Thursday, September 27, 2012

A moment to Basque in the Spanish Sun?

Tyler Durden over at Zerohedge notes today that the outflow of deposits from Spanish banks continues. While the rate of movement has slowed--from 5% in July to 1% in August--the money is still leaving. Unemployment in Spain is near 25%, unemployment among youths in Spain is over 50%. And the forecast for the Spanish economy to contract by .5% in 2013 is now being viewed as overly optimistic by those directly involved in the Spanish economy:
...Said Jose Luis Martinez of Citigroup Madrid, "However, we see as too optimistic the macroeconomic assumption of 0.5 percent recession for the next year. We see a scenario with a deeper recession and if this were the case, further spending cuts will be needed."
Money fleeing Spanish banks, a government forced to make huge--seriously huge--spending cuts, high unemployment, and an economy going in the wrong direction: sounds like an awful good recipe for something. How about revolution?

In Navarre and the Basque Country, thousands have taken to the streets to protest budget cuts, most of them members of Basque trade unions. The Spanish government is desperately trying to work out a deal with the European Central Bank, but in order to meet the requirements of an ECB bond-buying program it would likely end up in the same boat as Greece. Either way, there is no relief in sight for the groups protesting.

In Catalonia, there is talk of all-out secession. Catalan President Artur Mas has already scheduled early elections for November, where he will seek to push through a referendum calling for more autonomy in Catalonia from the Spanish government. Given that Catalonia is the biggest economic region in Spain when it comes to output,  this is no small thing. If things keep going downhill in the region, a deal with the ECB for a bailout will be next to impossible to conclude, since the bonds that would end up in the ECB's possession would be worth even less than nothing, given that a near one-fifth of the Spanish economy would be potentially gone. Who in their right mind would buy these bonds from the ECB?

Yet, I think the problems in Navarre and Basque Country have the potential to be even worse, both for Spain and the EU at large. Because again, it is moments like these that lead to real revolution. And coupled with the events in Catalonia, the Spanish government will have a difficult time maintaining control if things get worse; each will feed off of the other, even while unrest continues in the southern parts of Spain, as well. Spain's opposition leader--socialist Alfredo PĂ©rez Rubalcaba--agrees, saying:
Spain is increasingly slipping from his [Spanish Prime Minister Mariano Rajoy] hands. There are very clear fractures in Spain, and the one I am most worried about is social fracture.
After the fall of the Soviet Empire, Balkanization became--for a while--a very common topic; many believed the world was unavoidably headed towards more localized systems of control. But by the mid-nineties, this idea fell out of favor, especially as the EU seemed to prosper. Now in Spain--and elsewhere--we see that traditional patterns of social cohesion remain, even after sustained efforts to forge broader linkages, less dependent on tradition. Economic pressure leads to societal stress and these old patterns return in force as a perceived--though ultimately irrational--solution to unsolvable problems.

We are given to suppose that the divisions in society break on economic lines, that economic class is the overriding factor. But it's moments like this where we can learn a difficult truth: people ultimately still self-identify first and foremost by perceived race, by ethnicity, by language, by culture, and by common history. They see themselves as a particular kind of people, not as members of a particular economic class. Middle class, lower class, upper class all go out the window. Despite the constant pressure from many in power to view the world through a wholly Marxist prism, the truth is that this prism is flawed, it is deeply fractured. And the fractures become apparent when attempts to define the world via contrived economic constructs, to establish some form of equality of outcome, fail miserably. As they always do, in the end.

Cheers, all.

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