"Check it since 1516 minds attacked and overseen, now crawl amidst the ruins of this empty dream.
With their borders and boots on top of us, pullin' knobs on the floor of their toxic metropolis.
But how you gonna get what you need to get? The gut eaters, blood drenched, get offensive like Tet.
The fifth sun sets get back reclaim, the spirit of Cuahtemoc, alive and untamed.
Now face the funk now blastin' out your speaker; on the one, Maya; Mexica.
That vulture came to try and steal your name, but now you got a gun.
Yeah, this is for the People of the Sun...
It's comin' back around again; this is for the People of the Sun!"
-Rage Against the Machine: People of the Sun
Part I in this series, Calm Like A Bomb: The Greek & The Irish, described why the future of bailouts and austerity in Europe will reveal its future of systemic social unrest as well, focusing on the sociopolitical mood in Greece and Ireland. The populations of debtor nations are forced to accept huge reductions in their standards of living to subsidize major bondholders, as a condition of previous IMF/ECB bailouts, while the populations of nations running a budget surplus are forced to contribute their increasingly strained incomes and revenues to do the same via the new "European Financial Stabilization Facility” (EFSF).
The recent step towards a "fiscal consolidation" of the EMU, through its modified EFSF, does nothing to reduce the austerity burdens of Southern Europe or Ireland, while simultaneously placing greater burdens of contribution on the populations of Northern Europe. The Greek and Irish people have already traveled far down the path of bailouts conditioned with severe austerity measures, and, while the latter have appeared to be relatively calm over the last year, they are simply acting as any high-powered explosive device would. The bomb lays still for awhile and, then, it detonates with a deafening BANG!
The next debtor nations to be fitted with I.E.D.s by the EMU hit parade are Portugal and Spain. The latter has not been offered subsidized rates for its public debt by the modified EFSF, and there has been no specific bailout or bond "haircut" plan set in place for it just yet. Given the recent and rapid deterioration in the bond yields of Italy and Spain, which were at one point topping 6%, the ECB has temporarily stepped in stick their bonds on its balance sheet, until the modified EFSF can be implemented. These measures have proven to be wholly inadequate in mitigating systemic fear, however, as French banks are now coming under tremendous pressure to boost capital reserves before they become utterly destitute.
The EMU now truly resembles a chicken with its head cut off, as it cobbles together temporary and ineffective measures to reassure investors. Meanwhile, it continues to exert enormous pressure on member states to implement excessive austerity measures, which are sure to make their financial predicaments even worse. Portugal and Spain, for example, have imposed austerity programs for their populations in response to weak growth in their private economies, threats of "financial contagion" and direct and indirect coercion by the ECB, with the latter doing so without an official bailout in place. In a painfully ironic twist of fate, the former colonial giants and conquistadors have evolved into the oppressed colonies of supranational finance; their populations, the People of the Sun.
The mood in Portugal over the last year is probably best described as "helpless shock" over its fragile public financing situation. Unlike Greece, Portugal had not extensively lied about its debt over the last decade, and, unlike Ireland, it did not have to systematically bail out a reckless domestic banking sector on the brink of insolvency. Even the housing bubble in Portugal was tame in comparison to that of Spain. The fiscal situation of the Portuguese was certainly influenced by all of the above factors to some degree, but at its heart was something more fundamental. It has fallen prey to the internal instabilities built up through years of systematic globalization and financialization.
Der Spiegel, Seeking a Path Out of the Crisis in Portugal (by Alexander Yung):
"The country is deep in a state of crisis, but it seems foreseeable that the worst is yet to come. Interest rates are going up, borrowing is getting more expensive, banks are lending less money, companies have stopped investing, some are going under as a result of the credit crunch, and the unemployment rate continues to rise. Surprisingly enough, there is hardly any sign of resistance in the country. Many Portuguese are simply shocked.
Unlike the Greeks, the Portuguese did not become involved in questionable business practices. Their banks did not issue nearly as many high-risk loans as their Irish counterparts. And a real estate bubble did not develop in Portugal, at least not to the same extent as it did in Spain. But now the Portuguese are in the same boat as several other ailing European economies. They are hopelessly in debt and their economic future seems questionable at best. Concerned citizens are asking themselves how this could have happened."
Essentially, Portugal's productive economic growth had stagnated for the last decade as both jobs and investment capital were siphoned away to lower-cost regions such as Eastern Europe and Asia, decimating its ability to develop a valuable export sector and leading to high rates of unemployment. Meanwhile, private consumer credit growth skyrocketed to make up the difference in value between what the people consumed and what they produced, as government-financed expenditures also increased. If the above sounds a lot like what has happened in the U.S., then it's not a coincidence. The difference for now is that Portugal, unlike the U.S., cannot unilaterally direct its own monetary policy and is part of a Union that openly encourages brutal austerity.
