Nini and the European Dream
July 17, 2010 6:04 PM   Subscribe

In Spain, almost everyone is ‘not in education or employment.’ It’s the end of the job for life

Doug Saunders writes in the Globe and Mail: now almost everyone (in Spain) is NINI. The under-30 unemployment rate in Spain has just hit 44 per cent, twice the adult rate. Italy also has passed the 40 per cent mark, and Greece has gone even further. If you count all the people who’ve given up looking, it means the number of people between 20 and 30 who have any form of employment in these countries is something like one in five.

The G&M will feature a short series of articles by Saunders called "Broken Europe", and he starts off the series by writing about Spain (this is a different article than above):

(A) 44-year-old construction worker sat at the folding table in the tiny living room of his basement apartment on the outskirts of Barcelona and tried to grasp the larger meaning of a letter from the bank informing him he no longer owned the property.

The apartment will be auctioned at a fraction of the price he’d paid for it four years ago, when his fast-rising salary seemed a sure ticket to middle-class stability for his family. If a buyer is found this week, he and his four teenaged children will be evicted. As Spain has no personal-bankruptcy law, he will still owe the bank almost €200,000 – more than the current market value of the apartment – even if he loses it.


The G&M series features a Google Map with financial data by country.

Upcoming stories in the series:

- Ireland: The exodus returns
- Britain: Learning to make things again
- France: The lifestyle of the state
- Germany: In the vortex, a calculated calm
- Greece: Families moving underground
posted by KokuRyu (92 comments total) 29 users marked this as a favorite
 
The articles really resonated with me because Saunders acknowledged that for people of my generation in Canada (Gen X), the 90s were a tough time:

I half understand what they’re experiencing. I, too, left school in the midst of a devastating recession, when full-time jobs were simply non-existent. Canada, lest we forget, was in a fiscal and employment position as serious in the early 1990s as countries such as Spain face today: Its government debt and deficit levels were comparable and, with the higher interest rates of the time, meant we were spending 35 per cent of all tax revenue on payments to Wall Street bondholders. There seemed to be no future for people like me.
posted by KokuRyu at 6:07 PM on July 17, 2010 [3 favorites]


Short-term and casual work is for poor immigrants and unschooled villagers, beneath the dignity of anyone whose parents had a full-time contract. (Even now, at the height of the crisis, ethnic Spaniards aren’t taking such jobs.) Small-scale entrepreneurship is still exotic.

Really, you're going to shit on a country with an under-30 unemployment rate hovering right under half and just like that attribute it to those spoiled Europeans who don't got that patented North American hustle? Horseshit. There's a point where you have to look around and realize that the problems here are above-and-beyond institutional. There's a slight acknowledgment of that in the article but the entire tone sounds like a whole lot of I-told-you-so in revenge for hearing about "easy" they've had it in Europe.

Oh, and one last thing: periods of low income are "noble" in retrospect alone. While you're in the shit, it's exactly that: shit.
posted by griphus at 6:14 PM on July 17, 2010 [23 favorites]


While it now seems likely the euro currency will remain intact after Germany and France acted to secure the debt of their faltering neighbours, and most economies will recover, there is a widespread sense this year’s harsh austerity measures will mark the end of “the social Europe”: the continent’s systems of social safety nets, job-security guarantees and early-retirement protections that made middle-class life sustainable for those able to enter it.


this is the Goldman-Sachification of the European economy. it's not the way things have to be for the people or even the governments. it's just the way things have to be for the financial and capitalist classes to maintain their high profit margins.

the thing is, the USA has never had any class wars but Europe knows them far too well. if they think forcing millions of Europeans into indentured labor is not going to have any consequences, they better think again.
posted by liza at 6:22 PM on July 17, 2010 [3 favorites]


We're starting to see that attitude in the US, too, griphus - the unemployed must just be lazy, or too proud to get their hands dirty. A lot of people have a strong interest in making this recession the victims' fault.
posted by zjacreman at 6:22 PM on July 17, 2010 [1 favorite]


Starting? Our entire social welfare system is based around that idea.
posted by griphus at 6:24 PM on July 17, 2010 [7 favorites]


the USA has never had any class wars

The last two hundred thirty-four years aside.
posted by Pope Guilty at 6:24 PM on July 17, 2010 [28 favorites]


Farah Mendlesohn said something on a similar subject which has stuck with me:
What this budget, backed by the Lib Dems, is, is a return to, and advocacy for, the idea that we can't afford ever to be a caring country. It is an argument that the welfare state as it was envisaged will always and ever be unaffordable, possible only with a spendthrift government that pays people to do makework to keep the money cycling.

It is an argument that social democracy, egalitarianism and what I understand as civilisation (books, education, housing, health) are only truly affordable by the privileged.
posted by kipmanley at 6:25 PM on July 17, 2010 [4 favorites]


We have globalized corporations but not labor. I'm sure there is somewhere in China that could use someone with your middle class typical skills, but language is a problem.
posted by furiousxgeorge at 6:26 PM on July 17, 2010


Starting in the sense that it's being manifested in new-to-this-recession policy shifts toward stinginess, benefit-cutting, and austerity, anyway. I know perfectly well that the Very Serious People have always thought this way. But now they're saying it out loud again.
posted by zjacreman at 6:28 PM on July 17, 2010


So if millions of people would just get on their bikes, there wouldn't be such a huge problem? Tebbit, what a semi-house-trained polecat visionary he was.
posted by shinybaum at 6:30 PM on July 17, 2010 [2 favorites]


The notion of the 'nobility' of poverty always rubs me the wrong way. It's not noble to work several jobs without health insurance or annual leave for minimum wage. It's not noble to struggle to pay rent. It is, however, noble for a country to insist that its citizen be paid a living wage, and have paid holiday time, and that they cannot be fired without good reason.

This isn't about Europeans who've had it too easy finally getting a taste of the real world. This is about countries that had their priorities straight getting scuppered by an irresponsible financial market.
posted by twirlypen at 6:36 PM on July 17, 2010 [34 favorites]


David Harvey has been good on this 'blame the victim' game in the recent crises - see for example Their crisis, our challenge (though the references are not specifically to the Eurozone economies):
We are seeing right-wing explanations of the crisis that explain it in terms of the personal greed of those who borrowed money to buy houses. So they attempt to blame the crisis on the victims. One of our tasks must be to say ‘no, you absolutely cannot do that’ and to try to create a consolidated explanation of this crisis as a class event in which a certain structure of exploitation broke down and is about to be displaced by an even deeper structure of exploitation. It’s very important this alternative explanation of the crisis is discussed and conveyed publicly.
posted by Abiezer at 6:36 PM on July 17, 2010


Really, you're going to shit on a country with an under-30 unemployment rate hovering right under half and just like that attribute it to those spoiled Europeans who don't got that patented North American hustle? Horseshit.

I don't think Saunders is saying that people in Spain etc. are spoiled and don't hustle, what he's saying is that entrepreneurial behaviour may not be part of Spanish culture.

