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From typicallyspanish.com

National
New York Times blames Angela Merkel for Spain's problems, while the Guardian says Andalucía is to blame
By h.b.
Apr 15, 2012 - 3:30 PM


An editorial in the New York Times on Friday, entitled ‘An Overdose of Pain’, in which the paper considered Spain could be the next European economy brought down by ‘German-led mismanagement of the Euro-zone crisis'.

The paper says it need not turn out that way but it surely will unless Chancellor Angela Merkel and her political allies inside and outside Germany acknowledge that no country can pay off its debts by suffocating economic growth. The NYT says that austerity, the one-size-fits-all cure prescribed by Ms. Merkel is not working anywhere.

The editorial has obtained wide coverage across the Spanish media this weekend.

Now comes a second article, this time written by Giles Tremlett who is the Guardian’s correspondent in Madrid. He concentrates his gaze on Andalucía with the title, ‘Eurozone crisis focuses on Andalucía, home to sun, sand and soaring deficits’, and says that senior Spanish officials have admitted they are clueless to the real size of the debt in the biggest region of all.

Tremlett claims Andalucía sells itself to British tourists as a holiday haven but it has now become the focus of worries about the Euro.

Indeed he reports that the EU inspectors from Brussels who were in Madrid on Friday have been demanding answers on how the Government intends to bring the regions under control. Antonio Beteta, the junior minister for the regions, claimed that Andalucía is cooking its books and hiding unpaid bills to cover up the debt.

Giles Tremlett notes that the Government passed a law last Thursday which would allow it take over the control of the finances in the regions which fail to stick to the austerity plan. He names the PP controlled Valencia and Castilla-La Mancha, and Cataluña as well as Andalucía as being out front with deficit and considers Rajoy may even enjoy intervening in Socialist controlled Andalucia.

The New York Times editorial is here.

The Guardian piece by Giles Tremlett is here
 

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From typicallyspanish.com

National
New York Times blames Angela Merkel for Spain's problems, while the Guardian says Andalucía is to blame
By h.b.
Apr 15, 2012 - 3:30 PM


An editorial in the New York Times on Friday, entitled ‘An Overdose of Pain’, in which the paper considered Spain could be the next European economy brought down by ‘German-led mismanagement of the Euro-zone crisis'.

The paper says it need not turn out that way but it surely will unless Chancellor Angela Merkel and her political allies inside and outside Germany acknowledge that no country can pay off its debts by suffocating economic growth. The NYT says that austerity, the one-size-fits-all cure prescribed by Ms. Merkel is not working anywhere.

The editorial has obtained wide coverage across the Spanish media this weekend.

Now comes a second article, this time written by Giles Tremlett who is the Guardian’s correspondent in Madrid. He concentrates his gaze on Andalucía with the title, ‘Eurozone crisis focuses on Andalucía, home to sun, sand and soaring deficits’, and says that senior Spanish officials have admitted they are clueless to the real size of the debt in the biggest region of all.

Tremlett claims Andalucía sells itself to British tourists as a holiday haven but it has now become the focus of worries about the Euro.

Indeed he reports that the EU inspectors from Brussels who were in Madrid on Friday have been demanding answers on how the Government intends to bring the regions under control. Antonio Beteta, the junior minister for the regions, claimed that Andalucía is cooking its books and hiding unpaid bills to cover up the debt.

Giles Tremlett notes that the Government passed a law last Thursday which would allow it take over the control of the finances in the regions which fail to stick to the austerity plan. He names the PP controlled Valencia and Castilla-La Mancha, and Cataluña as well as Andalucía as being out front with deficit and considers Rajoy may even enjoy intervening in Socialist controlled Andalucia.

The New York Times editorial is here.

The Guardian piece by Giles Tremlett is here
I shall have a read of these later, but in the meantime I'm copying your post to the 'economic' sticky
 

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From reading a few articles on the weekend I can see that

1) Spain's public debt is not too bad in comparison to other EU states
2) Spain's banks have huge amounts of loans in default still on the books that they have not marked down.

