Letter to Chancellor Merkel: demand the ending of the Regions system

Three weeks ago the North American professor and historian David Spengler published a letter directed to you in The Asian Times in which he asked you to “let Spain collapse” and detailed the reasons to do so which went from incompetence, the squandering and the general corruption, which the different governments, fundamentally the regional ones, use the money received from the European institutions and where no one controls anything and no one answers to anything, which implies an assignment of the bulk of the public resources in such an absurd , inefficient way which beats anything imaginable. In addition, according to Dr. Spengler, the government lacks a plan or any strategy, lies massively about the reality of the economic banking and tax problems, and the debt is already unaffordable, coming to the conclusion that the situation has deteriorated irreversibly and consequently we cannot be saved.

Nevertheless, and still recognising the truthfulness of his statements, Spain not only can be saved but also does not even need the intervention which analysts and institutions consider inevitable, just the suppression of the regional system which is an annual waste of more than 120.000 million euros, equivalent to 12% of GDP. However the political oligarchy which governs us, opposes with all its strength to take apart this gigantic structure which they have built for their own benefit and the power to change this epic sacking has been taken out of the hands of the Spanish people. To this day the deficit of the regions and city councils is about 5.000 million euros and is met by the government with supposed “budget advances”, supposed because it will never be paid back, which raises the State deficit by 50% until April, annually equivalent to 10% GDP. Neither can they pay the debt on time, more than 25.000 millions which they expect the government to pay with the money from ECB.

With a total public debt, not only the accountable, of 118% GDP, a public deficit of 2012 estimated in more than 110,000 million and interest double the previous, the 4.5% GDP of the next 12 months, Spain has already passed the point of no return and it so happens that only you as the Chancellor of Germany and the most qualified leader of the democratic world has the power and dare I say, the duty to put an end to a situation which will entail in a short time not only the ruin of my country but also the end of the euro zone. So to avoid this it would be sufficient to force –conditioning “sine qua non” whatever help-  the political oligarchy to radically reform the regional institutions which are responsible for two thirds of the public expenditure of the country. It is precisely there, Chancellor where the Spanish people desperately  need your help, to terminate immediately the massive loans of ECB, handed over unconditionally, without control and where not even one euro goes towards the productive economy.

As you know perfectly well, because you experienced it at close hand, Spain has been governed for more than seven years by an illiterate, and in spite of the popular illusions placed on the change, Rodríguez Zapatero has been substituted by Mariano Rajoy, who has no plan and no intention of having one, all the measures taken are either useless or have gone in the opposite direction. Both, together with how their own political parties work, form exclusively an oligarchy of common interest and never working for the interest of Spain. For them the party and personal benefits are much more important than the interest of the nation, which at all cost makes them maintain a type of nation whose waste and corruption is leading the country to ruin.

It is all about an example which divided the country in 17 independent regions, totally opposing except two, to the History and the objective reality of Spain. These regions, whose powers more than double those of the federal states, are a way in which the political oligarchy put family, friends and party followers in positions, by doing so creating the equivalent of 17 mini states with all their own governing state bodies, from 17 parliaments to 19 public televisions, from 23 universities without justifiable students, to 22 airports with only 300 passengers each month, to fully equipped sports centres in areas with hardly 1.000 inhabitants or 30.000 official cars, more than there are in U.S.A. To that add 8.200 City Councils when no more than 3.000 are justified and with amounts of squandering unknown in Europe, Madrid alone, the most indebted capital in Europe –officially 120% GDP but 180% really- has 1.500 useless advisers, 200 official cars and has spent 500 million euros renovating the most luxurious palace headquarters in all the western world.

Firstly tens of thousands were placed, then hundreds of thousands and today there is a total of two million civil servants – this being the principal cause of the brutal level of unemployment as in Spain, each public job destroys 2.8 jobs in the private sector- also where as not to give any explanations to anyone, as many as 4,000 public companies were created, the great cover-up of public waste, an enormous web hiding debt and corruption, 450.000 people personally employed with salaries 45% more than the average in the private sector. The bulk of the banking crisis would also arise from the model of the state. 45% of the bank deposits up to the year 2000 was concentrated in the savings banks, which had been the reference for the humble Spanish classes during nearly two centuries, were converted into the preferred booty of the regional Presidents, that put politicians and not professionals in charge with the objective of being able to enjoy virtually unlimited economical power to finance their absurd works and unheard of craziness.

Twenty irresponsible and morally corrupt “agents”, supported economically and politically interrelated to the 14 regional Presidents who guaranteed that firstly the Bank of Spain would not intervene, and the cover up of the true balance after, would finance their unheard of building projects which together with their monumental works would lead the majority of these bicentenary institutions to bankruptcy in just eight years.  PP and PSOE made a pact of silence so that not one of those responsible for such a catastrophe would be accused.  Sr Rajoy would play the leading role in the last action in agreement with PSOE and the nationalists, not to accuse the Governor of the Bank of Spain of grave failure of not fulfilling his obligations in exchange for silence.

Altogether, this situation has lead Spain to a level of public and private debt in the region of 400% GDP, the highest of the planet, a sum that can never be returned. But while the debt of non-financial companies and families, somewhat less than half of the total, is reducing that of the financial institutions and the Government, it does not cease to increase and the ECB is the one principally responsible for this with its uncontrolled loans which will ruin Spain for several generations to come. It is obvious that the bank bail out has been absolutely insufficient, firstly because the financial sector needs at least double, secondly because of the vicious circle of bankrupt banks buying government stock and cashing it in the ECB, in order to maintain the current expenditure of a bankrupt state, which at the same time has got itself into debt to save those very same bankrupt banks, only the simultaneous action on the financial system and the model of the State makes any sense. To state that, as Sr Rajoy says, this can only be put right with more Europe, that is to say with more debt is a monstrosity and will ruin us for several generations.

However, if the inevitable bailing out takes place indiscriminately, without knowing the economic reality of the country, cutting salaries and loans and raising taxes, without getting to the root of the squandering, the result would be a historical disaster and misery and hunger for millions. For this reason, Chancellor as the only person today in a position to help the Spanish people, I ask for your help, before the bailing out insist on the abolition of the economic madness which involves the present territorial administration.  The elimination of a useless expense of  120.000 million euros annually, would permit the reduction of the debt and create in a relatively short time significant employment, meanwhile the alternative would lead to a brutal internal deflation and the maintenance of a ludicrous assignment of resources, with devastating economic and social consequences. Almost unimaginable suffering for the present and future Spanish people so that the incompetent and morally corrupt, political oligarchy can maintain their privileges.

Yours sincerely,

Roberto Centeno, Professor of Economics, Polytechnic University of Madrid

(Copies sent to Wolfgang Schäuble, Finance Minister; Olli Rehn, Economic Affairs and Euro Commisioner and Mario Draghi, President of ECB)