Thursday, March 8, 2012

Spain Falling Apart

It is my belief, previously stated, that Western European social democracy is being deliberately under mined to wreck the true welfare state conceived in the rubble of Post World War Two Europe. I believe that the people in charge, the so called one per centers see clearly that crushing unions, increasing the stupidity of television and wrecking public schools will reduce expensive first world workers to penury and will "persuade" them to be more amenable to even more reductions in our standard of living. And with European social services wrecked by lack of cash we will have nowhere to turn to lead us out of a welfare- free future. Spain is already there, reducing people to poverty to feed the banks and make them whole following their critical role in wrecking the world economy.



By Farooque Chowdhury

29 February, 2012
Countercurrents.org

The broader society is paying bill for the speculators’ gamble in the Kingdom of Spain. The desolate days are harsh for the people. The kingdom’s capitalist prosperity crash has created the context, severe and difficult.

Banks are on the charge after making a great deal with profit by tricking a lot in their speculation gamble. Senor bankers are hitting people hard, sending the young generation dubbed generacion cero to a place named lost, pushing up unemployment number, evicting people from their homes, cutting down health and education provisions. The musical chairs with bourgeois politics have brought the conservative Popular Party to preside over after pushing out the socialists on November 20, 2011. The conservatives are pledge-bound to strengthen banks while data and news from macro and micro levels expose real-life face of speculation-crash and austerity measures in Spain.

With a section of ruling elites’ fascist background the bourgeois kingdom, the eurozone’s fourth-largest economy, is now the home of about 5.4 million or almost 23% unemployed, highest in the present industrialized dominion. Unemployment in the country has tripled since 2007. The year 2011 found 1.6 million households without a single member holding an official job. The rate of 16-24 year olds without work, according to a report by the country’s National Statistics Institute, climbed to more than 51% in December, which is more than double the EU average. In 2008 as the crisis began, the under-25 unemployment rate was less than 18%. Within four years, it has almost tripled. Unemployment rate jumped to more than 40% for 20-24 year olds. A university degree doesn’t guarantee employment in the country while cannabis, etc. usage and drinking alcohol in public places among the younger generation is annoying. After a mind shattering growth caved into recession, more than 11 million Spaniards are at risk of social exclusion.

More than nine million people live in extreme poverty in Spain while nearly one million are illiterate, according to a report in 2011. An Amnesty International study found that hundreds of thousands of families in Spain are at risk of losing their homes. In one case, in Valencia, a disabled solicitor having a master’s degree was forced to live on the street with her husband. Their home was repossessed after her redundancy meant failure in mortgage repayments.

One million “Valencianos” live balancing on the poverty line, the European Anti Poverty Network informed recently. It said: More than 20% of the region’s population is in a state of emergency with more than 137,450 families sinking into poverty in just one year, the region is having the sharpest rise in the number of citizens at risk of falling into poverty with 208,555 more “Valencianos” facing the breadline in one year. The affected households are forced to survive on income that is 60% below the national average.

It estimated there are 300,000 people with no entitlement to free healthcare, and the jobless are among the worst hit. In February, a report exposed the health care situation: With cuts on medicines, technology and maintenance patient care is deteriorating. Cost per inhabitant has fallen 10% over the past two years, waiting lists are getting longer, and a shortage of beds and a lack of payment to suppliers is more common. Supplies are being rationed. Unions claim there are hospitals that are rationing bandages. There are hospitals that no longer operate in the afternoons, and emergency departments are often saturated. Professionals and patients are noticing the cuts. Patients are being placed in overcrowded rooms. The amount owed to suppliers by hospital authorities has increased to €11.6 billion.

Many health centers in the Valencia region will be closed at weekends as part of cost cutting measures, said a report. However, these will be kept open for an hour extra for five days to compensate for the closures. The union representing medical staff said: By increasing hours quality service to the public cannot be provided. Opinion of medical staff was not sought before introducing the cost cutting measure.

Last year, a public school in Huelva asked students to bring a roll of toilet paper and €5 for photocopies every month. In the face of protests the authority gave back the toilet rolls and money donated. In January, directors at a number of grant-aided centers requested donations from parents to help pay for utilities including electricity and fuel for heating.