While Portugal will be eligible for the low 3.5% borrowing rates under the new EFSF, it is currently not in line for any more bailouts or a Greek-style plan for bondholders to “voluntarily” take minimal haircuts on the value of their holdings. Now that the former Prime Minister Jose Socrates and his "Socialist" government have been taken out of power for failing to burden their citizens with harsh austerity measures, the new Portuguese government has adopted sweeping measures to reduce its budget deficit 3.3% over the course of this year. The government has made it perfectly clear that the new EMU plan will not slow its relentless drive towards economic suicide.
"Last week's EU summit that gave a new lifeline to Greece was favourable for Portugal, but the country cannot soften its austerity drive under a 78 billion euro bailout, Finance Minister Vitor Gaspar said on Monday.
He told a banking conference the summit reduced the chances of the Iberian country getting caught up in debt crisis contagion and allows for better market access while Portugal faces at least nine consecutive quarters of economic contraction with growth only expected to return in early 2013."
So Gaspar doesn't feel the slightest need for his country to temper its plan to reduce its deficit by more than 30% this year, even though the Portuguese economy is set to contract for at least the next 2+ years. That's not a bold move or an act of courage; it's foolish and it's an act of cruelty exercised upon a majority of the population. The austerity programme adopted by the Social Democratic Party in early June contains the now boilerplate terms of severe cuts to public sector jobs, salaries and benefits, as well as public spending on health care and social programs.
The government has also established a timetable for privatizing state-owned corporate assets, such as the power utility EDP, the power distribution company REN and the banks, BPN, TAP and CDG. . In addition to major reductions in public spending and the sales of the people's corporate assets, a number of devastating taxes, tolls and regulatory changes will be imposed on the general population as well. These changes will include the following terms, as they are described by the Irish Examiner:
Irish Examiner, Portuguese Youth Protest Joblesness:
"- An increase of between one and two percent in the VAT from its current figure of 23 percent is widely forecast by analysts to be brought forward from its initial projected date of December 2011 to as early as this month.
- The payment of these additional taxes will also be joined by the loss of a number fiscal privileges. Every year, taxpayers claim back tens of millions of euros in expenses, with costs regarding children or interest paid on mortgages set to be removed from the equation when they file their tax declarations in 2011. Council tax exemptions are also expected to be cancelled, though existing agreements will remain in place.
- The charging of tolls on previously unpaid motorways is also firmly back on the agenda after the previous government went back on its decision to introduce them by 15 April as the general election approached.
- The government is also looking to change the way bank holidays are taken in order to boost productivity and avoid long weekends becoming ‘longer’ by limiting the days upon which they can be enjoyed to Mondays and Fridays.
- The government had also previously agreed to change labour laws and limit the damages workers are paid when they are sacked. “We will align severance payments for open-ended and fixed-term employment and submit legislation by end-July 2011 reducing severance payments for all new contracts to 10 days per year of tenure”, Portugal has pledged, adding it will “present a proposal to revise severance payment entitlements for current employees in line with the reform for new hires by end-2011, without reducing accrued-to-date entitlements.”
- Portugal has further undertaken that it will also reduce the maximum duration of unemployment insurance benefits to no more than 18 months, while any increase in the minimum wage will take place only if justified by economic conditions and agreed in the context of regular programme reviews."
The government has also suspended most current and future infrastructure programs for an indefinite period, including a high-speed rail line that was in being built between Lisbon and Madrid. The scariest aspect of these plans is the fact that Prime Minister Pedro Passos Coelhos has been bragging about his intentions to go over and above the deficit reduction targets set by the IMF/ECB, in an attempt to outdo the foolish audacity of his Finance Minister.
The Guardian, Portugal’s Cutbacks Halt High-Speed Train to Spain (by Sandrine Morel):
"In exchange for a €78bn European bailout plan, the Social Democratic party (PSD),voted in on 6 June, has committed itself to a number of measures and reforms to reduce the public deficit to 3% of GDP by 2013. But Passos Coelhos, who has boasted that he will exceed the austerity targets agreed in the EU-IMF bailout, has added objectives that weren't on the cards, including the postponement of the Iberian high-speed line.
In Spain, that Portuguese zeal is not appreciated. The Spanish transportation minister, José Blanco López, has described the Portuguese decision as a "bad" one and reminded his neighbour that "the project has obtained European financing". Madrid fears that the European funds allocated to the railway will be scaled down if the Portuguese decide to pull out permanently. To press his point, Blanco has asked to meet his Portuguese counterpart at the earliest opportunity.
