Tag Archives: Spain

No pasarán! was the slogan, but it did happen


Some old dead white man said: “All historical analogies are odious”. He meant they stink because time, place and dramatis personae of any historical event are so particularistic; drawing similarities with another event defies logic.

Yet, yet … we amateur historians play at the game and often. And perhaps there is value in shredding a past major historical event with 20-20 hindsight to see if we can make something of a current conundrum.

That’s how – hang on to your seats – I caught myself thinking about Syria recently in terms of the Spanish Civil War of my youth.

For you kiddies out there, let me encapsulate: the first great modern empire, Spain, entered the 20th century in tatters after the U.S. had given it a near fatal wallop with William Randolph Hearst’s war delivering Cuban independence. Continuing colonial problems in North Africa, Madrid’s failure [along with the rest of Europe and FDR’s America] to emerge from a severe business cycle plus growing regional ethnic and linguistic independence movements [“las Españas”], paralyzed the second republic from its 1921 inauguration. By 1936, Communist, anarchist and syndicalist revolutionaries on the left faced a showdown with fascist, aristocratic and clerical reactionaries on the right. Another military revolt bounced in from North Africa.

Still mired in The Great Depression, Western democracies could not sort out this problem on their doorstep. The totalitarians – Moscow on the left and Berlin and Rome on the right – chose up sides, moving in while London and Paris wrung their hands, and Washington pulled up its two-ocean drawbridge. The right eventually won out establishing a dictatorship which toyed with ideological loyalties to the Axis but opportunist and wily Generalissimo Francisco Franco had the good sense to maintain mock neutrality in World War II.

Syria today is not Spain 1936 in any conceivable way. But the Western democratic alliance’s inability to halt unrestricted violence against its own people by an atrocious regime resembles the West in the mid-30s trying to deal with unparalleled Spanish atrocities. Iran 2012 is not the Soviets of the Nazi-Fascist era but their support [along with Beijing and Moscow] of Dictator Basher al-Assad in the face of Western shillyshallowing is similar. And the growing jihadist intervention against the crumbling regime promises a successor unlikely to contribute to regional peace as post-Civil War Spain originally threatened to do. And just as the continuing 1930s economic disaster paralyzed the world community, so the Euro crisis and leftovers from the U.S.’ 2007-08 financial crisis with world dependence on Mideast oil today hamstrings the democracies.

The Spanish Civil War was confined to the least important of the major European nation-states. But just as its crucial geography and its multi-minority composition gives little Syria entangling tentacles to all its neighbors, Spain’s war had links and effects – as far away as Mexico.

Germany and Italy tested their weapons in Spain for Adolph Hitler’s coming war for Europe. [It’s fitting an opponent of the Assad regime calls Homs “Syria’s Guernica”, the Basque city which saw one of the first demonstrations of air power decimating a civilian population, a horror captured by Spanish painter Pablo Picasso.] New techniques of terrorism and asymmetrical warfare are being tested. And just as Germany’s fate was so tied up in Generalissimo Francisco Franco’s war, the fate of the mullahs’ regime in Tehran could well depend on Damascus’s outcome. Tehran mullahs’ attempt to dominate the region by controlling its oil [armed with a nuclear weapon] depends on penetrating the Arab world – which they have done ironically through supposedly secularist Syria, and its clients Shia Hezbollah and Sunni Hamas. All that’s at stake in Syria now just as the Nazis’ imperial dreams were given a fillip by Hitler’s tacit victory in Spain.

Of course, what looking back on Spain also teaches us is the complexity of world events; how despite all odds, an Allied victory in World War II guaranteed eventual Spanish democracy and prosperity. But, that, too, alas!, is now up for grabs with an economic crisis destabilizing all southern Europe including Spain with its 20% of the Eurozone’s gross national product and the continents highest unemployment.

That may well lead us back to where we started: No, Prof. Jorge Agustín Nicolás Ruiz de Santayana y Borrás notwithstanding, there may be no mistakes not to be repeated to be learned from history.

sws-02-24-12

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We already went through that


News item, August 23, 20111

Spain will reform its constitution to limit the budget deficit and the level of public debt under a law proposed by José Luis Rodríguez Zapatero, the Socialist prime minister, and supported by the rightwing opposition.

