Comments on: Spain Is A Serious Country

By: Jeronimo

Jeronimo — Tue, 09 Feb 2010 02:37:08 +0000

When you say “severity of recession”, are you aware that spanish economy shrinked 3.6% last year comparing to for example 5% of Germany? or is it just a lose use of adjectives. When you say “major challenges of its banking system”, are you aware that the two top performing european banks are spanish? When you mention the proposal for retirement age, are you aware that it is an european wide policy? that other countries like the UK are thinking on extending working life two years further to 69? Spanish banks do not have “extensive holdings of government bonds” just about 30% of the total just like other banking systems have of their country’s, the major holder of spanish bonds is foreign investors. Unemployment in Spain is certainly worrying, but being the country with highest unemployment in europe has been a constant in spanish statistics for the las 30 years and it did not preclude being also the one with highest GDP growth for the last decade. If you look at the number of employed people instead of the number of unemployed you will see that Spain has one million more people employed that it had four years ago. Not many other countries in europe have such record, if at all. Regarding spanish deficit and control of its budget I urge you to add up deficits and superavits of the last five years and tell me which countries have a better record than Spain in controlling its public accounts.

By: kevloral

kevloral — Wed, 03 Feb 2010 13:37:10 +0000

As you probably know by now, those blank spaces for the projected budget deficits in 2010, 2011 and 2012 have already been filled:

2009: -11,4
2010: -9,8
2011: -7,5
2012: -5,3
2013: -3,0

All of the details are available here (in Spanish): http://www.elpais.com/elpaismedia/ultimahora/media/201002/03/economia/20100203elpepueco_1_Pes_PDF.pdf

Greetings.

By: uberVU - social comments

uberVU - social comments — Wed, 03 Feb 2010 07:54:12 +0000

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By: Pavel from Prague

Pavel from Prague — Wed, 03 Feb 2010 00:16:59 +0000

Funny. I DID live in a Communist country. Yes, they had plenty of political will and yet they couldn’t win the fight against human nature.

Today’s EU is much more liberal and benevolent than the Communist empire. You can travel freely and that sort of things. You can run a business and they even leave you some money after you pay heavy taxes. Yet I recognize some traits that were typical for Communist rulers: the quasi-religious conviction that there is The Only Single Truth, and we, the infallible rulers, have the right to tell people what they may do ro what they must not do.

The single European currency is a product of this way of thinking. I’m only suprised it took only a decade since the introduction of the euro – only one decade and the system is already breaking down with astonishing speed.

By: Bengt Larsson

Bengt Larsson — Tue, 02 Feb 2010 21:08:25 +0000

Jon Livesey: It’s funny you should mention USSR. The Communists assumed everything would be politics and government, and not economy. Now some people make the opposite mistake. Political will is not worth zero, in the Eurozone or anywhere else.

By: Oliver

Oliver — Tue, 02 Feb 2010 20:21:54 +0000

If you refuse to touch benefits to unemployed people how do you control spending while your policies will raise unemployment?

By: jon livesey

jon livesey — Tue, 02 Feb 2010 20:13:20 +0000

“The Eurozone is very solid because there is political will.”

Having lived and worked in the old USSR, I have heard that song before. People always think will is enough, because that is part of human nature. We don’t like to think we are at the mercy of uncontrollable events, so we imagine that our will can change reality.

Just a few facts that I have noticed recently. Four million unemployed in Spain, versus 2.5 million in the much larger UK economy. Also, not only is unemployment significantly lower in the UK than in the Euro-area, it is also lower in the EU as a whole than in the Euro-area, meaning that in the non-Euro-area EU it is quite a bit lower than in the Euro-area.

I expect that the elites in Spain still favour the Euro – the Euro is a political rather than an economic construct, after all – but when you take four million people out of the work-force and put them on the welfare rolls, reality begins to bite.

Of course, maybe I “misunderstand”.

By: Bengt Larsson

Bengt Larsson — Tue, 02 Feb 2010 20:00:24 +0000

I think people misunderstand. There is political commitment to the Euro. The Eurozone is very solid because there is political will. That doesn’t mean, or course, that there is anything wrong with signaling that some people screwed up via high bond yields.

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By: m

Tue, 02 Feb 2010 14:51:39 +0000

One thing that looks like happening is that reality is converging to your expectations Edward.
The problem of Spain not controlling its currency will become increasingly painful for the spaniards, and an increasing headache for the EU.
This looks now like the classic IMF mandate austerity programs in the developing countries in the late 90s and we all know how that ended. If Spain tries to tighten too much it will only depress its economy further, and with 20% unemployment that is not a very good idea. On the other hand if it continues spending its way out of recession, it will create a debt burden dificult to recoup later.
No easy choices here. I would expect things to get worse and the government to become increasingly “message” oriented whilst doing less and less in terms of real measures to sort things out.