In the Spanish regions that were to be covered by the high-speed train, there is concern about the local repercussions in terms of jobs and tourism, although according to the president of Extremadura, Guillermo Fernández Vara, "this decision won't affect the Spanish end of the line". Last week, the Portuguese prime minister announced that further budget cuts would be put before parliament."
Spain may have a right to be a little peeved with Portugal's decision to halt construction on the rail-line, given the fact that its government had already expended significant funds pursuing the project and is just as broke, but that's really nothing compared to what the Portuguese people must be feeling right now. The world was provided a glimpse of this fear, frustration and incipient rage in March of this year, when thousands of young protesters took to the streets of 10 different cities in the country.
The Irish Examiner:
"Some 30,000 people, mostly in their 20s and 30s, crammed into Lisbon's main downtown avenue, called onto the streets by a social media campaign that harnessed a broad sense of disaffection. Local media reported thousands more attended simultaneous protests at 10 other cities nationwide. A banner at the front of the Lisbon march said: "Our country is in dire straits" while another said: "We are the future."
...But after a decade of feeble economic growth and a huge debt burden that has forced the government to enact crippling austerity measures, Portugal's economy can't deliver the opportunities that trained young people are seeking. The jobless rate stands at a record 11.2%, and half the unemployed are under 35. In the third quarter of last year, 68,500 college graduates were idle - a 6.5% increase on the same quarter the previous year, according to the National Statistics Institute.
...Four graduates in their 20s were inspired to organise the unprecedented protests after a pop song struck a chord with their despairing generation. The song, called "What a fool I am" by Portuguese band Deolinda, was an unexpected hit in January, even though it hadn't been released yet. An amateur video of a concert performance of the song posted on YouTube went viral as it set a generation's simmering grievances to music.
The song's lyrics - including the lines "I can't go on like this/This situation's dragged on for too long" - built into a battle cry."
This event was no doubt a populist expression of deep frustration with Portugal's economic path, but it was generally only concerned with unemployment and under-employment, and was also relatively timid compared to the protests and riots in Greece this year. As time moved on and new austerity measures came to light, however, the people of Portugal returned to the streets several different times to express more frustration and anger over the increasingly specific and brutal plans. They are now beginning to realize that their government will continue to ignore their cries, and choose instead to bail out large Western banks through the IMF/ECB/EFSF, maintaining the status quo of oppressive inequality at all costs.
The Portugal News Online, May Day Demonstrators Denounce Austerity, Bailouts Talks:
"In the capital, several thousand people braved heavy rain on Sunday [July 3] to participate in two peaceful marches organised by the country’s rival trade union confederations. Incidents were only reported from the industrial city of Setúbal, south of Lisbon, where a small group of black-clad “anarchists” clashed with police, leaving three protesters lightly injured.
At the biggest demonstration in Lisbon, the head of the leftist CGTP union federation, Manuel Carvalhoda Silva, accused the caretaker Socialist administration of burying the country in debt in order to rescue scandal-ridden banks, not to aid the poorest or the unemployed. Many of the demonstrators sported red CGTP t-shirts and shouted slogans like: “We don’t want the IMF here”!
Carvalho da Silva called on supporters to vote against the Socialists, in power for six years, and centre-right parties that governed earlier in snap elections set for 5 June. At the smaller UGT rally, some 2,000 protesters heard leader João Proença reject any austerity move to cut vacation and year-end subsidies or reduce the €475 monthly minimum wage.
The unemployed youth and struggling workers of Portugal are rapidly becoming fed up with their government's stubborn march towards neo-feudalism, as it desperately hopes to remain in the favors of a European Union run by bankers and corrupt politicians. Prime Minister Coelhos announced in mid-July that his government found a "colossal" $1.7B hole in its current budget plan, along with weak economic data, and therefore new austerity measures must be adopted. What he didn't announce is that they are going to fill that hole up with the skeletal remains of the Portuguese population.
EuroNews, Portuguese Austerity Tax on Bonuses Sparks Protest:
“We want higher pay”: that was the message from thousands who marched in Lisbon on Thursday [July 14], heeding union calls to protest against recent austerity measures in Portugal. They include an extraordinary tax on end-of-year bonuses, announced by the prime minister Passos Cuelho.
The move goes beyond Portugal’s bailout terms – because, he says, new figures on the economy show it is necessary. The demonstrators beg to differ.
“I’m here because I think the measures being brought in are very unfair. I am here because it’s through this workers’ struggle that we can fight against the rising cost of living,” said one young woman.
