Eurozone Q4 GDP Growth Disappoints

GDP releases are, by their very nature, lagging indicators and thus do not tell us a whole lot about the current momentum in an economy. Moreover, the immediate focus of attention in the Eurozone remains, and rightly so, the situation in Greece (and Spain), and what precise plans are likely to emerge from the busy schedule meetings which is taking place between Eurogroup and EU finance ministers and heads of states. Yet, despite all the known shortcomings, GDP data remains our basic source of information about the health and progress of our economies, and with the Q4 data out today and the 2009 GDP summary we are able to arrive at some sort of interim conclusion [1] on what was obvioiusly an absolutely abysmal 2009. More importantly we are also able to take stock of a recovery which permanently promises to arrive, but never actually seems to do so, much to the chagrin, I am sure, of the various Eurozone policy makers (click for better viewing)

Call me smug if you will, but I for one am not surprised to see that France is all over this reading and basically it is thanks to France that the Eurozone is seeing growth at all. I would venture the claim that this is the beginning of a trend. In terms of the figures, the Eurozone (EU16) grew 0.1% from Q3 when the economy pulled out of recession by growing 0.4% qoq. The figure was primarily held down by continuing contractions in Greece and Spain (-0.8% and -0.1% respectively) as well as of course the stagnation in Germany where the growth rate was flat at 0% qoq after a strong showing in Q3. In Italy, the strong rebound in Q3 GDP at 0.6% qoq was somewhat given back in the form of a -0.2 contraction in Q4.

Year on year, Eurozone output fell by 2.1% with Germany, Greece, France, Spain, and Italy contracting 2.4%, 2.6%, 0.3%, 3.1 and 2.8% respectively.

The biggest losers with respect to national output remain Spain and Greece. Yet, the rest, save France, do not seem to be able to take up the slack for the these two hitherto dynamic sources of demand. The Economist pinpoints the order du jour quite adequately;

The main problem is a familiar one: consumers within the euro zone are not spending enough and the strong currency is making it hard to tap demand in the rest of the world. The best hope for a home-grown stimulus is Germany, where firms and consumers had practised thrift when the rest of the world indulged in a spending boom. Sadly Germany still relies too heavily on exports. Consumer spending and investment both fell in the fourth quarter and were it not for a boost from foreign trade, the German economy would have shrunk. This week Axel Weber, the head of Germany’s central bank, gave warning that cold weather could mean that GDP falls in the current quarter.

Other countries are tapped out. Spain was once a rich source of internal euro-area demand but its consumers are now weighed down by debts accumulated during a long housing boom. The unemployment rate is perilously close to 20% and its rigid jobs markets mean it is unlikely to come down soon. Bond-market pressures mean Spain’s government is having to withdraw some of its support to the economy sooner than it would like. The wonder is that Spain is not in a deeper funk. GDP fell by 3.1% in the year to the fourth quarter, not much worse than in Germany.

Basically, this is like a relay race where the change of baton has gone horribly wrong. Consequently, we were supposed to see a rebalancing of intra-Eurozone growth whereby the consumers of Spain, Greece etc were given a much needed break with those of particularly Germany taking over. This has not materialised and while France is still standing strong it is hardly enough to propel the entire Eurozone economy let alone its export dependent economies growing rapidly in number. I have argued several times that this exactly is now set to be an enduring feature of the Eurozone as an economic entity which of course makes it even harder for those intra-Eurozone imbalances to be resolved in an orderly manner.

Additionally, Eurozone growth or the lack of an even more catastrophic contraction in some member countries is still driven by large fiscal deficits. In this way, it does not take much economic intuition to see that if 2010 is set to be the year of the big fiscal scare (in a global context) the natural and inevitable retrenchment of fiscal deficit spending is going to reveal, in all certainty, just what the underlying growth momentum is. Personally, this is where I think the biggest negative surprise will come in terms of overall activity measured by national output.

More generally something, naturally, has to give here and according to the FT’s Martin Wolf, Germany needs to return the favor as he puts it, or more specifically; the Eurozone needs German consumers.

