Was austerity the right measure for Southern Europe?

Was austerity the right measure for Southern Europe?

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How can it not be the solution when you spend more than you get?

Economically speaking, no it wasn't.
Politically speaking, it was clearly the easiest way to solve some issues, so given how incompetent current european politicians are, perhaps it was for the best.

There is also the Keynesian macroeconomic theory that states you should do exactly that in time of stagnation. Also also the thousandfold proven argument that austerity when entering a crisis severely worsens it.

What do you mean by "politically speaking right"? The countries that adopted austerity measures experienced unrest and government changes.

>What do you mean by "politically speaking right"?
I mean it was far easier to pass a couple cutthroat laws like spiking up retirement age and slashing budgets left and right than it was to mediate an understanding with the EU that would guarantee ECB credit support while having the country undergo the necessary changes gradually while smoothing down the transition, so that the economy doesn't basically grinds to a halt and start moving backwards.
I mean just look at yourself: when you did your road to 2020 shit you didn't slash your expenses, you spent even more money and broke all EU credit regulations. That's the right way to go about changing shit, you need to put our a "cushion" minimize damages to people and businesses.

>There is also the Keynesian macroeconomic theory
Already tried right at the beginning of the crisis. The gov called this shit Plan E (E was for employment). Things got worse.
Investments have to be productive. You're supposed to get back the money you pay or you won't be able to keep paying.

Well, that is also right. That meant that your economy did not have the productivity to make use of this money. In the US and Germany, a stimulus package played out decently.

>you need to put our a "cushion" minimize damages to people and businesses
So you basically also advocate a Keynesian policy?

And that was not adopted due to lack of trust into Italy (or other South European countries) by the EU - and the disability of your politicians to convey this trust?

That may as well turn out to be the wrong decision politically, if it leads to Italy and/or Spain leaving the EU. We already lost a member over this.

>So you basically also advocate a Keynesian policy?
Basically yeah. I'm not a keynesian strictly speaking because reasons, but I do agree with the necessity of government spending during recessions.
>And that was not adopted due to lack of trust into Italy (or other South European countries) by the EU - and the disability of your politicians to convey this trust?
Lack of trust is simply incompetence on both sides. That's why I said it was easier to do it this way than doing it the smart way. Even if they tried doing the smart way, it's doubtful whether they'd actually have done anything rather than just waste time while abusing the safety net.
>That may as well turn out to be the wrong decision politically, if it leads to Italy and/or Spain leaving the EU. We already lost a member over this.
That's not gonna happen, and Britain did not leave over austerity either.

>Was austerity the right measure for Southern Europe?

No, because we have extremely corrupted governments at every single level (local, regional and national). This is NEVER adressed by the EU or Merkel. It's like they don't give a single shit while we pay back our private debt with he german banks. They just use the old rhetoric of "PIGS are lazy and that's the sole reason of their crisis, work as hard as we do and everything will be ok".

Just look Madrid, the filthy commies are reducing the debt of the city while keeping the social expenditures. Incredible, right? Just stop supporting Rajoy and all his horde of thieves and maybe then we will be able to fix this shithole.

>That's not gonna happen
Five Star movement stronk, or is it? So is Podemos.
>and Britain did not leave over austerity either
It kinda did, over a whole different kind of austerity. Basically, the economic policies of Thatcher, later continued by other Tories, that left rural regions and the working class at the mercy of the markets.

>Was austerity the right measure for Southern Europe?
what do you think?after 8 years we still have 20% unemployment rate20 %

Corruption is persistent in Spain, but it is not structural to the extent it interferes with the market, like in Russia. But then, you know better.

I am not sympathetic of Podemos to the extent you are, as their (rather populist) rhetoric blames a lot of things on Germany. What I agree with is that the competence and honesty of a government is more important than its political stance in your situation.

And if it's being reduced it's because the youth are emigrating or people don't bother to go to the employment offices. Also, we should be grateful to ISIS messing with northern Africa and Turkey, bringing more tourists and thus, creating more waiter jobs.

Afaik Spain always had large structural unemployment in lesser developed parts.

>but it is not structural to the extent it interferes with the market,

Of course it is, our public expenditures suffer from it, we pay much more due this inefficency generated by the corruption. And our public income suffer as well because of our 20% informal economy.

Again, you don't have any idea about how corrupted are our politicians and civil servants, no fucking idea. Most of our polticians would have resigned in countries like UK for doing just a small part of the shit they do.

