Spectre of Great Depression looms over Spain

A new phase of the financial and economic crisis threatens to drag Spain and other so-called “peripheral” countries in the eurozone into a 1930s-style depression and trigger a renewed global crash.

Spain’s failure to raise all the foreign loans it requires has sent markets tumbling and renewed pressure on the ailing euro. The European Central Bank’s decision to rein back on cheap loans to cash-starved commercial banks also adds to the sense of crisis.

Astute observers like economist and academic Nouriel Roubini believe that the pressure on countries like Spain and Portugal to slash spending coming from the European Union, the ECB and the IMF, could trigger major events.

“Japan had a Great Recession, and a Great Stagnation, but it never had a Great Depression,” he says. “But recession in some eurozone countries could become a depression, just like the 1930s.”

Earlier this week, treasury minister Cristóbal Montoro, presented the Spanish parliament with the harshest budget since the death of dictator General Francisco Franco. Prime Minster Mariano Rajoy described the situation as “extreme, at the limit and exceptional”.

This was the day after news came that youth unemployment in Spain's rose to 50.5% in January compared with an average eurozone youth unemployment rate of 21.6%. Total unemployment is up by 10% in a year to stand at 4.75 million.

The Spanish government agreed the details of a savage budget, brushing aside a 24 hour general strike which saw more than 1 million people take to the streets on March 29 against laws making it easier to sack workers.

Spending cuts averaging 17% and a further freeze on public sector workers’ wages will be imposed along with sharp rises in gas and electricity bills. Business taxes are being reduced. These measures can only accelerate the contraction of the economy already predicted to be 1.7% smaller this year.

But it wasn’t enough to satisfy the profit-hungry investors. Despite the severity of the budget measures, Spain’s debt was still forecast to rise to record levels, soaring to 80% of annual income.

In the latest auction of its bonds intended to raise the funds needed to keep the economy breathing, and the acid test of the market’s reaction, investors showed that they were losing confidence in the Spanish government’s ability even to make the interest payments. They forced up interest rates and only bought two-thirds of what was offered.

In Spain, as in other countries, the people have reached the limits of their endurance and a new kind of response is maturing. The Assembly of the Neighbourhood Los Austrias in Madrid played its part in mobilising for the general strike.

As Global Voices correspondent Lidia Ucher put it, the movement that sprung up on May 15 “has been a turning point in terms of supporting the calls of a part of civil society, organised in collectives, neighbourhood assemblies, and local or individually-led associations. In this general strike, the citizen movement has taken different forms in the streets, neighbourhoods, social organisations, and digital social networks.”

This new movement is seeking creative ways for all affected to join the action. Among the proposals from the neighbourhood assemblies was for those without jobs to support the withdrawal of labour, with a consumption strike, taking to the streets without paying to consume food for 24 hours. Another was to involve women in a “care and gender strike”.

Together with the Arab Spring, and the revolutions in North Africa, the 15M movement has been the inspiration for the worldwide Occupy movement. As the global capitalist crisis continues to seek its victims, the new movement for democracy should seek to go beyond more inventive protest which the state can cope with.

We need a strategy for mobilising millions of people to actually defeat the present political and economic system, which M15 rightly identified as the problem not the solution. Our aim has to be the creation of a not-for-profit society of ecologically sustainable production satisfying the needs of the 99%. That’s the only alternative to a capitalism heading for a new Great Depression.

Gerry Gold
Economics editor

Getting from A to B

A key discussion taking place within the global occupation movement is what kind of “demands” (if any) should be made and who they should be addressed to (if anyone). This conundrum gets to the heart of the matter.

Many drawn to the continuing actions on Wall Street and in the City of London, and to massive rallies in Madrid and other countries, have been driven to the streets precisely by the serial failure of existing political channels.

The self-evident convergence between the state, mainstream political parties, corporate and financial power has angered increasing numbers of people. What limited democracy there was has been sold to the highest bidder.

Banks form an orderly queue for state bail-outs, energy suppliers let prices rip, public services like health and education are turned into commodities, corporate lobbyists have direct access to ministers, pensions are reduced and employment rights undermined.

On the other side, the mounting grievances of ordinary people about their jobs, housing, incomes, education, health and human rights are ignored. This is the price we have to pay, we are told, for the economic crisis.

The crisis is, naturally, presented as an act of God, something beyond human control. This is deliberate mystification. It is intended to obscure the fact that the disaster is the product of an unstable, unsustainable, capitalist system of production for profit, fuelled by mountains of debt.

So as no one in authority is listening, the occupations and marches for real democracy are presented with an apparent contradiction. There is no point making “demands” of the existing powers, yet a statement of aims and aspirations is absolutely vital to garner support and build the movement.

The initial statement from the St Paul’s occupation in London reflects the dilemma. The starting point – “the current system is unsustainable. It is undemocratic and unjust” – is dead right. The system – political, economic and financial – is the problem, not the solution.

The focus is, or should be, entirely on changing the system and not appealing to existing power and governments to do what they can’t/won’t do. However, point 5 about appealing to regulators to regulate properly and part of point 8 about urging governments to stop oppressing people, tends towards a reform of a status quo which is well passed its use-by date.

Of course, incorporating system change into a set of demands wouldn’t by itself resolve the apparent impasse (although it would be a step forward). If we are to avoid placing demands on existing powers, we should try and suggest an alternative. One way forward is through People’s Assemblies as a transition to a new, real democracy (see details about an open event this Saturday, the 22nd).

Our new flyer says: “Occupations run by assemblies are test beds, showing what people can do when they are independent and liberated. A network of People’s Assemblies can widen this to the whole of society, giving it a concrete form that can appeal to all those under attack from capitalism.

“Assemblies can facilitate a transition to a democratic society based on co-operation and self-determination instead of profit and corporate power. They will disprove in action the lie that there is no alternative to the capitalist system and the states/local government bodies that serve it.”

In the end, it has to be about getting from A to B, transcending capitalism as a social system, replacing alienating, oppressive, undemocratic power structures with new democratic forms. Millions of people now see that there is something fundamentally wrong with the system. On October 15, their anger produced the first global day of action in the history of the world. Let’s take it on from there.

Paul Feldman

Communications editor