July 12, 2012
By LUIS MIRANDA | THE REAL AGENDA | JULY 12, 2012
Mariano Rajoy and his government have provided another sign that they are not about to stop starving Spain through the policies proposed and enforced by the European government, after it agreed to rescue the peninsular nation with some 125 billion in aid. The conditions imposed by Brussels were clear in order to provide the funding to rescue the Spanish banking system: deadly austerity and exorbitant increases in taxes.
Rajoy has delivered as promised a week ago, when he proudly announced that the European government had accepted the conditions Spain had proposed, even though it was the other way around. Back then, Rajoy announced the bailout as a triumph and a step in the right direction to get Spain back on track and to pursue economic growth and higher employment. However, since the announcement of the bailout and the realization of the contract between Spain and the EU government, things have been going downhill only.
Since the acceptance of the financial aid, which by the way the Spanish people will have to pay for, deeper austerity measures have been implemented and the value added tax increased to 21 percent. The spanish government says it has officially cut 65 billion euros from the fiscal deficit, a measure whose results will be fulfilled, says Rajoy in 2014. Much of the money the government is cutting belongs to social programs, on which millions of spanish people depend to live. In practical terms, this means that the government has effectively tied a noose around the necks of all of those dependent people who will see their purchasing power and resources decrease exponentially in the next 2 years.
The package of measures imposed by the European government as a condition to rescue to the Spanish banking system also includes deep cuts in unemployment benefits and civil service pay. It is also believed that future measures will include tapping into the monies destined to fund pension funds and retirement accounts as well as determine that people will have to retire at a much later age and pay a bigger cut of their already depleted income to those pension or retirement systems. Rajoy’s announcement of more austerity and cuts to government entitlement programs provoked a mix of jeers and boos from opposition party members in the Spanish Parliament.
“These measures are not pleasant, but they are necessary. Our public spending exceeds our income by tens of billions of euros,” Rajoy told the members present at the parliament. He also warned people about new plans to enact new taxes on energy consumption and plans to give away SPanish infrastructure to private companies who work for the European banking system. Rajoy said places such as ports, airports and rail would be ‘privatized’ in order to pinch every penny possible to help the government deal with its current deficit. The government of Spain will also reverse property tax breaks it had announced back in December 2011.
The current fiscal problems that Spain faces have been aggravated by a recent public protest that extended to the streets of Madrid, where hundreds of coal miners who marched to the capital from the northern regions of Spain, are protesting against cuts in mining subsidies that they say will put them out of work. Those cuts are also part of the government’s recently adopted measures to supposedly reduce the deficit. The newest austerity measures are even making a dent into one of the most important social distractions in Spain: Soccer. As reported by Sport.es, the austerity measures announced by Mariano Rajoy greatly influence that sales and transfers of players before the start of the next soccer season.
More than five years of economic digression, that began back in the days of José Maria Aznar, have morphed into a recession and a government rejected depression that translated into a 24+ percent unemployment rate, the highest deficits in recent decades, a failing banking system that was heavily invested in fictitious financial products, soaring borrowing costs, financial downgrades of both the Spanish government and the banks, decreasing purchasing power for the average Spanish, a deeper fall into the indebtedness black hole and of course the loss of national sovereignty.
Although similar measures adopted in other nations such as Greece have not yielded any positive results the government led by Mariano Rajoy has already compromised with the European bankers to adopt and execute a package of policies that seem to be taking Spain slowly and painfully the way of the financial butcher’s. The only missing part from the Argentinian situation of 1999 to 2000 in the Spanish scenario are the public riots on the streets, that seem closer than ever now that the miners have taken to the capital to protest the cuts in subsidies. With more shutdowns of public companies, reduced benefits for civil servants, budget cuts for political parties and labor unions, the adoption of more deadly policies originated in Brussels warn that the riots might just be around the corner.