Blog on the Run: Reloaded

Tuesday, August 13, 2013 6:10 pm

Foreseeable harm, Spanish edition

This is why you don’t try to balance your national budget when unemployment is 25%.

Before the 2008 crash, Spain was running a surplus, news that too frequently comes as a surprise to austerians. But it, like many other countries, was experiencing a housing bubble. That bubble was caused by many of the same bankers who are now insisting that Spain “take its medicine.” What should happen instead is that those bankers should take their medicine, including an outright scalping on their bond holdings. The Spanish people didn’t cause this problem, and visiting unnecessary pain and poverty on Spaniards will not get Spain out of this problem. If both economics and history are any guide, it’s more likely to lead to bankers dangling from lampposts than to economic prosperity in Spain. But nobody, not even bankers, believes that bankers act in their own best long-term interests all the time, mainly because they don’t. So here we are. Well, here the Spaniards are. And if the Republicans got their way, here we would be as well.


  1. Krugman points out one of the scarier aspects of this mess, the rise of extremist political parties in Europe, both on the left and the right, which is happening because moderates have been discredited by the economic madness they’re perpetrating.

    Comment by Andrew Brod — Wednesday, August 14, 2013 12:59 am @ 12:59 am

  2. Germany has the most control over the European Central Bank. And you would think the Germans, of all people, would understand the hazards of recreating the conditions of the late 1920s and early 1930s. But no.

    Comment by Lex — Wednesday, August 14, 2013 8:15 am @ 8:15 am

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