What did him in? Did he listen too closely to the Serious People, or was his majority overly dependent on people who turned out to be deficit chickenhawks? Something else?
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
It is appalling than no one in a "socialist" party should be able to diagnose a problem deriving from the excesses of the very wealthy.
European Tribune - Spain Crisis Report
[Zapatero] also espoused his philosophy that he didn't want to be accused of being a "demagogue" for trying to neutralise impopular measures such as freezing pensions until 2011 and cutting public servants' wages with a simultaneous tax raise for "the rich".
That may have been a generational thing. Remember that the economic conventional wisdom threw Keynes out with the bathwater during the 1970's stagflation. Pretty much anyone born after 1960 has basically been educated in neoclassical economics or MBA-think, and that's if they have a formal economics education as opposed to what you pick up from pundits, best-selling paperbacks and the guy at the bar. Throw in the "electability" dynamic and you end up with the hegemonic parties of the left putting their economic policy apparatus in the hands of "serious" economists (albeit with the heart in the right - that is, left - place) with, in hindsight, unsurprising consequences. By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
noone faced merkel with the real problem. Noone threateened to stop paying the debt if it was not monetize. Noone insisted on germany inflation.
And,e ven itn eh worst case scenario , nobody proposed a full tax ont he rich to compensate for teh losses.
The sad truth is that they might not know what hit them. It is really sad... this is the case or... Spain was blackmailed. That is anotehr option .. because someone somewhere must know that you can not contract yourself out of a crisis.
A pleasure I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude
Can anyone defend in this day and age that a social democratic programme must favour more taxes and spending and introduce normative rigidities into the economy?
Note: "New Way" (Nueva Vía) is not the third way, but the name of the internal "current" within the PSOE which propelled Zapatero to the party leadership in 2000.
We erred. In good times we allowed social spending, and especially the taxes on the wealthy to remain low. We did this for social peace. Why go after more money from the wealthy, no matter how lightly taxes they are, if we can do well with what we have. Now that times are bad these agreements, especially along with further reductions as insisted on by economists and politicians who are apologists for the wealthy, will crush the lower income portion of our nation.
Worse, these policies will not end our economic problems. They will only make them worse. The problems are not due to the actions of those who are being asked to bear greater burdens. The problems are due to the actions of the very wealthy, and politicians, ourselves included, who went along with what the very wealthy wanted.
Our most basic problem is paying down the large debts that the wealthy and the government have run up. Cutting government spending in this economic situation WILL REDUCE economic activity and, thus, our ability to pay our debts. The economic activity of our country is the result of all of the spending throughout our country. When times are hard and people have too much debt they cut back spending. But the bottom 80% of the earners are unable to cut much. Those who can make big cuts in their spending are the very wealthy, and they do make these cuts. That is a large part of why the economy drops.
Why do the wealthy stop spending? Because they made a mess of the economy. Created, with the help of the banks and the government, a large run up in property prices, took loans and built retirement villas on the coasts, which villas cannot now be sold for a price that will pay the loan, etc. etc. They kept the profits when the bubble was expanding. Now they want your social benefits to pay for the costs when the bubble has collapsed.
So we will raise taxes on the highest earners. This will start with including all income in the payments for social benefits. That now includes only the base salary. Now bonuses and all other income will be taxed at the same rate as basic income. This will enable us to maintain benefits to the unemployed during these hard times and that will keep times from becoming harder. We will also phase out all exemptions and double the rate for all incomes over one million euros/year.
In addition we will impose a 1% tax on the gross earnings of all corporations doing business in Spain in return for the privilege of enjoying the benefits of being a corporation and we will impose a transaction fee of 0.1% on all financial transactions, with an exemption for the first 100,000 Euros/year. Etc. Etc. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
The second problem is that much of the wealth of the past boom was, in fact, counterfeit. Now the counterfeiters are demanding that their counterfeit money be made real out of your pension and salary.
(In principle, the two can be addressed separately, but I rather like the idea of insinuating that wealth disparity is due to counterfeiting by the wealthy - mostly because it's normally true.)
