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Well, Andalucia is creating huge exports for Spain through fruit and vegetable production, but that area is not labour intensive until harvest. What Spain needs is manufacturing and industry to which is labour intensive. Every communidad has something to offer, splitting that up into independent states is a recipe for disaster. How will it pan out, I don't know, but it will not be any different in the short to medium term. The best you can hope for is a return to a decent level of growth in the long term.
 

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For any economy to grow, you need people to buy things so revenue can go to retailers/producers so they can pay wages and taxes to finance social spending.
People can't buy stuff without money and governments can't provide decent education, health and other social services without revenue from the private sector.
You don't need a degree in economics to work that out.

Currently in Spain and many other European countries there is a high level of unemployment so people have little if any money to spend on anything but the basics and governments are borrowing to fund unemployment and other social benefits. It's a vicious circle.

But it seems there are also deep-seated structural problems in most Western economies. There's no doubt that since the late 1950s 'ordinary' people have seen a rise in their material standard of living. Goods and services once the preserve of the wealthy are now within the reach of most people. It's a rare household, regardless of whether working or on benefits, that doesn't have all the gadgets we now deem 'essential'.
But...and I think this is the crux of it... this increased standard of living has been largely fuelled by credit.
The fact is that wages have for many people not kept up with prices. So, to repeat a slogan used in the 1960s when Barclaycard, which I think was the first major credit card in the UK, consumers on low incomes could , 'Take the waiting out of wanting'. Houses, cars, clothes, holidays, meals out, fuel, even grocery bills were put on the plastic. Nobody seemed to think it strange that the people who actually produced many of these things couldn't afford to buy them without borrowing. Hire purchase was also a new way of buying what you didn't have the money for.
Shareholder profits meanwhile scooped up the 'surplus value'. In the UK, profits were not used to invest in new plant and machinery and instead of collaborating with employers to distribute profits more sensibly and fairly, trades unions, then more powerful, embarked on a confrontation course with what they perceived as the 'class enemy'.
In Spain, which came later to the party, the borrowing went into property. Cheap credit from European, mainly German, banks made Spain the EU nation with the highest % of home ownership, 84%.
The bubble burst, the legendary chickens came home to roost and governments faced spiralling debt as they borrowed to finance the growing numbers of unemployed and to rescue banks from their exposure to bad loans.

I would argue that most of Europe's current woes relate to structural problems. The only EU state that has throughout it all managed to keep its head above water is Germany. A mixture of envy, resentment and hostility prevents some people from looking objectively at Germany's model of comparatively harmonious labour relations, industrial democracy, small scale credit union banking institutions, its famed 'Mittelstand', small to medium size family owned hi-tech export-orientated businesses and it model of a social market economy.
Germany isn't paradise, it too has problems but since 1991 it has assimilated the virtually bankrupt former DDR.
But there are surely lessons we can learn.
 

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¡TOMA! Growth! Woohoo!

"Strangely," the communities with the most growth are the ones that are the worst off, aren't they?


EDIT: I just read the 2018 forecast. Ow.
It could be because they start from a lower level.
Developing countries such as China often show amazing growth %s but they're running to catch up.
 
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Growth does not interest me as much as distribution. Yesterday the local news announced that the new trend is to rent out bedrooms to make ends meet... 300 available in Gijón & no count of how many are already rented. Meanwhile, a multibillionaire in Australia can have an exact copy of the Titanic built without diminishing his wealth.
 

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The only EU state that has throughout it all managed to keep its head above water is Germany.
I wonder why?

Could be because Germany is the one who flooded the EU with cheap credit for the simple reason that it wanted EU consumers to buy its consumer products? Germany would have suffered just as badly as everyone else had the supply of cheap credit dried up and no-one bought German exports.

To get round this Germanys Bundesbank underwrote loans to the ECB who in turn loaned that money to countries like Spain who gorged themselves on credit and bought Bosch, Siemens and AEG consumer products and Mercedes, VW, Audi and BMW cars.

It's Germany that is causing countries like Spain who are struggling to export themselves out of the current problems they have by keeping the Euro currency so strong. Spain needs a weak Euro to boost its economy through exports and encourage more foreign buyers to invest in its property market.

That can't happen whilst a strong economy like Germany remains part of the Euro. Which is precisely why it's taking countries like Spain so long to recover.

Otherwise I though your post was a very good analysis.
 
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Growth does not interest me as much as distribution. Yesterday the local news announced that the new trend is to rent out bedrooms to make ends meet... 300 available in Gijón & no count of how many are already rented. Meanwhile, a multibillionaire in Australia can have an exact copy of the Titanic built without diminishing his wealth.
But redistribution without growth would result only in less wealth to redistribute.

