Posts tagged ‘Spain’
Today Spain has reached a record number of unemployed. Although we do not like the current state of things, no one seems to know against whom to direct their anger.
Actually, we are under a dictatorship perhaps worse than the Portuguese or Spanish forty years ago because it is more subtle and works almost invisibly. And we can embody it too, not in an institution or a person, but with a symbol: the euro.
There are many reasons to believe that Spain would not be as bad off out of the single currency. To explore this question we must look at least three things: First, what is the profile of the countries that have left monetary unions? Second, what does empirical evidence tells us regarding effectiveness of countries have left currency unions? Third, what are the economic and social conditions that need to be taken into account in making such a decision?
Spain fits he profile of the countries that have tended to get out of currency unions: large countries economically developed with well-established democracies.
Second, what empirical evidence tell us? According to the IMF, no countries have been able to make needed fiscal consolidation without a mixture of structural reforms and monetary policy changes. Spain compares favorably in this respect to Argentina and Korean cases. Argentina went off the dollar peg in 2002. Although initially the Argentina economy suffered a severe recession, the year of the return to the country was growing weight (and in fact has grown at an average rate of over 7% from that year until 2011).
Third, we must take into account, the real exchange rate, the financing capacity of a country, and the behavior of its exports. In relation to the three aspects, Spain has bad fundamentals including a competitiveness problem that comes largely from an overvalued euro and a long-term funding problem with interest rates far higher than other countries in the eurozone………………………
The unemployment rate in the EU reached a record high of 10.7% in November 2012, according to figures published earlier this week by eurostat. Youth unemployment, in particular, has been consistently gloomy since the beginning of the crisis, with almost 1 in 4 young people in the European Union now out of work.
Youth unemployment was highest in Greece (57.6%) and Spain (56.5%), and last year we had a comment sent in from a young Spanish jobseeker, Javier, who told a depressing (but perhaps all too common) story:
My personal experience is that I could not find a job so I continued to study. Now, I had a job interview two days ago and I was told that my CV is ‘intimidating’, and that I know ‘too much’. So with studies or without studies, we are screwed…
We decided to put this comment to Santiago Fisas Ayxela, an MEP with the centre-right European People’s Party group, to see how he would respond to Javier:
- Unemployment in Spain tops 6.1m, says Eurostat (elpais.com)
- Brand New Data On Youth Unemployment – The Scariest Numbers In Europe (businessinsider.com)
- Eurozone unemployment at new high (bbc.co.uk)
- youth unemployment at record high (thesun.co.uk)
- New Studies: Austerity Is Crushing, Not Saving, Europe (commondreams.org)
- Eurozone Unemployment Hits Record High 11.8%; Spain 26.6%; Greece 26%; Youth Unemployment top 56% in Greece and Spain (globaleconomicanalysis.blogspot.com)
Unemployment in the eurozone has risen to a new high, with Spain recording the highest jobless rate with more than one in four out of work.
There are now 18.49 million people without jobs in the 17 countries sharing the euro, European statistics office Eurostat said on Wednesday, with an extra 146,000 joining the ranks of the unemployed last month. The jobless rate increased to 11.6% in September, the highest on record, from a revised 11.5% in August.
“With surveys suggesting that firms are becoming more reluctant to hire, the eurozone unemployment rate looks set to rise further, placing more pressure on struggling households,” said Ben May, European economist at Capital Economics.
The lowest unemployment rates were recorded in Austria (4.4%), Luxembourg (5.2%), Germany and the Netherlands (both 5.4%), which are near full employment. Spain (25.8%) and Greece (25.1% in July) had the highest unemployment in the eurozone, while France looks much like Italy (both at 10.8%), with a steady rise in joblessness. August data for Greece will be published next week, although the true picture is probably worse, as a growing number of Greek workers remain nominally employed but have not been paid for some time………………
full article at source:http://www.guardian.co.uk/business/2012/oct/31/eurozone-unemployment-record-high-eurostat
Spanish unemployment hits new peak … One in four Spanish workers are now without a job. Spain’s unemployment rate hit a record high of 25% in the third quarter, as the jobless total grew to nearly 5.8 million people. The latest unemployment data reflects the impact of the region’s recession, and Spain’s government cuts aimed at restoring stability to the country’s finances. The national statistics office said unemployment in the July to September period rose 0.4%, compared to the previous quarter; and 3.5% compared to the year prior, as another 85,000 people were left without work. – CNN
Dominant Social Theme: We shall overcome. This is merely another challenge for civilized society.
