German magistrates, who questioned and later approved the rescue of Greece in 2011, have this month started to review the constitutionality of the bond-buying programme of the European Central Bank (ECB) at the request of over 35,000 citizens. They allege that it is an instrument to provide struggling countries with easy money from German pockets. According to many experts, this policy helped Spain and Italy avert disastrous defaults by preventing bonds’ interest rates from escalating to unaffordable levels, which was what was happening until the ECB president Mario Draghi threatened to do “whatever it takes” to protect the euro in July and subsequently launched the bond-buying programme … [Read more...] about How EU austerity is falling foul of the law
pensions
Not yet a Greek tragedy, but still a Spanish drama
“Complete insanity” is how Prime Minister José Luis Rodríguez Zapatero summed up speculation that his government had approached the International Monetary Fund to request a €280-billion bailout. “These rumours can increase differences and hurt the interests of our country, which is simply intolerable and of course we intend to fight it,” he told reporters in Brussels ahead of an emergency summit among leaders of countries using the euro currency. The IMF also denied the speculation. The rumours that Spain was looking for help started circulating after the European Union and the IMF agreed on Sunday to the first bailout of a euro-zone country, giving Greece a €110-billion loan over … [Read more...] about Not yet a Greek tragedy, but still a Spanish drama
Time to end Spain’s labour market apartheid
Take a look at a crowded street in any Spanish city and you will see two classes of workers. You won’t be able to distinguish them by their clothes, their skin colour or their schooling. But when they show up for work, receive their payslips at the end of the month or think about their future, they are very different. One group, let’s call them the fijos, feel more secure and more confident. With fixed contracts from their employers, they know they can’t be laid off easily - or cheaply - even in the current recession-bound economy. They don’t have to worry about their bosses renewing their contracts every month, every six months or every year. They may get training to advance their … [Read more...] about Time to end Spain’s labour market apartheid
Saving the pension system
For many years politicians, economists and demographers have been nervously watching a slowly ticking economic and social time-bomb. It is set to detonate – depending on your calculations – sometime after 2025 as an aging population and shrinking workforce combine with explosive effect, undermining the financial foundations of the Spanish pension system and rupturing the welfare state. Prime Minister José Luis Rodríguez Zapatero, who might like to imagine himself as a Hollywood action hero putting his life on the line to cut the red wire and defuse the bomb, has decided to risk his political future to reform the pension system and soften the retirement blow to today's and tomorrow's … [Read more...] about Saving the pension system