25 Jul, 2012 @ 10:48
2 mins read

Meltdown in Spain

meltdown in spain as cuts announced by rajoy

By Wendy Williams and Jon Clarke

THE Spanish economy has finally come to the brink of collapse threatening to take the euro down with it.

Despite the economy minister Luis de Guindos insisting on Monday that Spain did not need a full bailout, last night he was on an ‘emergency mission’ to Germany, reportedly asking for further bailout money.

It came as stock markets crashed to their lowest level in 11 years on what was described as ‘Black Monday’, with shares plummetting and the risk premium for Spain at the highest level since the euro was formed.

According to analyst Carsten Brzeski of ING bank, events since Friday have been a  ‘wake-up call to anyone who thought the Spanish bank rescue package had bought a calm summer for the euro’.

It comes as Spain introduced urgent measures to stop so-called ‘short selling’ or betting against the markets to make a quick profit.

The measures came in after the regions Valencia and Murcia asked for urgent bailouts to keep their economies going.

As the Olive Press went to press Cataluna asked for a bailout, with Andalucia also in danger of needing an urgent cash injection.

The country meanwhile has vowed that it would clamp down on recent protests that have seen dozens injured when police fired rubber bullets and charged protestors who had set fires on the streets of Madrid.

Millions of Spaniards came out in protest in over 80 cities just hours after Mariano Rajoy’s PP government ratified the largest cuts in Spanish history.

Workers protesting against the cuts marched with shouts of ‘Hands up, this is a robbery!’ and placards that read: “There isn’t a shortage of money – there are too many thieves.”

It marks the culmination of an almost daily series of protests that erupted with the miners arriving in Madrid on July 10. Rajoy has confirmed measures to save €65 billion by cutting unemployment benefit, getting rid of Christmas bonuses and increasing VAT (IVA).

“There is no money in the coffers to pay for public services,” said Budget Minister Cristobal Montoro. “It is time to call a spade a spade. Financing services with more deficit and more debt will doom us.”

But critics say the government’s new austerity measures will worsen conditions for Spaniards already struggling to make ends meet.

Many families are living on less than €400 a month and  from September VAT rises to 21 per cent.

PP politician Andrea Fabra made the situation worse when she insulted the unemployed by clapping and saying ‘que se jodan’ (f*** them) as Rajoy announced the cuts.

Meanwhile a poll in El Pais over the weekend showed 82 per cent of Spaniards believe public workers have good reason to protest with the same number believing the unrest could now spread to other groups.

Markets are worried that the latest turmoil is pushing the euro to the brink of collapse. According to one commentator, its financial problems make the Greek meltdown look like a ‘tea party’.

Crisis at a glance

  • €100bn bailout approved with first €30bn this month
  • Rumours suggest Spain will ask for a full blown bailout
  • 10-year borrowing costs soar to 7.57 per cent
  • Cataluna joins Valencia and Murcia in needing a bailout

Eloise Horsfield

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  1. I hope the spanish government doesn’t bring their “economic recovery” measures here to Rota because we’re doing just fine. The american military folks occupying our base is all the economic assistance we need. Plus we are still able to sell shacks for 250k euros and 300m2 plots for 300k euros. And since there is no limit to what we can charge the americans for rent, a 3BR, 1BA, 88m2 apartment can rent for up to 1500 euros/mo with a binding 3 year contract. And all our restaurants and bars are full. Leave us alone.

  2. Just wait, now the other regions will put their hands out for a bailout in case the money runs out before they get their “share”. Then Spanish debt will suddenly rocket and sadly everything will start to quickly unravel once the IMF and other agencies send in some real accountants.

  3. dangli dangli I wouldn’t hang around in front of that ventilator but then again this mountain of mierda might just big big enough to bury this vent for ever ………

  4. Well Spain is in a big mess and yet they think by clamping down on people protesting is going to make things ok and yet again the is denying it will need a full bailout by the autumn. That government is in denial as usual.

  5. When the Fed bailed the US economy, (last year now?) they made the info publicly available – you could literally look it up online to see exactly who got how much…
    Wouldn’t it be fun if Europe did the same? Where *exactly* do these bailouts go…

    (steve, please don’t quote headlines about bank debts. Pleeeease)

  6. might be due to the lack of the news coverage (which might be instilled by 3rd parties…) that nobody mentions the big picture here…
    aren’t you aware that this is happening right now on virtually the entire planet?
    this is no ‘local meltdown’. we are seeing – let me pick up the words of a former commentator – the big mother bulk of mierda on its way to the grandfather of fans.
    if you want to get a proper image, check the internet communication channels that are not run by mainstream operators which are government-friendly – seek the truth…
    buy non-perishable food, water, batteries, and whatever you might need to survive when it actually comes to it.
    i do not think it will take much longer….