(…) Germany was able to offset extreme domestic demand weakness with robust external demand, from both inside and outside the eurozone. Indeed, as much as 70 per cent of the increase in Germany’s GDP between 1999 and 2007 was accounted for by the increase in its net exports.

Germany needs to return the favour. More precisely, the only way for eurozone countries to slash huge fiscal deficits, without their economies collapsing, is to engineer another private-sector credit bubble or a huge expansion in net exports. The former is undesirable. The latter requires improved competitiveness and buoyant external demand. At present, none of this is available. It is difficult to regain competitiveness when the euro is strong, partly because Germany is so competitive, and eurozone inflation also so low.

This argument is similar to one Mr. Wolf made recently on Japan and in the context of which he and I had a tête-à-tête on just what the possibilities are for Japan’s economy and its consumers to stage a recovery driven by domestic demand. My argument and beef with Mr Wolf is the same here. Thus, it is not because I think that Wolf is wrong and certainly not because I cannot see the fundamental need for Germany to attempt a rebalancing of its economy. However, the key question here is not what Germany needs to do, but whether it is feasible to expect Germany to pull forward the Eurozone through growth in domestic demand? I think it is not and I think you need to take a long hard look at the increasingly ageing German population and how this feeds into the ability of the economy to generate growth based on domestic demand.

Yet, as Martin Wolf adequately pointed out to me during our bataille on Japan that argument hardly brings anything to the table in terms of solution. I concur that it does not in the state that I present here. Yet, the consequence of the argument (and thus in some sense the solution) is very clear I think. If the Eurozone before the financial crisis had economies that were able, or who were allowed/pushed onto an unsustainable growth path where domestic demand/credit flourished it does not have these economies anymore (save perhaps France). It follows logically from this that while Germany (and Italy) was the main export dependent economy in the Eurozone before the financial crisis, the whole Eurozone is now effectively dependent on exports to grow. Notwithstanding the Economist’s point that this means the recent weakening of the Euro is actually a blessing, it also provides a very important perspective to the discourse on the global imbalances and how to unwind them.

Post script:

It is all about the Eurozone at the moment of course and not so much about the Q4 reading but more fundamentally about the Eurozone/EU itself in the wake of the growing economic crisis in Spain and most notably Greece. My good friend Edward Hugh is pretty much pushing forward the discourse at this point (on Spain and in general) especially with his new blog for the newspaper Expansion (in Spanish!, but see also this) as well as his amusing yet important post on Chart Wars featuring as prominent a cast as the recent economics nobel laureate Paul Krugman and the Kingdom of Spain itself. Meanwhile, in a different media another good acquaintance of mine, Jonathan Tepper from Variant Perception, has an interview on the economic situation in Spain which is also much worth a look. Finally, I had a piece this week on the Guardian’s Comment is Free edifice which got a host of interesting comments.

So, enjoy reading!

[1] – We don’t have a detailed break-down yet on the country and Eurozone-wide level.

24 thoughts on “Eurozone Q4 GDP Growth Disappoints

  1. Hello,

    I think you misplaced France and Spain numbers in the following statement:

    For the whole year, the Eurozone contracted 2.1% annualised with Germany, Greece, France, Spain, and Italy contracting 2.4%, 1.8%, 3.1%, 0.2% and 2.8% respectively.

  2. It is very curious that in that graph Spain does better than France in six of the twelve quarters reflected and better than the average of europe in eight. Yet one would understand with the interpretation that Spain is doing far far worst than France, and that the EU is presenting any good figures just because of the later, while the former is pulling the rest downward. I know that Spain and talking doom about it is the soup of the day, but sometimes this obsession borders the ridicule.

  3. Jeronimo, I don’t know whether you’ve gotten hold of this point, but Spain had a housing bubble, one of the worst on the planet, that is why the growth was so high. I think people in France are basically happy that this didn’t happen to them. It’s what happens next that matters, you know, 15 good years followed by 15 bad ones. As I said, you are entitled to your point of view, and I hope it works out for you, but I live in Spain, and it doesn’t make me happy to see my friends losing their jobs, or having their businesses ruined, or having to watch their children emmigrate since prospects are now so bad.