Severe cash shortage prompted the Junta de Andalucía shelve three key public works projects. The budget for the projects was slashed by more than 60%. In January, Ana Botella, the Mayor of Madrid, called for volunteers to man municipal installations and facilities, “given the exceptional situation” the city finds in, referring to the recession and the lack of money. Valencia City Hall experienced its power supply switched off on a February day because of unpaid electricity bill. Its workers remained in the dark.

Fiona Govan wrote a haunted town-story from Madrid as “modern-day ghost towns are rapidly becoming a familiar part of the Spanish landscape”, as “an estimated one million new properties left unsold and the number of foreclosure proceedings rocketing.” (“The ghost towns of Spain: Images that are desolate symbols of collapsed property market”, The Telegraph, Feb. 16, 2012) She wrote:

“With its empty streets, bricked-up shops and deserted playgrounds, the sprawling residential development of Sesena has become a ghost town and a desolate symbol of the collapse of Spain’s property market.

“Once dubbed the ‘Manhattan of La Mancha’ [it] was supposed to include 13,000 apartments to create a satellite town and suburban paradise for 30,000 people.

“But just five years after work began only 5,100 of the properties are completed, less than a fifth occupied and construction of the promised infrastructure including schools and sport centres, have long been abandoned.”

Citing recently released data Fiona refers to the Spanish real estatescape:

“Over 500,000 foreclosures were granted by courts in Spain in the three years leading up to September 2011 […] Property in half finished developments across Spain is being offered at discounts of up to 50 per cent of their original prices as banks struggle to offload a glut of real estate.

[….]

“Spain’s property boom was a key source of jobs and allowing the country’s economy to grow at a faster rate than the rest of the eurozone before the bubble burst in the second half of 2007.

“People who did invest in properties at the new developments are now stuck living in half built complexes without any of the promised amenities.”

Fiona goes back to Sesena:

“[…] marked by row upon row of empty commercial units where once it was hoped small businesses, shops and restaurants would thrive.”

Then, her narrative tells of the town of Yebes:

“[M]ore than an hour’s drive from Madrid, 9,000 apartments and small houses were supposed to be built in an idyllic country setting next to a high-speed train station so workers could get downtown in less than 20 minutes.

“But only 1,500 were finished before developers went broke, 3,000 people live there instead of the projected 30,000 and government officials never launched the train service.

“‘The station is built, the trains are bought but they never started running’, said Mayor Joaquin Ormazabal.”

In this world dominated by capital Spain is not exception now. It’s the global capital that puts its undeniable mark of misery, suffering, poverty, hunger, deprivation on all lands, from the east to the west, from the north to the south. It’s capital’s mark of uniformity and regimentation, uniformed and regimented by poverty, suffering, by curtailed rights and opportunities. It turns difficult to differentiate a First or Second World poverty story from a Third or Fourth World one. Thus, with worldwide poverty and misery the humanity is paying bill for gambling capital’s greed.

Then, a news report from Spain depicts a dire life:

An evicted family was facing spending Christmas on street. There was a child, and the family was frozen, and the girl had purple hands. With a stroke of luck, the unfortunate family was housed in an empty shop owned by the council of Medina del Campo in Valladolid.

Had the child Christmas celebration? How was the cold? And, how was the festivity?

And, all after these sad tales, in this enjoyable world, there are “12 Night Luxury Wine Tasting Cruises visiting popular wine regions in France, Spain and Portugal”, “Itineraries include customised wine tasting events”, “Autumn Wine Tasting …” (from advertisements) And, in this charming world, as a news report tells, a restaurant in Ribarroja, Valencia, is having packed hall three times a week with live midday strip show. In addition to the females offering a full nudity show, they also stage a mud fight in a pool with customers given the chance of getting in the pool with them in a game of bingo.

And, in this amazing world, imposing individuals lavishly spend money while some folks own a lot of misery! And, isn’t this a face of bank’s free market that upholds bourgeois ethics, Berlusconi politics, Brussels dictation, and sells everything, from wine to poor females to human misery?