The 2 become one when the debt is "socialized" when the banks come begging to be bailed out. Then Spain's debt would be 300% of GDP.

Now the government is telling the banks to get on with it and come clean that D day is approaching. If you own property and are trying to sell it I would hurry up and drop the price unless you want to lose some money.
 

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It is quite correct to state that, unlike Greece, Spain's previous Government did not borrow recklessly to fund further an already bloated and unproductive public sector.
Zapetero was forced to borrow to fund the cost of unemployment consequent upon the collapse of the construction boom.
Spanish banks now find themselves exposed to 136bn euros of potentially toxic debts with only 50 bn euros to cover this. Add to this the fact that Spanish banks are currently the chief purchasers of Spanish Treasury bonds and are unlikely to continue doing so.
Any recovery must come from the private sector, wherever the stimulus for that originates, whether from public or private funding.
Yet Spain ranks at number 133 in the World Bank Index of 'Ease of Doing Business'. Obstacles to business start-ups are too high. The permanent/temporary system of work contracts is restrictive to both parties, employer and employee. Severance pay is way above EU norms...only two EU states have higher levels of severance pay than Spain.
Much is made of 'worker resistance' to reforms but only 15% membership of workers belong to trades unions. Large and noisy demonstrations are not per se indicative of majority public opinion. It would seem from polling evidence that the majority of Spaniards wearily accept the need for reform.
Another problem is indeed the lack of control by central government can exert over regional spending .Regional unpaid debt has risen by 10bn euros (38)%) since the start of the crisis. Unpaid bills now amount to 36bn euros.
It is scarcely surprising that Germany, with folk memories of out-of-control inflation leading to the rise of Nazism, is unwilling to see the ECB print more money to save EU states who as they see it are architects of their own misfortunes. It is worth noting that Spanish unit labour costs are higher than those in Germany....during the boom years Spanish wages more than tripled...but productivity fell sharply.
It would seem that the most expedient solution is for an injection from the European Stability Mechanism directly into Spanish banks. The Government must also initiate other measures to stimulate growth - something Merkel herself advocated - since the somewhat incomplete severance pay reforms -the level is still far too high - will not take effect for at least a year or two.
Another step forward would be for people to stop laying all the blame for the crisis on Governments. While times were good and credit flowed easily, many people eagerly seized the opportunity to buy that house, that car, that exotic holiday, without any thought as to the future. True, not everyone participated and those who didn't have to suffer with those who did. No discrimination here, sadly. I have never owed a cent to a credit card company or taken out a loan...but I'm suffering a loss of income from low interest rates like many others. Grin and bear it is all we can do, apart from working to ensure the still-current neo-liberal orthodoxy is seen as the snake-oil it is and is never again given the opportunity to ruin people's lives.
 

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I saw it.:) I had already posted about the ridiculously high levels. No wonder people are reluctant to hire people legally.
The organisation I help run here in Spain has already had experience of these laws.
We decided to be kind and make the post of an unsatisfactory employee redundant rather than go through the lengthy and complex dismissal procedures.
He took us to court and we were obliged to pay him several thousand euros.
We had evidence of his petty theft and incompetence but this was disregarded by the Judge.
Someone drily remarked it would have been cheaper to have had him shot...:(
A joke in poor taste, perhaps but I fear, true.

Incidentally, further to my comments about regional overspending and the current focus on Andalucia.....subsequent to the recent elections, the fate of Andalucia lies in the hands of twelve Communists, Trotskyites and other assorted ultra-left ideologues...
 

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Italy is the same. In our Rome office we need to pay 13 and 14th annual salary, I think some public officials even get a 15th salary. WTF are they on.

Now they have labour reform there too which is long overdue. Unsurprisingly Italy has the most black income of any EU country, even more than Bulgaria and Romania, something like 50% of non compliance, unlike the UK which is about 12% in the underground economy.