    And the first step towards putting all this straight is to recognise the situation we are in, and that we need help from our EU partners.

  4. Edward,
    I hope you understand that is not enough saying something for it to be true, this might be the first rule behind the first step. If you talk about “spanish housing price bubble” you have to explain how a market swamped with supply (spanish residential construction was as big as french, british, german and italian put together) can produce a price bubble. That goes against the most simple rule in economics, supply and demand fix the price and excess supply lowers the price. You also say that the bubble is in the past (you used ‘had’) but prices have gone down far less than in the USA, UK or even France; they are even rotating up now in a number of places. Defaults on mortgages are also lower than on those countries. Not a single bank has gone bust for that issue as in the UK, France, Germany, Belgium, etc
    Of course I am entitled to an opinion and so are you. Everybody can have one but no one can have their own data. If the data where you support your argument resides in the future, in those supposed 15 years of downturn that you predict, then your opinion does not have any data behind.
    Spain has endured the biggest population growth of europe, one in every two arriving in EU15 settled in Spain. Talk about the sons of your friends emigrating, but remember the millions of immigrants that have arrived to Spain these years (are you sorry for their parents? more than four million immigrants have come to Spain). I am spanish myself so I also have fingers in the cake. Also are spanish the people that respond to the ICO interview and express their good expectations in the future of the economy, they seem to disagree with the bad prospects you foresee.
    Regarding unemployment, as you point in one of your articles, those losing their jobs are mostly unskilled workers in the construction sector, which as I have said in a number of posts have never been more than 15% of the spanish GDP. Something very regrettable but far from being a scenery of gloom. Look, Spain has had higher unemployment rate than the one it has now in a very not far away past. In that occasion it was not a global crisis but a local one involving the dismantling of many industries. Those were skilled workers. This time it is unskilled labour and at the same time Spain has got in the first position in many high tech business with very good growth future ahead. I recommend you to, for example, take a look at ree.es the website that tracks electricity production in Spain. There you can see records from past years and see how Spain has reduced its dependency on fossil fuels for electricity production by 40% in a very short period of time. Other countries will want to do the same and spanish companies will be there to sell them the knowhow and the technology. You can also look to see where have the cars manufacturers located their first production plants for electrical vehicles (hint, Renault did not chose france but Valladolid), etc.
    We not only need help from our european partners, we can also help them on many issues (Apparently Richard Branson was saying the other day that unless Britain changes the way it manages its transport network and it stops its reliance in petrol there will be shortages of basic products in five to eight years. We can show them how to use electric trains instead of diesel and to have them running from the electricity produced by wind turbines). But that is nothing new, that is what partnerships are about.

    http://www.dailymail.co.uk/news/article-1249884/Britain-faces-oil-crunch-years-Richard-Branson-warns.html

    http://www.ree.es/ingles/home.asp

    http://www.ree.es/ingles/operacion/comprobar_ines.asp?Fichero=12022010

    http://www.ree.es/ingles/operacion/comprobar_ines.asp?Fichero=12022006

    http://news.bbc.co.uk/1/hi/business/8501348.stm

    http://www.industryweek.com/articles/minister_suggests_renault_could_make_second_electric_car_in_spain_20819.aspx

  5. Hi Jeronimo,

    “I hope you understand that is not enough saying something for it to be true”

    I certainly do, this is why I disagreed so much with the recent Kingdom of Spain presentation in London. Apart from the fact that they underdeclared the level of bond issuing they would need to do this year, they completely failed to declare that the data they presented revealed Spain to have been a massive imports powerhouse.