For example, I was just laid off in November, and I currently have 5 different contracts that, pieced together, give me an income that is actually higher than what I was earning a year ago.

However, if I was in the same situation in, say, Japan (I don't know much about Spain or Europe), I would not be able to easily pick up contract consulting work. The concept just doesn't exist in Japan (although "contract employees" with no job security are depressingly normal).

Not only are workers unused to thinking and behaving entrepreneurially, employers or other potential clients aren't able to think outside the box (and hire contractors) either (construction is an exception to this rule). There is also no access to capital - banks are reluctant to loan money to small-scale entrepreneurs. Corporate governance is also an obstacle - Japanese folks are reluctant to start small businesses because they are almost impossible to dissolve.

So in Spain, it may not be as simple as people just not wanting to work. There may be cultural and structural obstacles to small-scale entrepreneurship.
posted by KokuRyu at 6:37 PM on July 17, 2010 [7 favorites]


the USA has never had any class wars

As PG hinted at above, we have had class wars, except it's only ever been in one direction: the rich in America have perpetually been at war with the poor and middle-class, all while telling us that we weren't really at war, and that all the efforts to enslave us have just been helpful boosts along the road to Prosperity.
posted by Avenger at 6:40 PM on July 17, 2010 [20 favorites]


I think blaming this on the culture is a cop-out. This isn't Japan we're talking about. Due, in part, to their isolationist policies and physical remoteness, Japan came late into the dominant (Western) economy. This is Spain. It hasn't exactly been hiding in a cave during America's ascent to the world stage via entrepreneurship. Spain got dropkicked by the mess made of the economy by America's lack of control of the market. You don't hit numbers that bad because there isn't a culture of entrepreneurship. Entrepreneurial interests fucked up bad and Spain's paying the price because their culture isn't compatible with, what? Global economic calamity?
posted by griphus at 6:48 PM on July 17, 2010 [4 favorites]


Mod note: North Americans change jobs seven times in a lifetime, on average; in Europe, the average and the expectation is one job per life. citation needed]
posted by goodnewsfortheinsane (staff) at 6:49 PM on July 17, 2010 [1 favorite]


The first linked article is the worst piece of ignorant, condescending bullshit I've read in a long, long time. In the first place, it isn't "almost impossible" to be fired in Spain: proof of that is that millions have been fired during the past two years. Much of the foreign commentary about the Spanish job market, and certainly this article, is based on a fundamental misunderstanding. Namely this:

The European Dream – in fact, the European Assumption if you’re a middle-class university graduate – is the permanent employment contract.

Since the early nineties, almost nobody in Spain has entered employment with a permanent employment contract. Indeed, because firing you from a permanent position is (relatively) expensive, employers have resorted to hiring mostly on fixed-term contract basis. At about 30%, Spain has the highest temporary employment rate in the OECD. Which is also why Spain went almost overnight from creating more jobs than any other European country to losing them faster than any other country.

This high temporary employment rate has had other negative effects:

Firstly, since it has been entrants to the job market who've got those contracts, this has created a dual job market in which the middle-aged have well-protected jobs, whereas the young and immigrants are all on short-term contracts. Of course, when the economy has turned sour, they've been the first to lose their jobs.

Secondly, because the young have no job security whatsoever, they must rely on the family safety net. This means that their mobility is impaired. Would you move to a different city for a crappy 6-month McJob which will hardly pay your rent?

Thirdly, because the employers do not see the young as permanent employees, they do not invest in them. Without professional training, the productivity of those workers has remained abysmal.

Yes, the Spanish government is taking steps to deregulate the permanent employment contracts, in order to close the gap between the two job market tiers, but this does not mean that short-term jobs are the solution to the crisis. To a great extent, they are at its source...
posted by Skeptic at 6:50 PM on July 17, 2010 [21 favorites]


we have had class wars, except it's only ever been in one direction

And it's worth remembering that everything that might seem to indicate otherwise (e.g. social security, child labor laws, weekends) has been the result of struggle and organizing from below.
posted by anarch at 6:52 PM on July 17, 2010 [3 favorites]


Entrepreneurship generally means self-employment. The term covers everything from starting up a hot dog stand, to selling asset-backed securities. Just because some folks in the continuum are bad does not mean entrepreneurialism is bad.

This isn't Japan we're talking about. Due, in part, to their isolationist policies and physical remoteness, Japan came late into the dominant (Western) economy.

I don't agree with you about what you say about Japan, but whatever. In my experience, some societies are more entrepreneurial than others. It's not good or bad, it's just a fact.
posted by KokuRyu at 6:52 PM on July 17, 2010 [1 favorite]


In fact, the whole theory and practice of Trickle-Down Economics is thinly-veiled class warfare.
posted by darkstar at 6:53 PM on July 17, 2010 [7 favorites]


North Americans change jobs seven times in a lifetime, on average; in Europe, the average and the expectation is one job per life.

I'm not sure either extreme is to be admired or desired.
posted by Thorzdad at 6:56 PM on July 17, 2010 [3 favorites]


The articles really resonated with me because Saunders acknowledged that for people of my generation in Canada (Gen X), the 90s were a tough time:

The boomer-focus of the media in much of the West makes for pretty jarring reading in times of downturn - here in NZ most of the reportage is on house prices and tax cuts; a paper covered government tax cuts with graphs where the leftmost point on incomes graphs was $40k, despite the median national income being $25k; the UK is now following our path of special taxes for anyone educated at university (but not retrospectively), and in the 1990s the under-25 unemployment rate was at depression-era levels. None of this is reflected in the official discourse of newspapers and TV; if you're under 40, you don't count.
posted by rodgerd at 6:57 PM on July 17, 2010 [2 favorites]


Just because some folks in the continuum are bad does not mean entrepreneurialism is bad.
It is when offered as panacea for structural crises as an '-ism' though - the notion that if we would only take in each other's washing we'd have an economy and our refusal to accept that somehow makes things our fault - this utter cobblers that wants to reduce the consequences of global flows of capital to supposed traits of the Greek national character or something.
posted by Abiezer at 7:02 PM on July 17, 2010 [1 favorite]


Entrepreneurship generally means self-employment. The term covers everything from starting up a hot dog stand, to selling asset-backed securities. Just because some folks in the continuum are bad does not mean entrepreneurialism is bad.

I never implied that. As I said, entrepreneurship is what got America where it is (for better or worse) and as an American, I enjoy the fruits of that, whether it is $20 DVD players or a job market which makes me want to preemptively hang myself.

In my experience, some societies are more entrepreneurial than others. It's not good or bad, it's just a fact.

Sure. I'll agree. But are you arguing that Spain's employment troubles are due to the lack of past entrepreneurship? Or that the lack of it is the reason for their inability to recover from the shake-up the global economy received. Which, I don't know about Japan, America hasn't begun to recover from either?
posted by griphus at 7:04 PM on July 17, 2010 [1 favorite]


Which, I don't know about Japan, America hasn't begun to recover from either?

