Politics & Policies

Spain / Should the euro be abandoned ?

The mind goes numb. Spanish unemployment jumped by another 237,000 people in the first quarter to 6.2 million, or 27.2 per cent.

The country is losing 3581 jobs a day. There are 1.9 million households where no member of the family has a job.

The unemployment rate has reached 36.8 per cent in Andalusia, Spain’s most populous region. The rate of unemployed youth is 57.2 per cent, rising to 70 per cent in the Canaries.

This is in spite of mass emigration by Spanish youth. El Pais reports that 260,000 young people aged between 16 and 30 left the country last year. A great number have gone to London. Others have gone to Germany, or the Persian Gulf, or further afield. Such is the Spanish diaspora, unseen since the mass exodus after the Civil War, or the Conquista.

Nothing like this has been seen before in modern times. Spain’s jobless crisis in the 1930s was much milder, and for a good reason. Spain was not strapped by the deflationary disaster of the interwar Gold Standard. It went its own way.

The government of Prime Minister Mariano Rajoy said this week that the crisis is ”dramatic” but insisted that the country has regained the confidence of the financial markets and is at last on the road to recovery. Sadly this is not the case. The bond vigilantes have been quiet only because the European Central Bank has promised to backstop the Spanish debt market. The crisis in the real economy is getting worse…

There are a few lone voices willing to utter heresy. I am an avid follower of Ilusion Monetaria, a blog by ex-Bank of Spain economist Miguel Navascues. Navascues calls a spade a spade. He exhorts Spain to break free of European monetary union oppression immediately.

On the left, Catalan economist David Lizoain says the time has come for Social Democrats to ask whether the European monetary union is doing more harm than good and therefore should be dismantled. I leave you with this extract from Lizoain: ”On account of the architecture of the eurozone, the countries of the European periphery cannot engage in a fiscal stimulus, a monetary stimulus, a competitive devaluation, or a financial restructuring. Trapped in the midst of recessionary downward spirals, their policy space is extremely limited. The eurozone framework has generated an economic depression and a crisis of democratic legitimacy. These are fertile conditions for even greater political failures, not for success.

Chosen excerpts by Job Market Monitor

smh

via Spain’s only hope is to abandon the euro.

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