    Let me explain:

    The Kingdom of Spain suggests that far from being subject to a continuing deterioration Spain’s tradeables sector (on aggregate) has maintained its share of world trade over the last decade. But there is something intuitively wrong with this argument, and what that something is becomes evident if you consider that Spain was running a growing trade deficit over the whole period in question. Now global imports = global exports (by definition, trade is zero sum) and since Spain’s trade deficit deteriorated over the period imports grew more than exports. Thus logically Spain’s import share grew more than it’s export share in world trade. That is Spain became a growing force in world IMPORTS. Somehow no one from the Kingdom of Spain mentioned this inconvenient little detail during their London roadshow since the country’s representatives seem to be more focused on winning arguments with the perceived enemy – the Anglo Saxon press – than on finding real solutions to real problems. There is also a simple explanation as to why Spain’s tradeable sector gives the appearance of being so competitive, and that is the non-competitive parts were simply driven out of business, and the demand for their products was met by imports. And this is just why Spain’s current situation is so unsustainable. To get back to growth Spain has to start supplying a higher percentage of its own needs internally, and it has to find work for a large number of low skilled workers, and there is simply no way round the issue.

  6. Again Jeronimo:

    “If you talk about “spanish housing price bubble” you have to explain how a market swamped with supply (spanish residential construction was as big as french, british, german and italian put together) can produce a price bubble. That goes against the most simple rule in economics, supply and demand fix the price and excess supply lowers the price.”

    This is exactly the point. In a market economy price would adjust downwards to clear the surplus, but in Spain it doesn’t, or at least not enough (only around 15% from peak) to clear the backlog. This is because Spain has invented – as one witty blogger put it – the theory of the “no market” economy, as banks prop up zombie developers, renegotiate mortgages with distressed households, and aquire any houses that miraculously escape the net and actually enter the market as their own property.

    Basically the Spanish housing market is dead, even the subasteros haven’t got funding so there are no subastas (auctions). The whole thing is one massive, self-deluding fiction, but all this will come to an end when the ECB stop funding the show, and the Spanish government starts to fix its deficit problem.

  7. And….

    “Spain has endured the biggest population growth of europe, one in every two arriving in EU15 settled in Spain. Talk about the sons of your friends emigrating, but remember the millions of immigrants that have arrived to Spain these years (are you sorry for their parents?”

    Yep, this was part of the bubble, since the Spanish themselves have been having very few children over the last thirty years (TFR around 1.3). But haven’t you heard, the migrant flows are reversing. According to the latest data from the Padron Municipal last September (see January population nowcast excel at INE) the net flow was almost zero, and by now we are surely in negative territory. The big danger is now that Spain’s population drops just as quickly as it rose, since if there are no jobs, who can afford to stay? Even the 420 euro a month payment will eventually run out.

    Face up to it man, the last 15 years of continuous growth were a complete national disaster, and now it is time to clean up the mess. I don’t think simply denying this evident reality does Spain any service at all.

  8. Jeronimo, one question, so we know where we are.

    At the present time the Spanish King, Juan Carlos, has added his name to the growing list of public figures (Felipe Gonzalez, Carlos Solchaga, Joaquin Almunia, Perdo Solbes, Miguel Angel Fernandz Ordoñez) who have expressed concern about where exactly it is that Spain is headed right now.

    In a gesture which is reminiscent of the role he played during the transition to democracy, he is conducting a round of consultations with all the Spanish social partners to try to get a consensus behind the programme of sacrifices that will now be presented to the Spanish people.

    Do you think he is basically wasting his time here, since there is no real problem to be sorted out?

  9. Pingback: Ya está aquí la Europa de las dos velocidades « Un caballo de cartón

  10. Edward,

    I am sure you know about the ‘straw man’ fallacy because you use it constantly. Who are you talking to? Your straw man or me? When have I said “there is no problem to short out”? Why do you say that the minister ‘suggests’ something which isn’t explicit anywhere but in your words and then discuss it as if it was her argument? Or why do you say that the intention of the road show was to win arguments and not to solve problems? How can you be so arrogant? Why if someone contradicts you with data is denying the evidence and not doing favors? How can you, or those who think like you, be the ones that are entitled to the side of ‘reality’ and the generosity of doing favors to others? Why do you reckon you are right before listening other’s arguments when you are talking about an unknown as is the future?

