Spain Proves that Austerity can never “Ensure” a Balanced Budget

The Wall Street Journal recently printed an economically incoherent and dishonest discussion of Spain’s budget deficit.  It begins its discussion with these paragraphs.

“Spain’s central government reported a new deterioration in its finances and struggled to impose budget discipline on the country’s restive regions as data showed a surge in capital flight from the euro zone’s fourth-largest economy.

The central government in Madrid said it had a budget deficit equal to 4.04% of gross domestic product in the first half, up from 2.2% a year earlier, as tax revenue remained weak and Madrid moved to extend emergency support to the country’s financially ailing regional and municipal governments.”

Twelve paragraphs later, the article finally informs the reader about unemployment.

“Spain’s economy continues to deteriorate. Unemployment figures for the second quarter of 2012, released last week, showed the jobless rate reached a record high of 24.6%, the highest in the developed world, and the government recently warned that the country’s economic contraction would drag through next year. Seasonally adjusted retail sales, an indicator of consumer confidence, fell 5.2% on the year in June, compared with a 4.9% yearly drop in May, Spain’s National Statistics Institute said Tuesday.”

Read more: http://neweconomicperspectives.org/2012/08/spain-proves-that-austerity-can-never-ensure-a-balanced-budget.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+neweconomicperspectives%2FyMfv+%28New+Economic+Perspectives%29