The Spanish government yesterday unveiled the toughest austerity measures and spending reforms in any budget of the post-Franco era. Public expressions of discontent bordering on civil disorder continued across the country. The problem for Spain in common with other weaker euro countries (i.e. all of them except Germany, Finland and Luxembourg is familiar: they cannot relieve their exploding debt burden by the traditional method of currency devaluation to get their economies back on track, so control of the economy must instead be achieved by decreasing the value of wages and forcing asset values to fall in real terms (‘internal devaluation’ aka inflation, the destroyer of savings, pensions and prosperity,). This means the population will have to pick up all the tab for the incompetence of their elitoist leaders through falling wages, fewer social benefits, less job security and so on.
When a netion gets into this state the situation becomes politically explosive, as the recent protests sweeping Athens, Madrid and Lisbon have indicated. Social and economic imperatives among the populace are clashing head to head with the deeply embedded authoroitarian idologies of the elite and threatening to derail their dream of a global totalitarian government.
It is clear that Spain, Greece and others need to undergo far-reaching structural reforms to improve their labour markets and industrial output in order to regain competitiveness and correct the brutal imbalances that have built up during their time in the fatally flawed Eurozone. Failing this, the euro will have to either break up or go for a full fiscal union. But is it possible to achieve such adjustment – and save the euro – through internal devaluation alone? This is the question Open Europe revisits in a briefing published yesterday.
In the view of the Daily Stirrer the answer is no. Many European nations are already close to social breakdown and even France is in deep trouble as President Hollande's socialist government is forced to abandon tax-and-spen promises and face up to the economic realities facing the country.
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