By Don Quijones, Raging Bull-Shit.
Almost exactly two years ago to this day Mariano Rajoy rode a wave of public anger to win a landslide victory in Spain’s general election. The man who it seemed could never win anything was suddenly gifted the closest any politician can hope to get to absolute power in an ostensibly democratic society.
Now, two years on, Rajoy’s government has finally made it to the halfway point of its majority mandate. To mark this achievement the normally media-shy, gaffe-prone prime minister took to the road this week to try to convince the Spanish people and overseas investors of the great strides his government has made in bringing the country’s economy back onto a stable footing.
It is, admittedly, a tall tale, but nonetheless one that will no doubt be greedily lapped up by the financial press and international investment community. After all, now that the Greek economy is officially dead, Portugal mortally wounded and Ireland a shadow of its former self, Spain is the last remaining poster child of the Troika’s austerity dogma and as such must be celebrated as a success story.
Yet for most ordinary people living in Spain – people who have to work or run a small business for a living, pay off exorbitant mortgages, find jobs that don’t exist or struggle to recoup the life savings they lost in the banks’ preferentes scam while supporting three generations of their family on rapidly dwindling pensions – the government’s claims of recovery, based on one quarter of GDP growth worth 0.1 percent, are a farce, an insult to the most modest intelligence.
The Real Picture
Rather than bearing hope of future prosperity, the green shoots Rajoy and his ministers endlessly tout are merely the last remaining weeds peeping through the rubble of what once existed of the country’s real economy. Rajoy’s true economic legacy is a bleak reality indeed, and one which includes:
– Ballooning public debt. Total public debt – that is, debt including municipal and regional obligations — is now well above 100 percent of GDP. Indeed, Spain’s public debt has increased more in the last two years under Rajoy than it did during Zapatero’s entire legislature, and that despite – or, as some might say, because of — the Rajoy administration’s brutal, ideologically driven austerity program.
It is a program or, better put, pogrom that targeted the weakest and most vulnerable in society, including the terminally ill, disabled and pensioners, while leaving completely unscathed the wallets of the country’s burgeoning political class — in Spain there are a staggering 450,000 elected representatives, political appointees, consultants, advisors and general hangers-on (working out at roughly one for every hundred Spanish residents). This compares to 100,000 in Germany, a country with a much larger population and which, if we’re being honest, is considerably better run than Spain.
-A zombie bank apocalypse. In Mariano’s distorted wee world the banks have been saved and the money owed to the Troika paid back in full. Both, unfortunately, are the delusions of a bearded madman. Despite the Troika’s 40 billion euro bailout, bad debt in Spain continues to rise, reaching 180.7 billion dollars in August of this year. Meanwhile the property market on which the health of their respective balance sheets depends continues to sink into the quagmire.
What’s more, rumours are circulating that the ECB may finally face the music and conduct a genuine stress test of all European banks early next year, the results of which will not be pretty – for the simple reason that most of the continent’s banks are already as insolvent as Enron, the company whose wildly dysfunctional business model became the business model of our times. As Zerohedge recently noted, “unlike the US, where the banks raised capital to address their problems, EU banks have not raised capital nor have they reduced their leverage (of 26 to 1 by the way). Instead, they’ve simply swapped garbage assets as collateral to the ECB, which counts this garbage at 100 cents on the Euro, and issues liquidity to the banks.”
– World-beating unemployment. Unemployment in Spain continues to hover above 25 percent and youth unemployment remains well above 50 percent. While Rajoy’s administration is not exclusively to blame for the level of unemployment, it is largely responsible for the destruction of more than one million jobs over the last two years. And that despite – some might say because of — the government’s much-lauded labour reforms last year.
– Plummeting living standards and internal demand. Disposable incomes for those lucky enough to have kept their jobs have shrunk significantly as a result of rising income and sales taxes, not to mention the addition of 40 new taxes during Rajoy’s mandate. In the private sector, meanwhile, salaries continue to fall precipitously. As such, is it any wonder that internal demand in the country has fallen off a cliff?
– An epidemic of small business closures. More than 250,000 small and medium size enterprises (SMEs) have closed since the crisis began. Many of those have perished in the last two years and more than a third of them due to late payment of invoices, the biggest offenders of which are Spain’s local and regional government institutions and large corporations. What’s more, whatever the government might say publicly, new businesses will not be taking up the slack. In fact, creating a new business in Spain is harder than ever. According to the World Bank, the country currently ranks 142nd in the world in terms of opening a new business – six places lower than last year’s performance — leaving it behind such illustrious economies as South Sudan and Yemen. In fact, according to the ranking it is easier to open a business even in war-torn Syria that in it is in Rajoy’s Spain.
As the economic panorama in Spain has deteriorated, so too have the political and social realities. According to a recent report by UNICEF, following the imposition of successive austerity measures by the country’s main two parties, the social conditions of post-civil war are returning with a vengeance. Poverty is spreading like liquid wildfire and over a quarter of under-16-years-olds — some 2.3 million — are now at risk of malnutrition.
Predictably crime is also on the increase. As La Vanguardia reports, burglaries are on the rise across Spain, with one taking place on average every 23 seconds. Domestic violence, a dirty hangover from the misogynistic traditions of the Franco regime, is also up, with 27 percent more cases reported in October of this year than the same month last year.
Government Gone Rogue
However, by far the biggest crime bubble is in the white-collar category and, as is becoming increasingly clear, the worst offenders include many of Rajoy’s senior ministers, and perhaps even Rajoy himself! At the end of last week, as Rajoy’s team of advisors were frantically interview-prepping their boss in a bid to avoid a repeat of his slapstick performance on Bloomberg last September (well worth a view here), Pablo Ruz, the judge in charge of the Bárcenas kickbacks scandal probe, threw an unexpected spanner into the works.