These goons in power need to get it into their thick heads that they cannot bleed the productive people dry. It is not OK for the government to pay 15 salaries for those in the public sector. They have known about non compliance for a long long time but just have chosen to ignore it because well....they are public officials who enjoy these benefits.

Anyway, off at a tangent sort of but Spain's troubles are the same as Greece and Italy with too much regulation, unfair demands on business. A classic socialist failure of spending too much of other people's money.

Have you seen the latest one? The government in Spain has now banned all transactions in cash over 2500 euros. Like that will stop anyone.
 

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Anyway, off at a tangent sort of but Spain's troubles are the same as Greece and Italy with too much regulation, unfair demands on business. A classic socialist failure of spending too much of other people's money.

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No, it is not a 'classic socialist case' of the state spending other people's money. I pointed out as did you that the Spanish Government was forced into heavily selling bonds to meet the debt caused by high unemployment, itself caused by the construction boom/bust.

What it is is a classic case of the folly of free-market, neo-liberal economic theories of the kind you support. Free movement of capital across Europe and the globe allowed cheap credit to flood into poorer EU states -and richer ones too like the UK.
Free movement of labour allowed a flood of cheap workers into the more prosperous EU states.
Free movement of goods allowed dumping on global markets, depressing demand for domestically-produced goods.

The sooner we get back to sound, regulated financial systems, protection for domestic goods and labour, flexible but fair labour laws, an emphasis on manufacturing rather than finance and internet commerce -all important in a balanced economy but all of which must rest on things actually produced - the sooner we shall get out of this mess.

Socialism, like fascism, is a word much used but little understood.
There are no socialist regimes currently extant. All are mixed economies.
 

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I would call Spain, Italy and Greece all socialist economies with daft provisions for employees. Unemployment may be 24% in Spain but unofficially you can bet a huge chunk of those are working cash in hand somewhere.

These are the socialist principles I was trying to pinpoint that create unemployment or create a shadow economy and a cycle of cash in hand.
 

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Perhaps a reduction in the governing bodies.

Here we are a population of 10,500,

We have three Ayuntamientos,

The Island Cabildo,

The Canary island Government,

The Spanish parliament,

Last but not least the European Buffunery.

Jobs for the boys! how many could make a honest living in real world?
 

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I would call Spain, Italy and Greece all socialist economies with daft provisions for employees. Unemployment may be 24% in Spain but unofficially you can bet a huge chunk of those are working cash in hand somewhere.

These are the socialist principles I was trying to pinpoint that create unemployment or create a shadow economy and a cycle of cash in hand.

Sorry, max, but your grasp of political concepts and practice isn't very sound...:)

Socialism: the public ownership of the means of production and distribution.
Apart from possibly North Korea, no country in the world fits that description.

Greece borrowed recklessly under a right-wing government. Italy has been ruled by a corrupt right-wing government for many years.
Spain has a mixed economy, the construction boom was instigated under a right-wing PP government and, ironically, some of the labour and tenancy laws you describe as 'socialist' have roots in the Franco era.

And yes, you are right. The black economy takes up a huge proportion, perhaps up to a third, of all economic activity in Spain. I suspect the same is true for the Czech Republic and all post-totalitarian states.
I'd be interested to learn how you can deduce that 'socialist principles' create a cash-in-hand shadow economy: avoiding tax due is an extremely unsocialist activity since it robs from the collective for the benefit of the individual.

So I repeat: the cause of the current crisis is the slavish adherence of Governments of both right and left to unsound free market ideology that has created a shallow economy lacking in the real substance needed to maintain growth and prosperity, namely a sound manufacturing base. In the UK Blair picked up from where Thatcher left off, publicly proclaiming his intention to implement the previous Tory Government's spending plans. In Spain, Zapetero did nothing that could be remotely described as 'socialist'. He did however introduce some progressive social measures.

I'm no fan of socialism or any ideology come to that but I do believe in the correct use of terms and the production of proof to substantiate an argument.:)
It's interesting, isn't it, that the world's soundest economies are those that didn't adopt the flaky neo-liberal approach to the economy....