>Five Star movement stronk, or is it?
Top fucking kek. They're not even gonna consider leaving the EU, they're all talk. Whenever they actually have the power to force in some reform they pushed for, they always pull back. The central direction is a shamble too, their nutjob early leadership is being overwhelmed by their moderates who are basically PD 2.0 anyway. Besides the situation is different compared to Britain. Italy's only gain from leaving the EU would be stopping the boats, but economically it would be a disaster. If the pound, a traditionally strong currency, floundered so much after brexit, imagine what would happen to the newly established currency of a BBB- economy based on industry, whose industry relies on foreign imports for raw materials.
>Basically, the economic policies of Thatcher, later continued by other Tories, that left rural regions and the working class at the mercy of the markets.
That was not the EU doing tho, so how is it related? The rage at the EU was due to immigration and regulationism and a perceived massive amount of tax money redirected to it. So all bullshit reasons that had nothing to do with the union.

We simply couldn't afford to spend anymore, the rate at which we could be financed was impossible to assume unless we got more Germoneys. People complain a lot and auterity is hard to cope with, politically, but we've been growing for a while and unemployment is falling. Pumping money into the system would've been useless, since marginal productivity was nearly nill.

If it hadn't been dor the Euro shackling us, we'd probably have become a South American-style failed state; I doubt we would've used monetary policy with the required caution.

>it is not structural to the extent it interferes with the market
This is an incredibly silly thing to say while discussing the worth of government intervention in the economy desu senpai

Debt started decreasing 4 years ago, while the horde of thieves was still ruling Madrid, papi.
elespanol.com/economia/20160616/132987484_0.html

>Afaik Spain always had large structural unemployment in lesser developed parts.
ironically structural unemployment started when spain joined in europe union.
i live in asturias and literally you can see a fucking industrial desert here.


all factories closed around 1980

>i live in asturias
Where u at
Who're you in /esp/

How do you make money

>If the pound, a traditionally strong currency, floundered so much after brexit, imagine what would happen to the newly established currency of a BBB- economy based on industry, whose industry relies on foreign imports for raw materials.
Sound perfectly logical, but then what about the narrative that Italy did far better with the Lira?
>That was not the EU doing tho, so how is it related?
I spoke about the feeling of hopelessness amongst many Brits. That was projected onto the EU, despite having little to do with it.

>I am not sympathetic of Podemos to the extent you are

In the city of Madrid Podemos doesn't rule. It's another party that was born because of the same reasons (commies as well, but at least they don't pretend to act like if they were a messiah). Many people were tired of the old school political parties (Ciudadanos, center-right, also grow because of that). The problem is that there is a huge amount of mindless people that would vote for PP or PSOE in any circumstances.

>How do you make money
i am student

Yeah, but PP said that Carmena would be the apocalypse and yet they still keep the social services and IIRC they increased them. And I'm pretty sure the lack of the corruption that PP had helped a lot as well. Of course, give them some years and they will get the "disease" as always happens in Spain.

Guess you are right.
>If it hadn't been dor the Euro shackling us, we'd probably have become a South American-style failed state
That is also a possibility to consider, given the monetary adventures of Argentina or Venezuela. But then, there is always the argument "it has not even been tried yet, because of the Euro!"

Studying what? are you going to emigrate

Second part of this posting should be an answer to

You could blame that partly on globalization, really. Most European markets, Spain included, are so inflexible they react very poorly to changes.

Globalization means that while losing jobs, you are gaining purchasing power due to cheaper imported goods ... in theory, lel.

>but then what about the narrative that Italy did far better with the Lira?
It's literally irrelevant to the current situation. If we left now, the exchange rate wouldn't hold a day anyway.
It's also fallacious regardless, because when we switched currency, we were facing periodic periods of massive inflation already.
>That was projected onto the EU, despite having little to do with it.
Exactly why I said austerity had nothing to do with it. It was all literally a massive decade long media shitstorm.

>Studying what? are you going to emigrate
software engineer,
>are you going to emigrate
i don't want although finally i will do

That's true for rich people. Globalization reduces salaries in countries like Spain.

That's actually what happens everytime.
Of course the back of the medal is that if you don't have a job, you don't have the money for the cheaper goods either, so it's a net loss. Globalization is only good when it involves similarly developed markets, so that they can mutually benefit from the lack of barriers rather than from the imbalances.

You don't need to jump headfirst into a fire to realize it's hot; you'll realize it simply by getting close enough. I'm glad it will be virtually impossible to take any strong political action, majorities being so difficult to form right now; let time pass by.