Banks’ fiesta in Spain

It is like a fiesta. It is like a fiesta of banks in Spain. But, the days are not bright, and the clouds are on the sky, and the air is thick with sadness.

Like a magic show performed in many countries banksters created a property bubble in Spain also. They allured everyone to borrow money, lent indiscriminately over the decade-wide bubble, and as the real estate speculators went bust, many creditor banks took on their land and unfinished housing blocks, booking those on their balance sheets at unrealistic prices.

Now, they own “bad assets”, taken over houses carrying less value. There is $820 billion in mortgages outstanding. However, the desperate bankers, the Confederation of Spanish Savings Banks, don’t accept the burden of their profiteering. “Since Spain’s economic boom came to a resounding end at the beginning of 2008, banks have repossessed more than 150,000 properties. […I]n the third quarter of 2011, there were 10,869 properties repossessed in Spain. In the previous quarter, that figure peaked at 16,464.” (BBC, “Spain protest movement fights housing evictions”, Feb. 7, 2012)

Potential losses of Spain’s banks reveal a reality, which is complex in appearance. The total exposure is about €176 billion or 18% of the country’s economic output. (Reuters, Feb. 1, 2012) Spain’s five main banks – Santander, BBVA, Banco Popular, Sabadell and Banesto – announced profits in 2011 down 35.34% on 2010. Spain’s biggest lender Banco Santander’s fourth-quarter profit plunged. However, its net interest income rose to €7.97 billion in the fourth quarter from €7.33 billion a year ago. (The New York Times, “Profit Plummets at Spain’s Biggest Bank”, Jan. 31, 2012)

So, the banks will be boosted. With alluring big cheque from the state and generous guarantees the conservatives will reinforce the financial sector. The state will organize stronger banks through mergers as a bigger bailout fund will be made available to those banks joining the merger process. The banks will get large state funds in exchange for bank executives’ pay and bonus curbs. Moreover, the state likes to create a financial cushion to cover the real estate assets. The Socialists, faithful to the system, also recapitalized and facilitated mergers of the Spanish banks. Ultimately, banks’ profits will not plunge.

Experience of Spanish bank mergers is “interesting”. Seven regional banks merged into Bankia, the country’s fourth-biggest bank by market value, and, Bankia has already received €4.5 billion in public money. Banks will not face problem as long as they own the lender of last resort.

Citing Spain’s immigration statistics, World Bank report and other sources Raphael Minder presented a revealing bank-story from Madrid (“Ecuadorean Bank Finds a Niche With Emigrants in Spain” The New York Times, Feb. 24, 2012) The news-story tells:

Ecuadoreans form the largest Latin American emigrant community in Spain: 540,000. Only a few thousand Ecuadoreans have gone home despite Spain’s struggles with unemployment. The number of registered Ecuadoreans fell by about 35,000 in the last two years, but that figure includes those who acquired Spanish citizenship.

Spain registered about five million migrants in a decade, now equivalent to 12% of its population.
In 2011, remittance flow to developing countries rose 8%, to $351 billion. It is likely to reach $441 billion by 2014. Remittance outflow from Spain remains “fairly resilient” and grew 15% in the first half of 2011 as “migrants have cut into savings and even consumption in order to send remittances, and perhaps to prepare for an eventual return.”

Raphael continued with tale of a bank not from Spain:

Ecuador’s biggest privately owned bank Banco Pichincha moved to Spain as Greece sought bailout, a sovereign debt crisis was set off and Spain was left with its banking sector reeling. “Since then, the bank’s Spanish unit has grown beyond the expectations of its own management by pulling off a trick that companies the world over seek to perform: selling familiarity to a loyal, nearly captive clientele far from home. Its timing also proved fortunate, as Spanish banks that had previously sought to attract Latin American migrants started to pull back from this line of business as the euro zone’s financial crisis put pressure on them to cut noncore activities.”

