Spain’s woes

Those sinking feelings

There seems to be no end to the troubles in Spain

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Readers' comments


Max Munchow

The euro was doomed at the start. How can you expect a single currency to work if the participating countries economies are so diverse and have different needs. At the root of it was idealistic political ideas trumping pragmatic economic doubts.

What we need to do is to disband the Euro, except for Germany and use it like an international currency, like the US dollar in Latin America.


For decades Spain, France, Italy, and Greece (eek!) have passed laws restricting labor practices and bad-mouthing businesses while increasing public employment. Commitments to public employee retirement benefits have been used to purchase votes. Fine. If that is what the voter wants and the politicians are re-elected then I guess all is good. Right?

But the catch is that markets will always catch-up with bad behavior no matter now much crying and pleading for German money is shown on TV. Markets reward good behavior with investments and low interest rates. Countries who lie or mislead are punished with little investment and high interest rates. That is how capital is allocated.

It is time for these countries' PEOPLE to grow-up and act like adults. Like children they should look-up to the parent in all this: Germany. If a politician offers something that can't be paid for, then don't vote for him/her. (We are suffering from this in the U.S. also, so it happens everywhere.)

If the countries in trouble were trust-worthy and responsible, one could advocate 10 year EuroBonds at the end of which they would really have their economic houses in order. But is there anyone who really believes that they would? Really?

WMH 2012 in reply to MySetDancer

All this countries have different problems and one in common. They have suffered very low interest rates when their economies were exploding up and have suffered not enough low interest rates once the crisis was at their doors. Why? Interest rates were being fixed according with "father's" situation. Remember Germany's economy almost stopped at the beginning of the century while all the others were enjoying such a growth? We had such a low interest rates! So, that is the problem and not this child and father metaphor and people needing to grow up... If we a single currency we need just one interest rate but also one single debt (the eurobonds) so that means to have all the policies coordinated. Try and drive with only the accelerator and no brake (the children) or with the brake and no accelerator (the father)... So what is needed to decide basically is wether we want a EU or not and if we do, to create Europe as fast as possible with Steering Wheel (A EU Government), accelerator (Budget policies and eurobonds), a brake (Interest rates) and also comfort inside (social policies).

guest-ilnsamj in reply to MySetDancer

Again the "parents-children" patronizing stuff...Ok. If dysfunctional parents don't face up to their children's disruptive behaviour, given that they are responsible in part for it, they must not be surprised at what children bring in home. As real parents know you can not return your own children when you don't like them any more, you must start the change yourself and later you will try to discipline them, more easily for sure. Do we all want a happy home?

nadamasqueso in reply to MySetDancer

When you've stopped laughing at the (Spaniards'?) replies you'll realise why they'll never understand the problem and consequently why it's gonna take at least 5 years to get even a brake on the situation,never mind a return to growth,to employment creation.










Jaime-Axel Ruiz

Your picture of a man 'playing' the accordion is a fake. And it shows one of the Spanish paradox: we are full of Romanians and Moldavian beggars supposing 'playing' instruments in the street corners of Madrid. They are bad musicians, they say hello all the time to passers-by and they are organised in groups, earning more money a day than a normal worker. So, many unemployed people, but many, many foreign beggars.

guest-ismawll in reply to Jaime-Axel Ruiz

@ Jaime Ruiz: I knew wages in Spain were bad, but really, one earns more by begging than by working? begs the question: "why doesn't everybody beg then?". If you're so against immigration, why don't you tell all your young people, who are fleeing 50% levels of unemployment to come back to Spain, and avoid those “nasty foreigners”. Or else you could cut the xenophobic rhetoric just say something worth saying...




What a miserable article!

The underlying story in Spain is very high investment rates (even now), rapid productivity growth towards West European norms, rapid wage growth (temporarily stalled), and booming exports (not far from current account surplus - would be in surplus of tourism revenue were included).

