Sorry Troika, PIGS’s and Spain Economic Recovery Is “One Big Lie”

Sorry Troika, PIGS’s and Spain Economic Recovery Is “One Big Lie”

During six months of protracted and terribly fraught negotiations between Athens, Berlin, Brussels, and the IMF, the idea that Spain, Italy, and Ireland somehow represented austerity “success stories” was frequently trotted out as the rationale behind demanding that Greece embark on a deeper fiscal retrenchment despite the fact that the country is mired in recession. Here’s the official line from the German Council of Economic Experts:

The economic turnarounds in Ireland, Portugal, Spain and – until the end of last year – also in Greece show that the principle “loans against reforms” can lead to success.For the new program to work, Greece has to show more ownership for deep structural reforms. And it should make use of the technical expertise offered by its European partners.

As we’ve shown, the idea that the periphery has truly implemented anything close to “austerity” is absurd on some measures – like debt-to-GDP for instance.

Equally absurd to the 44.2% of Italian youths who are unemployed and, no doubt, to the nearly 23% of Spain’s population that are jobless, is the idea that the policies imposed by the troika in exchange for aid have done anything at all to engineer what Germany’s economic wisemen are calling “turnarounds.”

Here, courtesy of The New York Times, is what “success” and “recovery” looks like in Spain:

Spain, heralded by many as a success story for austerity policies, is on track for more than 3 percent growth this year and has created more than one million jobs since the beginning of 2014.


But for many Spaniards, the statistics are meaningless — even suspect.


Experts say that is not surprising because the vast majority of the new jobs are part-time — some lasting only a few days — and they pay poorly, doing little to improve the lives of the millions of Spaniards who lost their jobs during the global economic crisis.


In many ways, the crisis here was deeper and more sustained than the downturn in the United States. Spain lost about 16 percent of its jobs, more than any other eurozone country. Its G.D.P. declined by 7 percent. And for the poorest 10 percent, real income dropped by 13 percent per year from 2007 to 2011, compared with only 1.4 percent for the richest 10 percent, according to the Organization for Economic Co-operation and Development, based in Paris.


The desperation among job seekers is now so acute that many accept work contracts that pay less than the country’s reduced minimum wage — often by agreeing on paper to work two days a week, but actually working many more unpaid hours, experts say. And some, returning to their old jobs, are finding that they must take huge pay cuts.

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