Ongoing European Debt Crisis

There was a bit on al-Jazeera today about unemployment in the UK. They interviewed a guy who has a Master's degree (don't recall which field) and has been applying for jobs in retail and fast food and so on for months. Hasn't even been invited to interviews, despite sending his CV to every new opening in his region that he finds online (checks every morning.)

He says that the wages that he expects to make are about the same as they would've been for the same job 10 years ago, and significantly less than they should be for inflation alone. There are so many unemployed people actively seeking employment that wages are going down rapidly.

Lots of people working part time?

Large-scale wage deflation would seem to contradict Krugman's theories on labor price stickiness. However, people working for lower wages than their qualifications would suggest does not contradict that theory and can easily explain a declining GDP even with rising employment.

More part-time & lower paid workers, plus the Olympics have skewed the figures somewhat by providing temporary work for quite a lot of people.

How about people being classified as self-employed yet doing very little work? Or so-called "work programs", shuffling people off the unemployed list for a few months? Or a combination of all the above?

In the article, it does say this:

I'm not sure what it says for the competence of those in charge. Economists had better watch out — they're Acceptable Targets...

The Olympics cost about £10 billion, right?

...a lot of them in the Olympics were unpaid volunteers, or people working for contractors and as such already in employment!

@Fighteer See, Spanish history led to an extremely complex social-political situation in Spain by the death of Franco in 1975, to fix it the 1978 constitution established a political system wich relies in a demi-federal structure where the country is divided in autonomous communities and every autonomus community is divided in provinces wich are already divided in municipalities. This is a extremely expensive system wich needed to be efficient in order to work, and wasn't. Every local government had different degrees of autonomy in regards of the central administrations, for instance, they would be in charge of education, healthcare and infrastructures wich the Government thought it would be handled with responsibility. The problem is that was a perfect situation for a bunch of irregular actions with resulted in the most outrageous and egregious examples of peoples robbery and pullfingering. The funds fiven by the National Government weren't always spent were it should, and prevailed situations that shouldn't be. A list of the most egregious examples:

Castellón, Valencia - An airport was constructed in the area despite the insistence on the lack of demand, the difficult terrain and other shenanigans. The total amount was of 150M €, the Airport resulted to be useless due to crytical planning fail. To the airport being actually functional it should be demolished and reconstructed. Nowadays, the airport is involved in the construction of a giant bronze statue of the promotor and first seat of the province, Mr Fabra. The terrains where it was built were owned by the Fabra family and bought by the local government.

Exactly the same situation in Cuenca.

Most of the airports in Spain lacks of demand and are expensive and technically useless.

Most of the railways of the AVE lacks demand and are too expensive.

Extremely big and smewhat useless infrastructures in Madrid, where you can read a proud sign that informs you were built with european funds.

The same situation all around the country.

And that's only the point of the iceberg.

Honestly, spaniards were used to being robbed but assault our european allies in that way...I can't blame the Germans, i wouldn't give a penny to this country. We have all the source of our own disgrace, every spanish citizen is responsible of allowing such a bunch of bastards in the administration for years. We deserve it.

Excuse my english.

No, everyday Spaniards don't deserve what is currently happening to them. Whatever the institutional or territorial framework under which Spain operates, it is not the source or the cause of the current financial or economic woes. Corruption in the local municipalities or a serious lack of financial oversight may certainly not help the situation, but it's a far cry to blame Spaniards who had no control over what investors, bankers, businessmen and local/regional politicians did (and continue doing).

I would say that Spaniards are the ones to blame for years of corrupt administrations, allowing a bunch of bastards to hijack the institutions. I've seen a lot of things in regards of this, how all the two-party system currently held by the socialist and the conservative parties, who go in all the most cynical, hypocritical way, the regional nationalists who are still more cynical and hypocritical, populist bastards than the main parties are, with all their party structure remembering most of those who mustn't be named with their members and affiliates being a sect-like, out-of-reality parasyte pricks. The whole polytical system is rotten, and this is nothing but a reflection of how rotten society really is, and all this without entering in religious/economic affiliations/issues.

In my opinion, this country needs an enema.