The immaturity of the Czech political class makes it difficult to untangle any precise ideological path of any post-Communist Czech Government, apart from the weird and wonderful ramblings of pen-stealing President Klaus.
 

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OK so socialist policies then. These policies is for me is people retiring at 54, 2 years severance pay, 15 salaries, generous holidays and so on.

It is called "social protection" but from the employers perspective it is a pain the bum. I believe in a minimum wage with 3 or 4 weeks holiday and that is about it.
 

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OK so socialist policies then. These policies is for me is people retiring at 54, 2 years severance pay, 15 salaries, generous holidays and so on.

It is called "social protection" but from the employers perspective it is a pain the bum. I believe in a minimum wage with 3 or 4 weeks holiday and that is about it.
I can't see what is socialist about what you cite, though. As I said, socialism refers to the organisation of the economy.

Increasing the retirement age makes sound social and economic sense as people are now living longer and the burden of pension provision for an ageing population is becoming unsustainable under current conditions. Nothing 'socialist' about that at all. It's inevitable...put it down to improved living conditions, increased medical knowledge and techniques and a generally much improved standard of living.

Fifteen instalments of salary or indeed salaries paid in any instalments make no sense to me. But again, nothing 'socialist' about that. It just makes more work for the payroll people.

As for wages...pay peanuts, you get monkeys is a good rule of thumb here. We paid the highest wages in our area commensurate with a profit sufficient enough to reinvest in the business and to also make our investment and input worthwhile in terms of personal remuneration.
We wanted the most highly skilled and well-motivated employees and they don't come cheap. People don't invest their time and energy in gaining qualifications only to receiver cheapskate wages. We also treated our employees with consideration and respect. They in turn treated us in the same way.

Frankly, if you are in such straits that you have to pay risible wages, you really shouldn't be in business. That kind of attitude is not one that keeps a business on an even footing through times of economic crisis. It's typical of what some have called the 'Mickey Mouse' economy and those businesses won't last.

There is the important factor that if people have too little disposable income they won't be able to spend it on such inessential extras as cars and holidays, even cheap cars, even cheap flights and cheap holiday accommodation. Add to that the fact that low-wage-earners require state aid to enable them to afford some of the expensive but necessary basics - a roof over their heads, for example - and the taxpayer is effectively subsidising the employer.

The clinching argument for what I am saying is surely that high-tax, high-welfare spending and high wage economies such as those of Scandinavia have been shown to have sounder economies and more social cohesion than those states which have swallowed the Friedman line of economic thought. Social cohesion is in itself an important factor in economic wellbeing, something which current and past Governments should give more consideration to.


Incidentally, have you seen that hilarious clip of Klaus 'furtively' stealing the official bejewelled 'signing' pen on a state visit -to Chile, I think it was? That and the photos of a naked Topolanek about to leap on a prostitute at one of Berlusconi's 'bunga-bunga' parties has helped make the CR a laughing stock..
 

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Well as a capitalist it is my duty to get as much as I can for me. The market decides people's salaries. If I employ someone at under market rate then I am probably going to lose them and will have to retrain. As for the monkeys you can pay them peanuts but I even think there should be a decent minimum there so there is some respect.

The market is sure deciding in Spain with regard to the governments ideas on employment. As you say 1/3 underground.

With regard to the 15th salary it really is nonsense. The gov decides that you have to pay an additional 3 salaries on top of normal holidays.

That is not a payroll problem it is a huge financial burden and no one in their right mind would give such full time contracts when they can get away with temporary ones or employ people overseas to do the same work.

hence that is why the North is shouting at the south to reform.
 

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Well as a capitalist it is my duty to get as much as I can for me. The market decides people's salaries. If I employ someone at under market rate then I am probably going to lose them and will have to retrain. As for the monkeys you can pay them peanuts but I even think there should be a decent minimum there so there is some respect.