Unlike elsewhere, taxes on new property construction had comprised an enormous share of tax revenue - forcing especially harsh budget cuts and tax increases just as the property bubble collapsed, European immigration stopped, tourism collapsed and massive foreign capital flight wrecked the Spanish banking system (no new lending for business investment, trade finance or households).

Already, the rapid growth of exports proves Spain's highly competitive position, and indicates that nothing would be gained by leaving the euro. A wider European recovery would help in restoring (highly cyclical) levels of tourism and holiday/ retirement home purchases. Far more importantly, it will take European action to fix the European financial system - which would do more than anything to facilitate faster-still growth in exports, and generally allow finance of profitable investment/ consumption by credit worthy households once again.

Great infrastructure, good education, low wages, a good legal system, little corruption, low-moderate taxes and in the heart of Europe - 24% unemployment is only possible because the banking system collapsed. It won't last - even with harsh fiscal austerity and dry credit conditions, the private sector (especially exporters) will flourish (is flourishing) at the pace permitted by cash-flow finance.

Unlike some places, Spain has done the most important things very well - which guarantees long term convergence.


Spain has had enough regional EU subsidies. Time to cancel the program and allow our country Netherlands and also Germany to keep more of our money. Enough of subsidizing the leeches.

Euronomics in reply to mvr36


nadamasqueso in reply to WMH 2012

You mean "others" are to blame-long live the Spanish denialists!!! Poor Spaniards forced to overmortgage themselves,poor Spaniards forced to inflate their sales prices,poor Spanish shopkeepers and hostelry bosses for confusing 100pts for a coffee with 1 euro for a coffee.Poor Spanish politicians for accidentally building more airports than most countries etc etc.
Poor Spanish companies for not investing in R&D,for taking advantage of the junk(basura) contracts to avoid training and giving confidence to young workers.

Victims-come on!!


Spain has some economic problems, but can we name any country in Europe that doesn't have them? I believe that what is happening to Spain has also happened to Portugal: speculation! Until there is no regulation over the "rating agencies" they are targeting frail economies and sentence them to a certain "death".

WMH 2012 in reply to mvr36

Debt in Spain is lower in % of GDP than UK, USA, Germany and so on. The problem is the Income and that is something related with the crisis. In 2008 Spain was definitely having surplus.
It's easy to understand: you earn 100 bugs and you get a mortgage of 20, ok, you even save 80 but, bad luck my friend, suddenly you are sacked and loose your job and you still have the mortgage and, yes, you have difficulty to pay it. Why did you loose your job? that is another question and we can talk and argue about it but do not tell me that i borrowed too much...
The consequences are being accepted and being paid , no doubt about that (just take a look at the papers), but let's face it, we live in Europe and have a common currency... but no common budget policies and no common debt and no common government institutions and that does not definitely help if not harms because you are being sent to the warfront with no weapons...

nadamasqueso in reply to WMH 2012

"Debt in Spain is lower in % of GDP than UK, USA, Germany and so on."-LET THE TROLLS KEEP ROLLING IN.
How many times do we have to put up with Spaniards moaning with half truths? Tell us Spanish private debt,Spanish overseas assets.Debt-GDP is irrelevant;Uk,US,Germany can AFFORD to pay their debt.

luigi bianchi


luigi bianchi in reply to nickik

TAKE THERE MONEY?WAIT A MINUTE!First of all we italians owe 55/60% of our public debt,second the biggest majority of our debt is held by French banks(money that Sakozy used to blackmail Italy),third we are the second world importer od German cars,fourth we were the second partnerer of GErmany only five years ago,now China is by far first.And you accuse Italy of asking "hard earned" money?Do you believe that in Italy(or Spain)red bills falls from the sky?You are robbing our jobs with a devalued currency,you import from China,assemble that stuff with the trade mark "made in GErmany" and export to the eurozone.You invented a new fantastic machinery,consistent with your tradition in mechanics.Pity that with this machinery,you are killing yourself and the rest of Europe.Your export is not going so well,in the last times:the hen producing golden eggs is dying.

