A Socialist Debacle in Spain, But Uncertainty Reigns
In what is being viewed as a dress rehearsal for the general election in 2012, Spain’s Socialist Party on May 22 suffered its worst defeat in municipal polls since Spain returned to democracy in 1978 after the death of the dictator General Francisco Franco. Amid mass anger at Spain’s failing economy, the center-right opposition Popular Party won 37.5 percent of the municipal vote across the country, compared with 28 percent for the Socialist Party. The left-wing El País newspaper described the defeat as “a tsunami drowning the Socialists.”
With more than 8,000 city councils and 13 out of Spain’s 17 regional legislatures up for grabs, the Socialists lost control of traditional strongholds in the cities of Barcelona and Seville as well as the Balearic Islands and the region of Castilla-La Mancha, which had been ruled by the Socialists for nearly 30 years. The Socialists ended up with clear control of only three of Spain’s 17 autonomous regions. Overall, the PP won by about two million votes, compared to its victory margin of just 150,000 votes in 2007.
There also was a shock result in the Basque Country, where a new radical separatist alliance beat the Socialists. The new grouping, Bildu, which was nearly banned because some of its members are linked to the terrorist group ETA, won more than 25 percent of the council election vote. That put Bildu in second place, just behind the more moderate Basque Nationalist Party, which won about 30 percent, and pushed the Socialists, with 16 percent, into third place.
Conceding defeat, Spanish Prime Minister José Luis Rodríguez Zapatero blamed voter discontent on three years of economic crisis which has left Spain with an unemployment rate of 21 percent, the highest in the industrialized world. In a brief news conference after the polls closed, Zapatero said: “These results have a clear relation to the economic crisis we have suffered for three years. It is a crisis that is having profound effects on the morale of the citizens. I know that many Spaniards are suffering great hardship and fear for their jobs and future well being.”
Nevertheless, Zapatero ruled out calling an early general election, saying he would stay in office until the end of his mandate in March 2012 to pursue “job-creating reforms” by using existing alliances with small parties in Parliament, where the Socialists are the biggest minority.
But the bigger-than-expected victories for the PP will increase pressure on Zapatero to step aside before his term is up. Much of that pressure will come from within the Socialist Party. Zapatero announced on April 2 that he would not stand for a third term, and many believe a new leader could halt the fall in the Socialists’ popularity.
In any case, Spain’s political landscape is now highly uncertain and ultimately unsustainable. As a lame duck lacking a parliamentary majority, Zapatero will find it difficult to impose further austerity measures to cut the budget deficit as Spain struggles not to follow Greece, Ireland, and Portugal down the path toward a debt default.
Moreover, a change of political power in Socialist strongholds may lead to the disclosure of higher budget deficits in Spanish regions and municipalities than previously reported. After Catalan nationalists dislodged a Socialist government in the wealthy region of Catalonia in November 2010, incoming officials said the local budget deficit was twice as big as previously thought. Standard & Poor’s cut Catalonia’s credit rating on May 19, because of its swelling debt and deficit, and said it may reduce the grade further.
Any new discoveries of hidden piles of debt could have an adverse effect on the central government’s effort to cut Spain’s overall budget deficit. Madrid is seeking to reduce its budget deficit to 6 percent of gross domestic product in 2011 and to 3 percent by 2013, from 9.3 percent in 2010.
Reflecting the perception of increased political risk in Spain, the spread between Spanish and German 10-year bonds, a key measure of risk, was 14 basis points higher at 257 basis points, up 20 percent from just before the elections. Spain’s 10-year government bonds now yield more than 5.5 percent. Bank of Spain Governor Miguel Ángel Fernández Ordóñez said on May 23 that the Spanish government must now push forward with economic reforms to lower its unsustainably high borrowing costs. He added that a 200 basis point spread with German bonds is not sustainable.
Spain’s political situation is a critical issue for the European Union as a whole. Analysts say the price tag for a Spanish bailout could exceed €500 billion ($700 billion), leading many observers to conclude that Spain is too big to be rescued, and that a Spanish default would almost certainly lead to the breakup of the 17-nation euro zone.
Hooray! The radical socialists were beaten by the slightly less radical socialists!
Thank you for saying that. I am sending your comment to my friends in Spain who have been in denial for decades! Now we have to start comparing that to our own situation here. Two parties have been playing good-cop-bad-cop with us since who knows when. It’s the ruling class vs. the middle class in America. The Tea Party pulled an extraordinary victory in our last election but nothing substantial has changed. We must fight in every front to return to government of the people, by the people, for the people, under God. That means much more than winning elections. The Spaniards are going to find that out soon.