The market is sure deciding in Spain with regard to the governments ideas on employment. As you say 1/3 underground.

With regard to the 15th salary it really is nonsense. The gov decides that you have to pay an additional 3 salaries on top of normal holidays.

That is not a payroll problem it is a huge financial burden and no one in their right mind would give such full time contracts when they can get away with temporary ones or employ people overseas to do the same work.

hence that is why the North is shouting at the south to reform.
Not all capitalists have such a narrow view of their activity, though. We too were capitalists, successful ones too...and also well-thought of and respected in our community. Our business had gone from strength to strength for over fifty years, expanding, modernising, building a position in the local community and economy, offering skilled jobs at good wages and salaries, taking on apprentices, giving to local causes and so on.

The 'market' isn't some kind of abstract entity, with god-like status, is it....It is a human artefact and assumes as many forms as there are cultures to enshrine it.
Russian capitalism, Japanese capitalism, Anglo-Saxon capitalism, Scandinavian capitalism, Asian capitalism...all of these are variants of a market economy with their own distinct features. The successful models are those which see the function of the market as serving society, not ruling it.

The North can shout all it likes as the South to 'reform'. Reform what??? Reform how?? Answers on a postcard, please:). For decades the only economic activity for Andalucia has been in the tourism, agriculture and construction sectors. All encouraged by Government.
How do you envisage this 'reform'? You can't squeeze wages any more here. People will work in our area for under 6 euros an hour - itself proof, in the face of massive local unemployment, that low wages don't stimulate an economy......they cause further stagnation through lack of spending power and create further unemployment.
Spain's problems are structural...too little central control over regional spending, too many banks with sour assets, ridiculous labour laws which discourage entrepreneurialism and lack of investment in 'solid' economic activities.
Add to this the huge problem of tax evasion and avoidance at all levels -tradespeople look at us in amazement when we refuse to pay unless we receive a proper invoice - and it all adds up to a major headache, regardless of whether right, left or centre is in power.
 

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"..too little central control over regional spending, too many banks with sour assets, ridiculous labour laws which discourage entrepreneurialism and lack of investment in 'solid' economic activities.
Add to this the huge problem of tax evasion and avoidance at all levels -tradespeople look at us in amazement when we refuse to pay unless we receive a proper invoice - and it all adds up to a major headache, regardless of whether right, left or centre is in power."

I agree with all that apart from getting an invoice for a tradesman :)
 

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"..too little central control over regional spending, too many banks with sour assets, ridiculous labour laws which discourage entrepreneurialism and lack of investment in 'solid' economic activities.
Add to this the huge problem of tax evasion and avoidance at all levels -tradespeople look at us in amazement when we refuse to pay unless we receive a proper invoice - and it all adds up to a major headache, regardless of whether right, left or centre is in power."

I agree with all that apart from getting an invoice for a tradesman :)
We always, as individuals and as a company, paid everry penny of tax due. We disapproved intensely -and still do - of people working on the black. These people not only deprive the state of revenue to provide decent infrastructure but also would have eaten at the profitability of other respectable businesses.

Tax evasion is not only a crime...if practised widely it is economic suicide. If you can't exist as a business without cheating the taxman you shouldn't be in business.

Legitimate tax avoidance is another matter. It's up to the Government to look out for and close loopholes. But it's self-contradictory to complain about the adverse effects of the black economy and engage in it yourself....


Did you see that video clip of Klaus the Klepto on YouTube?

It's odd, I sometimes feel quite nostalgic for Prague...but visiting from London - I try to spend time with family in the UK although they have property here and visit regularly -and then flying back to Spain reinforced my view that three years was enough. I miss the opera, the concerts, easy access to cinemas and theatres. But I couldn't face another winter of extreme cold, snow...and then the mud and squalour of the thaw....

And half of Prague seems to be under permanent road repair....
 

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I'm off to walk the dog in the campo now it's a bit cooler...
Nice 'talking' to you, I like to be disagreed with. When I'm next in Prague you can buy me a drink!!:D
 
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