Saturday, January 30, 2010

SPAIN'S JOBLESNESS jumped to almost 19 percent, which doubles Europe's average. Now, after having demonized anyone who dared to suggest the need to raise the retirement age and implement serious budget cuts, labeling them as "un-Spanish", "irresponsible alarmists" (literally, I'm not kidding), the Zapatero government plans to do exactly that: raise the retirement age from 65 to 67, and cut €50 bn in spending in 3 years. Which, of course, is a bucket in an ocean of deficit: in these 3 years at the current pace of 12 percent yearly, the deficit in those 3 years would reach a staggering €360 billion.

So going back to a 3% deficit in 2013, as dictated by the European Union (a not too realistic target, if you ask me), would require a wide range of measures. Some of them are not likely to be applied by Zapatero, such as liberalizing the economy, particularly the notoriously disatrous employment laws, making easier for companies to fire people and, consequently, giving them an incentive to hire more. Others are measures that Zapatero doesn't mind applying, but without announcing them in advance because they're extremely unpopular, like raising taxes. When he does, he'll destroy once and for all any chance of recovery.