Sunday, April 28, 2013


The Keystone Keynesian Klowns are going to have a delightful time explaining the meltdown of Europe, which has only just begun.

Five years after its housing boom turned to bust, Spanish unemployment hit a record high of 27.2 percent in the first quarter of 2013. It's almost too horrible to comprehend, but 19.5 percent of the total workforce has not had a job in the past six months; 15.3 percent have not in the past year; and 9.2 percent have not in the past two years. You can see this 1930s-style catastrophe in the chart below from the National Statistics Institute.

...the real story of the Spanish depression has been the story of the indignados: the mostly young, long-term unemployed. It's a bit hard to see just how dramatic it's been in the chart above, so I converted it to a line chart below. Almost all of the increase in unemployment since 2010 has been due to the increase in long-term unemployment of two years or more...

In other words, unemployment is a trap people fall into, but can't fall out of... That is what a permanent underclass looks like.

This debt-fueled madness will, of course, end in war and misery -- as it has throughout human history.

And Paul Krugman was, you may recall, an early champion of the Euro experiment. Combined with his stint at Enron, championing the housing bubble, and endorsing Fannie Mae's subprime extravaganza, the midget propaganconomist has a track record only Jamie Gorelick could love.

Hat tip: BadBlue Financial News.

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