A man said:
“I’m a worker, living conditions today are bad and are likely to get worse so I’m here to fight for my interests, for the workers’ interests.”
Yes, Mr. Coelhos, the "new figures" on your economy are indeed very weak and your budget deficit isn't getting better, because you insist on funneling the productive capital of Portuguese workers to your unproductive banker overlords as interest on the unproductive debt instruments that they hold. You, me and everyone with half a brain knows that the solution to Portugal's economic woes is not oppressive austerity and blatant extraction of wealth, but you insist on doing just that anyway. The people on the street, though, cannot be silenced for generations like the Native Americans were. You can rest or lay awake assured that their future demonstrations will not be quite so peaceful.
The public balance sheet of Spain, like Ireland, has been entirely at the mercy of its reckless and insolvent banking sector, especially its 12 "cajas", or savings banks. The extent of this insolvency is easily implied by the extent of the housing bubble that was financed by these banks over the previous 12 years, which is now thoroughly in the process of imploding. The following graph is a screenshot of an interactive applet found at The Economist website, which can be toyed around with to include more countries, change the measure of housing prices on the Y-axis and change dates on the X-axis.
The Spanish bubble and bust has clearly been one of the worst among those in Europe, and the picture only gets bleaker when you factor in the 20%+ unemployment rate for the Spanish population, which is more like 44% for its young adults, and its projected sub-1% growth until 2016. . It's estimated that the banking sector needs to raise upwards of $20B in capital by September of this year, and it's practically impossible to imagine that any private investors will be brazen enough to put their money into Spanish banks within the next few months. . That really only leaves the Spanish government, the ECB/IMF and their new fiscal collapse sharing mechanism, the EFSF.
For the moment, the ECB/IMF are keeping their paws off of Spain (except for recent bond purchases), hoping and praying that the country can avoid fiscal ruin by imposing its own independent austerity program, while it simultaneously subsidizes its domestic banking sector. Of course, there is a reason why the new ESFS was conceived, and if it is successfully shoved down the throats of the German people, we can be certain it will be used for Spain. The odds of Spain remaining solvent by its own right are becoming less favorable by the day, thanks in no small part to the systematic austerity that is currently and will continue to plague the Spanish people.
That's a big IF, though, and it will necessarily take a few months to get underway, which is a few months too long for Spain. For now, the ECB is directly intervening in Spanish and Italian bond markets to stem the upwards surge in their long-term bond yields, while engaging in shady backdoor discussions with their respective governments about immediate austerity. I was sent the following observation about two months ago from Justin Ritchie, who runs the clever and comprehensive Extra Environmentalist podcast interview website (their latest interviews were with Chris Martenson and economist Manfred Max-Neef). He had been visiting Spain at the time.
"Justin: As I've been walking around the streets of Granada, Spain over the last few days I'm seeing the protests grow every day even though police are trying their best to quiet things among the students here. People were marching with megaphones today and handing out flyers tell all of us to gather in the town square. Much of the pressure here is in anticipation of the election that's coming soon but all the candidates are still thinking within the mainstream paradigm. In the very near future, Spain will have to deal with its debt and that likely means a bailout from the EU with the restructuring required, now that the youth are becoming more and more organized after frustration with low wages and 40%+ unemployment, Spain has everything in place to become the first European nation to experience a full scale revolution."
Justin's observations are lent some clear support in this brief video clip from Global Research TV about the ongoing protests in Spain. These protests reflect a Spanish populace rapidly coming to the conclusion that expressing its solidarity on the streets is much more meaningful and effective than voting in a few political elections that are designed to manipulate the peoples' perceptions and present them with the illusion of choice. Really, what conclusion is left to draw when you face staggering unemployment, little to no economic growth, brutal austerity measures and your country is still broke?
On November 20, the Spanish people will be given the choice to vote for either retaining the "Socialist Party" or bringing in the "People's Party". The former has already started implementing painful austerity measures on the people in an attempt to cut its deficit by 50% over two years. These measures have included an increase in the VAT by 2% (from 16% to 18%) and an elimination of jobless benefits for unemployed people who have depleted their contribution-based benefits. A privatization plan was also put into place by Zapatero's government in 2010.
Businesweek, Spanish Industry Sinks as Austerity Dents Recovery (by Emma-Ross Thomas):
"Prime Minister Jose Luis Rodriguez Zapatero’s Cabinet is due to approve partial privatizations of the national lottery and airport operator Aena in asset sales that may raise 14 billion euros ($18.5 billion) and allow Spain to issue less debt next year. It also plans to pass tax cuts for small companies while scrapping the jobless subsidy that was introduced in 2009 for people who have run through their contributions-based benefits."
