The Crisis and the Spanish Revolution

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What do we do when we see that the world we live in simply makes no sense at all? What do we do when we see that the entire thing just seems to be about to collapse and anything around us just looks like a pure absolute dunghill? But there is no point in trying to attack all the nonsense present in this world. I have neither the energy nor the time. Let's not talk about the uncontrolled consumption, a product demand which cannot possibly be sustained by the resources that this planet provides. The resilience of this planet is incredible but i think numerous evidences show that the bargain is about to end. Yes, let's not talk about consumption. Let's not talk about the fact that goods are becoming poorer and poorer and less durable simply because it keeps the whole consumption machinery growing and growing. We are maintaining an exacerbated consumption, which is putting at risk every single form of life in the planet, by incredibly “creative” strategies such as adding a planned expiring date to all electronic devices, which moreover are filled with precious metals and other components that the planet is no longer able to regenerate. Does this not have the name of insanity? That is, instead of going towards a more efficient and sustainable system, we are digging our own grave, something i find profoundly despairing.Let's not talk about the fact that the well being of a country is measured in terms of things such as the Gross Domestic Product (GDP), which only indicates something as simple as money circulation. That is, now the standard of living is measured by a market value that includes 100% nonproductive things such as warfare. A market value in which for instance, health care may account for a significant percentage of it despite having the meaning that there are more sick people!Let's not talk about the fact that the most profitable economic sector on the planet is finantial trading, an arbitrary distribution of money which accounts for 0 production. A world in which things such as warfare are profitable, a world in which companies invest more on comercial advertising than in the production of goods. A world in which we need to have x number of possesions in order to be happy! Just buy, buy and buy, work and buy, work and buy, keep the cycle while a child dies every five seconds in this planet as a cause of malnutrition and hunger. That is the money value. Money, created out of nothing and estimulating more and more consumption.

But let's not talk about all this. Let's focus, and talk about something in particular which after all, also puzzles me as i find complete nonsense on the whole thing. It turns out that the Spanish crisis is due to a combination between a terrible housing bubble and people's obsession of living beyond their means. Thus, it turns out that we are just pigs which have created a huge debt by speculation and runaway spending. It turns out that the whole European survival is threatened by Spain. But wait, is it really that simple?

When Spain joined the Euro, the interest rates were very low and why was that? Surprise, the Germand and French economies were in recession and needed to be reactivated. Germany, which is now defending meeting the Maastricht treaty at any cost, did not care at all when it overflowed the budget deficit and public debt up to 14 times during its recession the first years of the new millenium. But i was saying that the interest rates were very low then and, what did that mean for Spain? A huge money influx from the German banks straight into the Spanish ones. This opened the door for that terrible housing bubble. Our Spanish banks have been massively funding the estate agencies while lending money to the regular people so that they could buy all those houses that were being built. And what happened with our politicians? Well, our politicians were too busy trying to get some part of the cake. A very substancial part of the mechanisms by which local governments obtained money consisted of selling terrain. Funding through the reclassification of land, that is, to determine what is or is not buildable land. You can imagine the huge amounts of money that developers and builders were eager to pay to local governments to obtain the permission to build. Who paid that in the end? People through a very increased housing price. That is, we have Spanish banks borrowing money from German banks. We have Spanish banks lending money to builders so that they can build. We have builders paying a lot of money to local governments and raising the housing price to exorbitant levels and we have the regular people asking the Spanish banks for more money to be able to pay those exorbitant levels. Isn't this called insanity too? We had very low interest rates in the beginning but an interest is after all, an interest. No matter how low it is when you set one it means that money needed to pay that interest does not exist at the moment. Money has been borrowed, and borrowed and borrowed and thus we can say money has been created out of debt. We have created an enormous hole impossible to be repaid and they wants us to believe that this could not be predicted? I was a child when all this was happening. I am not an economist and have very little idea about it but, i dont need numbers or any scientific explanation to see that the whole story was doomed to collapse. The Spanish government knew it, and the Germans knew it too but hey! Why to stop something while it is still profitable? The truth is that the German banks found a great cake on the Spanish housing bubble.

It is incredible how many people in other countries still believe that what we have is a result of trying to live beyond the means. That our public spending was simply too much. Well, we have actually not seen any of that money. Spain has one of the lowest rates of public spending per capita among the countries of the EU-15. In 2007 Spain had a surplus of around 2% of GDP, above the German one. What happened then that by 2009 this was transformed into a deficit of about 11% of the GDP? The whole crisis begins and the Germans stop giving money to the Spanish banks. The whole thing collapses. The housing bubble collapses creating an enormous hole in our economy. The state revenues depend on labor income and therefore, once the housing bubble burst, driving the unemployment rate from 9 to 18% in two years, the revenues decreased dramatically. Add to this the low contribution of the “high incomes” to state coffers and its tax fraud, the thousands of millions of euros that the politicians have been injecting into the saving banks (literally controlled by them) and the unfounded monumental works such as airports or high-speed train stations that lack passengers (some of these are incredible cases of corruption) and there you have it.