    Lets go with the issues one by one. First, the ‘road show’ was about spanish public debt and intended to clarify that the spanish case had nothing to do with the greek one. Spanish debt is about half OECD average, spanish interest payments (as percentage of GDP) are below France’s, Germany’s, the average, etc… and have been going downwards because of the level of debt and because of lower interest rates. In the worst case scenario (the one painted by the prophets) spanish debt will not reach the current level of Germany, not to mention Belgium or Italy. That was the issue, public debt. None of this was reflected by those you call ‘the enemies’ or the favor doers. There is a very clear graph of debt/GDP and another of GDP/interest payments which you seem to want to ignore.

    Then there is the issue of wanting to burn the candle by both ends. On one side you say that Spain has to produce more of its internal needs and find jobs for people (both things actually complement each other very nicely), and on the other you say that the population is shrinking. Of course the later is not true but if it were there you’d have jobs that would not need to be created and demand that would not need to be fulfilled. But hey! you need arguments for every issue even if they contradict themselves. Now if you have that INE population excel handy, please take a look at the figures that show the number of employed workers in relation to people perceiving a public pension (2.06 in 1996; 2.57 now). You will see that we never had it better. That is why the system runs a surplus and doesn’t need any money from the government budget as it already happens in many countries. There was a downward trend at the end of last century which has turned upward. Then, fifteen years ago, there were people talking about the unsustainability of the proportion and the trend. They kept silence for sometime only to return now with the same boring/fantastic/so called realistic and favor doing doom stories.

    Spanish trade sector was running a deficit. Curiously the trend has changed in the last two years and now it has almost been halved. It is funny how you focus on some trend changes (like unemployment or immigration) and not in others. Personally I think that halving the trade deficit is something spectacular in the current conditions, considering the rise in unemployment and the global situation. But to you it seems an interesting figure only when it goes down and can fit in your scheme. For this indicator you focus on the data before the change of trend.

    The spanish housing market moved last year 400.000 sales. Something completely in tune with spanish population. The same level that there is in the rest of Europe. You call it dead but I’d say it is a very healthy corpse. Of course it is not the level of previous years, but hey, we do not have the same level of immigration nor are the rest of european countries in an economical position to keep purchasing second homes in our shores. This thing about banks propping the market I think you got it wrong and you might be talking about UK banks. Spanish banks have always had developing companies in their books. Metrovacesa used to belong to BBVA and Urbis to Banesto. It is absolutely something normal that they hold property in their books. It is even a great business because they are acquiring assets from developers at a discount over building price, far below from market price. And remember one very important thing: in Spain mortgages are loans with recourse, that means that is not enough to hand over the keys (as it happens in the USA), the borrower and his guarantors are liable to all interest payments capital and expenses with present or future wealth or income. Spanish banks have lower default rates than european banks, definitely lower than UK banks.

    The thing you mention about the King of Spain is most laughable. So to you it is an exceptionally interesting point that the head of state calls the parties. I wonder if you think the same when the president of the italian or french republics meet their political leaders to talk about current issues. How about when the King of Belgium had meetings for months simply to arrange a government after their elections? And this is happening in the midst of a global crisis. Obama visited the other day the republican caucus, I don’t know what reading you give to this unusual fact.

    Sorry mate but one thing is agreeing that there is a global crisis and a very different one is bracing for the end of the world much less focusing that event in just one country.

  11. Jeronimo,

    “Spanish debt is about half OECD average, spanish interest payments (as percentage of GDP) are below France’s, Germany’s, the average, etc… and have been going downwards because of the level of debt and because of lower interest rates.”

    Excuse me, but what the hell are you talking about?

    Spain’s debt to gdp – 2008: 40% – 2009: 55% of GDP – 2010: 66.3% (Eurostat November 2009 estimate) – 2011 74% (EU Commission November 2009 estimate).

    This is going down?

    “In the worst case scenario (the one painted by the prophets) spanish debt will not reach the current level of Germany, not to mention Belgium or Italy.”

    Germany’s debt to gdp – 2008: 65.9% – 2009: 73.1% of GDP – 2010: 76.7% (Eurostat November estimate) – 2011 79.7% (EU Commission November 2009 estimate)

    This isn’t the worst case scenario, it is a reasonably optimistic EU Commission forecast. Unless Spain changes course she will overtake Germany in the great debt race in 2012.