Nobody seems to remember that we had a stipulation in the original Maastricht Treaty [Feb. 2, 1992] limiting national budget deficits and France and Germany were the first ones to ask for the remission of the proviso — temporarily, that is. 

Oh those naughty North European spendthrifts!

Charlie Chaplin’s suit?


The geopolitical question of the hour: is there a tripwire that will tie together a series of regional crises bringing on another 2007-08 worldwide economic disaster?

Lehman Brothers’ collapse dramatized how enhanced interconnections can tumble through the new world economy with domino effect. But if the world finance mavim know a seminal interrelation of our several bubbling crises, they are not telling us. Meanwhile, the minitheaters percolate:

Europe –There’s growing consensus Greece’s economic collapse is leading to a restructuring of the European Union’s finances with more than 20% of the world’s gross product. Shooting the messenger – the growing attacks on rating agencies which, indeed, are feeding debilitating increases in the cost of debt – doesn’t solve the problem nor do complicated if band-aid solutions. Nor, does it seem likely to this observer, creation of a Eurobond market to absorb growing debt would automatically bring about inspired, problem-solving central European fiscal and monetary direction. [It didn’t with creation of the Euro “common currency”.]

The U.S. – However much the Obama Administration’s stimulus program staved off an even worse crisis – to be argued until the end of the economists’ time, not soon contrary to John Maynard Keynes hopeful prediction the profession would die out – it has run out its string. Public opinion demands curbing deficit spending. But how against pressures of “special interests” [yours’ always are, mine are heaven blessed] is a conundrum taxing the American political system. It‘s a time when parliamentary government – with its ability to bring down a cabinet’s failed strategy instantaneously – is envied. Instead, more than a year’s political mudslinging appears inevitably producing near paralysis. Meanwhile despite widespread denials – including fudging with inventions like “core inflation” – higher prices could couple with stubborn underdemployment/unemployment and an unresolved housing bubble for increasing misery.

China – The cracks, long seen by the few who questioned sustainability of the miracle of “the world’s factory”, are widening. Beijing central planners – despite their rationale only rapid growth could legitimate “Communism with Chinese characteristics” by providing jobs and stability — have curbed unlimited infrastructure expansion which with now slowing exports was the engine of growth. “Creative accounting” takes on new meaning for government banks hiding “non-performing loans” in new set-aside organs now making their own bad loans. Beijing’s inability to “feed” local Party hacks leads them to “squeeze” workers and farmers in turn leading to growing violence. Inflation, especially food where most Chinese live, grows despite monetary devices borrowed from Western systems largely ineffective on what still is a Soviet skeleton.

Japan – The world’s third largest economic power drifts, mysteriously bereft of political leadership, caricatured in its inability to address the destruction of the earthquake-tsunami with characteristic “Yamato Damishi” [fortitude]. In Japan’s hot, muggy summer, only 19 of 54 reactors are operating in the face of anti-nuclear sentiment. With more to shut down, cutbacks of 15% already haunt large electricity customers and boosts expensive fossil fuel imports. Consumer confidence falls to record lows, ominous for Japan’s rapidly ageing population. Government debt, already the world’s highest ratio at 200% of GDP, will rise as Tokyo borrows $100 billion to rebuild and GDP shrinks. Luckily, Tokyo borrows at home at floor-scraping 1.5%. But, Japan, too, has its echo of the American argument: Economy Minister Kaoru Yosano opposes Tokyo selling itself bonds as the Fed and Treasury have done, warning resulting higher finance charges would hit Japanese banks.

But how does it all connect? We saw how Japan’s disaster put a crimp in the manufacturing supply chain from Shanghai to Detroit. But, for example, what call have German and other European banks on their U.S. colleagues if Greece defaults? Japan, which has been lending the world $175 billion annually in investment capital, is out of that business. Nobody wants to talk about the impact on Spain [20% of the EU GDP] if Greece [3% of the EU GDP], followed by Portugal and perhaps Ireland, “goes”. What will that do to Latin America where Spanish banks have invested heavily as the Brazilian boom simultaneously now threatens to go “bust”? Australia’s roaring dollar is already feeling Chinese cutbacks as will all commodities producers, perhaps even the Mideast petrosheikhs.