We'd be out of this mess if only American workers were more like Americans!
posted by Avenger at 7:08 PM on July 17, 2010 [1 favorite]


We'd be out of this mess if only American workers were more like Americans!

Or the Mexicans, at least.
posted by griphus at 7:11 PM on July 17, 2010


I'm saying that it's difficult for unemployed folks to generate income through small-scale entrepreneurship. From what I got out of the article, Saunders is saying that you can't just go out (like I did) and hustle up some contract work. People (according to Saunders) are used to full-time jobs, employers are not used to contracting out. My main point was that, from my perspective, Saunders wasn't calling people lazy, he was just describing the culture of work, which tends to differ from country to country.
posted by KokuRyu at 7:11 PM on July 17, 2010


To be fair, the second linked article is much more accurate about the origin of the economic crisis in Spain: an absurd housing bubble grounded on predatory mortgages. With the aggravating circumstance that in Spain, you can't just walk away from your house: there is no personal bankruptcy and the negative equity will follow you. Even worse: because banks usually require a third party (usually a relative) to guarantee the mortgage, you may lose not just your house, but even your parents'.
posted by Skeptic at 7:12 PM on July 17, 2010 [4 favorites]


From what I got out of the article, Saunders is saying that you can't just go out (like I did) and hustle up some contract work.

No, he's saying that "[short]-term and casual work is ... beneath the dignity of anyone whose parents had a full-time contract ... [and] ... ethnic Spaniards aren’t taking such jobs."
posted by griphus at 7:14 PM on July 17, 2010 [1 favorite]


I don't agree with you about what you say about Japan, but whatever. In my experience, some societies are more entrepreneurial than others. It's not good or bad, it's just a fact.

Just wanted to clarify that I think Japan is very entrepreneurial, although the avenues for entrepreneurship are different: you don't go get a BCom and apply for the Bus Dev department - you start at the bottom (by joining a company rather than starting your own) and someone chooses for you. Or, if you want to start a small business, you can get financing for a bar, or hairdressing place, or a coffee shop, or a trucking company - enterprises that are very small scale (and low risk), and are hardly part of the knowledge economy.
posted by KokuRyu at 7:18 PM on July 17, 2010


Also, "entrepreneurship" is related less to mentality and culture than to access to capital and the consequences of bankruptcy. Spanish banks are notoriously more reluctant to lend to entrepreneurs than to homebuyers, and their methods to get their debts paid are only one step below those of Don Corleone.
posted by Skeptic at 7:22 PM on July 17, 2010 [2 favorites]


People having "Jobs" and "Careers" is a historical abberation that's only existed for a tiny fraction of humanities history. We are moving to a post-labor society. Eventually everything is going to be made by robots and the only people that will be 'working' will be people that enjoy their work.

Or we'll all be killed and ground up to feed our cyborg overlords.

It could go either way.
posted by empath at 7:28 PM on July 17, 2010 [7 favorites]


the USA has never had any class wars


The last two hundred thirty-four years aside.
posted by Pope Guilty at 9:24 PM on July 17



sorry. i meant actual killing, disemboweling and beheading of the capitalist and financial classes, not ... you know ... the every day exploitation that is "normal" in a country segregated by socio-economic classes.

the problem with the US is that everybody calls themselves middle class. even a lot of wealthy people call themselves middle class. so people in this country have been deluded for generations into thinking there's no significant class stratification in this country. the focus has always been on racial segregation and what Time Wise calls "the lure of whiteness" :
the whiteness, and the lure of whiteness, has tricked these have-nothing-in-their-bank-account white people into believing that they have more than common with the rich white folks on St. Charles Avenue that didn’t lose anything in that flooding than they have in common with the black working class folks who live about 500 yards away
we dont need to look too far back into the history of Europe to know they've killed each other at different times over land, wages, cake.

what is different now is that European elites are now in a position to copy the racist playbook of the US elite and use immigrants as scapegoats.

now, will the European nouveau pauvre stay in denial, just like their US counterparts? will they take the race-bait? or will they look back at their history and create the kinds of political and even military coalitions that let them, indeed, eat cake in victory?

that's what i meant by having a history of class wars. when was the last time people in the US took to Wall and Pearl streets in a violent struggle against the real ruling classes?
posted by liza at 7:30 PM on July 17, 2010 [4 favorites]


It's not noble to work several jobs without health insurance or annual leave for minimum wage. It's not noble to struggle to pay rent. It is, however, noble for a country to insist that its citizen be paid a living wage, and have paid holiday time, and that they cannot be fired without good reason.

In America, such a concept would be considered "entitlement." We insist that people struggle for what they need, let alone what they want. This is why we never had (and most likely will never have) universal health care.
posted by Anima Mundi at 7:44 PM on July 17, 2010 [1 favorite]


People having "Jobs" and "Careers" is a historical abberation that's only existed for a tiny fraction of humanities history.

If you're taking a long view including the period prior to the written word, then I guess you could have that opinion. Otherwise it's a remarkably ahistorical view that would have to overlook the trade guilds, serfdom, the role of the Roman millitary, the Chinese bureaucratic schools, and many similar institutions in pretty much every historical culture that have, if anything, pushed from people to remain in the same career for the bulk of their lives.
posted by rodgerd at 7:49 PM on July 17, 2010 [4 favorites]


This isn't about Europeans who've had it too easy finally getting a taste of the real world. This is about countries that had their priorities straight getting scuppered by an irresponsible financial market.

A country that has its priorities straight won't get messed up by financial market meltdowns. If their plan was to keep refinancing every 6 months, they didn't have a very good plan.
posted by gjc at 7:55 PM on July 17, 2010


I think KokuRyu is right in bring up Japan in a discussion like this. In Japan, they've borrowed the British NEET (Not in Education, Employment, or Training) and the number of young people under 30 that fit that description is staggeringly high. Other than NEETs, most young people under 30 are working only part-time, many still live at home, and contract work (as KokuRyu mentioned) is only growing. The average income of people under 30 in Japan is, if I recall correctly, under $20,000 a year, which is pretty hard to get by on here, unless you're living with your family. I'm hoping someone, somewhere can find a way to turn these things around, because it's only getting uglier.
posted by Ghidorah at 8:00 PM on July 17, 2010


A country that has its priorities straight won't get messed up by financial market meltdowns.

All countries get messed up by financial market meltdowns.
posted by furiousxgeorge at 8:01 PM on July 17, 2010 [2 favorites]


on average; in Europe, the average and the expectation is one job per life.
These kind of statements are quite over generalised if anything.

In the socialist Netherlands I know nobody who has had one job so far (40+) or who expected that. And the labour unions and the government know that that is inevitable.
I think it's been 20 years since the job for life went away.
There's a balance here between the needs of the companies and the needs of the employed: if a company wants to get rid of someone or several people they have to show to the judge that the person didn't function well or that they can't employ them anymore due to a changing of the competitive situation. And there's some go away package that's commensurate to how long somebody worked for that company.

