Spanish Prime Minister Mariano Rajoy has given a whole new meaning to Ricky Ricardo’s famous phrase, “Lucy, you’ve got some ‘splainin to do!”
Faced with the impossible odds of resurrecting the growth pattern of a country whose place in current history is now being questioned, Rajoy chose to save the bankers and let the people be damned.
The current recession that inflicts Spain is highlighted by 25% unemployment, collapsing real estate markets, and widespread corruption within the banking system.
Therefore, the normal response should be “what do we need to do in order to turn this thing around?”
In my opinion, Spain should withdraw from the European Union since the EU cannot seem to escape crisis mode. Also, in order to avoid being at the mercy of other entities, they should also revert back to their own currency.
Next, decrease the value added tax (VAT) from 18% to 10% which would allow more money to be kept in people’s pockets, thus encouraging spending.
In addition, maintain jobless benefits for the unemployed because it would automatically provide a safety net for those who need it while still keeping a small velocity of money in the system.
Preserve salaries for state employees at current levels to not only instill confidence, but to keep a tax base, as well.
Last, eliminate all artificial budget deficit targets since it’s widely known they’re inherently unachievable.
The combination of these actions will start to put the people of Spain back on the right path. However, and this is where the ‘splainin comes in; Rajoy has decided to do just the opposite.
He has decided to increase, not decrease, the VAT.
He chose to cut, not maintain, jobless benefits and state employee salaries.
Finally, he’s about to embark on a plan of local government reform in order to try and save billions of euros.
Yet, reforms are usually code for “less people employed, less money paid, and more money taxed.”
Rajoy told lawmakers in parliament “we are trying to stick to a path that is not easy, short, or comfortable, but we cannot avoid it.” “It’s the only one that leads to recovery.”
After listening to such a convoluted answer, which makes absolutely no sense to anyone except for Hollande, Monti, Merkel, and even Obama, Rajoy certainly made Lucy, in her ‘splainin to Ricky, sound like a Rhodes Scholar.
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 firstname.lastname@example.org and on Twitter @tatroshow.