Most of the stories about Greece and Spain talk about how their problems will affect banks and the markets. Remember, there is also a human side:
The Caritas report also found that 22 percent of Spanish households were living in poverty and that about 600,000 had no income whatsoever. All these numbers are expected to continue to get worse in the coming months.
About a third of those seeking help, the Caritas report said, had never used a food pantry or a soup kitchen before the economic crisis hit. For many of them, the need to ask for help is deeply embarrassing. In some cases, families go to food pantries in neighboring towns so their friends and acquaintances will not see them.
And this is a huge problem in Spain:
Spain is stuck in a double-dip recession with unemployment close to 25 percent. The conservative government of the Spanish prime minister, Mariano Rajoy, has introduced sharp cuts and raised taxes in a move to reduce the deficit and to reassure investors and officials from the 17-nation euro zone.
“The cumulative reduction (of gross domestic product) since 2008 is just under 20% and is expected to reach 25% by 2014,” he told a Greek–Chinese business forum in Athens.
Perhaps at some point, they might realize that austerity is not helping:
Consider Greece. The country’s prime minister, Antonio Samaras, has been pushing a package of pension cuts and public salary reductions worth $14.6 billion next year in order to satisfy the conditions of its February aid package from the rest of Europe. In a country with 24 percent unemployment, those measures are already inciting protests and labor unrest. And now it turns out, according to reports from Germany, that those austerity measures won’t even be enough, because Greece’s economy is hurting so badly that its deficit keeps swelling anyway:
Spiegel Online and Suddeutsche Zeitung have updates on the Greek budget gap, which is even bigger than previously assumed – around €30bn. This is the accumulated short-fall the troika is expected to identify in its forthcoming report – the amount Greece has to raise, save, restructure, default on, if it wants to make it through the second loan programme.
Spiegel writes that the troika will say that the recession has totally counteracted the budgetary savings, while the government has failed to introduce structural reforms.
Given that this has been going on for 4 years, I’m not optimistic.