But apart from that; 44% unemployed among 20-30 in Spain?! Good god. Poor people.
posted by joost de vries at 8:39 PM on July 17, 2010


If you're taking a long view including the period prior to the written word

Yeah, I meant the history of the species, not 'recorded history'.
posted by empath at 8:45 PM on July 17, 2010


I love how rich people wax eloquent about the "nobility" and "honor" or working a bunch of shitty jobs and not defaulting on your mortgage and all that. It reminds me of when some woman asked bush a question and started out by saying "I work three jobs, and don't have health care..." and he said "That's great, and uniquely American" or some bullshit like that. A guy who grew up rich and never had to work a day in his life.
posted by delmoi at 9:33 PM on July 17, 2010 [8 favorites]


Poverty is miserable, painful shit and anybody who tells you otherwise, well, you'd do well to do them in because they're planning on doing it to you.
posted by Pope Guilty at 9:49 PM on July 17, 2010


When I was a kid, my mum was an office clerk at a huge construction company. When a Great Big Project was complete, she and my dad were invited to the celebration. One of the company owners chatted with my dad, who is a blue-collar guy. The owner was bragging about his son's success, and claimed that the young man "started from nothing." Later at home, my dad, who was abandoned to the street in Europe in 1938 when he was nine, and knew something about "nothing" sputtered his outrage. "A law degree paid for by his parents is not nothing. It's a godamned big something!"

The rich are different from you and me.
posted by angiep at 9:59 PM on July 17, 2010 [12 favorites]


I love how rich people wax eloquent about the "nobility" and "honor" or working a bunch of shitty jobs and not defaulting on your mortgage and all that.

Ahh, Jarvis Cocker has a song for every occasion.

posted by rodgerd at 10:44 PM on July 17, 2010 [1 favorite]


gjc wrote: "A country that has its priorities straight won't get messed up by financial market meltdowns"

You are clearly in need of reading about the many monetary panics we endured prior to the Federal Reserve. Clearly, the financial markets are an important part of what makes an economy go. When they get jacked up, everything else does, too.

You may be correct in stating that we presently have an overreliance on the financial system, but it's not optional by any means.
posted by wierdo at 12:27 AM on July 18, 2010


North Korea was not influenced by the GFC. Zimbabwe was not. Countries with no significant trade or economical relations to the global economy were immune to it. So stop relying on the exchange of goods, finance and services between countries and you don't have to worry!

Your capacity for creating wealth will just be severely limited by cutting of the facilitators of division of labor, comparative advantage, and economy of scales etc.
posted by Catfry at 12:55 AM on July 18, 2010


Rodgerd: The UK is now following [New Zealand's] path of special taxes for anyone educated at university (but not retrospectively)

Well not quite. A UK Minister has proposed a graduate tax, it hasn't been implemented. It's also different from NZ in that the NZ graduate tax is purely to pay back student loans (if you don't have a loan, or once you pay it off, you stop paying the tax). The proposed UK tax would be permanent, as far as I know, but would possibly replace loans/fees.
posted by Infinite Jest at 3:11 AM on July 18, 2010


Ahh, Jarvis Cocker has a song for every occasion.

Sure it's not this one instead? (NSFW)
posted by daveje at 3:20 AM on July 18, 2010


The proposed UK tax would be permanent, as far as I know,

I'd missed that wrinkle - that really is generational warfare writ large. "Hey, fuck you, we borrowed the next few generations' money for tax cuts and pensions, but don't worry, you can pay more taxes to fund our lifestyle!"
posted by rodgerd at 4:06 AM on July 18, 2010 [1 favorite]


A country that has its priorities straight won't get messed up by financial market meltdowns

Spain didn't get mess up by the financial market meltdown, its problems are all of its own, although the sources are the same.

One first thing you must be aware of is that almost every mortgage in Spain is an adjustable rate mortgage. Spanish lenders are extraordinarily risk-averse, paradoxical though this may seem now, and they push ARMs very hard in order to offload the interest rate risk onto the homeowners. Fixed-rate mortgages are almost unheard-of in Spain.

When the euro was set up (and, unlike other countries, Spain didn't cheat to get in: its public accounts were, and still are, among the healthiest in the OECD - Spain has a lower public debt than Germany, though you won't find that mentioned in current breathless reporting of the "debt crisis"), Spain suddenly found itself with unprecedently low interest rates. As a result, those ARMs became extremely affordable. At the same time, the switch to the euro flushed large amounts of undeclared money onto the market. Much of that money went into real estate, stoking a real estate market that was already among the fastest-growing in Europe.

Spain has slightly unusual demographics, with a late baby-boom which stretched into the seventies. Because of this, there had always been, in living memory, a steady housing demand. The Spanish real estate market seemed indeed "safe as houses", as there had never been a price decline in living memory. People thought it could only go up, and, with cheap money, they started buying houses. Among the middle classes it even became common to indulge in a bit of real-estate speculation, by buying not one, but two or three houses. After all, with interest rates under 5%, and yearly housing price increases of over 15%, it would be stupid not to do so, wouldn't it? All over Spain, landscapes were created that would be familiar to visitors to other Financial Crisis ground zeros, like Las Vegas and Dubai: acres and acres of building projects, with cranes crowding up the horizon. Visiting Madrid about twice-yearly between 2000 and 2008, I could notice that every time I landed there the urban sprawl would have grown by several kilometers.

This set up a classic pyramid scheme. As long as people kept buying houses, these delivered a rich return. The trouble with pyramid schemes is that they continuously need new entrants to keep going. As in the US, these were delivered through predatory lending: 40- and 50-year mortgages, "liar" mortgages, etc. It's also important to note that Spain had gone through a period of banking consolidation in the 90s, and that there were a lot of branch closures. Branch directors were put under immense pressure by HQ to "deliver" high monthly quotas of mortgages, if they wanted their branches to stay open. Quite conservative lending guidelines were systematically breached, and long-term ARM mortgages granted to young people and immigrants with highly precarious employment, even to interns. These people were the ultimate suckers in the Great Spanish Housing Ponzi Scheme.

Of course, out-of-control speculation wasn't the exclusive preserve of Spain: there was a global bubble, and in its swansong in 2007 and early 2008 it pushed global commodity prices to giddy heights. This in turn pushed up inflation worldwide, also in the eurozone, and the European Central Bank reacted in the only way it is programmed to do: by ratcheting up interest rates.

Because so many mortgages were very long-term ones, the interest represented a massive part of the downpayments. An increase in interest rates had thus a huge impact in the amounts people had to pay back monthly. Quite suddenly, people found themselves with their mortgage bills doubled. And this, when they already had trouble paying at the original interest rates. Furthermore, the bubble had led to an overgrown building sector, representing over 30% of GDP, and employing many or most of the latest entrants to the pyramid. When higher interest rates reduced the attraction of housebuying, the whole sector suddenly found itself like Wile E. Coyote after chasing the Roadrunner off a cliff.

The Bubble popped.

