More bad news from Europe. Spain’s Employment Minister Valeriano Gomez told CNBC that a slow economy almost certainly will cause his country to miss growth targets. About the same time he was interviewed, huge strikes broke out in Greece that shuttered the country’s air traffic, some of its tax offices, schools and ground transportation. Side-by-side, these news items are a microcosm of what is wrong with Europe and why it will not get better.
Greece’s citizens have shown a willingness to destroy their own economy in the name of retaining high wages and excellent benefits. It cannot be lost on them that this is a huge gamble. They do not seem to care. Perhaps they believe that the EU will bail out their country to protect the region’s interests. Or perhaps they believe that a default will not drive their economy into a depression and deprive them of their livelihoods altogether.
Spain’s lament about its budget and GDP are almost identical to comments made by Greece. Similar problems most likely will plague Italy and almost certainly Portugal. Any hope that an even modest GDP expansion in the EU would underpin the rescue of weak countries has disappeared in the past few weeks as it has become nearly certain that the region has already entered a recession.
Labor strikes will spread from Greece to other austerity-prone countries. There have already been some in Spain. It is hard to see the logic of people who would damage their own economies. The subject of austerity has become an emotional one more than anything else.
Douglas A. McIntyre