Spain is exactly a microcosim of what will happen to the whole of the EU in time. The citizens are bascially socialists and anti capitalists. What is failing them is the fact that the state cannot produce jobs. That is why they have a 21% unemployment rate and massive debts. They also have spent billions on windmills and solar that went down the drain–again another socialist boon doggle in the name of climate change. Zapettero is just like some other head of state. Any guesses? Spain will change governments to the PP but they will likely remain attached to their job killing and big government idealogy. This is the irony of the EU where capitalism is in a death spiral. The people are delusional to think that another party can change their fortunes.
The US is about ten years behind Europe but is on the same path. When dependency on the welfare state reaches a certain point, reform becomes politically impossible.
So you think 10 years behind? If Obama gets a second term, try only 4 more years and we will speed by the EU in our death spiral.
Term limits. Trial by their peers: the American people, not congressmen and senators. Perhaps then true justice will be carried out.
I know, so please wake me up.
Analysts say the price tag for a Spanish bailout could exceed €500 billion ($700 billion), leading many observers to conclude that Spain is too big to be rescued, and that a Spanish default would almost certainly lead to the breakup of the 17-nation euro zone.
That would be about €1000 per EU citizen. I’d think that any (non-Spanish) party that supports a Spanish bailout would commit political suicide, so I conclude that Spain is too big to be rescued … but I have been surprised before by the irresponsibility of the EU political class.
Not sure about a breakup of the eurozone: countries that have defaulted might want to leave, but if they leave, the remaining countries will be more enthusiastic about the euro than ever.
OTOH Finland or some other small country might decide that the euro is not good enough for them, and if they do, then the Germans might get the same idea…
“Zapatero will find it difficult to impose further austerity measures to cut the budget deficit as Spain struggles not to follow Greece, Ireland, and Portugal down the path toward a debt default.”
Of course they will find it difficult to impose further austerity measures. They’re socialists and have grown up in a fat social-welfare state. They can’t get it through their thick skulls that they’re broke and that they finally ran out of spedning other people’s money. So nothing really will change in any of these countries. They will slip deeper and deeper into debt until the really do go bankrupt, like Greece is about to do (with Portugal not far behind). There is nothing a new Spanish government can do unless they scrap the welfare state, reduce taxes, reduce the size of their government, and privatize all businesses. Let the free market take over and try to make the country as business-friendly as possible. Then, maybe, they will stand a chance. If not, all another loan will do is kick the can down the road a bit until they finally do run out of money (as Greece is about to do).
And this is America’s future unless we stop this nonsense and get a new president in 2012 who will actually cut spending dramatically and shrink the size of the government. If not, then Spain is what we have to look forward to, and soon.
Perhaps all you zealots should read some facts before you start screaming about “radical socialists” and the “welfare state”.
http://www.diagonalperiodico.net/El-crecimiento-exponencial-de-las.html
The article linked hereto provides statistics according to which the “socialist” government has presided over a drastic reallocation of Spain’s national income and wealth in favour of the propertied classes and to the great detriment of the working class. Furthermore, Spain had no central government budget deficit worthy of mention when the crisis began. The current deficit is the inevitable outcome of less economic activity, fewer people paying taxes. Big deal! Austerity won’t solve that problem, but bringing back the peseta might.
Response to your duplicate comment on #13
THE MAIN POINT IS THAT THE SOCIALISTS STILL GOT TWENTY EIGHT PERCENT OF THE VOTE WHICH MEANS THAT THE SPANISH PEOPLE STILL DO NOT GET IT. THEY STILL BELIEVE THAT THE WORLD AND THE GOVERNMENT OWE THEM A LIVING. SPAIN WAS ALMOST TAKEN OVER BY THE COMMUNISTS IN THE THIRTIES AND THERE IS STILL A HARD CORE SOVIET STYLE COMMUNIST MINDSET AMONG MANY OF THE EDUCATED SPANIARDS. THE USA IS SIMILIAR IN THAT THE HARD CORE DEMOCRAT PARTY STILL CONTROLS MOST OF THE AMERICAN CITIES WHICH ARE IN DEPLORABLE CONDITIONS. EVEN THE IRISH AFTER THIER FINANCIAL COLLAPSE VOTED FOR MORE SOCIALISM. THERE IS IN THE HUMAN CONDITION A BASIC FAULT WHICH USED TO BE CALLED ORIGINAL SIN WHICH MEANS THAT HUMANS LEFT TO THEIR OWN JUDGEMENTS WILL CHOOSE EVIL.