guest-ilnsamj in reply to nickik

Germany has taken so much as it has given, it is not precisely an NGO. If you need to impose your will over others because you think it is the best and the only one, the least thing you will obtain will be hate. And you should have already learnt that and the consequences for us all that it will have.

nadamasqueso in reply to mvr36

Your last comment ruined an otherwise cogent set of comments-pizza or paella eaters is a bit childish.Unfortunately though,too many Spaniards and Italians,but this is an article on Spain,do not get the point of these articles and constantly deflect to others' problems.It's cvalled being in denial

guest-isjsejw in reply to luigi bianchi

What happened in Spain is that the private sector borrowed money, built houses with it that noone lives in and now can't pay back their banks, who, as a result, are on the verge of bankruptcy.

I was wondering how this mess would be spun into being Germanies fault.
Screaming "austerity" and "Germany was a Nazi" is enough these days to blame everything on Germany, obviously.

WMH 2012 in reply to luigi bianchi

You mention there is an economic world war going on. What intrigues me is to have clearly defined the rivals. I do not think Germany is the rival this time around. Probably is the one that should work all this out, always along with France in regard with Eurocrisis. The Euro countries should be working together seriously. Probably the rival is more likely to be the dollar in its attempt to keep its status of reference currency. The euro, half way to succeed, half way to be defeated, we'll see, could be a terrible competition to dollar if they had not enough with the Yuan. Specially in this changing world where EEUU is loosing its post-ussr status as the only world mega power. But Euro and no political union wont live together too long. We have to decide. But definetely I don't buy the idea of working north and lazy south, that some are trying to sell , don't know why, first because it's not true, and second because that brings us to divisions and insane nationalism.


Ok I'm not an economist but I have a question regarding the pros and cons for Spain of exiting the single currency. Spain has a relatively low debt towards its lenders and has a strong export economy as well as a tourist economy. Business is a damaged products right now but it is a future investment.
So my quesiton is why is it still in the single currency? Don't the pros outweight the cons?
In case of Greece, their debt is so high and their economy very dependednt that if they left the currency they would be black listed by all their lenders and imports would be extremely expensive, rendering Greece in chaos.
But for Spain, Who would get soo upset that it would outweight the benefits of leaving the single currency??

nadamasqueso in reply to CostasM

You are clearly not an economist-but why not google your question? Everyone agrees Spain should get out,BUT.....debt would be revalued is one argument.So can they repay their debts. Low debt is always referred to-usually by denialist Spaniards-that is public debt.Look at private debt,well over 300pc and mostly but not all in the moribund property industry,ie never will be The banks.Who at the moment refuse,despite govt pushing,to reveal the true state of their property losses.
Strong export economy?.It's constant as a percentage over the years but a drop in the ocean compared to Germany.

Juan A. Hervada














No, no, no! you see, you don't understand the fine reasoning behind Messer Hervada's lines; buzz words "unions", "socialists". "Royals" is just a bit of ditraction tactic to fend of attention to the standard line of thinking these days: blame socialists, their incompetence for leaving a rotten inheritance to nowadays government. Doesn't matter if it's well documented that autonomies were the ones that strayed from deficit targets (and that many of these are and WERE in PP's hands), blame socialists for the whole of it, and you will also admire a fullfilment of the prophecy: spaniards atavistic moral laziness, as shown by the fact that most did not bother to consider that many of spain's problems spawn by the parties in their regional governments (an argument perverted by the ad hoc reasoning that it's the autonomies themselves in their full abstraction that are to blame, not the people in those governments -unless of course they are socialists, catalan or basque separatists). this brings me back to the debate in the presidential campaign between Rajoy and rubalcaba: I never quite understood why rubalcaba lamely accepted rajoy's underlying argument of full blame on central government when he could've easily counterattacked with the data from pp's autonomies and their dismal records... I understood this as an admision that doing that would've exposed their own weaknesses. Fair enough, but at least that would've protected the image of the central government to the extent it could, which was pretty little but at least some.

