Spain’s recession worsened in the second quarter as the government’s austerity push to reduce the euro area’s third-biggest budget deficit and a slump in consumer spending offset growth in exports.
Gross domestic product fell 0.4 percent from the previous quarter, when it declined 0.3 percent, the Madrid-based National Statistics Institute said today. That’s in line with an estimate published July 30. Separately, Spain’s borrowing costs fell to the lowest in three months at an auction today after the nation’s bonds rallied this month on optimism the European Central Bank will agree on a plan to help peripheral nations.
Prime Minister Mariano Rajoy last month gave up on his forecast for a return to growth in 2013 as he unveiled budget cuts that will expand austerity measures to a total of 15 percent of annual GDP by 2014. He is due to host European Union President Herman Van Rompuy today for the first in a series of meetings aimed at solving the nation’s funding issues.
“We fear that things are likely to get worse before they get better,” said Martin van Vliet, an economist at ING Bank in Amsterdam, who expects Spain will seek additional financial aid as early as next month. “With much more fiscal austerity in the pipeline and unemployment at astronomic highs, the risks are clearly tilted toward a more protracted recession.”
Yeah, gosh, protracted austerity is going to cause recession and massive unemployment for the next 18 months or so, awesome. And that's if Spain's economy doesn't crash. This is the good scenario.
And once again, keep in mind this is exactly what the GOP says they want to do to our economy: balance the budget through steep cuts to social programs, government services, infrastructure programs, schools, public safety, highways and bridges, and civil service. The equivalent of what Spain is doing here, cutting the budget by 15% of GDP by 2014, would equal eliminating about $2.4 trillion dollars from the budget here in America. There would basically be no discretionary spending, period. It would all go away.
Basically, Rajoy is doing what the GOP say they would do if they were in charge. But here's the thing, they would actually make a lot of these cuts, and then make trillions in tax cuts for the rich in addition. The tax cuts would far outweigh the spending cuts, and the deficit would skyrocket upwards.
Austerity is a proven failure. The only thing worse is the GOP's fake austerity.