Quoting Pichincha’s Spain operations head the bank-tale tells:

“The crisis has meant that our competition simply vacated the space that was our obvious target, in terms of clients”. The head said his bank would make a profit this year on its Spanish business, two years ahead of schedule. Assets under management in Spain are expected to double, after having reached €63 million ($84 million) at the end of 2011, up from €27 million a year earlier. The head wants “at least” 20 branches across Spain by the end of the year, up from 12 at present.

Raphael’s story concluded with a note of expectation:

As migration worldwide is expected to rise banking to migrants looks promising that in turn should benefit Pichincha and other institutions, which cater to migrants sending part of their earnings home.

Facts that come out from the narration above are: (1) Emigrant labor (EL) is engaged for surplus value generation while Spanish labor (SL) is demobilized as EL is cheaper to buy and softer to subdue than SL. This is pitting a section of labor against the other. Speculator-made crisis has created this condition in labor market. (2) Bank’s profit making goes unhindered. (3) While bank faces problem in profiteering from real estate speculation it profits from taking share of EL’s necessary labor as the remittance EL sends home is part of its labor that capital has spared because that is necessary for survival of labor so that labor can regenerate capital. (4) EL’s remittance is output of a cruel exercise with survival. For sending home remittance, EL has to cut down consumption and savings. It’s known that profit is converted form of surplus value. Bank’s profit, as interest, charges, fees, etc. are part of surplus value labor generates. Thus, it comes out that capital in the face of crisis turns much brutal: It not only appropriates surplus labor, it also appropriates part of necessary labor that capital gave away during appropriation of surplus labor. This act makes capital thrive.

With the highest twin deficit – combined budget and current account deficits – in the world except Iceland a forecast from the EC warned the ravaged country’s debt load would climb to 78% of GDP next year. Its banking sector as a whole is considered “high risk” as Standard & Poor’s downgraded the sector to Group 5. The S&P reduced the rankings for 15 Spanish banks while Fitch did the same for five top Spanish banks. Fitch concluded the reductions reflected the general reduction for the country. In late-January, Spain was pushed further below, from AA- to A. Fitch was concerned that the banks had a high exposure to national debt. Moody’s said the country was losing one of its “key relative credit strengths.”

For the ruling interests, there is stereotype solution: austerity. In mid-February, Olli Rehn, the EU Economic and Monetary Affairs boss, asked Spain to specify more austerity measures it would initiate on top of the austerity package consisting of €15 billion of tax increases and spending cuts announced in December. In January, central government tightened control over regional governments’ spending. Subsidies to future renewable energy projects have been frozen. The hardest hit was made on labor. Spanish elites’ trick took the right turn: subdue and rob the exhausted labor reeling under widespread unemployment.

To steer out capital from its debacle the conservative government took steps to demobilize labor by marketing a “package of reforms”, a task carried out by state in the service of capital. It is boosting of capital, which is grappling with its crisis. The labor reforms, a sharper tool, proposed by the government would make it easier and cheaper to fire workers and get rid of collective bargaining agreements. It will allow companies to have dandier flexibility to adjust wages, employees’ schedules and workplace tasks. Plans are in the offing to raise wages below the rate of inflation. Real wages will fall 5% in 2012 as a result of freeze in the minimum wage and price increases, trade unions asses.

New labor legislation places Spain “close to the most advanced European countries”, the bosses claim. The fact is brought to light: (1) Advanced capitalist sluggish economies are awash with enormous debt, unemployed, homeless; (2) their expansion has ground to a near-halt; (3) they are terrorizing labor and making onslaught on labor. It’s a symphony by dictatorial capital played across the world eclipsed by crisis. Actually, it’s capital’s cacophony, an attribute of capital that tries to shape the entire world uniform, regimented.

With the reform, the Spaniard employers are happy. Their organization feels: “The workers and the businessmen have won, Spain has won”. Yes, in all lands, capital considers capital is country, country is capital, capital’s interest is country’s interest, it doesn’t matter at all if labor is crushed by capital’s wheels.

