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European Debt Crisis

The party is over…just in case you didn’t know

Mr. Rajoy, the Spanish President-elect, stated yesterday that the party in Spain had ended; the country was not in a condition for it to continue.

On the surface, this seems to be accurate enough. In fact, it has been true for the past 3 and a half years, which makes CS wonder why it is even necessary to make such a declaration. When you stop to think about it, something that politicos rarely expect and never desire, it seems to be a somewhat moronic piece of reflexive political regurgitation which is so typical as to have become stereotypical.

Much depends on the intended audience, which is not at all clear from Mr. Rajoy’s statement.

If the audience is the financial markets, the investors who are demanding ruinous interest rates for European bonds when they are not dumping them, Mr. Rajoy had best save his breath. The markets have already discounted the pronunciamientos of more powerful politicians than the President-elect. Statements not backed by concrete actions are all the markets have seen so far, and the new Spanisj leader has little enough credibility to spare.

Perhaps Mr. Rajoy meant to address his defeated Socialist opponents, a means of distancing himself from their maladministration. It is perhaps justified; certainly the Zapatero government was inexcusably slow and half-hearted in their measures to deal with the financial crisis when the property bubble imploded. And yet one should point out that when Zapatero did react – under heavy prodding from Berlin and Paris – some good results wee obtained.

The government cut the deficit from over 10% of GDP to 6.6%, slightly over the agreed mark but a suvstantial achievement nonetheless. And the government has successfully undertaken a round of bank condolidation and reform that has, for the moment, shored up the financial sector. Much more needs to be done, as previous articles on this site have pointed out, but the reforms to date have been necessary and prudent.

It is true that the Partido Popular does not need Socialist support in order to govern, nor that of anyone else in the legislature. But Mr. Rajoy has campaigned on a promise of leading a government for all Spaniards, and to begin it with a back-handed swipe at the PSOE and the full third of the electorate it still represents, is at best undiplomatic and at worst the sign of a middling politician and no statesman. With a resounding victory to his credit, he could afford to be gracious.

It is also possible that Mr. Rajoy was adressing the whole Spanish people, warning them of the austerity to come. Perhaps, but there are 5 million unemployed and there families who need no warning. Some of them have have been out of work for 3 years with no end in sight. To speak to them of partying excess must seem cruel levity. At the same time, the news is filled of the ouster of Savings Bank CEO from nationalized institutions. These men and women drove their banks to ruin and are being retired on the public treasury, yet their golden parachutes are worth tens of millioms of euros. It does not appear that Mr. Rajoy’s comments were directed at these…individuals.

Mr. Rajoy would do well to heed the precedent of another President-elect during a diffeent time of trial. After Mr. Lincoln’s November 1860 victory, while the South was preparing for secession and civil war, the President-elect was hounded by newspapers for statements, plans and positions. His invariable answer was “I have nothing to say that I have not already said during the campaign. If I thought a repitition would do any good, I would make it.” Mr. Lincoln, under very different circimstances, knew the value of patience and silence when there is nothing new to say. Mr. Rajoy could take a lesson here: until his government is formed and he has concrete results to announce, he will be better off “saying nothing that was not aleady said” lest by some unintended gaffe or gaucherie, he make a bad situation worse.

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