Facts<br />Unemployment of over 20 percent over the span of 10 years.<br />Undermines Prime Minister Zapatero’s fight to cut budget deficit.<br />Deficit is 3rd largest in the euro region.<br />
The scenario<br />Spanish borrowing costs have surged in the past two weeks on concern the country will struggle to push the deficit below the EU limit of 3 percent of economic output. <br />Standard & Poor’s cut Spain’s credit rating on April 28, saying the government was underestimating its fiscal problems and overestimating growth prospects. <br />Adding to public spending, Zapatero has extended benefits for the long-term unemployed.<br />
Budget deficit<br />11.2 percent of gross domestic product (GDP).<br />Spain’s budget shortfall was the third-biggest in the euro area last year. (Trailing only Greece and Ireland)<br />S&P said it expects the Spanish deficit to stay above 5 percent in 2013, the year the government has pledged to cut it to the EU’s 3 percent limit.<br />Crisis in Greece is “generating instability” that’s affecting Spain.<br />
‘Knock-On Implications’<br />The Socialist government has extended unemployment benefits for the long-term unemployed and 80 percent of those out of work receive some kind of subsidy, Labor Ministry data shows. <br />Spain has some of the highest firing costs for open-ended contracts in Europe, according to the World Bank’s Doing Business Index<br />Around a quarter of the country’s workers have temporary contracts. <br />The Bank of Spain says a labor-market overhaul is “urgent.”<br />
Banking System<br />Zapatero has pledged to maintain welfare payments even as he works to cut the budget shortfall.<br />Banco Santander SA Chief Executive Officer Alfredo Saenz said yesterday that changes to labor rules should be carried out immediately.<br />The surge in unemployment is eroding support for Zapatero, who was re-elected in 2008 on pledges of full employment. <br />
Unions Members March, Demand Bankers ‘Fix The Mess’<br />
Union member’s march<br />AFL-CIO President Richard Trumka led thousands of labor-union protesters in a march on Wall Street, chanting that investment banks must “fix the mess that you made” by paying more taxes and lending more money.<br />Special taxes for bank bonuses.<br />
“Make wall street pay” campaign<br />Nation’s largest organization of labor unions.<br />“Break Up Megabanks”<br />“Hey Big Banks – Less Bail, More Jail.”<br />Rallies target Goldman Sachs Group Inc.<br />+ Five biggest U.S. banks.<br />Police estimated that over 7500 people had gathered.<br />
‘Fed Up’<br />“The average person is just fed up with big business and Wall Street manipulation.”<br />Brendan Plunkett, 46, a corporate bond trader, was heading home to Essex Falls, New Jersey, as the marchers walked down Broadway.“If they care so much about the country, they should go to work and be productive and stop with the protests,” he said. “It’s all nonsense to me, and it always will be.”<br />
The tax<br />AFL-CIO urges Congress to impose a transaction tax on securities trading.<br />The U.S. Chamber of Commerce, the nation’s largest business lobbying group, opposes the tax, which it says would hurt more than bankers.<br />“Wall Street must create” and “not destroy real lives, real hopes, real dreams,” Trumka said. “The bankers, the brokers, and big shots on Wall Street must understand.”<br />
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