P.S. It's really difficult to explain all this when one have to assume it's not talking with somebody familiar with everyday Spain, well, think of Springfield on a nation scale, and you will get some idea about what's going on. It is not as if I didn't liked my country, this is the pain of being aware of the country one loves going to hell because of a mix of stupidity, bastardy, selfishness and long-time hatred. There's a huge bibliography about people noticing this about our history (From Larra to Unamuno), because we've always been like this, but this is not a thread about history of Spain. I would just hope that situation would teach people a lesson, but i'm an skeptic about people taking lessons from history. Even the germans.

edited 24th Aug '12 4:44:38 AM by MrsRatched

"Allowing" implies that Spaniards have any control over what administrators or public servants do. Yes, politicians who are elected to become mayors or local representatives are elected by the constituents, but on the basis that they will act ethically. I do share many of your sentiments regarding the current "partitocracia" and I'm very much in agreement with the instigators of the 15-M Democracia Real Ya. I do believe an overhaul of the entire territorial organization is necessary as well as a new constitution (or at least extensive constitutional reforms).

However these are only factors that serve to contribute the deepening of the economic (or I should say employment) crisis, they are not the source of it. I don't think I would have the gall to visit an unemployed family in Andalucia and tell them that their current financial problems is all "their fault".

PS: I am Spanish.

That is correct. Whatever the source of Spain's internal fiscal troubles may be, the blame for the current crisis lies firmly with the bond investors who drove the Euro monetary union and threw billions of euros at countries like Spain and Greece in the expectation that they would be as safe to invest in as Germany.

Or, in some cases, deliberately took advantage of said investment strategies to place CDO bets against Euro bonds, like Goldman Sachs.

edited 24th Aug '12 9:28:17 AM by Fighteer

But Spain's internal fiscal problems still need to be fixed, right? And that applies for every country inside and outside the Eurozone...

Yes, of course. However, it's been observed before that you don't take the time to repair the foundations when your house is burning down, and you don't apply bandages to a wound when your patient is dying of a heart attack. Fix the macroscopic fiscal problems first and the structural ones later.

edited 24th Aug '12 2:55:52 PM by Fighteer

Well, that's not strictly true...I mean once you've called an Ambulance for the heart attack then you treat the wound*

Hmm...

See, in 2008, four gentlemen one of them was George Soros met for a lunch in New York, these four gentlemen shared a plan, shrunk the Eurozone. To fulfill their plan, they only had to bankrupt the economy of a member of the Eurozone. Greece was easy, their accounts were faked and their financial system was weak, but it was a small nation. Ireland and Portugal were easy as well, but also small. They needed a big country, Italy would be perfect due to political division but had a strong financial system, Spain was perfect for this, with a weak financial system and a slightly more strong political system. The plan was attack Spain financially and Italy politically, after all, they were pigs to be slaughtered.

A nation wich is strong in its unity and does its homework has a chance to survive an outer attack, a nation who is not, has none. I wouldn't be neither the one who would tell an unemployed it's his fault shit happens, but there's a social responsability about what's happening, society it's responsible for how things are going and, definitely, how problems are managed. And that's what I claim.

Okay, what is social responsibility in the context of a financial crisis in Spain? That each household should spend less in order to make ends meet? I'm quite certain people are already doing that and more to survive. That Spanish citizens should make as many sacrifices as possible in the name of austerity? Already happening, and quite extensively at that (next stop: pensions, joy). That citizens should elect better politicians? Currently there are two main parties grabbing all the votes and function effectively under what is known as the Iron Law of Oligarchy: "He who says organization, says oligarchy". They are organizational machines that produce professional politicians in the service of themselves or the party. The apparatus of each party will always dictate who will be the deputies for congress, who will be the candidate for prime minister and the ideological/political direction of the party. Tell me how citizens can change that other than protesting (which has and is still happening, 15-M movement, Democracia Real Ya, etc). There is no real feasible way to change these parties from the inside, so tell me how citizens can be involved directly in the decision making processes of these parties... or the decision making process of the legislature?