Second pillar of mr Hervada's reasoning: the unions. it's the first time I hear that the honchos at the unions were froncoist, and it seems an ad hominem attack on them. I will adhere to the preceeding reply: who were the francoist honchos? And what in the world makes them suspicious? that they belonged to franco's institutions? i daresay many well respected personalities would not come clean of that sort of exam in spain. It's an argumental falacy. At any rate why not examine the role of the union's rather than the background of their leaders? That is a very long discussion, so I will let Mr Hervada lead the proceedings of why unions are worthy of criticism other than where their members came from.

About Catalan and Basque independentists, I share many of Mr Hervada's own mistrust for their positions, regarding the eventual usefulness of their quest in a globalised world and the mystic roots of their cultures as opposed to that of their colonisers. but even if I/we do not share their reasoning, and however mistaken it may be, it is not a reason for excluding their independence: it doesn't matter if the argument is based on the fact that lollypops quit growing on trees after the "decretos de nueva planta", if Catalan's want independence, they should have a right to at run a referendum. I've long advocated that they get their referendum and either lose it or win it but with a qualified majority (58%-60% for example of positive votes for independence).

As for "truth", mr Hervada, it's a terminology I feel extremely uneasy about... maybe your truth is the truth in capitals but it may not be what we need.

Try to see if you know the face of the young fascist on the right of this picture:

Yes, Felipe González as a member of the Francoist student union.

Here you have him in the military with the francoist fascist badge of the student union (note that it was a voluntary organization)

And here you have a photo of him as a young politico, after his transformation into a fighter for socialism and on the shining path to riches:






MilovanDjilas in reply to FROMMADRID



Juan A. Hervada





RRoca in reply to Juan A. Hervada

Why Catalonia wouldn't be able to survive beyond the limits of the domestic Spanish market?

Of course domestic bonds of regions have higher interest rates. It's also obvious that on the current situation Catalonia will probably fail to achieve the austerity measures.

But also seems obvious that getting out of Spain would fix this problems for Catalonia immediately, just by not having to sustain poorer Spanish regions.



Pointout in reply to JavBall

Please add figures rather than rely on stereotyping.







Jaime-Axel Ruiz in reply to Rafelot

The Basque Country and Navarre have a kind of Fiscal Paradise. They do not share the burden of the whole Spain. This privilege comes from longtime ago, and Franco, rewarding Navarre for supporting his coup in 1936, and trying to pacify the Basque Nationalists (after all, they are very conservative) kept the Concierto Basco, as is called, to allow them to organise their own fiscal system. So, these regions are not comparable with the rest of them.

Flipando in reply to Jaime-Axel Ruiz

To call the Basque Country and Navarre a 'fiscal paradise' is an exaggeration, to say the least. They administer most of their own taxes and then pay an agreed quota to the Spanish State for things that are not part of their competencies. If the high level of fiscal autonomy enjoyed by the Basque Country and Navarre were extended to the rest of Spain we would soon see who was spending their money wisely or not. These two regions - together with Catalonia - have always demonstrated a more serious approach than the rest of the mickey-mouse 'autonomías'.

nadamasqueso in reply to Flipando

It's not an exaggeration,though he said "kind of",it's just incorrect:they have as you both say special conditions or privileges;a tax haven(no Spanglish please) is a place where low or no tax is paid;Jersey,Caiman etc.Basque and Catalan situations are not the same.

WMH 2012 in reply to nadamasqueso

Probably, but how many basques have been Real State promotors in Andalusia or the Mediterranean? If there has not been a boom is because other reasons , not because it was an idea of a grey brain. The same would we said if we do a statement that Germany has got not beach tourism bubble (if it were, just figuring...) thanks to their thoughtful model of economy... words...
Both germans and basques have been doing money promoting and selling material for construction at the mediterranean as much as locals. C'mon!











bcn_uk in reply to pandemonic










Vinarossenc in reply to pandemonic





J Rawlins




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