    “There is a very clear graph of debt/GDP and another of GDP/interest payments which you seem to want to ignore.”

    I’ve got graphs of Spanish debt to GDP all over my posts, and you know that perfectly well. One thing no one can accuse me of is not having charts. But you seem to the first person who is valiant enough to attempt the impossible, I should at least give you credit for that.

    “why do you say that the intention of the road show was to win arguments and not to solve problems?”

    Because that is what it was. The presentation was intellectually insolvent, which is what the country will soon be with this type of leadership.

    “the ‘road show’ was about spanish public debt and intended to clarify that the spanish case had nothing to do with the greek one”.

    This is what I mean. They tried to clarify something which it wasn’t possible to clarify. The Spanish case is worse than the Greek one in the longer term. Greece has a bigger short term financing problem, that is the only significant difference. That and the fact that Spain has a huge housing bubble to clean up, and Greece doesn’t.

    As I said, we are living in different worlds, but I wish you good luck in yours.

  12. Edward, just the first one cause I’ve got to go:

    I’m talking about literally what I mention:

    “Spanish debt is about half OECD average, spanish interest payments (as percentage of GDP) are below France’s, Germany’s, the average, etc… and have been going downwards because of the level of debt and because of lower interest rates.”

    If you read you will see I am saying “interest payments” (not ratio of Debt/GDP) going down. Which is a fact.

    When I talk about ratio Debt/GDP I say:

    “Spanish debt is about half OECD average” Which is also a fact.

    and also:

    “In the worst case scenario (the one painted by the prophets) spanish debt will not reach the current level of Germany, not to mention Belgium or Italy.” Which is also a fact with the figures you bring.

  13. Definitely we are living in two different worlds. In my case I do not speak about the future as if it was a known fact. You seem to be living the life of Dr. Who going back and forward with data from today and the past and predictions from the future, adapting the later to your thesis. I do not need to say that I am right including in my argument things that have not happened.

    The road show that you say that did not clarify anything because it was impossible, managed to bring the spread with the German Bund almost one third. Of course that being a fact of present reality is weightless in your fantasy future built with predictions.

  14. Incidentally Jeronimo,

    “On one side you say that Spain has to produce more of its internal needs and find jobs for people (both things actually complement each other very nicely), and on the other you say that the population is shrinking.”

    What I am saying is that wages and prices have to become competitive to facilitate this job creation, and make it more attractive to buy made in Spain products than to buy imports.

    “Now if you have that INE population excel handy, please take a look at the figures that show the number of employed workers in relation to people perceiving a public pension (2.06 in 1996; 2.57 now).”

    Absolutely. We are now in the most favourable moment. But this situation won’t last, as the large boom generation (which in part fuelled the demand for houses) ages. Spain needs the migrants to maintain pension sustainability in the face of population ageing, and to put a platform under the housing market collapse, which is why I think we should be doing more than just offering 420 euros a month to stay at home to try to persuade them to stay.

    I am not saying the population is falling dramatically yet (although it may well be slightly) but that the big danger is that it will now fall just as dramatically as it has come up. This is because the employment increase wasn’t a sustainable one, but driven by a low interest fuelled property boom.

    The two objectives, more internal production and more jobs, naturally complement each other, if the pricing is right. But as I show in the charts on my charts war post, the ECB liquidity driven enhancement in demand went straight into buying imports, and this is the problem. This is what economics is all about.

    At the moment, and despite the government deficit fuelled support for demand, unemployment is simply going up and up as more and more jobs are getting destroyed. And so it will go on, until something is done.

  15. Jeronimo,

    “In my case I do not speak about the future as if it was a known fact.”

    I think you touch on a very important point here. A cultural one: attitudes towards mañana. I don’t know the future exactly, but I do have some scientific training, and some ability to follow economic trends. What I try to do is present an analysis which can help us foresee some of the difficulties in front of us before we hit them.

    The “unknowability” of the future view simply means you crash the car without seeing the wall that is standing in your way. I have been basically writing about the Spanish crisis since it broke out in August 2007, and I am quite happy that the general lines of my analysis have been confirmed. I don’t know too many other people who can say that. Perhaps that’s why you call me arrogant.

