Spain Feels the Pressure

To this point Spain's economy hasn't suffered as much as Portugal, Greece, or Ireland, but that doesn't mean things are going well. Economic pressures continue to mount, and Spain faces the same exchange rate pressures as those other countries. A currency devaluation would help boost competitiveness and thus employment, but that isn't possible under the euro. In a fixed exchange rate system, internal devaluation via wage cuts and increased unemployment is the only option. And democratic publics don't like that very much:

About 28,000 people, most of them young, spent Friday night in Puerta del Sol, a main square in downtown Madrid, the police said. They stayed even as the protest ban went into effect at midnight under rules that bring an official end to campaigning before the election in 13 of Spain’s 17 regions and in more than 8,000 municipalities.

Fueling the demonstrators’ anger is the perceived failure by politicians to alleviate the hardships imposed on a struggling population. The unemployment rate in Spain is 21 percent.

And Spain looks likely to be the next European country to tilt right since the economic crisis:

Sunday’s election is expected to result in a countrywide sweep by the Popular Party, the main center-right opposition, at the expense of the governing Socialists, whose popularity has plummeted because of the economic crisis. The most recent opinion polls suggest that the Socialist Party may lose in regions and municipalities where it has been in power since Spain’s return to democracy in the late 1970s, notably Castilla-La Mancha.

There are other issues at stake, including concerns about corruption, but those get magnified when unemployment is at 21%. Some folks on Twitter are saying that the police tried to break up some protests, but I haven't seen a credible report on that yet. Either way, these issues aren't going away.