I know Spain well. The comments here prove my point: it is not too hard to see where Spain’s problems come from. Ever since the times of Joseph Bonaparte they have been going through the same process. Every Socialist government has been a calamity and left the country in ruins. If Americans can see this from a distance, why is it that Spaniards cannot see it under their noses?
The dichotomy in Spanish culture goes back a long time. Two things I read gave me an idea of the problem: Historia de los Heterodoxos Españoles (History of the Spanish Heterodox’ by Menéndez y Pelayo) and El Liberalismo es Pecado (‘Liberalism is a Sin’ by Fr. Sardá i Salvany) a prophetic book one can read on line here: http://www.liberalismisasin.com.
One can surmise in this two very different books the problem of the “two Spains” one of whom is Hispania the daughter of Rome, and the other the “Cainite” Spain fixated in eternal discontent and self destruction.
Menendez y Pelayo presents the idea that Spain can only be understood from Rome onwards. It begins its ascent from the tribal mud by following the light of Rome. When the husk of Rome has been consumed by history, the Church continues as the preserver of the identity received from the Empire. That idea is historically perfect and shared by many other countries in Europe–even if they don’t like to admit it now.
The other Spain, the Cainite Spain, is defined by a historical force that runs in the opposite direction. The progressive atomization of Spain in a number of regions like a post-Tito Yugoslavia is an unconscious intent to return to the days before the Roman invasion. Negating the Roman-Christian past is essential to it.
That force appears today in the form of Socialism and Regionalism. The two uneasy partners that are destroying Spain idea after idea, abortion after abortion with the intensity that makes the old barbarians look tame.
Unfortunately the Church of Spain has decided to play safe. The bishops are silent, the King is acquiescent, a mere tin crown presiding over the killings and destruction and in fact approving it and validating it with his own dissipation, poor thing.
The fight rages in fact inside the heart of every Spaniard, it is a problem of near biblical intensity, like the idea of St. Paul that both man and creation are awaiting the final redemption and yet the devil has temporarily become the god of this age. In that sense, the struggle of Spain is no different from the struggle of the whole human race as Johann said.
Zapatero was happy to insult the American flag by sitting down as Old Glory paraded in front of him on Victory Day. Little did he know his act would come back to bite him in the rear. The recession took away the American tourists (the only tourists that spend real money) and the German, British and American retirees stopped buying condos in Spain. Faced with a stagnant economy he unveiled a plan to hire TWO MILLION public employees and gave the young “emancipation money,” basically throwing money on the street in the hope that the economy would return.
The GREAT LESSON here is hidden but still visible: the engine of the world’s economy is still the United States. Europe, China, etc. do not have the strength to replace the US. In a way this brief reign of The One (and The Previous One) has put the US on the sidelines and given the rest of the world a taste of what an absent US will be like. The US did not grow ONE new job since the beginning of the GWB administration. Unless we start growing jobs again countries like Spain (and the other PIIGS) will not return. The EU (which is to say the Germans) cannot carry the whole Continent.
Isn’t Spain the example for the “Green Economy”? Socialism is collapsing. Why are we so anxious to follow their model?
The crushing burden put on the free market by all the “do gooder” legislation kills any chance of building a real growth economy in a Welfare State whether it is Spain or Maryland. We elect a bunch of near criminals to write our laws and incent them to pander to every special interest group who wants to dip their beak in the public trough and then wonder why we have very high levels of unemployment.
Any small businessman who has ever had to try and deal with the insanity of most regulations and the red tape that goes along with them knows exactly what I am talking about. Most entrepeneurs say “why take the risk?” if they also want to declare higher and higher marginal tax rates whenever the political class needs some more graft.
Yet, we as a people we don’t seem to be able to grasp this simple fact.
Tax those that make the jobs available to such a level that it isn’t profitable for them to take the risk and you will get exactly what you are seeing happen in Spain and also in the US.
Put antother way.
I’ve owned 7 small businessess over the past 40 years and just sold my last one at age 62 years of age. I’m done and would not even consider starting another company in this envronment.
Here’s what I have learned:
Whatever you incentivize you will get more of whether it be welfare or economic productivity (or anything else humans do or other living things do for that matter, for example smart Deer do not try to lick a mountain lion, smart people don’t buy stock in a company going bankrupt or try to pet a rattlesnake).
The Socialists do not get this in terms of private wealth creation for all/capitalism/investment/money/the givers and how it works but they certainly undstand it with regard to the electorate/the takers/votes/political power and the domination of the many by the few.
Hello Spain see you in a few years. Or maybe not.
In fairness to the Socialist Marxist, they sincerely believe they can change Human Nature. Then again they also believe given enough time and money they can change a Rattlesnake and have it eat out of their hand. Of course they are wrong in both instances.