People, starting with the most vulnerable, suddenly found themselves jobless and in crushing debt. Building companies, without any work and also in huge debt for their equipment. Real estate promoters, with massive empty projects and equally massive debt. And the banks with a lot of worthless assets: although Spanish law, which is massively slanted towards commercial lenders' interests, makes it very easy for them to repossess from their debtors and still squeeze their lifeblood out of them, to whom are they then supposed to sell all those repossessed assets? Finally, the government suddenly found that a huge slice of its tax income had vanished overnight.

Did the crisis take everybody by surprise? Of course not, they had been plenty of warning voices, although strikingly few from within the financial sector, or the financial press. Even to somebody unschooled in economics like me it was pretty obvious that something quite crazy was going on, and that it was going to end all in tears. Still, greed and hubris won. Spaniards, traditionally very even-headed when it comes to matters of money, were swept by the reigning euphoria. There was a growing arrogance about the supposedly model economy. Now the pendulum has swung and Spaniards are shocked to find themselves among the "PIGS".

Still, I expect Spain to prevail. Indeed, this could be a much-needed cure of humility that should force Spain to focus on its strengths (a hard-working, committed workforce, a good location, and plenty of creativity) and address its weaknesses (a failing educational system, encrusted vested interests, and a much too powerful financial sector). I hope it will.
posted by Skeptic at 4:17 AM on July 18, 2010 [16 favorites]


North Americans change jobs seven times in a lifetime, on average; in Europe, the average and the expectation is one job per life.


Really, this hurts the credibility of the article. Europe has a lot of problems. The expectation of a job for life really hasn't been one of them for quite some time.
posted by DNye at 6:01 AM on July 18, 2010


Yeah, I meant the history of the species, not 'recorded history'.

Then it's a meaningless comparison. Recorded history (and the 5000 years immediately prior) is when population starts to go up. It goes up because a hunter-gathering lifestyle can't support the sort of population agriculture can. Agriculture can support more people because it's more intensive and less nutritious. But the consequence of, the requirement of, agriculture is division of labor. Most everyone has to farm, but some folks have to defend the farm, or figure out when to plant and when to harvest, or propitiate the gods.

Prior to agriculture, you had on average one person per square mile.

Before agriculture, every man has the same job -- join the hunt --, and every women has the same job -- gather for her family. (For a variety of reasons, hunted meat is shared amongst the community, gathered food isn't.) Hours aren't that bad if times are good, and people start dying off if times are bad, so nobody is putting in a 40 hour week, no one is alienated from his labor.

After agriculture, you have a job, and it never ends, because you're not growing food just for your family, you're growing it for everyone (and oh yeah, we're going to use a lot of that grain to make beer, to keep overworked masses opiated, and a lot will go to the priests for the same reason).

So yeah, people have always had jobs. And since agriculture, bosses. And most people had the same kind of job all their lives, indeed often the same job as their fathers had, and you'd change employers infrequently if at all.

In England, for example, It's only after the Black Death depopulated half the country that you see the peasantry going to the cities for work.
posted by orthogonality at 6:35 AM on July 18, 2010


But apart from that; 44% unemployed among 20-30 in Spain?! Good god. Poor people.

What are the statistics on unemployment among young black men in America? I'll bet it is twice as high.

Entrepreneurial spirit in America is a natural side effect of the much-touted "Rugged Individualism" meme so beloved by Conservatives. The rags-to-riches story as written by Heratio Alger in which a street urchin pulls himself up by his own bootstrap is the gospel truth fervently believed by the capitalists. However, the flip side-- the guy who goes into business for himself and impoverishes his family-- is never, ever told even though it is just as likely.

The Japanese value society over individual and this is reflected in the way they do business. Unfortunately, the job for life, the company man, are disappearing there as well. I wonder how this will change their cultural outlook.
posted by Secret Life of Gravy at 6:38 AM on July 18, 2010 [1 favorite]


In England, for example, It's only after the Black Death depopulated half the country that you see the peasantry going to the cities for work.

Funny, I was thinking as I was reading the comments that what we need right now is a good plague.
posted by Secret Life of Gravy at 6:41 AM on July 18, 2010


A lot of defending of Europeans here, but I have to say that I work with a fair number of European colleagues (French, especially) in a US academic setting.

Almost to a one, and over many years of my experience, they are constantly harping about how much better Europe is than the US, how their countries provide health insurance and social security for everyone, a job for life, subsidies for artists, long vacations, high wages. They bitch constantly about how badly they are treated working for an American university (even the ones with tenure!) and how they can't wait to go back to Europe for a vacation or retirement or their next job, how benighted we Americans are, how banal our culture is, how relentless our work pace is, how we never relax or take vacations, to the point that I often want to say "so go fucking back to Europe if it's so great."

Except that, oh yeah, there aren't any real jobs for scholars or artists there that are not government subsidized (which they think is a fine thing), basically unemployment insurance for the over-educated. And all that subsidy has been steadily drying up (first in the UK, then Germany, now France and Spain). They absolutely do have a a weaker work ethic than their American-born and educated colleagues, and feel it makes them superior not to have had to work as hard as those of us who had to work our way through school at shit jobs (as I did in college). They can't believe America lets people with graduate degrees or "artistic talent" go unemployed or work at shit jobs when back in wonderful Europe every "artist" gets a check from the state just for making useless art or research that no one wants to buy. They are appalled when I tell them that to be a successful academic in the US you have to be willing to sell, to do relevant research, to be an entrepreneur on behalf of your ideas or your art or your department or program.

The differences *are* somewhat cultural. I spent my adolescence in Europe in the malaise years of the early 80s (in Thatcher's unemployed Britain, in fact). I was never impressed with the nanny role the state played in the arts or science, the way unemployment was not even slightly stigmatized, and the way manual labor was beneath educated people.

This is not to dismiss the macroeconomic and structural forces making life in Europe ever less secure and cushy. But don't expect me to cry to hard for at least the upper middle class in western Europe. Spoiled rotten.
posted by fourcheesemac at 7:00 AM on July 18, 2010 [2 favorites]


cry *too* hard, sorry . . .
posted by fourcheesemac at 7:02 AM on July 18, 2010


See, the other side to your rant fourcheesemac isn't that they were spoiled but that you were duped by the US system.

As enough other people here have been saying, the idea about the US system representing the real world and Europe being the thing that needs to change isn't an idea that needs to challenge. I have no problem with funding culture or academics because I don't believe the free economy will support them. It's what's known as a market failure.