It has been somewhat difficult, though, for the national government to direct systematic austerity, given the relative autonomy of Spain's regional governments and their share of the spending. That is where the new government will come in and pile loads of fresh, searing pain on top of what the Old Boss had managed to accomplish. The "People's Party" claims that it will do a better job of implementing austerity and will cajole investors back into Spain's bond markets. These claims came after the Spanish 10-year was once again getting hammered above a 6% yield, despite the "comprehensive" plan developed by EU leaders at their summit in the weeks before.
Bloomberg, Spain Election May Mean More Austerity (by Angeline Benoit) :
"The current government shied away from sorting out decision sharing between regions and the central government, Nadal said. “This has led to massive overspending,” as each level conducts its own policies, he said. “There is a lot left to do for the new government.” He cited reform of the labor market and energy sector as well as an overhaul of the regional administrations.
Spain’s regions are crucial to its efforts to rein in the deficit. They have accumulated debt of 121 billion euros ($174 billion) and control more than a third of the nation’s spending, including health, education and half of public employment."
A castration of Spain's regional governments would certainly be keeping in line with the overall trend within the "EU dream", but it would do very little to put Spain's fiscal house in order. In fact, the spending programs of these regions, which are significantly more tailored to their specific populations, are perhaps the only thing keeping the country's housing-based economy afloat, which keeps some tax revenues flowing to the national government. Once these regional administrations are "overhauled" with austerity, the Spanish people can wave goodbye to what remains of their housing and employment markets. Holders of Spanish public debt will once again be clawing at the ECB and ESFS for a bailout while the Spanish people continue to starve.
"Spain’s opposition People’s Party pledged to restore investor trust in the euro area’s fourth- biggest economy by imposing more spending cuts if it wins early elections in November. With Europe’s debt crisis lapping at Spanish shores, the People’s Party led by Mariano Rajoy, 56, is set to campaign on the extra steps it says are needed to kick-start growth and slash unemployment of more than 20 percent. The PP is holding out the prospect of more austerity after the Nov. 20 election as it bids to repeat the trouncing it gave Prime Minister Jose Luis Rodriguez Zapatero’s Socialist Party at local polls in May.
...Spanish 10-year bonds rose today for the first time in four days, sending yields down 10 basis points to 5.98 percent. The additional yield investors demand to hold the securities instead of similar-maturity German bunds fell 15 basis points to 339 basis points. Bonds fell on July 29 for a third day after Moody’s Investors Service said it may downgrade Spain’s credit rating. Zapatero announced the election hours later in a bid “to project political and economic certainty for the next few months.” The International Monetary Fund said the same day that Spain remains in “the danger zone.
Spain’s biggest companies were instrumental in Zapatero’s decision to call early elections, El Mundo reported yesterday, citing people at the country’s main business group it didn’t identify. Francisco Gonzalez, chairman of Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, said in a July 29 statement that Zapatero had taken the “right decision” in calling early elections. The Nov. 20 date for the elections coincides with the anniversary of the death of the Spanish dictator Francisco Franco in 1975."
So the ghost of the fascist and ruthless dictator, Franco, will return to haunt the people of Spain in November, when the "Biggest Companies' Party" wins the early elections and proceeds to develop and implement extensive spending cuts, tax increases, regional "reforms" and plans for privatizing public assets. It is inevitable that such a development will further stoke the fires of rage and revolution within the Spanish population. History has clearly proven that it rhymes, but will it repeat itself? Will the uprisings be squashed by a fascist, militaristic government or combination of governments in Europe? Or, instead, will the modern-day People of the Sun ultimately prevail in unlocking their financial chains?
The Guardian, Spanish Riot Police Clash in Madrid With Anti-Austerity Protesters:
”Protesters angry about the government's austerity programme during Spain's economic crisis have been demonstrating for four days in Madrid. Police have been preventing them from re-erecting a protest camp in the central Puerta del Sol square where they had held protests since May. Some of the demonstrators are known as indignados (the outraged). They have protested over Spain's current high unemployment, and demanded more democracy, a new electoral law and an end to political corruption in the country.”
Only time can answer the questions posed above, but there is one thing that is nearly certain at this point in time - revolutions are on the way. From Greece and Ireland to Portugal, Spain and beyond, there is very little reason for the people of the developed world to stand down or protest in peace any longer. Their national elections are theatrical shams, and their national governments are clearly beholden to supranational political and financial institutions when the curtains come down on that show. Any meaningful change is then forced to arrive from the bottom-up, starting off slow and then accelerating exponentially, spreading like a wildfire. This time, the revolutionary "contagion" will be contained for very long.