Euro

Spain and Greece Take Steps Towards Austerity

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The Spanish government has unveiled its 2013 budget. If the protests of the last few days are anything to go by chances are it might not be as well received as many in the Spanish government might like.

The austerity budget includes the following (the last one in particular sounds oddly familiar):

a 12% average cut in ministerial spending

a freeze in public sector pay for the third consecutive year

a new independent authority to monitor government finances

an increase in pensions funded by drawing on 3bn euros of reserves

a new 20% tax on lottery wins above 2,500 euros (£2,000; $3,200)

a new car scrappage scheme

On the other side of the Mediterranean, Greek politicians are looking closer to an agreement on austerity measures for 2013-14 ahead of negotiations with international lenders. The agreement has to go before the Greek parliament for approval. Without these austerity measures being met Greece will almost certainly have to default on its debt in the coming weeks.

Both Spain and Greece have experienced protests this week against the austerity programs being proposed by the Spanish and Greek governments. In Spain, the unrest over the measures being pursued by the central government is only part of the story. From Forbes:

Beyond its economic crisis, Spain is mired in a political crisis as well.  The autonomous regions are all running out of cash, putting further pressure on Madrid to request the bailout (the EU has already committed up to €100 billion ($128.6 billion) to bailout its banks).  Already, five of regions (including Valencia, Catalonia, and Andalucia) have taken about 90% of a regional liquidity fund, leaving less than €3 billion ($3.9 billion) for the rest.

And Catalonia, the rich and highly autonomous region where Barcelona is located, is on the verge of holding a referendum on independence.

Even with the new budget Spain may well be asking for more assistance from its European neighbors soon. The Spanish government is under some pressure to take part in the European Central Bank's bond buying program. Thus far the cigar smoking Prime Minister, Mariano Rajoy, has yet to seek such assistance. 

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  1. What the fuck is a “car scrappage scheme”? If it means incentives provided by government to interests who destroy assets, how is this properly categorized as an “austerity measure”?

    1. Mao put in a mandate that all farmers produce so many ounces of Iron to be given to the government each year.

      The result is they broke down their iron farm tools and gave them to the government thus helping millions more starve to death.

      My guess is the scheme is something like that.

    2. Even better, it’s not merely “a car scrappage scheme” — as bad as that would be — it’s ” a new car scrappage scheme”, implying they’ve already scrapped cars in the recent past. Which makes even less sense.

      1. A new scheme for scrapping cars? Or a scheme for scrapping new cars? Either way.

    3. No more private chauffeurs for government bureaucrats?

  2. Does the word “Austerity” mean something different in European English than in American English? Because adding new bureaucracies, increasing pensions and Dineros por Limones does not sound like austerity to me.

    1. No in American English austerity means to spend more year over year but at a slightly slower rate then what some people want….in European English it means pretty much the same thing…only the year over year increases in spending are bigger.

      Only neanderthal dead-ender libertarians think austerity means spending less….hell those crazy motherfuckers actually think spending cuts are cuts to spending rather then slowing the rate of increased spending.

      1. Estonia is in europe, right?

        1. According to Krugman it is either a fairly land place that does not really exist or it is one the deeper levels of hell where cat food eats old people.

          Also I don’t if what they did was officially called Austerity when they did it.

    2. Words sometimes change their meaning to something completely different, think of gay or google. I recently was watching bloombergs and some airhead was stating how tax increases were part of Greeces “austerity” measures.

      Austerity really has in the mainstream come to mean tax increases and slowing the rate of spending increases, it is time to use a new word to represent the act of spending decreases.

    3. Same reason that “spending cut” means “increase of 8% instead of 10%”

  3. And Catalonia, the rich and highly autonomous region where Barcelona is located, is on the verge of holding a referendum on independence.

    This would be the most awesome thing ever.

  4. If Catalonia breaks free (which I doubt will happen, though this time of Spain being in so much financial trouble makes this probably the most likely time in decades) Spain is in big fucking trouble. But the Kingdom of Aragon will live once again!

    1. But do you think Quebec will brake free?

      1. If Quebec wants to break away, all they have to do is have the other provinces vote on it instead of Quebecers voting on it every 2 years.

      2. Only if there are no downhill stretches.

    2. Aragon is a separate region from Catalonia, isn’t it? Or are you projecting more disintegration?

      And what of Andorra?

      1. Andorra only needs the bishop of Urgel from Spain.

        If France breaks up they have a bit of a political crisis on their hands.

    3. No one expects the Spanish Liquidation.

      1. Pwned at 5:23 by Rich!

        1. When it comes to being punny he’s worst.
          When it comes to being lucky he’s first.

    4. If Catalonia breaks free (which I doubt will happen, though this time of Spain being in so much financial trouble makes this probably the most likely time in decades) Spain is in big fucking trouble.

      Anyone giving it odds over the chances of the Quebec run for independence?

      1. Quebec independence would cause too many problems for Canada. They couldn’t possibly hold on to the Atlantic provinces if that happened.

        And I’ll be damned if the US taxpayers have to take Prince Edward Island fugees under our wing.

  5. No one expects the Spanish austerity!

  6. a new car scrappage scheme

    Wait, what?

  7. Thus far the cigar smoking Prime Minister, Mariano Rajoy

    My favorite comment from that link:

    ?fumando en estados unidos?

    Yeah, I’m equally surprised.

  8. We already have a new car scrappage scheme in the US. It’s called the Chevy Volt.

    1. That’s not car scrappage, that’s car crappage.

    2. No that was the old new scrappage scheme. The new new scrappage scheme is the Tesla Model S.

    1. Intrade has 5:2 odds that you suck.

      1. Did you watch the video? How can Romney compete with this stupidity?

        1. Carlos Spicy Weiner
          I would like to see anybody on Romney’s side do anything that competent.

          No one can.

          Also, why the fuck do I care what some kid is worried about? Kids know dick.

        2. you can’t compete with stupidity, only recognize it as such and point it out to others. Kinda like this motivated voter:

          http://www.youtube.com/watch?v=CEQrrmjBg5w

          Apologies if there is an ad, but the video is priceless.

  9. Both Spain and Greece have experienced protests this week against the austerity programs being proposed by the Spanish and Greek governments.

    How stupid are these people?

    “Don’t stop spending money we don’t have!”

    I’m guessing the budget for mathematics education was the first hing to go, a long time ago.

  10. The insanity will continue until the system crashes. Thats all.

  11. I have an honest question: since libertarians hate cops how are they supposed to respond to anti-“austerity” protests? Cuz believe me if actual libertarians came to power anymore there will be a lot of people opposing them.

    1. Make note of where they’re taking place and drive around them.

      1. Encourage them to set up tent cities wherever they like. Declare tent cities anarchy zones. Allow them to form their own government, police forces and economies. Then study them like interesting socio-economic experiments.

  12. a new car scrappage scheme

    WTF? LOL… This is austerity? Burn your car and buy a new one?

  13. a 12% average cut in ministerial spending

    We can’t even handle 5%.

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