In order to remain a member of the eurozone, has Spain made a sufficient commitment toward fiscal responsibility?
That’s the $64,000, oops, I mean billion dollar question (just showing my age).
As central bankers, finance ministers, and a host of other moneyed officials meet week after week and month after month in order to solve the European crisis, an almost mano-a-mano effect takes place.
They all stare across tables trying to convince each other that they are truly committed to implementing austerity measures that would help to eliminate their deficits thus allowing them to obtain their share of the loan pie.
As they pour another glass of chardonnay, they sternly commit to less government and corporate workers since that will reduce government expenses.
As the crab appetizer is replaced by the medium rare filet, everyone agrees that an increase in taxes is a necessity.
However, when it comes to education reform, substituting the word “fees” instead of using the word “taxes” is probably more palatable to the mass.
All agreed, as the cabaret sauvignon was served. Cutting healthcare services was an idea that only utilized a few seconds of discussion.
Of course it’s an area to cut, the general population doesn’t mind waiting a little longer in the waiting room, after all, that’s why they call it the waiting room.
Without a doubt, budget cuts and tax hikes played very well around the table as everyone agreed that a belt tightening was absolutely necessary for the economic health and well being of the eurozone.
Even Spain agreed.
However, Prime Minister Mariano Rajoy confused and distressed everyone by stating that he would aim at a higher deficit to GDP than had originally been agreed upon.
With 23% unemployment, a disintegrating real estate market, general strike shutdowns the order of the day, and recession-to-depression lurking on the horizon, Rajoy thought it would be best to press his foot to the throat of the Spanish citizenry, at least for the time being.
All the officials could understand and certainly thought about making an accommodation for Spain. Sadly, everyone’s limousine had arrived so dessert had to be boxed to go and further discussion was postponed until next time.
Yet, according to the media it was unanimous.
It was reported that all officials had truly practiced and fully understood sovereign austerity, even the Spanish.
Footnote: Complimentary bottles of Sauternes could be picked up for the ride back to the hotel, half-size of course.
Indeed, everyone must share the pain.
Along with his 40-years of dedication in the financial services industry, Bill is the President and CEO of GPSforLife, has recently authored a highly successful book entitled 44th: A Presidential Conspiracy, publishes his dynamic monthly financial newsletter MacroProfit, and faithfully continues his third decade on the radio with It’s All About Money, which can be heard weekdays on Money Radio in Phoenix and in podcast form on his website (and on smartphone apps) published at billtatro.com weekdays at 5pm Eastern. Bill can be reached via email at email@example.com and on Twitter @tatroshow.