It’s Time For Madrid To Pay The Piper

Imagine a Spanish politician unlucky or unwitting enough to run under the banner of Prime Minister Mariano Rajoy’s Partido Popular (PP) in the upcoming regional elections in Catalonia.

The PP candidate grips both sides of the podium and speaks eloquently and at length about European solidarity and Spanish sacrifice. Now the opposition candidate steps up to the microphone, leans forward, and asks: “Are you better off now than you were a year ago? No? How about four years ago? How about five?”

The answer is an unqualified no: The Spanish haven’t been this miserable since the Spanish Civil War. At 26.44%, Spain’s Misery Index exceeds that of Greece. The Misery Index of Spain’s youth now sits at 54%.

Now take a look at the Consumer Confidence Index (CCI) indicator for Portugal, Ireland, Italy, Greece, and Spain below. The CCI data illustrates how deflation is taking hold of various sectors of the Spanish economy, most importantly housing. (The CCI is calculated with 1985 as the benchmark year, since that year was neither a peak nor trough in the business cycle.)

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