Monday 16 April 2012

Dear Markets,

You'll forgive me, but I am confused and rather annoyed. 

The Rajoy Government did what you told them to do. To wit:
  1. 27bn euros (AU$ 35bn) budget cuts: 2.3% to 2.5% of estimated 2011 GDP.
  2. Average ministerial budget cuts: 16.9%. But public works cuts to reach 34%.
  3. Public sector wages and salaries frozen.
  4. Electricity and gas, increase by 7% and 5%.
  5. Housing subsidies and employment policy cuts: 2bn euros (AU$ 2.6bn).
  6. 12.3bn euros (AU$15.9bn) tax increases, supposedly from big corporations but including fiscal fraud amnesty fees (10% of the fiscal debt!); personal income tax (1.9% increase)
VAT remains unchanged, unemployment benefits frozen, age pensions indexed by CPI. (See here)

Two weeks down the road, this is what you give them in exchange:
  1. As we speak, the risk premium demanded to acquire Spanish bonds reached 445 basic points.
  2. Interest rate paid by Spanish bonds reached 6.122%.
  3. Luis de Guindos goes around the place to explain to you, The Markets, why things in Spain are going just fine. (See here and here)
Meantime, after the governments of Greece, Italy and Ireland did what you told them, their people are killing themselves, out of despair. (See here or here)

If I were De Guindos, following Rage Against the Machine, this is what I'd tell you (yes, The Markets), the troika, Frau Merkel, Monsieur Sarkosy, Signore Draghi and the whole bunch:

Fuck you
I won't do what you tell me


the Magpie

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