COTW: What Austerity Does

It is official, Spain has the worst unemployment rate in modern times exceeding the 25% officially unemployed in the United States during the First Great Contraction. Only Greece is experiencing mass unemployment on the level of Spain.

source: businessinsider.com

Unemployment in Spain has hit young people the hardest. 57% are without jobs. Spanish businesses are also closing at a record pace, up 45% since 2012. The causes of this depression are by now familiar: the end of a real estate development bubble that caught banks overextended in debt, and an economy  failing to recover from the world financial crisis. The social dislocations are bad enough to force people to leave the country. For the first time since records began in the '90s Spain's population is decreasing. The outlook for Spain is not good. The IMF forecasts a 1.6% contraction in 2013, and no growth until 2017.

The Great Austerity Experiment, as Europe's infatuation with fiscal discipline might be called has been discredited. French Finance Minister Pierre Moscovici said, "Austerity is over, but we remain serious." Only a Frenchman could deliver that contradictory line with a straight face. The Austerians' confidence fairy returning after the magic number of 90% debt/GDP was reached is just a modern myth after all. The reality is fiscal austerity is a means for the economic elite to further enrich themselves at the expense of the rest of society. In the United States, the last bastion of so-called free market capitalism, the richest 8 million families received an average rise in their wealth from $1.7 to $2.5 million each. The rest of us, the bottom 93%, suffered on average a decline of $6,000 each. The explanation is simple. The federal stimulus doled out in terms of ultra-low interest rates on debt funnels money into the Wall Street stock casino seeking capital gains taxed at a ridiculous 15%. The proof of that is the record high levels of your favorite stock index. Only there is cunning catch. Like a casino, only the owners get rich on Wall Street. This chart shows who owns stocks in America:

Meanwhile the owners' government in Washington is hacking and slashing the public payrolls just like a corporate raider taking over a going business:

So the next time you see a corporate talking-head cheerleading another Dow-Jones ejaculation, call the studios and tell them to get serious or move to Spain, their choice.