I will be the first one to say that most European countries need to rebuild the concept of what it means to be a citizen, your rights and your responsibilities, etc. Certainly Spain needs to reinvent itself as a country and it's people need to stop being persons and start being 'citizens'. We need to build ethical institutions and create amateur politicians. A change in political culture and a harsher stance against local/regional corruption is necessary. Democracy has become a system rather than the system becoming democratic. You will see me the first being harsh on our homeland for all it's faults.

However I will not, under any circumstances, blame ordinary people who are now struggling to buy basic necessities and ask of them more than they can give. Right now they have only one tool to enact formal change: the vote. Unless you're in favour of Sanchez Gordillo's method of protesting (I'm quite impressed with how things are done in Marinaleda, though it may be very much dependent on regional financing), I suggest you take a hard look at the potential for positive change in our country and come up with ideas on how to enlighten our leaders on the gravity of their mistakes. I would also look at other external factors other than the incompetence and lack of transparency of certain political parties and guard carefully at the attitude of the ECB and Germany (and it's allies in the EU). We live in an economic interdependent world, where economic problems cannot be solved solely by national governments, especially in a regional organization such as the EU, an organization which I deeply cherish despite it's flaws.

edited 24th Aug '12 4:35:48 PM by germi91

There are other methods; for example, the ETA method or the Franco method — not that those will happen, though.

edited 25th Aug '12 12:20:11 AM by Greenmantle

I dont think the situation will get better in Spain, at least for his people. Maybe politics can steal so much but they are still doing it. Now the worst part is the public administration. We have a 22% of civil servant. The proportion is not the problem, the problem is that they are (mostly of them) really negligent, especially the bureaucracy.

Shit, Im working for two years from now and I have see everything. Chief officer that spend 500k € in things that doesnt cost more than 30k, spend thousand in design stuff because you have to finish your budget, people faking demos for empty projects payed from EU and bribes between companies and some guys. And lots of people who works about 2h in a 8h employ. And thats what me, myself, with MY eyes have seen. I dont think often about this because poison my blood. All those things happened after 2010.

And meanwhile the banks, the Church, big or public companies are fueled with money and small ones,self employed are strangled. We dont touch bureaucratic (hired at political parties) but we mess with public televison channel, the education and wealth. Things are bad to the same of all times, people who earn less money and make the country works.

Maybe I will go to another country to earn my greens. Like my parents, grandparents and even great-grandfathers that spent 15-30 years outside either one. Im not sure if I will go back. Im saying that without sadness because I grow up between this crap, I only share my thoughts. Note that I dont talk about politics never IRL or are really into it. Im just a random guy who likes films, music and some fun with my friends.

There are little hope in here except something BIG happens and blow up the country. Something more violent that is happening now. Things are bitter. But I still have Bittorrent and can eat and buy clothes and a PC so I am not unlucky.

Sorry about the grammar-rapist brick.

@Fighteer: So essentially, Krugman is arguing for equalizing the periphery's competitiveness by inflating the center?

That kind of sounds like repairing the foundations on a burning house, here. It's a long-term solution to an immediate problem.

Not sure I agree with that analysis-but Krugman's general point has been that the Euro is kind of dumb monetary policy to begin with, and there really are no "desirable" options left.

Well, yeah. Europe either needs a fiscal union (and probably an outright federation) or it needs to break the Euro somehow.

Ironic, isn't it? The Greek party who campaigned on "no austerity! Fuck Germany!" was factually right, and them operating on that policy would have been an unmitigated disaster. Wonder what that means (aside from "Europe is being governed on Alice in Wonderland logic," of course).

Krugman argues for fiscal stimulus first and foremost instead of austerity, but recognizing that it's not a solution that's on the table, he proposes core inflation as one measure that could keep the Euro alive in the medium term.

Yeah, but rebuilding the Euro by the monetarist playbook is even farther from the real world. As well as not being enough to save the periphery from a spasm in the short term.

Basically, Krugman is saying "You should do X" "X is totally not an option" and then Krugman sighs, rolls his eyes, shrugs, and says "Okay well... I don't know, how about This Crazy Thing Y That Will Work but we Both Realize It Sucks"