Today’s Wall Street Journal has a very fine front page article on separatist movements and parties within the EU, especially in Spain (“Europe’s Crisis Spawns Calls For a Breakup—Of Spain”). In Catalonia, independence parties are expected to prevail in regional elections on November 25. Pro-independence parties have already won control of parliament in Basque Country. Elsewhere in Europe, Belgium sports a powerful separatist movement in Dutch-speaking Flanders. One could add (although the Journal does not) that Scotland is displaying similar tendencies. And in Italy and even in Germany, regional tensions are on the rise.
Earlier posts have described Argentina’s fiscal federalism as a real-world picture of what U.S. federalism may look like ten or twenty years hence: escalating federal transfer payments; profligacy and dysfunction at all levels of government; reckless state gambles on federal bailouts; public insolvencies and increasingly desperate central interventions. However, fiscal federalism—that is, central tax authority, coupled with local authority to spend and borrow—is a disaster just about everywhere one looks. Lately, the global bond markets have been looking at Spain.