    The Spanish verb Espero means (in English) I hope, I expect, and I wait. Most of the Spanish discourse about the crisis is based on a fushion of the two first meanings, as if simply by accepting that what is happening is actually happening you help it to happen.

    As I say, two different cultures, passing each other in the Ocean of discourse like ships in the night. Communication is very difficult. Possibly impossible.

  16. Because I also have a scientific training I have also firm views regarding this issue. On the contrary to what you say I never use the form “espero” because that lives in the future. It is actually you the one that talks about the future as if they was a fact. I simply never argue about the future, I do argue though with those that use it as a value of truth for descriptions of PRESENT situations in sentences like:
    -Unless Spain changes course she WILL overtake Germany in the great debt race in 2012. (as it was even a big deal even though it has not even happened! to have as much debt as the leading economy)
    -The Spanish case IS worse than the Greek one in the LONGER term. (Talking about to countries, one with 50% of GDP debt other with 130% of GDP, one with 70 points spread, another with 270 points spread)
    -…

    And I am sorry but those examples of the moving car going towards a wall or the rising sun of every morning in the east are complete bollocks. They do not have anything to do with the issue at hand. But are just a simplification: the wall for the car lives in the present, the wall that you paint is in your imaginary future, they completely different things. Saying that this is a cultural issue and mentioning ships is funny when you happen to come from the country that built the “unsinkable” liner.

  17. egarding your track record of predictions, just let others be the judge of that. Did you ever predict that spanish recession would start later, be shallower and last less quarters than the German or French one? Well that has happened.

    PS: About the unsinkable ship, I agree that on our side we built The Invincible Armada. There, just to show you that we are not so far apart culturally.

  18. I predicted Jeronimo that the Spanish economy would not return to sustainable growth, or start creating employment without an internal devaluation to restore export competitiveness. This is still the case. I have also said that the crisis isn’t over yet, in fact for the majority of Spanish people it has hardly even got going. This year people will start to notice.

    Incidentally, I also suggested after the October 2008 Paris meeting to guarantee the banks that the problem would become a financial crisis of the state, and the hard part would start in 2011. Again, I am still here, and I am still saying that.

    “Did you ever predict that spanish recession would start later, be shallower and last less quarters than the German or French one?”

    Don’t you ever get anything right? The French economy contracted a lot less than the Spanish one, and the French recession ended two quarters ago, while the Spanish one continues, with little in the way of relief in sight. I am beginning to get the impression that whatever I say you will simply say the opposite – whatever the facts of the matter – and that this is a waste of both our valuable time.

  19. When I was just a little girl
    I asked my mother, what will I be
    Will I be pretty, will I be rich
    Here’s what she said to me.

    Que Sera, Sera,
    Whatever will be, will be
    The future’s not ours, to see
    Que Sera, Sera
    What will be, will be.

  20. Edward,

    The graph is up there. Take a close look and tell me if Spain did not get in to recession two quarters after Germany. Or tell me if they did not have a contraction 1% larger than Spain in their worst quarter or 1.5% in the aggregate of last year. Of course, I forgot: your data lives in the future.

    I said that reality doesn’t fulfill your predictions and you return with victories that again live in the future, apparently they won’t be solved until 2011. There is not any financial crisis of the state: all emissions are covered within minutes of being released. But hey, you say that this is something for 2011.

    “This year people WILL start to notice”

    This is like reading an horoscope. Please stop it!

    And finally:

    “Incidentally, the Spanish may not be leaving in very large numbers yet, but the Irish certainly are”

    What kind of scientific methodology did you learn? How can you support the inclusion of Spain in that sentence. Could it be changed to any other country and be just as feeble logic? Why “yet”?