I think that tempting though it is, comparing the wealth of the few to the comparative poverty of the many is a zero sum exercise.
I agree that the tax system should be much fairer, loopholes plugged, evaders prosecuted and avoiders morally compromised.
A zero-growth economy might be desirable in many ways - Japan has had almost zero growth for years. I actually think that zero growth will be the norm for most European economies in the next thirty to
fifty years, maybe even sooner.

But redistribution can only be done by agreement. If in a democracy you allow people to make money within the law then you cannot simply seize what you may perceive as their excess wealth without the consent of the legislative body.
To do otherwise would lead to anarchy and set precedents we might all come to regret.

The first thing that has to be tackled in the UK at least and probably Spain too is the issue of low pay. Over a million UK workers have seen the value of their take-home pay in the last year.
Then the tax authorities should devote 100% of their time and energy to chasing the individuals and companies who owe £billions in unpaid tax. Tax avoidance loopholes should be closed so there's no moral decision to be made.

I'm not sure about tax levels. I think the gap between those at the bottom of the pay scales and those at the top should be narrowed dramatically but there are many ways of doing this, education and skills training for the modern economy being one way.

As well as a Minimum Wage there should perhaps be a Maximum Wage.

But all this should be the subject of a national debate. People need educating about the realities of economic life but we also as a nation need a new 'moral compass', to use a cliche, where such disparities of wealth are seen as vulgar and immoral. But it will not be an easy task...we have posters on this Forum arguing for tax avoidance and the ability to increase one's personal wealth without restraint.
They are, in a democracy, entitled to that view. I see no superior moral virtue in being poor or any vice in being rich. But I do see the problems that come with too big a gap between the two.
 

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I wonder why?

Could be because Germany is the one who flooded the EU with cheap credit for the simple reason that it wanted EU consumers to buy its consumer products? Germany would have suffered just as badly as everyone else had the supply of cheap credit dried up and no-one bought German exports.

To get round this Germanys Bundesbank underwrote loans to the ECB who in turn loaned that money to countries like Spain who gorged themselves on credit and bought Bosch, Siemens and AEG consumer products and Mercedes, VW, Audi and BMW cars.

It's Germany that is causing countries like Spain who are struggling to export themselves out of the current problems they have by keeping the Euro currency so strong. Spain needs a weak Euro to boost its economy through exports and encourage more foreign buyers to invest in its property market.

That can't happen whilst a strong economy like Germany remains part of the Euro. Which is precisely why it's taking countries like Spain so long to recover.

Otherwise I though your post was a very good analysis.
I don't remember Germany putting a gun to Spain's head to borrow money? :confused:

Either way, don't think Germany's streets are paved in gold. Plenty of people there are struggling to make ends meet as well.

Also, they forecast Spanish house prices to drop another 20-25% by the next couple years.
 

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I wonder why?

Could be because Germany is the one who flooded the EU with cheap credit for the simple reason that it wanted EU consumers to buy its consumer products? Germany would have suffered just as badly as everyone else had the supply of cheap credit dried up and no-one bought German exports.

To get round this Germanys Bundesbank underwrote loans to the ECB who in turn loaned that money to countries like Spain who gorged themselves on credit and bought Bosch, Siemens and AEG consumer products and Mercedes, VW, Audi and BMW cars.

It's Germany that is causing countries like Spain who are struggling to export themselves out of the current problems they have by keeping the Euro currency so strong. Spain needs a weak Euro to boost its economy through exports and encourage more foreign buyers to invest in its property market.

That can't happen whilst a strong economy like Germany remains part of the Euro. Which is precisely why it's taking countries like Spain so long to recover.

Otherwise I though your post was a very good analysis.
Yes, German banks lent money recklessly. But the rules of the Single European Act allowed them to do that and just as the Poles, Latvians etc. took advantage of the right to free movemment of labour, Germany took advantage of the free movement of capital. And why not? It was in the country's interests.
Greece with the aid of Goldman Sachs fiddled the books to make their economy seem sounder than it was and I guess Germany was well aware of the true picture.
Germany has also broken many of the rules relating to what you can and can't do in the eurozone.
But Germany has acted as Cameron would like to...use the EU to itsbest national advantage.
Germany has made a major breakthrough in the BRIC market. It doesn't just look to Western Europe. It has a major presence in Russia and the former Soviet states too.
I think one of the major reasons for Germany's relative success is its strong tradition of worker involvement in the actual management of companies. German Union negotiators have the right of access to all financial affairs of the enterprise.
Locally based German banks have a much closer involvement with the local companies they finance. There is no outdated 'class' antagonism of any significance.
The German SPD jettisoned its Marxism almost a century ago....the British Labour Party and some Trades Unions want to solve the problems of the twenty-first century with the philosophy and method of a dead white Russian male who died long before
anyone thought of moving £billions at the stroke of a keyboard.

If you have thirty minutes or so to spare, Zen, google Ordo Economics. I'd be interested in your comments.
 