Only in certain industries, it just rebalances the economies of the trading nations to focus on what they're good at. Murika is good at finance and technology, and those sectors pay extremely well. But you won't get paid well to do what a crippled Filipino can for a fraction of a paycheck pulling levers in a factory.

>If we left now, the exchange rate wouldn't hold a day anyway.
But that is the point. The Lira would devalue into oblivion, making your home-made products competitive again.

Competitive devaluations were commonplace in Europe before the common currency. It may very well lead to inflation, but inflation is something you can control, whilst you can never outcompete Germany directly.

It reduces salaries, yes. But an iPhone assembled in the US would cost 1200 dollars to have the same profit margins (instead of 600), whilst the process of assembly would not double US salaries.

I guess it is difficult to empirically evaluate the net loss of lost jobs and the net win of cheaper goods against each other. It certainly produced countless losers and winners and many mixed results.

>PP said that Carmena would be the apocalypse
So? Ahora Madrid spent all the campaign rambling on starving kids and shit like we were through an humanitarian crisis. Then they won and oh surprise, the topic was not mentioned again. If we talk about dirty campaigns, Podemos is the king. They tried to make a politic matter out of falling trees (they still falling btw) and of a FUCKING DEAD DOG, took moral superiority complex and political banter to a new level and made everything justifiable because "al menos no roban como los del PP". But yeah, guess we have to congratulate them for keeping the social services after PP had destroyed them (?).

And Spain is good at serving beers and scamming tourists. Just for your information, it's not a coincidence that most of the spanish regions with a highest unemployment rate are the touristic ones. The spanish economy is a fucking mess and it's too late to fix it.

You being glad that time passed without big changes means that your current situation is bearable. For many Spaniards, it is probably not, as they have neither jobs nor government benefits.

Unless you directly get beneffits from the PP web of corruption in Madrid I don't see why you give a fuck about what some perroflautas have to say while they keep reducing the debt, something that's should be the priority of evey single institution in Spain. The day they fail at that, I will be mad at them.

with Franco we had low unemployment rate ,LOL

around 2%-5%

i will vote falange lad, i hate this situation

>while they keep reducing the debt
Why do you assume they will? Did you read their program?

It is not unbearable, we still rank very high on most HDI-esque thingies. The situation will improve slowly with little action; certain measures would help it improve even faster. Going out of our way to try miraculous recipes will end in failure as it always has.

>making your home-made products competitive again
The home made products that require all raw material to be imported you mean? The products we mostly sell to the EU market? Oh yeah, that's gonna go down well.
And let's not even talk about what ridiculous interest would be asked of our government bonds. That'd be 6 month before bankruptcy, tops. Much sooner than any possible return from exports at any rate.
>but inflation is something you can control
Yes, when you're doing it on purpose. Which wouldn't be the case in this scenario.
>you can never outcompete Germany directly
Meh. I dare say it would actually be far easier to straight out outcompete you than it would be to devaluate ourselves enough to compete with the pits of eastern Europe available to you through the EU market.

>Austerity meme

Who are you going to believe, a 4channer or those communist from the IMF?

forbes.com/sites/eriksherman/2016/06/05/even-the-imf-sees-30-years-of-neoliberalism-as-a-mistake/#749ded5e1a04

There's plenty of literature in the opposite direction, from just as reputed sources.

>dude debt is good lmao
Indeed, as long as you can pay it back so creditors can trust you as someone who will not eat their money.

>supporting government assistance during recession means supporting unconditional debt spending and globalization
'no'
Fuck off with your strawman Rodrigo.

Well they stopped spending money on stupid shit so I'd say it was a rousing success.

>they stopped spending money on stupid shit
>

jaja yo sigo votando al pp subnormales, tengo un huevo de pasta y estos payasos me dan mas no se ingles

t. Falseflagging Cybervoluntario

There is a reason Eastern Europe never adopted the Euro: competing on equal footing with Germany would do little good for them. The countries that did adopt the Euro - Croatia, Slovenia, Slovakia - are all experiencing two-digit unemployment.

Italy might indeed default after leaving the Eurozone, but recover afterwards. The interest on Italian bonds is already so high it cannot plan reforms.

The only argument against leaving the Euro I really see is the raw materials. But how were you buying them before the Euro, anyway? You had an extremely weak currency.

Their quality of life, as is ours, is way higher than you seem to assume. I spent 6 months studying in Wiesbaden and I can safely say life here is much better. There's no reason whatsoever for Italians to prefer a default over their current state of affairs.