One out of every four Spanish workers is now without a job. This is a full-fledged depression by any standard. This statistic is topped by another one, that 50 percent of Spanish youth is unemployed.
The larger unstated dominant social theme is that unemployment and subsequent suffering are simply part of life. The sub-dominant theme is that austerity is a necessary part of the solution.
Fear is an essential element. Unemployment is a fact of life and only government programs can alleviate it……………….
full article at source: http://www.thedailybell.com/28224/Spain-Consequences-of-a-Generalized-Depression
- One in four Spaniards jobless as unemployment hits record high (rt.com)
- Eurozone Unemployment Rate Hits a Record 11.6% (247wallst.com)
- Spain jobless rate hits new high (bbc.co.uk)
- Why the Economic Outlook for Spain is Positively Dismal (world.time.com)
- Eurozone unemployment hits new high (guardian.co.uk)
“Concern about politics and the processes of international co-operation is warranted but the best one can hope for from politics in any country is that it will drive rational responses to serious problems. If there is no consensus on the causes or solutions to serious problems, it is unreasonable to ask a political system to implement forceful actions in a sustained way. Unfortunately, this is to an important extent the case with respect to current economic difficulties, especially in the industrial world.
“While there is agreement on the need for more growth and job creation in the short run and on containing the accumulation of debt in the long run, there are deep differences of opinion both within and across countries as to how this can be accomplished.What might be labelled the ‘orthodox view’ attributes much of our current difficulty to excess borrowing by the public and private sectors, emphasises the need to contain debt, puts a premium on credibly austere fiscal and monetary policies, and stresses the need for long-term structural measures rather than short-term demand-oriented steps to promote growth.”The alternative ‘demand support view’ also recognises the need to contain debt accumulation and avoid high inflation, but it pushes for steps to increase demand in the short run as a means of jump-starting economic growth and setting off a virtuous circle in which income growth, job creation and financial strengthening are mutually reinforcing. International economic dialogue has vacillated between these two viewpoints in recent years.”There is indeed considerable disagreement throughout the world on what policies to pursue in the face of rising deficits and economies that are barely growing or at stall speed. Both sides look at the same set of realities and yet draw drastically different conclusions. Both sides marshal arguments based on rigorous mathematical models “proving” the correctness of their favorite solution, and both sides can point to counterfactuals that show the other side to be insincere or just plain wrong.
Spain and Greece are both examples of what happens when there is too much debt and austerity is applied to deal with the problem. One side argues that the cure for too much debt is yet more debt, while the other side seemingly argues that the cure for a lack of growth is to shrink the economy. It is as if one side argues that the cure for a night of drunken revelry is a fifth of whiskey while the other side prescribes a very-low-calorie diet of fiber and veggies…………………………..
full article at source: http://www.marketoracle.co.uk/Article37031.html
by Staff Report (Daily Bell)
Be Very Careful, Beloved Spain … Two weeks ago I was interviewed by the Catalan newspaper El Punt Avui. I said it would be unthinkable for the Spanish state to stop Catalan secession by military force. Such action would violate EU Treaties and lead to Spain’s suspension from the European Union. You do not do such things in the early 21st Century. “No pots ser membre de la UE si utilitzes la força” was the headline. I may have underestimated the vigour of the Spanish officer corps. First we have the robust comments of Colonel Francisco Alaman comparing the crisis to 1936 and vowing to crush Catalan nationalists, described as “vultures”. “Independence for Catalonia? Over my dead body. Spain is not Yugoslavia or Belgium. Even if the lion is sleeping, don’t provoke the lion, because he will show the ferocity proven over centuries,” he said. – UK Telegraph
Dominant Social Theme: The riots have begun again. What a surprise.
Free-Market Analysis: Ambrose Evans-Pritchard reports on Spain and what he provides us with is a look at the underbelly of Spanish despair that you won’t read about in other similar mainstream reporting.
What Evans-Pritchard provides us with, in fact, is the bloody sociopathic grin that lurks under the current, escalating social tension. The grin is that of one collectively plastered across the faces of the armed forces. It is the same in Britain and soon will be, no doubt, in France and Germany………………………….
full article at source:http://www.thedailybell.com/4358/Spain-Falls-to-Pieces-as-Predicted
There are signs of serious jitters in the City today. As feared, the yield on Spain’s 10-year bonds has now risen about 6% (6.03% at pixel time). The stock markets are all still lower,, with Spain’s IBEX down 2.66%.