President Obama, January 2009: “And think of what’s happening in countries like Spain, Germany and Japan, where they’re making real investments in renewable energy. They’re surging ahead of us, poised to take the lead in these new industries.
This isn’t because they’re smarter than us, or work harder than us, or are more innovative than we are. It’s because their governments have harnessed their people’s hard work and ingenuity with bold investments — investments that are paying off in good, high-wage jobs — jobs they won’t lose to other countries.”
If only the US had an independent media that would actually look no further back than 2 years and ask questions of the President.
The US had a pretty good run through the 20th century, but it’s all over now.
My sense, when reading the article, is identical to the several comments; this is America a few years from now. Spain opted to go for green energy, windmills and solar cells, and learned the hard way that green energy is both hideously expensive and that these ubiquitous costs are a cancer to economic well being. Their young opted for a socialistic redistribution of wealth, and got unemployment, the certain result of socialism. What was unmentioned is the deliberate slaughter, by terrorists, of a train load of people, hours before a prior election. It did not happen, this time. It was a tactic perfected by Hitler. He used wide spread poverty, lack of employment, no hope, and brown shirt violence to gain power.
I pray that Spain does not repeat her history of violent struggle for power. And also for my nation.
Now is a time for discipline thinking, blunt honesty, and hard choices. Our options are narrowing.
I think that will be obama’s tactic as well.
With a “leader” like Rajoy (or is it RINORAJOY?),and a feckless electorate that expects his party to continue their welfare dependency,Spain is cooked. We are witnessing the end of the latest European criminal fantasy and political fraud: the egalitarian welfare state,based on PC delusions, welfare dependency,and hypertrophied egalitarianism . The end of Spain will signal the collapse of the EURO,and with it, the EU,globalism, welfarism, enviromentalism, multiculturalism, gender feminism,and all the other virulent defecations of the 60′s degeneration which has destroyed the West.What is needed is a conservatism of survival which will seek political solutions outside of the state and a suicidal maistream culture . It’s going to be interesting to watch the collapse of a continent that’s become a life inimical fraud.
Spaniard here,
The main problems Spain has faced in these last years and faces now are these.
1) Although PSOE (the Socialists) are on the way of historical defeat in the next general elections, the Popular Party is not much better economically speaking, the Spanish equivalent of RINOs. There’s no such thing as an economic liberalistic party nor a numerous popular movement that demands it, nor popular awareness about it being necessary. As Cantino mentions, here in Spain, “Liberalism is a sin”. The only parties that dare to have somewhat liberalistic programs are the regional right ones, such as PNV and CiU, and only marginally.
2) Even if the Popular Party did have the will to make powerful fiscal reforms (which I doubt it will), the Spanish economy is heavily based on subsidies, heavy labor regulations and a culture of people expecting the government to do everything for them (as it has been doing from 2004). Salvation at this point would mean a total tax, labor law, business law redo. Combining this with the inbalances between the autonomies’ economies, tax burdens, and different economic dynamics means they would have a really, really tought job ahead even if they really wanted to solve Spain’s situation. Add to this the 3-sided independentist tensions and you’ve got yourself a hell of a theater. The right nationalistic parties might be the PP’s best allies in economic terms, though.
Also, Catino, although I agree there’s two cultural “groups” in the whole of Spain, that of latin origins and that of iberia natives/germanic one, I can’t agree with you on assigning to the “regionalist” movements the fault of Spain’s situation and the rise of the moocher culture. For one thing, Spain has only existed as such from 1492 onwards, while many of the old kingdoms and counties had solid cultures and identities even before the Castilian culture, that eventually came to dominate the rest, existed as such. Two of these cultures, the Basque and the Catalan, have historically outperformed Castillian territories economically at all epoques, and still do. Catalonia, for example, with barely 15% of the population, has 25% of the country exports, a similar share of the economy, and contributes yearly through taxes 10% of its production towards helping develop (or pay for the excesses of) the rest of the less-developed autonomies. In this crisis situation, Catalonia has also been the first autonomy to cut spending heavily, with a 2011 budget 10-15% inferior to that of 2010.
Sir Sefirot,
I am quoting roughly Menéndez y Pelayo’s exposition. I agree with him. There is no Hispania before Rome basically makes it happen. Rome goes and then, as you correctly state, the Reconquista brings back the sense of Hispania but that sense is now Christian. The fact that one region could be more productive than the other is irrelevant (in my view.) I found hard to understand that Catalonians refuse to speak Castellano with a tourist (it happened to me in the Museo Gaudí) but gladly use that language when doing business with 600 million Spanish-speakers around the world. Ea! siempre hay alguno que no habla el catalán!
