Which Economists Told the Wall Street Journal that 24% Unemployment Wasn’t “Dire?”

By William K. Black
Bloomington, MN: January 11, 2015

Sometimes it is the little things than make everything clear. The WSJ gem I ran across explains so much about what is wrong about economists and the Wall Street Journal. The headline of the January 9, 2015 article foreshadows the strong chance that the reader is about to be transported into a strange dimension: “Weak Industrial Data Suggest Eurozone Economy May Be Faltering.” I don’t know how to break this to Murdoch’s minions, but the word “may” is hilarious and “faltering” is a euphemism. Here’s the money quote.

“Though some economists caution that things in Germany and Spain aren’t dire, as both economies are expected still to have grown in the fourth quarter, conditions there remain challenging. Germany’s economy—the powerhouse of the eurozone—has stagnated through much of 2014 after an artificially strong first quarter of the year. Spain also has one of the highest rates of unemployment in Europe which, though falling, is at nearly 24%.”

Conditions are “challenging” – but not “dire” – in Spain?!? Six years after the peak of the financial crisis, Spain remains in a depression that has lasted longer and is more severe than the Great Depression. As I have explained in prior articles, in late 2014, Ollie Rehn, the troika’s propagandist-in-chief for austerity and TINA (“there is no alternative” to austerity) has admitted that under his most optimistic scenario (already wiped out by reality) Spain would need 10 more years (until 2024) to emerge from the “crisis.” Full recovery would take additional years. Spain’s economy was tanking in 2007, so Rehn is admitting that its crisis phase would, if all had gone well, end 17 years after it began. Youth unemployment in Spain is about 50 percent and the emigration of Spanish university graduates is commonplace. Spain’s “lost generation” really will be lost to Spain. Spain is not a “dire” situation, it is a catastrophe.

So, who are the economists that actually told the WSJ that conditions in Spain were not “dire?” We all understand why they didn’t want to be named, but why didn’t the WSJ name them, ask follow-up questions probing their callous and crazed claims, and scratch them off the list of people worth interviewing? For bonus points, the WSJ could have presented the views of what one fervently prays are the views of 99% of economists on the subject and then present reasoned and moral judgments about the reality of conditions in Spain and what it says about economists that their answer is to continue the failed policies and spread the myth of TINA.

Conclusion: The Unused Capacity of Europe’s Dominant Economists

The tragedy of unused capacity in Spain – denying millions of people who want to work and are capable of working the opportunity to work – is driven by the unused moral and intellectual capacity of Europe’s dominant economists, the TINAnauts, and aided and abetted by the financial media.