Funding them is a matter of priorities, even in a time of economic recession - and compared to a lot of government expenditure is fairly cheap and also provides a lot of external benefits.
posted by treblekicker at 7:40 AM on July 18, 2010 [4 favorites]


Obv. that second sentence should say "...needs to be challenged"
posted by treblekicker at 7:52 AM on July 18, 2010 [1 favorite]


...also in challenged the ideas laid out, I'm not sure how much of a role the government played in arts funding during the time you were there. There was massive cuts at the time so it wasn't historically representative of the post-war whole, before or after.
posted by treblekicker at 7:54 AM on July 18, 2010


Just back from Spain where I stayed with a friend who works closely with law enforcement over there. A few germane points he made: the cops have not made a ruckus over their recent 10% pay cut because they are basically embarrassed by how good they have had it the last few years, cops fly business class to meetings within Europe and on International flights, they start drinking at 11AM, just a beer or two before lunch, but still, and basically are lazy as hell. You have to beg them to arrest people.
In Barcelona they wont arrest someone unless they have committed multiple thefts within 24 hours. But they do employ a squad to return recovered stolen property so as to keep the tourists impressed.
I have to say- Spain is beautiful, clean, has amazing infrastructure, is bustling, people have a great lifestyle, just won the world cup, but the hangover is coming.
posted by T10B at 8:18 AM on July 18, 2010


@Fourcheesemac: I suspect that your European academic colleagues are playing what they might call une petite blague on you. They are making things up about Europe because it's fun to watch the veins in your forehead throb with red-blooded American rage at the thought of an entirely fictitious class of artists and minor academics living in luxury at the expense of the state.

It seems that a cause of your unhappiness might be that for a long time undergraduate university educations in Western Europe have been government-subsidised: that the tuition in an undergraduate degree in the United Kingdom, say, was until fairly recently not paid for directly by the student - in which case you'll be glad to hear that all that has changed since you were here in the 80s. I'm not sure if the upper middle class are particularly hurting as a result, but it does mean that, realistically, only the upper middle class are going to be able to send their children to elite universities. Which will mean that whatever plum jobs remain will be even further ring-fenced by and for the upper middle classes. So, happy ending all round, really.
posted by DNye at 8:33 AM on July 18, 2010 [1 favorite]


fourcheesemac Your rant is typical of many Americans' scoffing at Europe: based on outdated perceptions dating from the 70s and early 80s, and overgeneralizing from a pretty exceptional sample. French academics are a particularly pampered, and dare I say obnoxious, minority in Europe. Nobody else in Europe is the public cultural sector as pampered as in France. Certainly not in Spain, which has spent several more orders of magnitude more money in roads and other infrastructure than in culture, the arts, and, unfortunately, education. The Spanish public cultural sector is notoriously niggardly.

Nor is Spanish work ethics a problem: according both to official statistics and my own perception, Spaniards work the longest hours in Europe (just not always very productively). If anything, the official statistics underestimate the number of hours worked: there's plenty of undeclared overtime. Indeed, what many critics of Europe are working hard to overlook is that, except for Greece, which has unique governance problems, it is those countries in Europe that have followed most closely the US model of low taxes, low social protection, long working hours, high consumption and high debt which have been the most gravely affected by the crisis: Spain, Ireland, Britain and (now conveniently forgotten) Iceland.

P.S.: Yes, France does pamper its "intellectuals" too much. But if you're going to waste tax money, wasting it in Lacanian fuckwits is still less damaging than wasting it in a gargantuan military-industrial complex. QED.
posted by Skeptic at 8:44 AM on July 18, 2010 [5 favorites]


Also, I must concede that a real problem in Spain is that a lot of middle-class students choose subsidised, but frankly hopeless university degrees. But that is less their fault, but rather that of a society that hasn't yet had the balls to make them understand that they've a snowball's chance in Hell to get a job with yet another sociology degree.
posted by Skeptic at 8:48 AM on July 18, 2010


i lived in Paris in the 80s but only for a few months. as a student, i got subway tickets at a discount and with my Cité housing card i could get into L'Ópera and other cultural events for free on specific days. i never had to shell out for a doctor or prescription medicine (and i was indeed very ill for about a week).

i live in NYC and i honestly wish this were true, particularly with the public transportation, for not only my kids but any teenager/young adult in high school, community college or college. nyc basically has levied a huge transportation tax on not just individual but families.

take the cost of a subway ride $2.25 times 365 and you have $821.25 per person. in my case, i have two kids. the city gives the kids a card for less than half the cost of a subway ride only for school days and only for the school year. i end up still having to pay about +$1000/yr in public transportation for my kids alone.

to say we walk a lot is an understatement.

and what's worse is that we who live in the city are subsidizing suburbanites. after my gall bladder basically exploded, i couldn't walk 3 or 4 blocks without having a bilial colic attack. taking the bus for 4 blocks ought not cost me the same as taking the subway from Riverdale (the rich part of the Bronx). politicians have pandered to the wealthier suburbs on this one claiming that it's actually poor people who will be affected. yet if bus rides within a person's neighborhood were cheaper because they would be based on distance alone, that would have an immediate effect on the pockets of a lot of New York City residents, especially the cash-strapped gray collars like me and the working poor.

universal health care and cheap public transportation ought not be niceties; especially if you're looking to keep people out of poverty. but that's not been the policy in the US. people like Bloomberg (NYCs mayor) want controlled poverty to keep wages low and to keep city real estate out of the hands of homeowners and mom-and-pop businesses. this is part of their urban development strategy.

and this is what Europe is copying from the US and it's why it's going to get worse for a lot of people here and there.
posted by liza at 9:29 AM on July 18, 2010 [2 favorites]


See, the other side to your rant fourcheesemac isn't that they were spoiled but that you were duped by the US system.


I don't think so. I held many jobs, did a lot of manual labor (cook, mover, construction, and many more), worked my ass off, got a great education to the PhD, and wound up in the upper middle class, with job security and health insurance. How was I duped? Oh, because I fail to see how much better life is in Europe? Pardon me, but believe it or not I have actually been to France. More than once. I spent my adolescence in Europe. Poverty there can be just as severe as it is in the US, or worse, and that didn't just become true. Anti-immigrant racism there is just as bad as here. I'm not an American apologist, nor am I ignorant of the European situation. Lots wrong with the US, but Europe is not now and never was a heavenly alternative, and statistically -- in purely economometric terms, the US has always had, and has now, much more upward class mobility.

The "dupes" are those who think Europe was a paradise, ever.


@Fourcheesemac: I suspect that your European academic colleagues are playing what they might call une petite blague on you. They are making things up about Europe because it's fun to watch the veins in your forehead throb with red-blooded American rage at the thought of an entirely fictitious class of artists and minor academics living in luxury at the expense of the state.


Do you suppose I need a translation for "une petite blague?" Or do you suspect I might be able to read French very fluently?

No, it's not entirely fictitious. Again, you seem to assume I'm a parochial rube rather than a relatively well traveled, cosmopolitan person. I've had dozens of close colleagues who were or are European. It is true that the ones who come here to work (because, I repeat, the academic job market in Europe makes the one in the US look like a gold rush) over time identify more and more with their home country. I do the same when I am abroad even for a few weeks -- nothing makes me appreciate living in the US more than visiting another country.

Of course it's a sort of one-upsmanship. And it usually occurs when I (in my capacity as a department chair) am negotiating a raise or a retention and they want to reinforce with me (or the administration) how stingy the American system is to them. But they work here, don't they?