Productivity growth is a deflationary pressure. To counteract that pressure you need an expansive monetary policy. Otherwise, servicing debt becomes increasingly difficult, a crisis ensues and growth is halted.
Not only have we allowed people to counterfeit money we have based our economic development on people counterfeiting money. Wait this is important. Someone is wrong on the Internet.
The way I see it, any credit (including bilateral trade credit, overdrafts, and so on) adds to the monetary mass. Clearing houses and banks can act as underwriters for trade credit, and they can issue their own credit. Then the monetary authorities merge with banking supervision because they have a dual role as underwriters of bank credit and directors of monetary policy.
So, the State provides a deposit guarantee to the private banks in exchange for outsourcing to them the underwriting of trade credit and the creation of money as credit. The monetary authorities are supposed to keep track of the monetary mass created in this way, and curtail credit creation through their banking supervisory role if they see the monetary mass grow too much. If the monetary mass shrinks, the monetary authorities can inject money into the economy, by lowering interest rates or by buying bonds (issued by the State treasury or private firms) with newly created money.
Private banking for profit has an incentive to create as much credit as possible, as this results in higher personal income for the private bankers. This means that normally the central bank has to worry more about curtailing excessive private credit creation than about injecting money into the economy. But note that the conflict of interest inherent in private banking, where private bankers have an incentive to create as much credit as possible, whether the borrowers are creditworthy or not, in order to skim a fraction as personal profit, coupled with the identity of credit and money and the State guarantee of bank credit implicit in the explicit deposit guarantee, makes excessive private banking credit creation a form of counterfeiting. By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
Not so in the banking system.
There are two problems:
The PP is still the ugly party (in fact, the recent corruption and spionage scandals around it just make it uglier) and its leader Rajoy still has a lower popularity rating than Zapatero, but at the moment it seems Zapatero is exhausted and everyone would rather have an election to clear the air. By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
I have to wonder whether they could get a pick up in support out of this. They've trended to historical lows in the last couple of years, but in the 1980s they'd get up to a fifth of the vote. They don't seem to have the same historical baggage as die Linke. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
The IC-V story is interesting because at one point IU was competing with IC-V in Catalonia but the more modern IC-V ate their lunch. I personally think that some sort of green left is the only viable ideological alternative to the left of the PSOE, but the green parties themselves are extremely fractured.
However, the "Left" is broader than IU, including (as quoted in the diary) ERC (Catalan Nationalists), BNG (Galician Nationalists), ICV (Catalan Green Left), and Nafarroa Bai (Navarran nationalists). They could potentially do much better is IU entered in coalition with all of them, but IU is ultimately a Spanish party... By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
They've trended to historical lows in the last couple of years, but in the 1980s they'd get up to a fifth of the vote.
Their highest vote share (as IU) was in the 1994 European elections, where they polled 13.44%. In a General Election their highest result was 10.54% in 1996, which was also theit highst-ever vote count at 2.6 million.
The highest result of the Communist Party was in the 1979 municipal elections with 12.7%, and their highest General election result was 10.77% in 1979. In think IU was created in response to the PCE's electoral collapse in 1982 (4% of the vote - but that's the year of Felipe González's landslide win with the PSOE). By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
Prior to the breakup between the unions and parties in the late 1980s, the strength of the PCE was bolstered by the number of works council meetings won by the CCOO. They had a social base. The same was true for PSOE, but at the start in the union elections CCOO was stronger than UGT (connected to PSOE).
I'm more interested in that than electoral politics. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
It's a bit too early to talk about this, though. Zapatero will probably still lead the PSOE in the next election. By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
Socially, I think he implemented all his programme in his first 4-year term. That's why he held some promise as a European socialist leader for all of Europe.
I don't think that's entirely true. He also started this crisis off with classic counter-cyclical fiscal policy. So what spooked him into his current Hooverian suicide?
It was all a half-hearted collection of patches, and it included some ill-advised policies such as eliminating property taxes. By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
How the mighty have fallen. By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