But anyway this is also just more bullshit. The Spanish public debt in 2007 was one of the lowest among the EU-15 (and that was because our welfare state was a joke compared to most of those other countries). This debt is increasing extremely quickly because of the huge interest rate imposed to the Spanish State when it borrows money to foreign countries, a disproportionate rate which does not fit reality (who is benefiting from this? You guess). But again, this public debt represented a very small percentage of the whole debt of Spain. Most of the debt is private: banks and other private institutions and, as a consequence, families. Once again debt due to the low interest rates and the collapse of the hosuing bubble as a result of a building process that was way over the demand and with exorbitant prices in comparison to the salaries and the real costs.

That is, we have Banks-Housing-Politicians. The three of them together are responsible for what Spain is going through now. What happens now? We have Spanish banks, which own about half the entire debt of Spain, asking for sacrifices to people while a massive influx of money from the State goes into the Spanish banks. The other half of the debt is on foreign countries like Germany. What do they do in Europe? They inject money onto the Spanish banks, because in the end, this money will get back to the German banks. That is, European banks lending money to Spanish banks at a very low interest rate so that the Spanish banks can buy government bonds at a much higher interest rate. The best business ever. If they really wanted to help, they could have given that money to the Spanish credit bureaus, to address the lack of credit in Spain.

So yes, while the Spanish banks are getting a huge influx of capital from European banks and from State public funds, the situation of millions of families in Spain becomes a real drama. The banks say that all these sacrifices are essential. They even dare to say that the slow economic growth is due to the very high salaries in Spain, which prevent us from being competitives. The measurements adopted are the ones which were always pursued: cut wages, eliminate social protection, raising the retirement age...meanwhile those responsible for a bank's bankruptcy obtain incredibly high severance packages, our politicians maintain all their privileges and the German banks continue to enrich themselves with the flow of capital from Spain to Germany, keeping very safe German government bonds. All this is done with the following excuse: “There is no alternative”. I suppose here is where we can say that money, like energy, is never destroyed. Unlike energy, money is not transformed, it is simply redistributed more or less equally, and it is clear where we are now. It is simply a SWINDLE, a FRAUD.

And the Spanish society. What does it have to say about it? It has been more than a year ago, on the 15^th of may 2011 when the Spanish people went to the streets. The “Spanish Revolution” began and people demanded some absolutely necessary changes such as a fare electoral law, a real separation of powers, the end of political privileges, payment in kind regarding mortgages...demonstrations all over Spain against a particular species called “the politicians”, which does not manage well the resources and which dooms Spain to its death. The Spaniards became a source of inspiration for many other people all over the globe. You could see demonstrations in many other countries, either supporting the “Spanish Revolution” or using it as the example to follow (or both). I was surprised when shortly after my arrival to Prague i found a whole floor of a big art gallery dedicated to the “Spanish revolution”.

Time went by and the movement lost strength, partly because of some radical groups within the movement but mostly due to external forces. All those who consistenly despised, ridiculed and poisoned the movement with lies and insults, partly idiots and partly those interested in the destruction of that movement. The movement lost strength but has never been dead. There were many people supporting that movement in the beginning, there are too many “outraged/indignados” in Spain. Time continues and more and more pressure is applied on the people. It is just a matter of time.

Two more waves are coming. On the 15^th of September there will be a (possibly massive) demonstration against the cuts made by the Spanish government and requesting a referendum so that people can vote on the cuts. On the 25^th of September, there is a planned massive arrival to Madrid under the name of “Ocupa el Congreso, 25 septiembre”, in order to surround the Congress of Deputies and stay there indefinitely, until the dissolution of the courts and the opening of a constitutional process for the drafting of a new constitution. This last one has been promoted by anonimous people through internet and they invite the whole citizenship to participate. These are some of the claims:

- The resignation of the entire government, the dissolution of Parliament and the call for a general election.

- That these elections are to convene a constituent assembly to draft a new constitution,

- An audit of the public debt of Spain, with a moratorium on debt payments until it has been clearly defined the items that must not be paid by the nation, as they have served private interests who used the country for their own purposes and not those of all Spanish citizens. They also demand the prosecution of all those who show to be suspicious of such maneuvers, and to respond with their property in case of being convicted.

- The reform of the electoral law in order to truly represent the will of the sovereign people, which is not true in any way with the current one.

- The immediate repeal of all the reforms carried out by the Popular Party, being not only a disaster for the country, but having been imposed on betrayal of the democratic will of the people.

-A fair tax reform, where the wealthy pay more. They also demand the repeal of the tax amnesty decreed by the government, whose injustice is a real insult to honest taxpayers.

-The abolition of all privileges of those exercising political responsibilities, and the implementation of strict control mechanisms on the performance of their duties.

I dont know what will happen. I dont know whether this will work out or not. I dont know what to expect from it. I just know that the Spanish society is boiling, that people's patience, like the Earth's resilience, has a limit and those who hold power are doing all what is possible to go over the limit. I wrote this post in English because these things need to be shared. This does not only affect Spain but humanity. I wrote it in English so that you who are not Spaniards can know that the “Spanish Revolution” is not dead and that many Spaniards will continue fighting. The Spaniards also need support from the outside. The 15^th and the 25^th of this month will be tense in Madrid and the whole of Spain and whether this works or not, it is likely to be followed by many other waves. You can participate by sharing this with friends or other people, by just talking about it. You can support in many different ways, just do it. Let's not keep this only within Spain but export it. Be aware that the Spaniards are getting stronger and stronger and that this is unstoppable.