However, a minister, Cristóbal Montoro, has admitted that the reform will not create jobs. The reform, unions argue, bear unconstitutional elements. Union leaders described the measures as “unjust, inefficient, lacking solidarity and degrading”. Unions termed the legislation discriminatory. The Secretary General of the UGT claimed the motive for the reform was financial and not to create jobs.

Banks’ fiesta fails to make all feel good. It’s not possible for the capital that cherishes only self-aggrandizement. The fiesta is for the minority, an absolute minority. The minority manipulates politics, constitutional elements, etc. in a democracy that ultimately stands for the minority. The minority’s democracy fails to stand for jobs, rights, interests of the majority.

Intermittent Resistance in Spain

The Sun Also Rises, and all fiestas don’t go unchallenged, and minorities’ interests stand opposed to majorities’ in society, and resistance grows in Spain.

Labor is resisting ruling elites’ push to take away labor rights in the name of austerity. A million marched in at least 57 cities across Spain on February 19, 2012 to protest the push. Two main trade unions, CCOO and UGT, organized demonstrations with the slogan: “No to the Labor Reforms – Unfair to Workers, Ineffective and Useless to the Economy and for Employment”.

Physicians from across Spain are uniting against the indiscriminate and disproportionate health cuts. A manifesto from the OMC, Collegial Medical Organisation, to which all the medical professional organizations have joined, says, “We doctors we rebel against the cuts”. The document was read out simultaneously in 20 cities in February. They considered the National Health System was in a critical situation because of the crisis, and as a consequence of the cuts. The OMC considered the government was modifying the labor laws and the pay of the physicians in a permanent and irreversible way.

The physicians say acceptance of the cuts will cause a loss in quality in patient care, above all for those who are the poorest, weakest, oldest, unfortunate and defenceless. The OMC also expressed concern about the precariousness of the labor market in the profession, and feared the lack of opportunities would see talent looking for work outside Spain, which they describe as a economic and intellectual loss.
Physicians staged demonstration against the cuts in Valladolid.

Spending cuts have generated crisis in public education. A desperate situation affecting public and grant-aided schools and colleges has brought teachers, students and parents to demonstration marches. In the Valencia region, thousands joined demonstrations held at more than 30 centers. In Alicante city, more than 40,000 people protested. Many of the demonstrators came in buses and trains from towns across the province. It was the largest demonstration in the city in decades. A number of placards read, “We are without chalk”.

A manifesto read out at the demonstration called for “more investment and more quality’ with concrete measures including increasing number of teachers, helping for school meals, transport and instruction material.

Defying police brutality, thousands of school and university students, parents, professors and others joined protest marches for days in Valencia in February. The protesters’ number disrupted traffic in the city centre. Other cities also witnessed similar protests. Demonstrations in support of the Valencia students were organized in half a dozen cities. Demonstrations were also held in response to the police brutality.

Police arrested 43 students including eight minors in the city. Police in Valencia made more arrests during the February protests than during all of the demonstrations in 2011.

The Federation of Journalist Unions condemned the disproportionate use of force by police. Journalists were beaten by police despite clearly identified as members of press. The EU spokesperson in the Valencia Parliament described the police action as “absolutely savage and uncontrolled”. “We are in a city taken by the police, which is giving brutal images of aggressions against youngsters, journalists and any person who happens to be passing by”, she said. But, the police chief in the Valencia region referred the demonstrators as “the enemy”.

People are collectively confronting and resisting eviction as banksters try to take control of defaulters’ houses, which is appropriating private property. Regular protests are being staged against banks as banks repossess defaulters’ homes. Associations representing about 40,000 owners of “illegal” homes from across Andalusia plans to fight a decree that regulates houses constructed on rustic land, because they believe that “it doesn’t solve anything”.

Spain-wide movement by Los Indignados, the Indignant ones, the protest camps throughout last summer is now known around the world. Los Indignados, mainly young, showed the world a method to recover public space that has been/is being encroached by capital.

A Eurobarometer survey found 88% of Spaniards consider corruption as a serious problem. Most of those questioned assume corruption has increased over the past three years and 93% consider that corruption affects the national institutions.