>Their quality of life, as is ours, is way higher than you seem to assume
In which way(s)?

Also, there is a mass exodus of Italian and Spanish youth implies the opposite.

>Italy might indeed default after leaving the Eurozone, but recover afterwards.
Dude, defaulting would tear down our whole economy. It's only a decent option if you're a third worlder with no local economy to destroy to begin with.

>But how were you buying them before the Euro, anyway?
Our postwar industrial recovery institution cornered markets left and right to supply our businesses. We can't do that anymore, the institutions are gone. Energy in particular was not an issue after ENI cornered the lybian oil market, but would be now that we're dependent on France and Russia.

Well, do whatever you can, there are seemingly no easy solutions. I will order a pizza.

The mass exodus is due to unemployment alone, it's not that our youth considers Italy so shit they wanna leave it. I have cousins who left for Switzerland, UK and HK for work, and they all extremely dislike it compared to here. I myself have been 6 months in Heidelberg and found no real difference in quality of life compared to here.

Croatia does not have the Euro. But the Croatian Kuna is pegged to it, and is also printed in Germany.
Crna Gora and Kosovo use the Euro, but are not a part of the eurozone.

>Also, there is a mass exodus of Italian and Spanish youth implies the opposite.
honestly, no offence bruh, actual spaniards don't like lifestyle in Germany, they only work few years and come back to spain.is not like old generation, they love Germany and thousands stay in your country but youth generation prefer spain by far.

>and they all extremely dislike it
>youth generation prefer spain by far.

Why? ;____;

>I myself have been 6 months in Heidelberg and found no real difference in quality of life compared to here.

like, really? many say there is a drastic difference between italy and germany.

I lived in Wiedbaden, Franfurt am Main. Neither Wiedbaden nor Frankfurt had any life in them, no decent leisure zones, nothing; Copenhaguen was fun as shit i comparison. I made a lot of friends from all over the world, but not one German, except for a guy who insisted he was Greek despite not speaking Greek and having lived in Germany since birth. In every German's defense, I'll say the lads in my area were insufferable posh kids.

A Canadian friend of mine kept saying the "Nazi thing" could've only happened there. Quite funny.

Spain should spend 80% of the GDP on spacecraft to colonize other planets, destroy alien civilizations and mingle with extraterrestrial women. We are good doing this.

You already did this with Latin America. Your rape babies have the same problems as you do.

I get what you mean, Germany is relatively soulless. But we are still one of the happiest countries in the World, whilst Spain and Italy declined sharpy on happiness ratings.

>But we are still one of the happiest countries in the World
destroying europe and countries (economically)


you should feel pretty good.

We had a discussion whether leaving the EU (Germanys influence) would help Spain and Italy, and came to the conclusion it would not. So solve your own problems.

>they stopped spending money on stupid shit
Yep, sure thing buddy

Where I went, people weren't happy, but rather merely content. Like they had no dreams and little personality, which appears rather sad for the country where many of the greatest composers in history were born and raised. I guess I was just unlucky, but I didn't like it there.

Spain had to give up his heavy industry to join the "union", that debilitate our economy too much.

You should know the biggest Spanish economic success was thanks to a protectionist policy of Francoism government.

en.wikipedia.org/wiki/Spanish_miracle

> Spain enjoyed the second highest growth rate in the world, only slightly behind Japan, and became the ninth largest economy in the world, just after Canada.

Spanish infrastructure is God-tier by the way, but I guess that also backfired on you, since it was unneeded.

and you still experienced massive growth after joining the eu and had your best times in 2006, almost surpassing the german gdp per capita.

No, it is actually like that here. That is the price we pay for our efficiency and industriousness, I guess.

North and South Italians also differ in the same way. North Italians are cold, calculating and work hard. South Italians care more about family and food than "the economy".

That was because the property bubble, that growth was just illusion.

>after joining the eu and had your best times in 2006, almost surpassing the german gdp per capita.
with no industry? only we have construction industry and now is going to down.

spain around 1960 built submarines,cars,helicopters,metal indsutry etc. now is a fucking industrial desert.

shameful

seriously i will vote falange

>seriously i will vote falange
Do that.
And leave the EU, if you wish to.
But do not expect things to magically get better. The competitive disadvantages and your debt will not disappear with Pesetas (or whatever you had).

>i will vote falange


As ideology is great, but there is no really serious Falangist party or politician nowadays.

You still produce airplanes, afaik. As for the industrial desert part, the same happened to many of our industries as we were facing competition from Japan. We got our way around it.
Not all of it, since your recession was not as hard as Greeces after the bubble popped.

