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Sunday, November 30, 2014 11:56 AM

Podemos "Economic Manifesto" Calls for Debt Restructuring, Spain to Abandon the "Euro Trap"

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The Podemos party, a far-left populist party in Spain led by Pablo Iglesias, has come from out of nowhere to lead the polls.

Podemos' economic manifesto includes debt restructuring, exiting the European Monetary Union, and a jobs program to end unemployment.

The plan was drawn up by Vincenç Navarro and Juan Torres, two Spanish economists.

Pablo Iglesias (party leader), Carolina Bescansa (party member) and economists Vincenç Navarro and Juan Torres, present Podemos' economic program.

Via translation from Libre Mercado, Podemos Admits Its Economic program Unfeasible Under Current Euro.

Globalization and National Sovereignty Incompatible

The document includes harsh criticism of globalization, stating  "democracy, national sovereignty and global economic integration are mutually incompatible."

Euro Trap

"Besides being quite integrated into the global economy, Spain is mostly integrated in the euro monetary union and this also represents a first order constraint when developing an economic program of government."

"Our membership of the single European currency means, as is well known, that do not have essential instruments of economic policy, as control over the amount of money or the external value of the currency. But not only that. It also means that other instruments which in principle could be at our disposal, such as fiscal policy and sectoral policies can only be used with great limitations and in some cases with hands completely tied."

"Spaniards should be aware that it is physically impossible that they can pursue policies that meet the national interest, within the euro as it is designed. Should know that the euro was conceived as a real trap, but nowhere is it written that people have to accept it without further."

Debt Restructuring

"Debt restructuring, especially the peripheral countries, is not a whimsical proposal but the result of a cooperative strategy which is much more favorable than that imposed so far and that can end a crisis far more serious and widespread. The only possible way out of this vicious circle is genuine restructuring of European and Spanish debt."

Job Creation Program

"Work towards full employment should be a priority of the government.  This can be achieved by stimulating the private sector, and where this is not enough, through job creation by the state to correct the huge deficit of social infrastructure including the expansion of public services of the welfare state, now clearly underfunded in Spain."

"If Spain had one person in five in public services, as did Sweden in 2010, there would be more than three million and additional jobs in our country."

Mish Comments

Other than to call for Spain to abandon the euro, Podemos' economic manifesto is economic nonsense. However, the manifesto is bound to have popular appeal.

Everyone likes to believe in the Keynesian free lunch concept. It's logical to expect some country in the eurozone is going to at some point be willing to try just that.

I keep repeating... "Eventually, there will come a time when a populist office-seeker will stand before the voters, hold up a copy of the EU treaty and (correctly) declare all the bail out debt foisted on their country to be null and void. That person will be elected."

It's quite possible Pablo Iglesias is just that person.

Mike "Mish" Shedlock

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