In one of his serio-comic sequences, Charlie Chaplin’s little tramp starts pulling a thread from his crumpled suit. Before long, his whole miserable costume dissolves. Is there that kind of loose thread here?

sws-07-08-11

Obama energy strategy: one part black magic, two parts propaganda


Again, and again, we must return to energy, the mother’s milk of the economy where the Obama Administration’s ham-fisted tactics are strangling the baby of recovery in the crib.

In his June 29th press conference, the President again singled out rebates to push U.S. fossil fuel production in his demand for tax increases for an economy already threatened by double-dip recession. The proposal compounds regulatory mischief: blocking oil and gas in the Gulf of Mexico while Chinese and other foreign companies drill off Cuba almost within sight of Florida beaches, forfeiting 250,000 jobs. “Regs” threaten West Texas fields contributing 20% of U.S. new production because of an obscure lizard. The White House dallies over a pipeline to bring Canadian oil sands crude to Texas refineries. While Moscow pushes Arctic prospecting, Juneau can’t get Washington to open up 14.7 million acres of state land with the critical Alaskan pipeline faltering from declining throughput.

Mr. Obama’s token strategic oil release – into the international crude pool rather than reducing U.S. pump prices – was one more feint in Mr.

Obama’s ideological war on fossil fuels. [Never mind ignoring the reserve’s national defense character; it was never meant as a price instrument – nor political toy.]

All this is done under the rubric of protecting the environment. “Junk science”, as many highly qualified skeptics believe, may underpin claims fossil fuels consumption decisively impacts climate change. It will take decades to know, given our shallow data for changing climate through the ages.

But “junk economics” is all too evident in the Administration’s energy strategies. Granted, impediments to cheap energy were inherited from previous governments and imperfect markets. But Mr. Obama’s drive for “renewable sources” mimics earlier Carter Administration’s abandoned “alternative energy” skeletons still littering the landscape.

Mr. Obama’s wind power subsides are indeed producing jobs – for China and Spain – with transferred American companies’ technology. Chinese windmills and solar panels are exported to the U.S., often replacing American manufacture.

The vignette of former Gov. Arnold Schwarzenegger entertaining the possibility of Chinese “high-speed rail” proposals with federal stimulus funds – just before California all but bankrupted — is quintessential of a mind set. High salaried propagandists for tax free non-governmental organizations [NGOs] promote “the environment” through advocacy of “mass transit”, citing China’s example. They fail to note deficit-ridden Chinese government railways – whose two top executives recently were arrested for stealing tens of millions – blackmailed European and U.S. companies for technology transfers in exchange for a phantom Chinese market. Now Beijing attempts exports while their own projects operate with anemic passenger loads — at lower speeds because of faulty engineering. The misrepresentation is all too typical of limitless, mindless propaganda pumped out on a daily basis, for example on that other Washington subsidized enterprise, National Public Radio, by the Obama cheering section.

In fact, a whole new era in fossil fuels is beginning. So-called “peak oil”, the crisis posited when diminishing reserves supposedly would meet rising consumption, has vanished. New vistas have developed worldwide with expanding deep-water drilling technology – a Norwegian billion-dollar floating platform in deep water off Rio de Janeiro, a good example. New fields await discovery in our own Gulf of Mexico – the less than cataclysmic British Petroleum oil spill notwithstanding. Recovering Iraq with the world’s second largest reserves, many yet untapped, is returning with 10 million barrels a day.

Even more spectacular, a new era for natural gas suddenly has emerged with new technology exploiting vast shale reserves lying deep below rock formations in a dozen countries, not the least the U.S. [An ironic comment on priorities: Beijing is investing government billions into American companies to get at that technology.] Of course, there already has been a half-baked university “study” by enviromentalistas arguing “fracking” – the process of getting at that gas – would poison ground drinking water. The study produces not a single instance nor does it explain the risk with most such deposits lying well below aquifers.

“Politically correct” spokesmen and the mainstream media promise black magic energy solutions, for example, electric cars, ignoring almost three quarters of our electricity for recharging batteries is met with coal and gas – much less the enormous costs and problems of grid expansion required for a massive changeover.

