The Spanish government has just announced an austerity plan, which aims to reduce the public deficit from 11.4% in 2009 to just 3% in 2013 (see here for the article in El Pais in Spanish and here for the FT in English). A few reflections:
a. The Spanish government policy has been rather erratic in the last two years and there is not much sense of direction. The situation is obviously quite difficult, but it would have made more sense to evaluate the situation rightly and maintain consistent policies.
b. I thought the crisis had shifted the macroeconomic policy debate... but I am no longer sure. Yes, it is true that many countries have run high deficits, but the concentration on returning to stability as soon as possible is still dominant. More importantly, the favourite sentence of most politicians is still "we need to preserve market confidence". What is exactly what markets want at the moment? And should that be the only concern?
c. We probably should make more comparisons about the effects of the crisis in Southern Europe and the big Latin American countries. For once, the situation in the former seems to be much worse in the latter... Is it all about the housing market?