Do you somehow benefit from the infrastructure and houses built in vain? That should at least lower rents.

>seriously i will vote falange

delusion at its finest

basically what said. Leaving the EU as one of the countries that are receiving more funds from the union is a stupid thing to do. Plus heavy industry isn't what we need to become competitive, we need innovative technology.

>Do you somehow benefit from the infrastructure and houses built in vain?

It's sad but quite true. Spain has 3.4 million empty houses. Houses that can not be sold too cheaply because it would not be economically profitable.

>unneeded

Well let me put it gently:

>Castellon Airport
Initial cost: 150 million. Finished in 2011. Until recently, it had no airplanes on it. Now Ryanair operates something like two flights a week.

>Ciudad Real Airport:
Closed since 2012. Cost: 450 million euros.

The list could go on. There are also a fuckton of Regional TV networks that are a complete financial loophole, yet the EU doesn't do shit about them and instead tells us to pay more for our university fees and to close or privatize hospitals.

As this guy stated, I don't think the problem itself is expenditure, but the fact that the public administration is full of parasites who or don't do jack shit or steal as much as they can.


bbc.com/mundo/noticias/2012/06/120601_economia_espana_regiones_endeudamiento.shtml

>seriously i will vote falange

If corruption is a problem, which it obviously is, simply elect something other than Conservatives that do little but steal and wait until the crisis suddenly disappears.

Sorry wrong pic, someone hacked my folder with pictures.

>yet the EU doesn't do shit about them and instead tells us to pay more for our university fees and to close or privatize hospitals.


Blaming the EU for our own issues is pretty cheap. I'm pretty sure that they can't do anything about politicians that haven't been officially declared criminals, even if everyone thinks they are. And I'm pretty sure that the privatization of hospitals is entirely a spanish government thing.

Just face it, unless we don't go through a deep change of our society, political corruption will be in Spain forever. Just take a look at all the small towns that do shady shit. Or look at Podemos, the self-proclaimed destroyers of corruption, even some of their most important members have been involved in messed up shit.

We ain't getting out of this any sooner.

>And I'm pretty sure that the privatization of hospitals is entirely a spanish government thing.

It is not. Believe it or not, Germany also privatized many of is hospitals, with very mixed results. Health and education institutions simply should not be run the way that produces the best "market outcome".

I meant that in Spain, that was the fault of the government, not of the EU, as implied.

Deficit spending is only a problem if political entities assert it is. Otherwise debt can keep growing forever.

So yes austerity is fucking retarded and all it does is turn short term unemployment into long term unemployment.

Basic macro says run higher deficits during a recession. You can't because of political pressure from other euro countries. The euro was a huge mistake.

come over lol

>Otherwise debt can keep growing forever
It can not. You have to convince creditors that they will get their money back.

Greece thought the way you suggest, and what they got was market distrust and sky-high interest rates.

They only had to implement austerity because that was the conditions of the loans they were given. That's why the euro is stupid.

The us for example csn run retarded deficits and if people "lose confidence" the interest rate just rises. But since the central bank sets interest rates they can just buy as many bonds as they need.

To reiterate, the euro is retarded.

> Plan E
>Keynesianism

TOPLEL Plan E was some kind of """""""""keynesian""""""" plan which consisted in asphalting already asphalted roads.

if the government invested in infrastructures like the mediterranean corridor all the economy of the levant would have experienced a great boost.
on the other hand, keynesian theories talk about strong unions, which we don't have in this country.
"""Austerity""" (we did not have it really since we spent the money on the banks) only brought unrest and poverty. In almost 10 years that we've been suffering this crisis what have we done? we continue without a productive economy.

>They only had to implement austerity because that was the conditions of the loans they were given.
Makes sense. The IWF and EU wanted to make sure the indebted countries lose their debt.
>But since the central bank sets interest rates
But they can not (nor can any other Central Bank) simply print money at zero interest rate. That would threaten a hyperinflation of the dollar. The same would happen if the ECB simply lent money to Greece unconditionally.

>asphalting already asphalted roads

lel

Hyperinflation is a total boogeyman. As long as there is slack in the economy (read: unemployment) there's no threat of hyper inflation.

Falange and the rest of the spanish far right are a bunch of walking memes, they are divided between the francoists, Nazis, followers of Jose Antonio, the followers of Ledesma, Ultra-Catholics...

Hyperinflation a boogeyman? Tell that to Brazil or Argentina, where hyperinflation persisted despite two-digit unemployment.