The Spanish government unveiled €65bn worth of tax increases and public spending cuts as part of a deal to secure European aid to rescue its banking system as thousands of miners marched on the centre of Madrid to protest against austerity measures.Lies You Can Believe In
Facing heckles from opposition politicians Mariano Rajoy, prime minister, issued stark warnings about the risk to Spain’s future as he announced a rolling back of unemployment benefits, an increase in value added tax would rise from 18 to 21 per cent, and cuts to local government to achieve the savings over two and a half years.
As he spoke, thousands of miners marched on the centre of Madrid, joined by other anti-austerity protesters, to bring the city’s main avenue to a near standstill, and sparking small skirmishes as police fired rubber bullets at parts of the crowds.
By raising VAT, Mr Rajoy was forced to add to a growing list of policy reversals in his time in office, with the prime minister having stood against tax increases made by the previous government when in opposition.“I said I would reduce taxes and I am increasing them ... the circumstances have changed and I have to adapt myself to them,” Mr Rajoy said.
Anyone who was thinking clearly knew Rajoy's pledge to not raise taxes was a gigantic lie the moment he spoke the words. However, few were thinking clearly, not that it matters one iota.
The unfortunate reality is no other choice would have made a difference either. All the electable fools would have done the same stupid thing: raise taxes, bailout bondholders, and punish taxpayers to stay with the euro.
People voted for Rajoy for the same reason people voted for Obama. Both told lies that everyone wanted to believe.
There are exceptions like Ron Paul, but essentially that's what politics is primarily all about - feeding people lies they want to believe in - just to get elected.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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