I've been a lot of places. America sucks in a lot of ways. But Europe didn't just start sucking in its own way. It was never as easy to enter the middle class in any European country as it has been to do the same thing in the US since WWII. Them's just the facts, and you can romanticize long vacations and lifetime contracts all you want without making them go away.
posted by fourcheesemac at 9:54 AM on July 18, 2010 [1 favorite]


Also, I am not making up anything about the class of subsidized artists in Europe. I work in academic music. I know dozens of composers. I've seen many dozens of European students come through my university who could not possibly be employable as composers or musicians in the US return to Europe and live on the middle class dole.

Facts crushing your ideology, it hurts.
posted by fourcheesemac at 9:56 AM on July 18, 2010


The facts of your system lead to that outcome. Doesn't mean that those facts are always valid everywhere at all times in all places.

Above all, it doesn't mean that the European system isn't valid. You can call it the dole but they are paid for working so it's not really the same, it's just that their employer is different - the state. Then it boils down to priorities - as someone said before, you have no money for this but the military gets millions for subsidies. I guess all those defence contractors are 'on the dole' if we follow the same pejorative logic in your last post.

What we are faced with in Europe currently is the attempt to impose a Shock Doctorine and it doesn't get more ideological than that - and European government has been free of ideology for a very long time... which is more than can be said about the free market right.
posted by treblekicker at 10:12 AM on July 18, 2010


statistically -- in purely economometric terms, the US has always had, and has now, much more upward class mobility.

Not really.

Facts crushing your ideology, it hurts.

Yes indeed.

Look, fourcheesemac, there isn't a lack of soul-searching and self-criticism in Europe right now, and you aren't exactly the first person to decry, in Europe or elsewhere, the comparatively pampered lifestyle of some heavily subsidised "creative" scions of the European (and quite specifically French) upper-middle classes.

Yet on one hand your point of view is heavily slanted by your own personal experience: those artists are hardly representative of the average European, or even the average Frenchman: they're rather a declining "aristocracy" that's also been heavily struck by social, political and economic development in Europe since the mid-80s. Those expats can hardly be hankering for current-day Europe, or even France, now, but rather for their memories of their class' 60s and 70s heyday.

(Besides, America's upper middle-class also manages to give its children nice cushy, or at least well-paid jobs, regardless of talent. Perhaps not in art, but certainly in marketing and business management)

The fact is, young Europeans (and even more so young Spaniards) who have got a job must work just as hard as their American and Asian counterparts. And this in the knowledge that they've basically been shafted by the previous generation, and that they'll never be able to hope to retire as young or to have the same kind of social security as their elders. Have some heart, do you mind?
posted by Skeptic at 10:27 AM on July 18, 2010 [4 favorites]


Again, you seem to assume I'm a parochial rube rather than a relatively well traveled, cosmopolitan person.

Well, no - although I think that being well-travelled and being parochial are by no means mutually exclusive.

What I am assuming, or rather concluding based on the available evidence, is that you are exulting in the ongoing financial hardships experienced primarily by the young and relatively less well-off in Europe, in the belief that it will in some way prove a point to a bunch of expat middle-aged French academics, who have left Europe and whose nostalgia for it you find infuriating. I realise that emotions run very high in academia, and the lower the stakes the higher they can be allowed to run, but do you really want to paint a picture of your discipline in which any sense of proportion or empathy is suborned not even to ideology but to simple anomie?
posted by DNye at 11:04 AM on July 18, 2010 [1 favorite]


Also, I am not making up anything about the class of subsidized artists in Europe. I work in academic music. I know dozens of composers. I've seen many dozens of European students come through my university who could not possibly be employable as composers or musicians in the US return to Europe and live on the middle class dole.

Whilst I don't agree with all of fourcheesemac's points, I have to say that this is true. I am a composer and I work in both the US and Europe (I teach in the US) and certainly it's a much cushier life being a composer in certain European countries (France and Germany in particular, not the UK) than in the US. Pretty much any old crap will get funded and composers are able to live fairly well just by virtue of the fact that they're a "creative artist".
posted by ob at 11:32 AM on July 18, 2010


Isn't this the art equivalent of theoretical physics though? Very little of it leads to anything of value but the more of it you have, the more possibilities for good stuff?
posted by treblekicker at 12:03 PM on July 18, 2010


The problem is the European Monetary Union rendered the various EU states no longer sovereign in their own currencies. From Bill Mitchell's blog:
Further, once again you realise that the EMU system is designed to ensure that financial matters take priority over everything. The democratically elected government have rendered their nations vulnerable because they bullied their citizenry into entering an economic and monetary system that would always deliver hardship the first time a serious negative aggregate demand shock hit that system.
Link
Mitchell is one of the founders of Modern Monetary Theory (MMT), which is an explanation of how a fiat currency actually works.

Really, in a fiat currency system (which is what the EMU is) there isn't a need to issue bonds (debt) to fund spending. The actual limits are hard resource limits and inflation. Unfortunately, even relatively popular 'left' commentators such as Paul Krugman refuse to acknowledge this.

You can see more about the MMT v.s. Krugman debate here.

Understanding the logic of MMT is crucial if we are to avoid a world wide depression.
posted by wuwei at 12:10 PM on July 18, 2010


I don't quite get why it is that we insist on denigrating other people's choices. One reason why we have different countries is so that they get to make their own decisions about how to spend their collective wealth.

We make very poor choices here, at least from the standpoint of the majority of the US population. We make those choices because we have been told our entire lives that we too can strike it rich. It's a lottery mentality.

I don't get to choose what other countries do. My SO gets that privilege in her other countries of citizenship, but I don't.

Kinda glad we didn't move to Spain when we were talking about it, though. I didn't realize they don't have personal bankruptcy over there. Talk about offensive to my American sensibilities...
posted by wierdo at 12:17 PM on July 18, 2010 [1 favorite]


On not-preview, wuwei, I don't quite get what that guy is saying? Deficits are bad? We have to cut spending now? The opposite? It wasn't really clear to me what his point of view is.
posted by wierdo at 12:21 PM on July 18, 2010


Wierdo: Mitchell is saying that the EMU focuses on these arbitrary deficit/GDP ratios. These ratios are meaningless. He's saying that deficits are only an issue insofar as government spending causes inflation. The point is that the EMU controls the money supply. They set interest rates and create the currency. However the various EU states, such as Greece or Germany, are still ruled by a local government. These local national governments still make spending decisions, as well as bring in income based on local tax receipts. Unfortunately since the local governments no longer control their currency, they ARE limited in their spending by the tax receipts. They are no longer currency issuers (the EMU issues the currency). This becomes a problem when demand for goods/services falls, i.e. the present situation. If the Greek government were a currency issuer, it could solve it's unemployment problem by offering a job to anyone who wanted one at some basic wage. Randall Wray refers to this as an Employer of Last Resort program. This would immediately put money into circulation. Paying for it would not be an issue-- the Greek government could simply credit accounts with the money. However with the EMU as the currency issuer, the Greek government IS limited-- it cannot establish the Employer of Last Resort program because all of the Greek government's spending has to be paid for out of its tax receipts.