This conjuror’s trick has gone wrong; Mr. Obama is actually cutting the beautiful young lady in half as he cripples the energy sector.

sws-07-01-11

Germany on the hot seat


The crisis of the European Union’s common currency goes into its second act, replete with a Spanish fandango as the curtain rises with the biggest peripheral Euro player downstage. Spain’s economy is almost twice as large as the combined early crisis victims – Greece and Ireland and waiting in the wings, Portugal. As the world’s No. 9 national economy, it is 10% of all Eurozone activity. And Madrid’s problems caricature the political issues dogging all the 27 EU members. They promise an endemic crisis.

As with all Europe, Spain is torn by internal rivalries as old as the nation state itself. Spaniards have always spoken of Las Españas – the Spains – acknowledging and rationalizing these differences. The divisions are more than regional geography but language, custom and legalities from before the modern era with important economic implications. The Chartered Community of Navarre, for example, one of Spain’s Basque-speaking political subdivisions, even has its own special tax arrangements dating from its inclusion in a united Spain in 1515.

Because the European Union was a top down construction – the creation of statesmen looking for a way out of centuries of warfare to permanent stability and prosperity – it has, as a byproduct, fed these differences. Like other European countries’ autonomous zones – including even highly centralized France – Spain’s regions increasingly see themselves as EU partners rather than nation state components. As more power has been seized by unelected Brussels Eurocrats – Europe’s parliament is a powerless figurehead where discredited politicians go to die – Madrid’s hold on its constituencies weakens. Separatism was fed, too, by subsidies [€347 billion in the last five years] from Brussels targeted at backward EU areas, revealed in the light of the new austerity as corrupt [along with huge agricultural subsidies].

As the economic crisis deepened, last month’s elections in Catalonia – which with the Basque Countries had per capita income a third higher than the national Spanish average — produced a majority advocating either more autonomy or independence. Ironically, Prime Minister José Luis Rodríguez Zapatero’s minority Socialist government has hung on by swapping autonomy concessions for the support of ethnic nationality parties in Madrid’s Cortes [parliament]. That’s despite their otherwise social and economic conservatism. That collaboration is ending with the economic strains.
For in addition to its central debt, Madrid has to deal with the autonomous governments having borrowed heavily. With their industry sparking Spain’s remarkable two decades of progress, they now are suffering the highest unemployment. That is going to further complicate Mr. Zapatero’s austerity program aimed at funding Spain’s debts. He proposes reducing deficits from €45 billion to €30 billion next year. A Socialist leader has gone to such lengths as advocating privatizing the world’s oldest lottery and other state-owned enterprises. But in the face of 20% unemployment, his core constituency, the trade unions, demand strengthening rather than dismantling generous unemployment benefits and protective labor legislation, a major impediment to growing the economy out of debt.
In fact, growth is stalling in the 16 countries using the Euro, even in Germany, and actually negative in the basket cases of Greece and Ireland, in part because of their very austerity programs. It’s hitting Spain, too, faced with rising debt refunding rates — up 20% in the last two months.
Attempting to come to the rescue, the EC’s central bank has been playing cat and mouse with the markets since May, occasionally sneakily buying up €67 billion worth of governments’ bonds to reduce interest rates. But it’s nothing like the €2 trillion or so which would be needed to mop up “the Club Med debt”. Berlin, with its historic fear of cheap money and inflation, adamantly opposes imitating the “quantitative easing” pursued by the U.S. Fed — printing Euros. In fact, German Chancellor Angela Merkel’s proposals for setting up contingencies for coming “bailouts” has only added to investors’ jitters and run up the price of refunding.
A growing number of critics hold that “bailouts”, in any case, are not the solution since they only kick the ball down the road. They argue the remedy has to be “restructuring”, default under which bondholders take their lumps. But as indicated by recent revelations of the massive extent to which the U.S. Fed came to the rescue of European banks in 2007-08, those kinds of losses for the banking system could bring on a whole new round of international financial crisis. The European central bank is already extending “emergency” loans to some European banks including the Spanish caja, savings banks.
This rats’ nest increasingly suggests dismantling the Euro may be the only way out, but something Mrs. Merkel has said is unthinkable because it is so emblematic of the European Union itself. Furthermore, a specter down the road for Germany, the powerhouse of the EU as the world’s largest economic entity, is a return to a neodeutschemark would bring speculators running, driving up German prices, possibly creating inflation – and threatening Berlin’s huge dependence on exports, the motor of its post-WWII prosperity.
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