There are several triggers for this sudden chill wind. The protests in Spain last night are certainly a factor – with analysts trying to assess whether the Spanish people have been pushed to the limit. Portugal’s u-turn on its latest tax rises (which threatened a political crisis in Lisbon) has also served as a reminder that politicians are still answerable to the people.
Another factor is that the eurozone’s commitment to recapitalise its banks through the European Stability Mechanism appears to be fraying. A statement last night from the finance ministers of Finland, Germany and the Netherlands appeared to reject some of the decisions made at last June’s summit (great analysis here on FT Alphaville).
If legacy banking assets aren’t going to included, how on earth with Spain and Ireland scrub their financial sectors clean?
The fear that Germany, the Netherlands and Finland have reneged on the deal has also hit Irish sovereign debt, pushing up the yield on its 10-year bonds to 5.213%.
As Peter Spiegel wrote in the FT today:
The need for Ireland and Spain to pump billions into their banking sector to keep them afloat forced otherwise fiscally prudent governments into eurozone bailout programmes with painful austerity measures that have exacerbated recessions.
Under the June deal, such bailouts would no longer be the responsibility of national governments but would shift to the eurozone rescue fund, the European Stability Mechanism, which was given the authority to inject capital directly into struggling banks. As part of the deal, Ireland was given a promise of equal treatment with Spain……………………………….
full article at source:http://www.guardian.co.uk/business/2012/sep/26/eurozone-crisis-general-strike-greece-spain
- Germany to Spain and Ireland: Drop Dead (forbes.com)
- Germany Losing Patience With Spain on Aid, Merkel Ally Says – Bloomberg (bloomberg.com)
- Tables turn on Spain with pressure to seek bailout (todayonline.com)
BY David Mc Williams
Last week was a highly significant one for the EU and the eurozone, but not in the way you might think. Mario Draghi, president of the European Central Bank (ECB), has driven a coach-and-horses through the teutonic barricades of the monetary orthodoxy. While it’s interesting to witness a German defeat for the first time in this crisis, the really interesting aspect is the process that Draghi has unleashed – and where it will end. The announcement that the ECB will buy the bonds of Spain and Italy will not be enough to stop this crisis, but it has paved the way for the next initiative, which will be evident as soon as the euphoria of this new move wears off. The next big thing will be a fiscal expansion, not contraction, in Europe. Yes, you read right, expansion.
I realise, at this stage, that this is anathema to everything that has gone before – and it is. But so is the idea that the ECB could monetise debt – which is exactly what it has just announced. We are in a state of flux and strange things are happening. Old positions are being abandoned and, in the course of doing ‘whatever it takes’, the world, as we know it, is changing dramatically. So keep an open mind.
In order to get our heads around this change, let’s first define the problems in Europe.
full article at source: http://www.davidmcwilliams.ie/2012/09/10/an-anorexic-on-a-drip-is-not-a-healthy-patient
- Markets rally after Mario Draghi unveils ECB plan to save the euro – Eurozone crisis live (thepressnet.com)
- Germans can still block or delay ECB aid program (thepressnet.com)
- Draghi Says Officials Agree on ECB Unlimited Bond-Buying (bloomberg.com)
- Draghi Told Lawmakers ECB Can Buy Three-Year Bonds, MEP Says – Bloomberg (bloomberg.com)
Before we get carried away with the euphoria, there are plenty of reasons to be cautious about what was announced today.
As mentioned earlier, the conditionality element is key – Draghi says countries who receive help through the Outright Monetary Transactions plan will be tied to making economic reforms. But can we really expect Spain’s Mariano Rajoy, or Italy’s Mario Monti (or their successors…) to implement extra austerity without making their recessions even deeper?
Open Europe, the think tank, argues that conditionality may not be as powerful a weapon as Draghi claimed today:
- Spain’s Rajoy to seek German backing for a bailout (news.terra.com)
- Spain, Italy continue to resist ECB funds (independent.ie)
- Draghi May See Silver Lining in Disappointments (bloomberg.com)
- Euro Survives 2012 Intact in Global Poll Seeing Spain Rescued – Bloomberg (bloomberg.com)
- Debt crisis: ECB holds rates as markets await Draghi – live (telegraph.co.uk)