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Bend Over, Baby

Chancellor Merkel, "That looks like it hurts."

This is out of the normal realm of the travel blog, but I sort of feel I must comment on the current economic situation of Spain. As anyone who pays attention to international economic news knows, Spain is currently in the middle of an America-like economic crisis, precipitated pretty much like America, by a collapsed housing bubble.

Unfortunately, unlike the United States, where we can at least control our own economic destiny (not that we would do anything hard, of course, like raise energy prices or cut military spending) Spain, unfortunately, is under the thumb of the common currency of Europe.

And that, also unfortunately, means under the economic thrall of the Germans. At least according to some accounts, this is not because Germany has any altruistic motives for imposing an employment killing austerity on Spain, Greece, Ireland, Italy, etc., but because German banks are the ones who made all those loans to the Spanish, Italian and Greek banks that would otherwise fail. And, since the Spanish government, like the American government, stupidly came to the rescue of the Spanish banks by guaranteeing their debts, the Spanish government now owes its debt to German banks. That, along with the whole stupidity of the pan-European currency in the first place, is killing Spain.

For there is over 20 percent unemployment here, and it’s getting worse as the government is forced to tighten spending even more. Today, the government proposed laying off more teachers and increasing class sizes–because it’s well known that penalizing teachers for the profligacy of bankers is sound economic policy. Of course, German Premier Angela Merkel could just be punishing all of southern Europe because Italian Prime Minister Berlusconi called her “unfuckable” in an overheard conversation. I imagine her thinking went something like, “I’ll show you who’s fuckable, Silvio. It’s you. And you other Latin countries. Bend over, bitches.”

If you know anything about European history, you know that it’s not a good idea to antagonize Germany.

To make matters worse, even third rate power Argentina is now piling on. Argentina just announced they were nationalizing the oil company they sold off to a Spanish company in the 90s, when Argentina was in such a mess it couldn’t even manage its own energy surplus. So, Argentina sold it to the Spanish oil company Repsol. Now Argentina claims, (“gasp”) that Repsol is making too much money and not paying enough attention to investing in Argentine reserves. Repsol counters with the fact that Argentina limits the amount Repsol can sell its oil for, and keeps energy prices low in Argentina for political reasons. Hence, says Repsol, it’s impossible to keep up with the demand stimulated by artificially low prices. To which Argentina replies, “Tough shit,” appropriates Repsol’s share of the Argentine interests and refuses to even pay back the billions Repsol paid to bail out Argentina in the 90s.

Repsol, by the way, is the largest company in Spain, and their stock value has dropped more than 20 percent in the last couple of days.

People here are already talking about another Falklands-like war. Maybe Germany will join in on Spain’s side to protect its bankers. I imagine Germans invading Argentina and running into its former citizens. “Fritz, good to see you. Haven’t seen you since 1945, right?”

Of course, all this has real consequences for real people in Spain. Although we haven’t been to the south yet, where the economic crisis is the worst, and unemployment is more than 40 percent in some areas, we can see evidence on the streets of Madrid. Most blocks in the center of the city have at least one beggar and one busker.

The buskers aren’t your usual unwashed guy with a guitar. Two we saw were classical musicians. One played played beautiful Bach on his cello. Another young woman sang operatic arias a capella.

When we lived here before, the only beggars in Madrid were the gypsies, who were professionals. The current occupants of the streets sit behind signs that say, “I have three children and they are hungry,” or,  “I was a mason for 25 years, and now I can’t find work.”

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2 Responses to Bend Over, Baby

  1. Curt April 18, 2012 at 5:52 pm #

    “… the whole stupidity of the European currency in the first place …” Amen. One monetary policy with 17 fiscal policies and no meaningful transparency … did that ever seem like a good idea? In the good old days, the value of the peseta or lira or drachma would simply fall against other currencies. Nominal prices and wages and interest rates would rise. Some investors would lose some money. Life would go on more or less as normal. Now … what a mess.

    Anyway, Tom, thanks your insight on this crisis!
    Curt recently posted…St. Mary’s Basilica in PhoenixMy Profile

  2. Tom Bartel April 19, 2012 at 5:17 am #

    Yes, Curt, the Euro seemed like a good idea at the time, and several Spaniards have told me that, over all, joining Europe was a wonderful boon for Spain. However, if you’re going to have one currency, you do have to have one monetary policy, and where there are so many countries involved, that’s just not going to happen.
    Tom Bartel recently posted…A Beginner’s Guide to MadridMy Profile

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