Spanish taxpayers now on the hook for bank debts
How will Spanish taxpayers pay for the massive new tax burden accepted on their behalf by the Rajoy government?
Already, the GFC has rendered jobless 50% Spaniards under 25. These unemployed are a net drain on the public purse. Before the Gfc, most of them would have become taxpayers.
Before the GFC, many young people quit school to feast on bloated salaries during the construction boom. They are now idle and with poor prospects of finding work. And commercial collapse and slashing of the public sector have smashed the expectations of educated Spaniards. This generation threatens to become the first to experience a reverse in prospects since the death of the dictator Franco in 1975.
The question of funding the Spanish public debt used to be a matter left in the hands of nameless bureaucrats whose business as usual was absentmindedly overseen by elected officials grown complacent and occasional corrupt by the long Indian summer of cheap and plentiful finance. Anger and dissatisfaction are great. For small business, loan capital has dried up. The economy is shrinking just as the Spanish government has committed the taxpayers to a greatly increased burden of repayment of interest and principle. Yesterday, the banks owed this money, today it is the taxpayer.
Polls last autumn indicated that young protesters had two overarching grievances: the incapability of the political class to enact a workable solution to the challenge of financial dislocation and failure, and joblessness. The sovereign debt crisis can explain both. This act of capitulation to the interests of the creditors of Spain’s banks can only serve to sharpen Spaniards’ sense of betrayal.
The major political parties of the centre exposed themslves as handmaidens of Brussels and Berlin.
Daily, hordes of Spaniards swarm the streets to protest mounting government cutbacks, while protesters with more programmatic leanings sound a refrain of reform: change the electoral law; make state finances more transparent; crack down on political corruption.
No one is surprised when the funding for the arts is drastically cut in times of economic hardship, but with the rich culture of Spain suffering from an unemployment level of 22% and no reduction in sight for the national debt, this rich cultural heritage is in serious peril. Even worse, the arts are taking a hit on two fronts: both in a reduction in government and commercial grants, as well as questioning over the widespread financial corruption in Spain.
The newspaper El Pais stated that the latest budget cuts impacted nearly all cultural sectors, including the ICAA and the Prado Museum. Not only are institutions feeling the economic crisis, but also the country festivals are being called off or reduced, and many contemporary art centers feeling the hard blow of economic cuts. Though important to the rich heritage and tourist attraction of Spain, cultural arts just cannot rival the budgets of vital services such as healthcare. Waiting lists for operations in the Catalonia region have lengthened to 23% this past year, and doctors have gone on strike in response to the swingeing health care budget cuts.
Unemployment levels are not expected to decrease below 20% in the next few years. Spain suffered zero growth for the third quarter of 2011. Spain’s centrist political classes slashed healthcare in the name of austerity.
Meanwhile, Spanish protestors seize upon corruption as an explanation for their dire condition and gloomy prospects. In the past, Spaniards shrugged at ever-present corruption in the local, regional, and state level. As the people gradually begin to question the corruption of their political system, scandals such as the Camps debacle and the Marbella scandal—to say nothing of the corruption of the banks—have come to light and may cause the people of Spain to demand systemic change.
This newfound sense of political outrage may be due to the Indignado Movement. Though idealistic and not focused on actually evolving solutions, participants insist that Spain needs reform, politicians with reliability, and a political economy that involves state regulators that protect Spain and its economy. In short, the Indignado Movement brings attention to all that is wrong with current political corruption.
This brings to mind the question of whether or not the Spanish people are angry enough about the corruption prevalent throughout Spain to ignite a ‘sea change’ that will force those in power to reform. Where the EU fits into this wish list is anyone’s guess.
But Spanish fixation on process is revealing. Citizens are losing confidence in the power of their votes; assemblies and rallies are hurriedly convened to stem the tide of further government cutbacks, but to scant effect. As one young protester told me, “We don’t have the luxury of advancing much of an agenda beyond beating back government cuts.”
Because Spain’s economic fate no longer seems to be in Spain’s own hands, the crucial intermediary space between what the state needs and what the people want — the ground on which politicians are normally held to account — has shrunk. Sometimes it seems that the closer Spain has moved to Europe, the more democracy eludes its grasp.
11 June 2012
Spain has officially requested a $125 billion bailout to keep its banks afloat after massive deposit withdrawals from the nation’s banks.
But within hours of the announcement a massive number of citizens took to the streets of the capital city of Madrid to protest the bailout.
As the sovereign debt crisis has made it infeasible to access funding from the markets Spain is being forced to borrow money from other European nations to pay for the bailout.
The additional debt will add to the overwhelming debt load Spanish citizens are being forced to pay as they face harsh austerity measure in the midst of raging unemployment in a depression-like economy.
Spanish protesters rally against bank bailout request
Press TV – Protesters in the debt-ridden country were out on the streets of the capital Madrid on Sunday against the newly elected government’s decision on asking for European Union financial assistance to save the banks.
The demonstrators were banging their pots and pans in protest against the government’s call for help.
They were telling their government that it’s the suffering citizens that should benefit from international aid, not the financial institutions.
Spain government on Saturday, after an emergency economic videoconference with eurozone finance ministers, announced the decision.
“The Spanish government declares its intention to request European financing for the recapitalization of those banks that need it,” Spanish Economy Minister Luis de Guindos said at a press conference after the videoconference.
The decision is seen as a U-turn in policy by Spanish Prime Minister Mariano Rajoy, who had firmly ruled out the need for a bailout for the country’s banking sector.
Spain has been under pressure to shore up its banking sector before the parliamentary elections in Greece.
There are growing concerns that the outcome of the Greek polls could lead to the country’s exit from the eurozone and further destabilize the euro.