yes, you are correct. But the sudden contraction of the economy that will result from chopping the government in half will CRASH AND BURN the whole country way before any free market style recovery has a chance to get started.

44 posted on 04/18/2012 9:28:47 AM PDT by mamelukesabre
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To: ctdonath2

Consolidate all government handout programs into one program.....a government loan program. No more giveaways. I don’t care if people are borrowed up to the top of their head, it’s a loan and you will pay it back. You might have to answer phones from your apartment or clean up streets, but you will have a job. The Great Giveaway has got to stop. It’s killing the country and it’s destroying good people. Yep, a lot of government employees will lose their present job. So what? As the cost of labor goes down, private business can hire more employees. Work is good for people. Sitting around on your ass doing nothing makes you bored, jealous and angry.

45 posted on 04/18/2012 9:32:01 AM PDT by blueunicorn6 ("A crack shot and a good dancer")
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To: mamelukesabre
Valid points. Even if we did the right things to fix America, the world is has changed.

Our current model is to create the technology and outsource the manufacturing of it, ie Apple products overseas. Now, that's great for the consumer, they can purchase the product, but the US loses out in jobs here, taxes, and numerous other benefits.

America's great growth in the past was partly due to our technology advantages. Now, other countries have caught up in numerous ways, for it was easy for them to do so. Especially, considering the rush of companies to help them. We in the end our cutting our own throats.

Throw in our fake growth, by simple tricks of low interest rates, increased Gov't spending, and the fact that we have greated so much debt, the US will not recover.

46 posted on 04/18/2012 9:38:48 AM PDT by Theoria (Rush Limbaugh: Ron Paul sounds like an Islamic terrorist)
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To: mamelukesabre
The only way out of this is massive increases in manufacturing...and the only way that is going to happen is a sudden technology breakthrough.

We could also try eliminating corporate tax, reducing personal tax drastically and slashing government regulation.

The labor needs of the expanding private sector could be met by the newly unemployed government workers, if they could be taught to produce.

47 posted on 04/18/2012 9:39:17 AM PDT by dead (I've got my eye out for Mullah Omar.)
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To: norwaypinesavage

Over-regulated socialist economies are doomed to fail. Until we start defining the problem accurately we will not be able to identify a solution. Until then the people of these countries are being played by bankers, policians and complicit media into rank serfdom. A slavery of the will -but that’s the premise of socialism isn’t it?

48 posted on 04/18/2012 9:40:29 AM PDT by Justa
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To: mamelukesabre

Lol! Yes, I know it’s a dream. In all likelihood, Spanish politicians will follow the path of least resistance, and perma-recession will result.

49 posted on 04/18/2012 9:43:43 AM PDT by St_Thomas_Aquinas (Viva Christo Rey!)
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To: ctdonath2

A breakthrough will influence banks and lending rates. That will buy them several years to get their sh1t straight. In theory. But a socialist politician is like a money grubbing whore addicted to crack. Odds are if a breakthrough does buy them time to ramp up manufacturing, they will squander it through corruption and graft and business as usual.

50 posted on 04/18/2012 9:47:56 AM PDT by mamelukesabre
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To: ctdonath2
The real difficulty is that the bleeding can't be stopped, but it can be slowed just a little...through the next election. The patient still exsanguinates, but it's on somebody else's watch.

That game is particularly insidious in the U.S., where European investors looking for a less hazardous arena have managed to help create an illusion of prosperity we haven't earned. We aren't immune, we're in the soup up to our necks.

51 posted on 04/18/2012 10:06:42 AM PDT by Billthedrill
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To: Nervous Tick

You are correct, of course, but a government chosen by universal franchise voting cannot and will not do what is necessary.

Significant cuts have not happened in any country with a popularly elected government since 1945. That is sufficient evidence to say that it is impossible.

I don’t know how this ends, but I DO know that voting by parasites isn’t going to get it done.

52 posted on 04/18/2012 10:43:51 AM PDT by Jim Noble ("The Germans: At your feet, or at your throat" - Winston Churchill)
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To: ctdonath2
If you disregard the capitalism-is-doomed b/s at this site, they give you some below-the-radar info not found in the US media.

Financial turbulence mounts as global economy slides deeper into slump

As others have posted, "It ain't gonna end well." Re-examine your SHTF preparations. (Just bought some hand-generated flashlights and radio.)

53 posted on 04/18/2012 12:11:47 PM PDT by Oatka (This is America. Assimilate or evaporate.)
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To: ctdonath2
Except at some point, it no longer matters.

Spain, and much of the Euro-zone, is in trouble. Either Germany and France bail them out, or let them fail. If they choose to bail them out, Germany will demand concessions that will not be acceptable to the rest of the EU. If they don't, the PIIGS will start leaving the EU.

The Fraco-Prussians got their dream, a United States of Europe. Lets see if they really want it now.

54 posted on 04/18/2012 12:16:17 PM PDT by redgolum ("God is dead" -- Nietzsche. "Nietzsche is dead" -- God.)
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To: mamelukesabre
The argument can be made that automation got us into trouble. There is a portion of the population that does not have the skill or IQ for a higher level job, and that typically meant factory or farm work. As those have declined because of automation, you are left with a lot people who are not equipped to hold the remaining jobs.

What do you do with them? What for the mass uprising?

There isn't an easy answer.

55 posted on 04/18/2012 12:28:04 PM PDT by redgolum ("God is dead" -- Nietzsche. "Nietzsche is dead" -- God.)
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To: LucianOfSamasota

Sorry, I haven’t read any of Galileo’s work. I found the qoute somewhere on the internet. It is edited to fit in the allowed tagline space. It’s possible it was a verbal statement at one of his trials.

56 posted on 04/18/2012 12:41:23 PM PDT by norwaypinesavage (Galileo: In science, the authority of a thousand is not worth the humble reasoning of one individual)
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To: redgolum

There isn’t an easy answer.

Sure there is

Accelerate the increase in automation.

Doing so will increase output per human being and increase wealth per human being and increase average standard of living. Sure, many of those people will have meaningless jobs and maybe will only do an honest 2 hours work per day, but it will still work out ok as long as overall average productivity per human being continues to increase. The alternative is to reduce standard of living or continue on business as usual until the eventual collapse.

Its not a life I would want...I mean having one of those meaningless jobs where you don’t really have much to do all day. I don’t get along with people in jobs like that because I have no ability to communicate with them. They place value on a completely different set of skills than what I have.

But, that is our destiny like it or not, unless we are ok with going backwards and letting some other culture take the lead.

57 posted on 04/18/2012 1:01:29 PM PDT by mamelukesabre
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To: mamelukesabre

Your not thinking this through.

What would we do with those people? Why would I hire them, pay them enough to support themselves, for two hours of meaningless work?

The trend has been the other way.

58 posted on 04/18/2012 1:20:12 PM PDT by redgolum ("God is dead" -- Nietzsche. "Nietzsche is dead" -- God.)
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To: redgolum

I’m talking about spain. In europe they only work 30 to 35 hours a week anyway.

second, you wouldn’t be hiring anyone. I’m talking about mega factories with robots running around. You don’t have what it takes to compete in this field.

59 posted on 04/18/2012 1:30:23 PM PDT by mamelukesabre
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To: ctdonath2


Yeah cutting the spending is killing the budgets!


They more you buy the more you will save!

60 posted on 04/18/2012 4:35:43 PM PDT by OlagJohnson
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