  7. I disagree George – Europe, USA (and by association South America) are up the creak. But near-east (India, Pa, etc) have a *minor* troubles. The recent increase in middle-class is suffering. The rest of the planet is business as usual. The rich are rich, maybe not getting richer at previous rates, and the poor are poor, like always. China of course is laughing all the way to the bank – literally. Andthats a third of the planet in one go. We might consider most of them poor, and slave labour, but they consider themselves better off than their parents…
    Add in Aussie, Mal,& USSR and thats half the planet laughing at the west.

  8. i guessing thats a reply to me, George, but sorry i just dont get it. As for CNN i only see that in hotels – often enough to dislike it. And as for Fox – i’m amazed they are allowed to use the word news its such bias shi#e. I have enjoyed RT the last couple of months…

  9. The writing was on the wall by 2003 for Spain and if you did’nt see that cleary then you need to re-evaluate how you look at the world.

    I can remember how smug the Bank of Spain was when the housing bubble burst in the USA and I remember telling my Spanish friends it’s going to be an awful lot worse when the housing bubble bursts in Spain – they did’nt believe me, too late, they do now.

    What has made it worse for Spain is that they are truly ‘lider mundial’ in denial syndrome. The Americans let the housing bubble explode, dealt with the consequences and now 5 years later their housing market is bottoming out.

    I have seen idiots on this forum blaming PSOE but the whole housing fiasco began with the PP in 98. What could No Shoulders Zapatero do once he gained power due to the Madrid bombing and the lies of the PP.

    The whole economy was built on only construction and nothing else. What could Zapatero replace it with – nothing. In the UK, GDP is almost totally reliant on the fraudsters/conmen and outright theives in the City of London (our turn next?).

    Is anyone with half a brain surprised at the clampdown on demonstrations or the remark Andrea Fabra made – this is how Fascists operate, just because Franco died does’nt mean Fascism died with him. Anyone who truly knows this country knows that the old Fascist families still control everything and it was these same controlling families that sent over €45 billion out of the country earlier this month.

    BigJon – you are quite wrong, the super rich have got much richer at the expense of ordinary people. Stocking up on non-perishable food – a good idea but what will you have to defend your stash with – there are an awful lot of high powered hunting rifles around Spain and most hunters are PP/Fascist so beware if they know you have a food stash.

    There is no hope for Spain until the mindset changes and I can’t see that happening anytime soon. What did the Spanish do with all the subsidies/wealth transfers from northern Europe – they spent it on ego projects like airports that never saw a plane,TGV passenger trains instead of high speed freight lines, spectacular civic constructions, instead of instituting proper building regs that save energy and allow people to sleep at night without expensive a/c.It could have been spent on re-forestation and intelligent water conservation projects but no ‘let’s have a ball’.

    I well remember talking with 3 bank managers who used to use my favourite bar every afternoon – they had zero knowledge of the way that capital markets operate and simply would’nt entertain that they were heading for a cliff with the construction bubble and as one said “it does’nt matter we are in the Euro now” – and they all laughed.

    Spain like the rest of southern Europe should have been given a list of things to change and do before being allowed to join the EC. It’s too late for that now and not to forget that Spain is a ‘put together’ country (like the not united kingdom) made up of very different racial groups with very different political leanings and it will be some trivial spark that could well ignite a full blown civil war.

  10. Hi Stuart
    I enjoyed reading your missive and like your Understanding of Spain even though you now live in France…
    I fear the old order creeping back with avengeance and despite the need for austerity it is definitely the poor who are being worst hit…
    The ruling classes still have their country estates and comfy functionary jobs…freezing salaries for functionaries who do nothing ? What a joke!
    They should lay off 50 per cent of them…I was in estepona town hall pulling together a supplement and aside from the fact that there were around 100 pen pushers per punter, they told us they were doing nothing in particular for the expats this year… That was the head of marketing who showed not one jot of interest that a foreign publication was promoting her town with a 16 pg supplement… The mayor even walked past w no introduction..then the following week I discovered they had a ‘ foreigners week’… Where do they get these people…how Spain needs a meritocracy… Not the outright jobs for the boys mentality.
    Until it changes were going down and down!

  11. Jon,
    it is’nt only Spain that is heaving with government/regional desk jockies – it’s right across Europe and your right about the old order and not only in Spain

    Just look at the Brussels/Strasbourg cesspit of corruption/cronyism – grossly overstaffed and with terms and conditions of employment that others can only dream of and we are the chumps that pay for it all.

    At the end of the day I think we all realise that nothing will change until ordinary hard working people loose their passivity and these bureaucracies feel their very existence is threatened and it does’nt matter what coloured shirts they wear, they are all the same parasitic leaches.

    Just maybe the justifiabley angry young Spanish will erupt and certainly all the young Spanish I talked with had a complete contempt for all political parties. I fit happens it will not be nice but the old order will not give up without a fight.

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