From "Naked Capitalism" - follow link to original
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http://www.nakedcapitalism.com/2012/07/spanish-protests-escalate-as-budget-cuts-draw-blood.html
It’s been fashionable to dismiss protests in austerity-victim countries as noise. And to date, that view has been correct.
But Spain lurched relatively suddenly into the acute distress of 24% unemployment. Thursday, the Spanish
bank
bailout terms were clarified, and as we’d thought early on, and as
Delusional Economics explained, the terms have the new bank bailout debt
as being added to existing Spanish borrowing levels. Spanish bond
yields rose, but Mr. Market shrugged that off all of one day. Valencia
sought assistance Friday under the rescue package approved the day
before. Investors freaked out at the proof that Spain was imploding
faster than they thought.
The protests may constitute another crisis front. It’s one thing to drive Greece into penury and social decay
pour décourager les autres. As horrific and deplorable as that is, the Eurozone can live with that. Having an economy as large as
Spain
come apart is not a viable outcome. Notice that this escalation in the
number of people protesting comes before the officials start wiping out
bank preference shares. As we’ve recounted, banks duped depositors into
buying these instruments, presenting them as being completely safe but
offering more yield. And it happened on a widespread basis: Reuters
reported that 62% of the preference shares are held by depositors at the
same banks. So if you aren’t convinced that the current level of
Spanish protests are meaningful, be warned: you ain’t seen nuthin’ yet.
Update: The Guardian also sees the protests against the latest round of
budget cuts, passed in connection with the Eurozone bank rescue,
as a sea change. It estimates 100,000 people turned out nationwide, 50,000 in Madrid.
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