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I find it bizarre that someone on the National Minimum Wage working a 38 hours week actually pays tax and NHI, if the NMW is supposed to reflect the amount that someone requires to live on this is stupid. But of course there will no doubt be department after department who's staff work their socks off to pay the deductions back in the guise of benefits (sorry for the B word).

As for a maximum wage I assume that the poster was being tongue in cheek as this could never work. Where I do agree is that there must be money available to spend in order to create growth, we are awaiting the next step following quantitative easing, but it doesn't appear to be on the current agenda. The banks are sitting on huge deposits and paying bog all out, if they started lending sensibly to both private individuals, businesses and companies it would be a start. As someone with cash investments, if I got a better deal from the banks I would be able to spend more money, most probably in Spain.

But we always have enough money for another military conflict, strange that isn't it?
 

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I don't remember Germany putting a gun to Spain's head to borrow money? :confused:

Either way, don't think Germany's streets are paved in gold. Plenty of people there are struggling to make ends meet as well.

Also, they forecast Spanish house prices to drop another 20-25% by the next couple years.
I think I did say that Germany wasn't paradise...if I didn't, I should have done.:)
There's poverty, racism, problems of unemployment in the Eastern Laender, that's undeniable.

By most standards of comparison, the German economy is performing better than other EU economies. The social wage as well as the 'earned' wage are as good as if not better than the stronger EU states.
Fewer days are lost through industrial unrest there than most other EU states.

Another thing about Germany: people value the public good so it is expected that buses and trains will run on time and be clean and easy to use, public spaces will be well-looked after, social services will be responsive to people's needs.
Of course people complain - it's human nature - but every time I visit Germany I am impressed by what I see.

I think you are right about Spanish house prices.
 

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I find it bizarre that someone on the National Minimum Wage working a 38 hours week actually pays tax and NHI, if the NMW is supposed to reflect the amount that someone requires to live on this is stupid. But of course there will no doubt be department after department who's staff work their socks off to pay the deductions back in the guise of benefits (sorry for the B word).

As for a maximum wage I assume that the poster was being tongue in cheek as this could never work. Where I do agree is that there must be money available to spend in order to create growth, we are awaiting the next step following quantitative easing, but it doesn't appear to be on the current agenda. The banks are sitting on huge deposits and paying bog all out, if they started lending sensibly to both private individuals, businesses and companies it would be a start. As someone with cash investments, if I got a better deal from the banks I would be able to spend more money, most probably in Spain.

But we always have enough money for another military conflict, strange that isn't it?
Most people on the Minimum Wage would be receiving Working Family Tax Credit if they have a family to support.
The Maximum Wage proposal really isn't connected with the current state of the economy and, whilst its not on the current agenda, I see no reason why it should be thought any more fanciful than the Minimum Wage proposal was when it was first mooted.

The 'next step after QE'...if you mean the banks' next step, it should surely be to use the money given to lend to SMEs. If you mean the Government's next step, surely it should be to bring forward the massive infrastructure projects planned, if I remember rightly, for late 2015.

As you rightly say,put people back to work so they can spend money and get business moving. It's nice to see that Osborne has moved towards a form of Keynesianism, however diluted.

I don't know what the lower tax threshhold is now or the level of the Minimum Wage but assuming it's £7 an hour for a thirty-five hour week, that comes to £12740 per annum. I think the MW is actually less than that so a single person whom I'm assuming wouldn't get WFTC would be paying tax and NI which agree does seem wrong. So why not increase NI for higher earners? Didn't Labour suggest that before the last election?
 

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Yes, German banks lent money recklessly. But the rules of the Single European Act allowed them to do that...
I don't recall ever saying they couldn't do it. I merely pointed out that the reason their economy is still very strong is because they have a solid manufacturing base that produces consumer products that Europeans want to buy. To enable those Europeans to continue buying those products, even though many of them probably couldn't afford them, the German Bundesbank underwrote loans to the ECB who in turn made loans to Spanish banks who in turn made loans to consumers to buy German products.

That's why Germany are the winners from the EU. It's also the reason Merkel calls the shots in Europe.

I also agree with your other reasons by the way.

If you have thirty minutes or so to spare, Zen, google Ordo Economics. I'd be interested in your comments.
Thanks I'll take a look when I get a moment.
 

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The banks are sitting on huge deposits and paying bog all out...
The banks are worried about their mortgage debt exposure and want to make sure their deposit to loan leverage is high enough to ensure a banking crash repeat doesn't happen.

That's why the government had to step in with their Loan to Buy scheme which effectively underwrites loans the banks makes to mortgagees. In other words if these new mortgagees default on these new loans the BoE via the taxpayer picks up the loss for them, not the bank.

Because of this the banks no longer have to appeal to savers for their deposit money. No wonder savings rates nose dived to the floor.