In doing that they recognize the force that Hispania was and still is albeit in a cultural sense. Rome did a good job in bringing the peninsula into the Roman order as a whole. The Church ended up being the glue that kept it going under the terrible stress of the barbarian invasions, and the Muslim occupation until 1492 and then beyond. The great unifier after that time was the national enterprise of conquering the Americas, an epic deed unsurpassed to this day (in my opinion.) I think Franco summarized the noblest objective of the Hispanic race by using that motto “Una, Grande, Libre.” If Spain is to be free and great again she has to be ONE. Everyone, even the most humble little tribe, contributes something to the greatness of the whole. The “Cainite” Spain insists in a return to the tribal past but that is running against the tide of history. This is the century of the great blocs. It is quite interesting to see Basques, Catalans, etc. proposing to shake the bonds that make them Spaniards while the whole continent is making a titanic effort to unite as one bloc. Take the example of Italy, my cultural background as a descendant of Genovese is that: cultural; but I also share the millenarian culture of Italy and the national identity that goes with it. But then you and I know well that since the Muslims left Spain the country has had a bit of a problem becoming European again. “You shall be what your duty bounds you to be. Otherwise you shall be nothing” said José de San Martín. Spain was not born yesterday, her roots go deep to times immemorial. In those roots a unity was forged that is indestructible. Machado may not have been aware of what he was writing when he said:
Mas otra España nace,
la España del cincel y de la maza,
con esa eterna juventud que se hace
del pasado macizo de la raza.
I think I should clarify that the term “Liberal” (left of the political spectrum, progressive) as used in American English does not equal the Spanish term “liberal” (supporter of the individual liberties in social and political realms and also of the private initiative in the economic realm.) Hence the confusion here. “Liberal” for a Spaniard means something akin to a Conservative Libertarian in the American common language. When Fr. Sardá i Salvany writes against Liberalism, he is referring roughly to the many movements that emerge from and after the French Revolution all of them having a strong humanist component, even an anti-God component. So when we say “Liberal” in 2011 American English a Spanish speaker should translate it as “progre” (Progressive.)
Of course it is no surprise that the two most economically productive regions, catalunya and pais vasco, are the least adulterated by the moorish invasion.
How politically incorrect! Are you trying to associate the Islamic occupation of Al Andalus with its chronic lack of economic growth? I am shocked!
If you were right then Islamic countries should be like that for the most part… oh! oh well…
Perhaps all you zealots should read some facts before you intone your ritual incantations about “radical socialists” and the “welfare state”.
http://www.diagonalperiodico.net/El-crecimiento-exponencial-de-las.html
The article linked hereto provides statistics according to which the “socialist” government has presided over a drastic reallocation of Spain’s national income and wealth in favour of the propertied classes and to the great detriment of the working class. Furthermore, Spain had no central government budget deficit worthy of mention when the crisis began. The current deficit is the inevitable outcome of less economic activity, fewer people paying taxes. Big deal! Austerity won’t solve that problem, but bringing back the peseta might.
That the rich become richer during Socialist rule is no news to me. Socialism has never made the people of any country rich. The rich have the means to hide and shelter their assets. The workers cannot afford luxuries like tax accountants and lawyers. That is why if one wants to have work, prosper, and thrive one must not vote progressives into power because progressive agendas are expensive and they always end up being paid for by the middle class.
Carl, I read the article you quote there. I translate here one of the most important paragraphs:
According to the Encuesta Financiera de las Familias (Financial Study of Families) the ratio of inequality of 25% between the wealthiest households and the most poor moved from 33.3 in 2002 to 39.3 in 2005, growing a spectacular 50,4 in the first trimester of 2009. Between 2005 and 2009 the poorest quarter of households experienced a loss of 6,4% of its worth while the wealthiest quarter increased a 19.9%. Finally, if the model of developmen during the boom period was characterized by an increment of inequality, the policies adopted to confront the crisis are generating an exponential growth of the same.
There is no mentioning of the PER CAPITA income. The comparison is based on household income. Any economist knows that you can make household income mean anything you want. Families change from year to year, children come and go, spouses die, etc. The obvious absence of any comparison in PER CAPITA income tells me that those numbers are not favorable to the point of view of the author.
If you want to know the truth about the evolution of any economy compare PER CAPITA income. A person is a person in 2001 and 2011 or any other year. When I read one of these articles and I see “family income” or “household income” I throw it away. That line of analysis can conclude anything that the analyst wishes to conclude.
correcto
always an agenda