Spain became the latest euro zone country to announce sweeping austerity measures on Wednesday as the executive European Commission sought unprecedented power to pre-vet national budgets.
Prime Minister Jose Luis Rodriguez Zapatero said Madrid would slash civil service pay by 5 percent this year, freeze it in 2011, cut investment spending and pensions and axe 13,000 public sector jobs in a drive to meet EU deficit targets.
The country must be aware of the deflationary impact these measures will have on its economy. A double-dip recession for much of Europe is virtually assured now. I find it telling that the U.S. is urging action prior to each announced decision at every key step of this bailout. Future historians will identify Tim Geithner and Ben Bernanke as the architects of the EU/IMF bailout.
Elites have had a lot to say about "global governance" in recent years. They can now put their theories to the test. John Robb at Global Guerrillas argues that the West's nation-states will lose their battle with the global financial marketplace and he is largely correct. Transnational institutions like the EU and IMF are useful proxies for the global marketplace. One path to prosperity is correctly anticipating the elite's next move. I'll hazard a guess: The evolution of IMF special drawing rights into a true global currency, probably backed by a basket of commodities. All it needs is a catchy name that dosen't translate into anything offensive in a widely-used language.