After hearing evidence from Bárcenas as well as a host of other witnesses, Ruz concluded that the governing People’s Party had used undeclared funds to finance the costly refurbishment of its Madrid headquarters.
Despite the government’s frantic denials, Ruz’s declaration provides yet further confirmation that Rajoy’s party operated a political slush fund for 18 long years, in direct contravention of the fiscal laws of the land it governs. What’s more, the rot of corruption is not merely confined to the central party apparatus, but has also infected many of its regional and municipal structures. As the business publication El Confidencial recently reported, in the Valencia region alone more than 100 PP officials currently face charges for crimes and misdemeanors committed while in office.
One of those officials — Carlos Fabra, the former president of the Castellón town council — has already been sent down for four years on charges of tax evasion. Once described by Rajoy as an “exemplary citizen,” Fabra is notorious for winning the national lottery seven times in 10 years, amassing a total fortune of 2.2 million euros. He also spearheaded the 170-million euro (and counting) construction of the ghost airport of Castellón, which since opening in March 2011 has not seen a single plane land or take off from its runways.
No Truth, No Consequences
Yet as Fabra beds down for the night in his new, rather austere surroundings, the chances of senior members of Rajoy’s government meeting a similar fate are about as slim as a supermodel during the “heroin-chic” era of the late-nineties.
While Judge Ruz might be causing some embarrassment for the administration right now, the moment he oversteps the mark — by, say, calling Rajoy as a witness in the Bárcenas case — you can bet your bottom euro that his legal career, like that of Judge Elpidio de Silvia and Balthazar Garzon, will be prematurely cut short.
One can expect even less opposition from the legislative branches. The PP’s main political rival, the PSOE (Spanish Socialist Workers’ Party), is blamed — quite rightly — for its woeful inaction as government during the early stages of the financial crisis. Hence, out of fear of the prospect of an even more brutal culling than the PP at the next election, the party refuses to call for a vote of no confidence in parliament.
In the absence of concerted opposition from either the judicial or political branches of government, Rajoy’s administration is free to continue to reshape the Spanish economy and society in its own image. As such, you can be sure that it will continue to leverage its absolute majority in parliament to obstruct justice while it squeezes the country’s economy into an ever-tighter neoliberal corset. And to do that, it must — and it will — run roughshod over the rights of ordinary citizens.
From Farce to Farcsism
The government’s latest crackdown on civil rights was unveiled last week in the draft of a new Citizen Security bill — a truly Orwellian name intended to mask the real purpose of the law, which is to protect the government from an increasingly disillusioned and angry public. This year alone there have been over 50,000 political demonstrations in Spain, dwarfing last year’s number by almost half. They include the now-notorious escraches, spontaneous gatherings of protestors outside politicians and bankers’ homes or offices.
The draft bill, which is almost guaranteed to pass through the PP-controlled parliament, is blatantly aimed at neutering such popular protest movements. In total it proposes 57 new finable offences, many of them aimed at political activists and protestors. For example, organisers or participants of unauthorised demonstrations that take place close to important government buildings – whether national or regional — could be hit with fines of as much as 30,000 euros (initially the government proposed a maximum fine of 600,000 euros but after a fierce public backlash has decided to reduce it).
The aim is clear: to dissuade most law-abiding citizens from participating in any form of political protest. Those that refuse to be bowed face the very real risk of being financially ruined by the state. And if they don’t have the financial means to pay the fine – and let’s face it, most of them won’t – the state may even be able to embargo their assets.
The same risibly disproportionate sanctions would also apply to anyone who captured and distributed images of the police going about their daily business. According to the government, the measure is aimed at protecting the “honor” and “anonymity” of the “defenders of public order”.
Obviously, it has nothing to do with protecting overzealous officers from the consequences of excessive use of force, which has become an increasingly common feature of public order policing in Spain. Indeed, in my home city of Barcelona a number of police officers stand accused of contributing to the recent death of a local businessman called Juan Andrés Benítez. And the only reason they’re implicated is that some local residents had the cojones to film the officers from their balconies as they “went about their business”, kicking, stamping and punching Benitéz as he lay prone on the ground.
As you can see from this video published by Publico, the police’s use of violence is undeniable. Yet according to the police officers’ original incident report, Benítez sustained his head injuries by (I kid you not) repeatedly butting his own head against the ground as they struggled to constrain him.
Granted, Benítez had been involved in a violent struggle with a neighbour before the police arrived on the scene. As such, we will likely never know who delivered the fatal blow(s). What we do know, however, is that the last people to use violent force against him were the very defenders of public order whose “honour” and “anonymity” Rajoy’s government now seeks to protect, at all costs. And had no one bothered to film the incident, those same police officers would have likely walked away from the scene with no repercussions whatsoever.
By protecting the police and criminalizing protestors, this government seeks to maintain order in the streets while the final orgy of looting plays out behind the scenes. It is this blatant attack on civil engagement that is perhaps the best testament to Rajoy’s ongoing legacy. After all, his first two years in government have been all about protecting the most powerful and venal in Spanish society – member of his government included – while persecuting the weakest and most vulnerable.
Put simply, at the very core of the Rajoy Horror Picture Show is a culture of plunder and blunder. It is just as the 19th century French political theorist and economist Frederic Bastiat once warned: “When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.” By Don Quijones, Raging Bull-Shit.
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.