Theoretically the EMU could start up an employer of last resort program since it is the currency issuer. But, the mechanism does not exist. Furthermore, it won't, because of its ideological opposition to full employment.

Wray (he's an economics professor in the US) actually described the problem with the EMU in 1998. The title of his book is Understanding Modern Money. On page 92, Wray writes
As currently designed, the EMU will have a central bank (the ECB) but it will not have any fiscal branch . . . It would be as if each EMU member country were to attempt to operate fiscal policy in a foreign currency; deficit spending will require borrowing in that foreign currency, according to the dictates of private markets . . .
That is exactly the situation in which the EU member states find themselves today. Be very clear on this -- there are people who have a clear interest in suffocating the power of the commonwealth (government) and disciplining it to the interests of private investors. That is why they want to make sure that central banks such as the ECB cannot be democratically controlled.
posted by wuwei at 12:45 PM on July 18, 2010 [1 favorite]


WRT "lazy" Europeans, this graph from Wikipedia (sourced from OECD data) is quite illuminating: while in some European countries (coincidentally the most productive) workers do indeed work considerably shorter hours than in the US, never mind Asia, Spanish workers are almost level with the US, and, of all people, the Greek actually work longer hours. The Czechs and Poles work even longer hours than the Japanese...
posted by Skeptic at 12:45 PM on July 18, 2010


Argh, this graph.
posted by Skeptic at 12:46 PM on July 18, 2010


One more clarification-- he's saying that deficits are bad if they cause inflation, i.e. too much money chasing too few goods. But that is not what is happening when Spain has a 44% unemployment rate amongst young people.
posted by wuwei at 12:46 PM on July 18, 2010


Ah, ok. Thanks for the explanation. It's pretty similar to my previously held views, actually.

I do think that in any modern economy, deficits are a more likely to cause inflation (even when you print the money) thanks to the global supply chain, but otherwise it seems like good reasoning.

Of course, that's not happening at the moment, so I may be all wrong, but I place the threat of deflation at the feet of the epic-scale money destruction we've had over the past couple of years.
posted by wierdo at 12:54 PM on July 18, 2010


And that "even when you print the money" made no sense at all. My apologies for the brain cobwebs.
posted by wierdo at 12:55 PM on July 18, 2010


wuwei, I'm sorry, but that's complete nonsense. The Greek government could only pay for those jobs by either printing money (thus basically robbing Peter to pay Paul, as the real income of everybody else would fall) or by taking loans. The trouble with the Greece is that it already is horribly indebted, and struggling to service its debt. This has little to do with the euro. Indeed, the problem could be even worse without it: sure, Greece could issue debt denominated in drachmas, and devaluate the fuck out of their currency, but who'd then be so stupid to buy such debt? Greece would be the same sort of financial pariah state as Iceland is now.
In short: there's only so much wealth around, and there's little that can be done to spend more than to create more of it, especially if you already maxxed out your credit card.
posted by Skeptic at 12:55 PM on July 18, 2010


With regard to small-scale entrepreneurship, the majority of businesses in Greece employ less than 10 people and new businesses are established all the time (as 50% of startups don't last longer than five years). It's not a panacea.
posted by ersatz at 12:59 PM on July 18, 2010 [1 favorite]


Skeptic, printing money may be inherently inflationary, but that isn't always the effect it has, especially in a situation like today where so much money has been destroyed recently that most countries are either in or headed for deflation.

Right now, printing money is a good thing, despite what the Germans (who don't have the unemployment rate Spain does) are trying to make everyone believe. Right now, the Euro is serving Germany and Germany alone. Great for them, shitty for the rest of Europe.
posted by wierdo at 1:22 PM on July 18, 2010


Skeptic: No need to apologize. You're mistaken:
1) The Greek government cannot print money because it uses the Euro, which is controlled by the European Central Bank. Greece is a member of the EMU and cannot issue currency.
2) If Greece pulled out of the EMU it could issue its own currency again.
3) If Greece issues its own currency there is NO requirement that Greece borrow money to do so. I understand that this is counterintuitive, but that's actually the mechanics of a fiat currency.

What's nonsense is the idea that a government that is a currency issuer ever has to borrow money or raise taxes to fund spending. Taxes serve as a drain of money from the system to fight inflation. Government bonds provide income to savers.

A government that issues its own currency is not analogous to a household with a credit card. The household is a user of currency, not an issuer. Issuers do not have to borrow. It's like World of Warcraft-- Blizzard doesn't have to "borrow" WoW gold to make it available to players. Blizzard creates the gold which it makes available in game to players when they complete various tasks. If there's too much gold in game,and too few goods, this causes inflation. Therefore, Blizzard enacts currency controls -- it sets a limit on the amount of gold one person can hold, it bans convertability (Blizzard punishes gold sellers) and Blizzard also has various ways of pulling gold out of the players hands via NPCs.
posted by wuwei at 1:36 PM on July 18, 2010


**by the way , I'm not endorsing setting limits to how much money a person can hold in the world of nation states, or in ending currency convertability
posted by wuwei at 1:40 PM on July 18, 2010


wuwei, you overlook the little problem of Greece's outstanding debt of 120% of GDP, which isn't denominated in drachmas, and won't be paid by printing them by the truckload. Besides, there's plenty of empiric evidence to what happens to the economies of countries who try to finance themselves through the printing press: for starters, capital flight and currency exchange controls.
You can print money, but you can't print wealth.
posted by Skeptic at 2:05 PM on July 18, 2010


Skeptic, can you point to one of those countries that didn't have external debt? (owed by the government, I mean)
posted by wierdo at 2:16 PM on July 18, 2010


Almost all of Japan's government debt is held domestically, and those domestic bondholders are going to sit tight. It's one big advantage Japan has over, say the US.
posted by KokuRyu at 6:12 PM on July 18, 2010


KokuRyu: Regardless of who holds the US debt, those bonds are denominated in dollars. External/internal doesn't really matter at that point.
posted by wuwei at 6:16 PM on July 18, 2010


Skeptic: some of the 13 colonies used a non-debt money system, as did the USG during the Civil War. Worked fine for the commonwealth; not so well for the bankers. But what's new?
posted by wuwei at 11:53 PM on July 18, 2010


nyc basically has levied a huge transportation tax on not just individual but families.

Considering how extensive it is, New York has just about the cheapest public transit system on the continent, and the fare only pays about a third of the actual cost of running it. The cost of the subway is not oppressive in any meaningful way.

taking the bus for 4 blocks ought not cost me the same as taking the subway from Riverdale

This is basically true, but it would almost certainly cost a lot of money to retrofit all of the subway stations, because you would either need to switch to a system where you register both your entry and your exit from the system, or you would need to change to the European-style proof-of-payment model.
posted by one more dead town's last parade at 2:16 PM on July 19, 2010


That is true practically all the socialist countries do not have bankruptcy or very limited such as Australia you can only declare up to 15,000. But the beautiful thing is Spain has a great welfare system. Free medical, renatl assistance and unemployment checks.
posted by ClueHut at 1:08 AM on July 20, 2010


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