Obviously, only perceptions shouldn’t be based for inferring reliable conclusions. But it’s also a fact that perceptions come from, among others, experience. The way 88% Spaniards perceived tells at least a part of reality.

Then, Spain’s citizens found: An embezzlement scandal involves a duke. The duke was formally made a suspect in a fraud case that alleges embezzlement of millions of euros of government funds through a non-profit organization (NPO), a “black hole” in the accounts of the NPO, allegations of false accounting and tax evasion, dozens of “ghost employees”, misappropriation of up to €5.8 million, and funds funneled to offshore accounts. The duke suffered indignity, but, it presents a snapshot of unsavory business practices.

Doesn’t corruption affect economy, its performance, quality, productivity? Does corruption act as a tool in competition? Corruption tells the economy doesn’t have the force and conditions to compete freely, and there is no other cheaper way to compete other than resorting to corruption. Corruption by an individual or by a group of individuals is dwarfed by corrupt practice of an entire class, of an entire capital, bank capital or loan capital or speculation capital. In that case, the economy doesn’t depend on fair competition or the “fair” economy makes corruption “fair”, and corruption turns part of the institutions the economy depends on to spread it tentacles of appropriation. Does fairness direct dominating interests to resort to austerity – robbing and depriving people more – instead of weeding out corruption? In that case, the “fairness” turns out as fairness of those dominating interests.

But the “fairness” of the dominating interests takes toll. Toll is taken from labor that produces surplus, and this toll taking is fair in this “fair” economy that pushes people out of houses, out of employment, that deprives patients in hospitals, that pushes students out of schools. The economy finds “survival” path by slashing essentials while fails to weed out corruption.

The cited examples expose an “efficient” economy that is failing to ensure (1) food, (2) employment, (3) health care, (4) shelter, (5) education, (6) municipal services, (7) public works. Its “efficiency”, utter inefficiency, is revealed in its incapacity to employ the youth workforce that could have generated “force” to get out of recession. Putting it point blank, the economy even doesn’t now have the capacity to (1) appropriate surplus labor of this young workforce, and (2) regenerate capital. It’s a decline in terms of capacity. No society can depend on such an economy with declining capacity and inefficiency. Similarly, (3) the “efficient” economy now is failing to consider that providing food, shelter, health care, education, consumption of these are proudly sold by a section of bourgeois economist, are required by capital to regenerate capital. This failure is encouraging capital to wage a brutal class war that embargoes basic provisions for life. At this phase of crisis, capital finds the embargo profitable as with this embargo capital can (1) threaten, (2) unarm, (3) break rank and file, (4) demobilize, (5) subdue, and (6) profitably bargain with labor, and (7) co-opt a section of labor leadership. On the other way, it shows capital’s dominating position of dictating terms even during its period of crisis, which labor can face only with political education, disciplined organization free from adventures, mature leadership and sustained struggle.

In its class war, capital is not only charging at labor directly under its employment, with which its relationship is hostile. Capital is also making assault, snatching away bare minimum space from other sections of broader society – children, students, sick, the aged, pensioners – as part of its class combat, which is a broadening of its appropriation mechanism. It’s, in one way, capital’s capacity to accumulate, and in an opposite way, its incapacity: while it shrewdly appropriates all portions, even a fraction of a grain of surplus value that reaches to other parts of society, from children, sick, others, from municipal facility, city hall, public works project, hospital, wine tasting, luxury cruise, nude show, school toilet, it fails to find enough surplus value in machine shop, foundry shop, and during period of crisis in speculation, finance-casino, it has to snatch away part of value that was necessary for capital’s regeneration – food, health care, education. In the period of crisis, in the name of austerity, capital thus embarks on its luxurious profit cruise. But, in this cruel cruise, capital creates a combat context as its acts compel other social forces to stand against it.

Like other contexts, the Spanish context – capital’s irresponsible game and fiesta, people’s agony and resistance – carries essential questions, questions related to people’s and labor’s survival and struggle. These questions shall accompany Spain, Latin America’s biggest foreign investor, as the country is facing the risk of another recession.

Farooque Chowdhury is a Dhaka-based freelancer.

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