Bin There, Eat That

As our American Congress ponders falling off a cliff, as Germans demand increasing levels of austerity form Eurozone nations seeking financial support as the debt crisis there is anything but stable, as India wrestles with a corrupt and tanking economy and as China struggles with stacks and piles of unsold inventory and crashing real estate prices, the world creaks and moans to find growth, but for the PIIGS (Portugal, Italy, Ireland, Greece and Spain), the plight of those at the bottom is particularly ugly. The world has drilled down on Greece, because it was extreme and obvious. Greece still cannot get its billionaires to pay taxes, and the notion of growth in a world of sole proprietorships and less-than-stellar education seems miscast in a nation that had to fudge its financials just to get into the EU.

But with almost five times the population than Greece and ranking as the fourth largest economy in the Eurozone, Spain’s troubles are vastly more impactful on Europe. The Spanish political structure is a system of relatively autonomous communities (including two cities) – where regional power is determinative – but where local economic problems mirror the overall financial instability that is present in southern Europe. As these communities run out of money, they turn to the central Spanish authorities for a bailout, just as Spain itself looks to the European Central Bank for support. Any large community running out of money – happening a lot recently – can destabilize the entire Spanish economy.

Catalonia (the economic giant which is mumbling about separating from the rest of the nation) needs $6.5 billion, Andalusia $6.3 billion and so it goes. On September 25, mirroring widespread parallel anti-austerity protests all across Greece that were even more violent, thousands of angry demonstrators descended on the Spanish parliament, fighting barricades and 1,400 riot police ringing the building, to protest the nation’s austerity program. Prime Minister Mariano Rajoy “finds himself in an increasingly tight bind between Spanish voters who oppose further cuts and investors and European finance officials demanding reassurance that Spain can meet budget deficit targets.” New York Times, September 25^th.  

The decisions facing the PM are anything but pretty in country that is exhausted from austerity. Rajoy is “preparing to roll out tough measures to bring the 2013 budget in line with its target — 4.5 percent of gross domestic product, from the 6.3 percent targeted for this year… Spain, which had already received a promise of up to 100 billion euros, or $129 billion, to restructure its shaky financial sector, is hoping to avoid the type of full bailout that Ireland, Portugal and Greece have already received, and more importantly, the constraints on government action such bailouts have entailed.”  New York Times, September 27^th. Budget cuts of $51 billion will undoubtedly further slam Spain’s staggering 25 unemployment rate, and a run on regional banks from a lack of confidence will is leading to a massive bailout of some of Spain’s largest financial institutions.

Because the euro is the standard across those EU nations who adopted the currency, like Greece there is no separate Spanish currency to be devalued to implement adjustments. And much more than is the case with Greece, a Spanish departure from the Eurozone anytime soon would have a devastating effect on the viability of the EU. As austerity measures are implemented, gross domestic product in the targeted countries continues to fall (the definition of recession), even as debt loads are slowly reduced. The result? Massive suffering and no positive change in the truly meaningful measurement of the program’s success: the ratio of debt to GDP. No wonder the people are angry.

Yet the austerity mandates have choked the life out of many struggling Spanish citizens, and the underlying statistics are abysmal. With half of the youngest members of the labor force out of a job, and the unemployment benefits for discharged workers running out among many, the prospect for many in this beautiful country is nothing short of bleak. The local Catholic charity, Caritas, is feeding double the number of people it helped in 2007, value-added taxes on consumer goods is rising, and small chips and cuts (like the popular school lunch programs) are taking away little benefits that sustained those at the bottom.

The sadness of this nation is particularly well-expressed by looking at the reality of trash bins scattered about the land. Folks have taken to “collecting ‘a little of everything’ from the garbage after stores closed and the streets were dark and quiet… Such survival tactics are becoming increasingly commonplace here, with an unemployment rate over 50 percent among young people and more and more households having adults without jobs. So pervasive is the problem of scavenging that one Spanish city [Girona, where the above picture was taken] has resorted to installing locks on supermarket trash bins as a public health precaution…

“For a growing number, the food in garbage bins helps make ends meet…  At the huge wholesale fruit and vegetable market on the outskirts of this city recently, workers bustled, loading crates onto trucks. But in virtually every bay, there were men and women furtively collecting items that had rolled into the gutter.” New York Times, September 24^th. It seems a lot like The Great Depression than a seemingly endless recession, and one has to wonder with pressure on Congress to cut the deficit including ending unemployment relief, could this actually happen here?

Caritas has been looking at this Spanish pervasive push at the bottom very carefully, and recently released a study on what they saw. “The Caritas report also found that 22 percent of Spanish households were living in poverty and that about 600,000 had no income whatsoever. All these numbers are expected to continue to get worse in the coming months. … About a third of those seeking help, the Caritas report said, had never used a food pantry or a soup kitchen before the economic crisis hit. For many of them, the need to ask for help is deeply embarrassing. In some cases, families go to food pantries in neighboring towns so their friends and acquaintances will not see them.

“In Madrid recently, as a supermarket prepared to close for the day in the Entrevias district of Vallecas, a small crowd gathered, ready to pounce on the garbage bins that would shortly be brought to the curb. Most reacted angrily to the presence of journalists. In the end, few managed to get anything as the trucks whisked the garbage away within minutes… But in the morning at the bus stop in the wholesale market, men and women of all ages waited, loaded down with the morning’s collection. Some insisted that they had bought the groceries, though food is not generally for sale to individuals there.” NY Times.

Europe is a cluster of bad news and falling consumer confidence: “The European Commission reported from Brussels that its economic sentiment indicator for the 17-nation euro zone fell by 1.1 points, to 85.0, a seventh month of decline.” New York Times, September 27^th.  Austerity seems to be failing fast on the continent, and in the U.K., voter sentiment has turned heavily against the ruling coalition government that was elected to implement an austerity platform. “Across Europe, six countries are in recession and economists predict the entire region could be heading for recession by the end of the year.” News.Yahoo.com, September 27^th. Yet austerity is the growing cry on this side of the pond, to stop supporting the unemployed and cut non-defense spending to the bone.

American cries to end safety net payments, that there are too many people dependent on a handout, seem to suggest that those receiving aid actually have alternatives. Most want jobs, but jobs numbers are going the other way in an austerity-driven economy. Exactly what those at the bottom can do to stand up and support themselves remains a mystery, but the Spanish example provides too many of “those people”  increasingly becoming experts at trolling the repositories of refuse for sustenance. It is painful and ugly to watch, and only those with an incredible lack of empathy seem to think that these unfortunates are simply expendable.

Funny how implementing the same kind of austerity measures that Europe has swallowed are principal platforms in many American politicians’ baskets… and we don’t remotely have the kinds of safety nets in place in Europe. Debt reduction with negative growth accomplishes nothing, literally, and austerity measures that cut the wrong programs (yep, back to education, infrastructure and research) insure a future with significantly reduced competitive power, further contracted upward mobility and a much lower quality of life for most of us. Still, so many Americans refuse to watch the failures of these programs in Europe… and want to see them implemented here.

I’m Peter Dekom, and I truly do fear that such remarkable and pathetic scenes could find their way to our shores if we fail to invest in ourselves and our own future.