Yet the conservative party believes in free market economics? What tosh!

The bankers are laughing their heads off now along with the politicians. It's all one great big scam and fraud being played out on the taxpaying public.

You couldn't make this stuff up if you tried.
 

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I totally agree that people on minimum wage and receiving tax credits etc should not be paying tax. That simply defeats the object. DM readers will argue that such people will spend this money on booze and ciggies but why not if that is what makes them happy. Spending money simply re-circulates the money and in a better way, I think, than the measly tax they pay to a government (don't care which party) who generally has no clue how to spend it. I'm going to stick with science and research for me. Far more interesting than watching stupid sods waste our money...
 

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I think that it's the feel good factor that has disappeared, for example when we used to visit Puerto Cabopino the first thing we saw was the water scooter/jet ski/paragliding shop, it's now a grocery store. When we got into the port there would be folk with their top of the range cars parked next to their top of the range boats, these days the boats are dirty and unused with no quality cars in sight. There was great activity on the beach, with all sorts of water sports taking place, these days you could fire an exocet missile along the beach with no danger of it hitting anyone.

It's like walking down empty high streets in UK towns and cities, folk don't get a buzz anymore, internet shopping has much to answer for in this area. People on good salaries/pensions believe that they are broke and search through the penultimate sell by date food shelves. If the government eased the purse strings a little and hinted that things were not that bad, these easily led folk might start to smile again, instead of being frightened death.
 

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I totally agree that people on minimum wage and receiving tax credits etc should not be paying tax. That simply defeats the object. DM readers will argue that such people will spend this money on booze and ciggies but why not if that is what makes them happy. Spending money simply re-circulates the money and in a better way, I think, than the measly tax they pay to a government (don't care which party) who generally has no clue how to spend it. I'm going to stick with science and research for me. Far more interesting than watching stupid sods waste our money...
Most people with families on Minimum Wage or even a low wage when set against family need as calculated by the government don't pay tax...
 

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I think that it's the feel good factor that has disappeared, for example when we used to visit Puerto Cabopino the first thing we saw was the water scooter/jet ski/paragliding shop, it's now a grocery store. When we got into the port there would be folk with their top of the range cars parked next to their top of the range boats, these days the boats are dirty and unused with no quality cars in sight. There was great activity on the beach, with all sorts of water sports taking place, these days you could fire an exocet missile along the beach with no danger of it hitting anyone.

It's like walking down empty high streets in UK towns and cities, folk don't get a buzz anymore, internet shopping has much to answer for in this area. People on good salaries/pensions believe that they are broke and search through the penultimate sell by date food shelves. If the government eased the purse strings a little and hinted that things were not that bad, these easily led folk might start to smile again, instead of being frightened death.

Re the highlighted part: I don't think I've got to that level and don't foresee a time that I will.:) I do not know of anyone on a good salary/pension who is feeling the squeeze. I'm certainly not because although we are receiving less for our investments and the purchasing power of our income has declined considerably this has made zero difference to how we live as we had enough to start with.

But this leads to an important point. People with no debts/mortgages above a certain income level are not really affected by the current crisis. We are not 'all in this together', as the UK PM constantly repeats. In the UK, unemployment is at less than 10% although that cloaks the zero hour contracts and part-time jobs and the perennial question of low pay.

My son and dil both are high earners,working in the City, well into the top tax bracket. They have if anything enhanced their income levels over the past year. They are far from being unique. Other posters have family members who are big earners.
We have to remember that not everyone is struggling to make ends meet.
But that doesn't cover up the fact that thanks to so-called free market policies we have a jungle where dog eat dog and the strongest survive is the case.
I sense a sea change, though. More and more people are beginning to realise they've been sold snake oil.

There was a fascinating programme on BBC 2 earlier this week, Robert Peston on the history and economics of shopping. After Resale Price Maintenance was abandoned the prices of goods were dramatically reduced. But people had to resort to Hire Purchase to buy them.
Why? Because wages were too low and profits and dividends too high.
You don't have to be a Marxist to see that.
And therein imo lay the seeds of our current woes.
Low wages = buying on credit = huge profits for financial institutions = unstable economy fuelled by debt = eventual downturn which is endemic to any form of capitalist society, even social market economies = crisis.
 

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Growth does not interest me as much as distribution. Yesterday the local news announced that the new trend is to rent out bedrooms to make ends meet... 300 available in Gijón & no count of how many are already rented. Meanwhile, a multibillionaire in Australia can have an exact copy of the Titanic built without diminishing his wealth.
Yes, "growth" is pretty meaningless if it comes at the expense of lower wages and ever-worsening social conditions for the majority.

Renting out your home during the holiday period has been going on for a while, but they are trying to make it illegal after complaints from the hotel lobby.

Spain cracks down on home rentals to tourists - The Local
 
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