While Greece negotiates over every detail in an austerity plan imposed by the EU, ECB and the IMF, Spain has been Europe's good son, obedient and dutiful.
Spain took the initiative in slashing deep into welfare budgets and reducing salaries and terminated jobs, vowing to get a handle on a dangerous pile of deficits and debts. The conservative prime minister elected three months ago, Mariano Rajoy, has pursued the cutback campaign even more vigorously, raising taxes and redoing labor laws. Pushing the austerity measures to the limit.
Spain's drastic cut backs have moved government accounts in the right direction for the first time since the European financial crisis erupted last year. But in so doing, it has pushedthe economy into recession, accelerating a wave of firings and darkening the horizon for millions of workers. Growth continues to drop along with taxes.
In most of the 17 countries using the E.U. common currency, this has become the no-win choice leaders have had to make: balance budgets but forsake growth and jobs. Although they regularly promise to stimulate their economies - particularly France's President Nicolas Sarkozy, who faces elections in the spring - the deep spending cuts required to carve down deficits and public debts have, in fact, strangled economic activity. The perfect example is the UK, where David Cameron has pushed difficult austerity measures voluntarily and growth and budget deficits remain a problem
With the exception of Germany, zero growth or even recession has been predicted across most of the continent for the rest of the year and perhaps beyond. As a result, tax receipts needed by the government are declining and, unemployment has risen to new heights.
Rajoy.. What did I get myself into ?
Rajoy warned last week that unemployment in Spain - already Europe's highest at nearly 23 percent - is likely to climb still higher before the year is out. The prospect for young people, those 24 and younger, among whom unemployment has reached 46 percent, is particularly bleak.
That was unwelcome but not unexpected news for Carlos Burillo as he marched around Madrid's Liberty Square on a cold winter evening in a subdued demonstration by labor unions. The 33-year-old physical education teacher found an interim job in a junior high school for this term, but as of September he faces a new round of unemployment unless he can find someplace that is hiring.
Spain's woes are due in large measure to outrageous spending by Socialists under former prime minister Jose Luis Zapatero. Zapatero did not realize the severity of the economic crisis as it descended on Europe in 2008, and failed to clamp down on corruption that infected the central government and especially the autonomous governments in Catalonia and other regions.
For others, the problem is that Spain's leaders are too willing to listen to Germany, or the European Union, or the International Monetary Fund - all demanding budget discipline to get deficits and debts under control.
El Pais newspaper, traditionally sympathetic to the Socialists, reported this week on Rajoy's effort to get E.U. approval for his labor reform plans, including a possible reduction in retirement benefits. But the Germans wanted more, the report said. A lot more.
Spain is in a very difficult situation with debts rising, taxes and growth down, they will need to ask the European Union for assistance if their borrowing costs continue to grow and they will be facing the same situation as Greece. The EU method, does not help a country recover.