    Incidentally I have lived long in the “Reino Unido de la Gran Bretaña e Irlanda del Norte” to have had the opportunity to read again and again how bad was the euro for Ireland. At the same time I have witnessed how per capita income for Ireland flew in the noses of all those journalist from News Corporation, The Telegraph or The Economist and the rest of the owners of future certainty, from being lower than that of the UK to being 50% higher. Now, according to that graph, net immigration to Ireland is exactly the opposite number as it was last year. So they have lost in one year the same they gained the previous one. Of course there is no need to look at the previous ten years of continuous immigration. Those immigrants suddenly stopped counting, they do not exist, only those leaving count. And of course there is nothing positive about this, it will not affect unemployment or help in any trade or current balances or mean the arrival of more skilled workers when this people return (if indeed they do, as it has happened in the past). Nope.

    PS: The author of that rime was American, his name was Ray Evans. He died exactly three years ago, on the 15th of February 2007. Nothing to do with Spain. As a matter of fact the lyrics are the same as the motto of the Dukes of Bedford, “Che Sera, Sera” and it was also used in the sixteenth century English play Doctor Faustus by Christopher Marlowe:

    http://en.wikipedia.org/wiki/Que_Sera,_Sera_(Whatever_Will_Be,_Will_Be)

    Ufff. I ‘hope’ (espero) it did not hurt too much.

  21. “Ufff. I ‘hope’ (espero) it did not hurt too much.”

    Not at all. You simply get everything wrong and change the argument as suits you. But having lived in Spain now for twenty years (in fact I am Catalan) I am pretty used to this way of doing things. Maybe that is why the country is so unproductive, since people spend so much of their time buying lottery tickets and sounding off about things they know little about.

    “The graph is up there. Take a close look and tell me if Spain did not get in to recession two quarters after Germany.”

    As I say, you just change the subject to suit youreslf, which makes genuine communication and the normal exchange of ideas impossible. What you said was:

    “Did you ever predict that spanish recession would start later, be shallower and last less quarters than the German or French one?”

    That is you talked about France AND Germany. I only spoke (in my reply) about France and pointed out you were talking tripe, since France had a shallower and shorter recession than Spain (and is now booming incidentally). All facts about the present to date.

    And you don’t even seem to be very clear about the German situation, since, as I pointed out regarding your error above, even though German sovereign debt to GDP entered the crisis at a lower level than Spain’s, Spanish debt is rising alarmingly quicky, and will in all probability overtake Germany’s in 2012, as long as the sun keeps rising every morning that is.

    And you haven’t even bothered to look at the data on the German recession before offering an opinion, since Germany was in recession for FOUR quarters, while Spain has already been in for SIX. So before you go on wasting people’s time with silly arguments, PLEASE CHECK YOUR FACTS.

    And, as I say, the Spanish recession isn’t over, so following your own methodology, since you bar yourself from making any prediction over the future (and menos mal, porque tu versión del pasado es bastante raro), how can you say Spain’s recession will be shorter than Germany’s? In fact, technically speaking, I don’t know whether Spain will, or will not, have a quarter of positive growth some time in 2010. What I do KNOW is that Spain’s DEPRESSION will be a long one, but I am entitled to make such predictions and retain coherence since I have carried out an analysis, and I do claim to be using use a methodology which doesn’t rule out a-priori such statements. You are entitled to tie your hands and feet as you will, but you can’t expect anyone else to do the same. But I do advise you not to follow Harry Houdini and jump in the Thames after you have done so. Your escapalogical skills don’t seem to be that impressive when you trap yourself in a dialectical connundrum of your own making.

    What those who take the trouble to discuss with you could expect is that you get your facts straight (and pay attention to the detail of your argument) before starting to waffle, and even using this minimalist measure I find your performance to be severely deficient. You call me arrogant, but I am at least talking about a topic I know something about.

    Incidentally

    “I have lived long in the “Reino Unido de la Gran Bretaña e Irlanda del Norte” …. and …..have witnessed how per capita income for Ireland flew in the noses of all those journalist from News Corporation, The Telegraph or The Economist and the rest of the owners of future certainty….”

    Now I understand, this argument has nothing to do with me. I suggest in future that you send your comments to the editors of those publications who so get up your nose, since it is to them they should really be addressed. You want an ideological rant, and I want solutions, and that is the difference between us.

    Now, does anyone have anything interesting to say about Q4 growth in the Eurozone? Over to you Claus.

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