Spain and the IMF: Round the Bend or Out of the Woods? http://www.economonitor.com/edwardhugh/2014/07/15/spain-and-the-imf-round-the-bend-or-out-of-the-woods/?utm_source=rss&utm_medium=rss&utm_campaign=spain-and-the-imf-round-the-bend-or-out-of-the-woods
The real problem in Spain – and this issue isn’t treated in the report – is the complete collapse of civic confidence in many of Spain’s institutions, from the Bank of Spain, to market regulator CNMV (the Bankia IPO, Preference Shares), to politicians and political parties (the Barcenas affair, among many others), to the monarchy. It is this crisis of confidence which makes it so difficult to get the consensus to make more sacrifices.
Many say that there can’t possibly be 25% unemployment in Spain since if there were there would be a revolution (referring to the existence of the underground economy but conveniently forgetting that the worst years of the 1930s depression were not years of revolution, those came later).
What people are missing about Spain is the way the credibility of the institutional structure is weakening. Voices talking about a constitutional crisis are growing. The economic crisis basically coincided with the moment when the set up established – including the return of the monarchy – during the transition from Franco’s dictatorship to democracy was increasingly seen as having “run its course”. Many observers recognise that major constitutional reform is needed and some kind of “rebirth” and renovation in the political system. Last months EU elections were the latest warning signal. The two main political parties (the so called institutional parties) for the first time since the transition failed to get over 50% of the popular vote between them, while the Syriza-like Podemos – who hadn’t even been listed in the opinion surveys – surged from nowhere to take 5 seats and 9% of the vote. And in Catalonia a large majority of voters voted for parties who are actively campaigning for independence from Spain. A general election is coming next year, but it is hard to see either of the “old” parties getting a majority without a complex set of coalition partners.
So rather than asking whether Spain has now gone round the bend perhaps the Fund would have been better off sticking with “Getting better, but not out of the woods yet, not by a long way”
The real problem in Spain – and this issue isn’t treated in the report – is the complete collapse of civic confidence in many of Spain’s institutions, from the Bank of Spain, to market regulator CNMV (the Bankia IPO, Preference Shares), to politicians and political parties (the Barcenas affair, among many others), to the monarchy. It is this crisis of confidence which makes it so difficult to get the consensus to make more sacrifices.
Many say that there can’t possibly be 25% unemployment in Spain since if there were there would be a revolution (referring to the existence of the underground economy but conveniently forgetting that the worst years of the 1930s depression were not years of revolution, those came later).
What people are missing about Spain is the way the credibility of the institutional structure is weakening. Voices talking about a constitutional crisis are growing. The economic crisis basically coincided with the moment when the set up established – including the return of the monarchy – during the transition from Franco’s dictatorship to democracy was increasingly seen as having “run its course”. Many observers recognise that major constitutional reform is needed and some kind of “rebirth” and renovation in the political system. Last months EU elections were the latest warning signal. The two main political parties (the so called institutional parties) for the first time since the transition failed to get over 50% of the popular vote between them, while the Syriza-like Podemos – who hadn’t even been listed in the opinion surveys – surged from nowhere to take 5 seats and 9% of the vote. And in Catalonia a large majority of voters voted for parties who are actively campaigning for independence from Spain. A general election is coming next year, but it is hard to see either of the “old” parties getting a majority without a complex set of coalition partners.
So rather than asking whether Spain has now gone round the bend perhaps the Fund would have been better off sticking with “Getting better, but not out of the woods yet, not by a long way”
Comments