Figures released by the Spanish government on Friday show that country with an unemployment rate of 24.4%, the highest in Europe, and a rate of over 50% among 16-24 year olds.
But despite the bad economic news, that country's leadership appears determined to stick with the austerity program it has pursued for the last two years and has even recently announcing an increase in consumer taxes for next year.
According to the San Francisco Chronicle, "Prime Minister Mariano Rajoy passed a plan in February to make it cheaper for employers to let workers go while raising taxes and cutting spending including health care and education."
As explained by The New York Times, the Spanish government's hope has been that even if growth and jobs suffer from draconian budget cuts, the lower interest rates that result will keep bond investors happy. But instead, foreign capital has been fleeing the country.
Standard & Poor's just downgraded Spanish bonds by two notches, confirming a sense among investors that "it will be nearly impossible for Spain to meet its current deficit-lowering target amid one of the most severe recessions in the euro zone."
Even The Wall Street Journal notes that "austerity only works if government finances are not taken under by a collapse in tax receipts due to high unemployment." And it quotes Nobel Prize-winning economist Joseph Stiglitz as saying, “There has never been any successful austerity program in any large country. The European approach definitely is the least promising. I think Europe is headed to a suicide,”
This video is from AFP, April 27, 2012.