Well it looks like Spain really is in for rough times if the best economist our new government could find to be Economics Minister is also a former executive for Lehman Brothers.
Call me a cynic but when a bank fails so spectacularly, it usually means the people at the top weren’t very competent, and that doesn’t bode well for the next four years in Spain if we have an Economics Minister who learned his craft from those sorts of people.
So what can we expect to see happen here in the next year or so? Well we’ve already got a commitment from the government to increase IVA (the Spanish version of VAT), and we know Rajoy wants to reduce the deficit by 16 billion euros. It doesn’t take a rocket scientist to realise that has to come from the biggest parts of the budget, health and social services.
I believe we may be in for a rough ride next year, perhaps a lot of anger will erupt in the streets with protests that will be bigger than the 15M movement managed to raise, and maybe national general strikes that could see blockades of our roads and ports.
The government response will be to crack down hard where they can, and I believe we could see a lot of riot police on the streets, just like they did in Greece. To be sure the Spanish enonomy isn’t dead and buried yet, the country isn’t a basket case, but a lot of people are really feeling the hurt and they might not be so supportive of a former Lehman Brother’s executive in charge of the economy.