The Spanish Challenge: 30/03/2012

Hello loyal reader,

If I had to tell you they story of Spain over the last few hours, this is what I would say…


**No-one knows if Rajoy’s cuts will work:** Rajoy’s government, in its attempt to save the Spanish economy, has just made a €27 billion bet on cuts being the best option for Spain in 2012. The confusion in the press conference reflects the confusion felt by the world’s best economists over the suitability of such measures.
([…keep reading and comment here][dailycomment])


1. **SPAIN = GREECE = CONFLICT**. Although yesterday’s general strike wasn’t that bad, international media have chosen the most shocking images for their front pages today, of course. I offer the following evidence in the form of the FT’s front page, with an aggressive looking Catalan riot policeman blocking the way to a vandalised Barcelona stock exchange. Would you invest in Spain? ([FT][ft])

2. **VIDEOS OF PICKET THUGS**. Libertad Digital asked readers to send in videos of picket thuggery during yesterday’s strike and they did so from several Spanish cities. Watch groups of union thugs roaming through the streets, intimidating and shouting abuse in a cowardly manner at passers-by and shop owners. Not quite sure what they hope to achieve like that. ([Libertad Digital][matones])

3. **BARCELONA DAMAGE**. It seems Barcelona was the epicenter of yesterday’s strike violence, notwithstanding the front page of the FT. The cost of the damage and burning has been estimated at €565,000 worth of skips, traffic lights and bins. ([El Mundo][destrozos])

4. **THE BIG CHOP: €27 BILLION**. €27 billion is the final figure, for now at least. A 16.9% spending reduction, on average, per ministry, although the Foreign Ministry will have to chop 54% and the Public Works Ministry 34% from the budgets compared to last year. Less aid, less diplomacy and fewer public works projects. ([La Tiza][27000])

5. **10% TAX AMNESTY**. Rajoy’s government has chosen to reward all of those Spaniards who have managed to avoid paying taxes for the last few years, offering them the chance to launder their money. Spaniards choosing to do so will pay just 10% on hidden income and 8% on any dividends they’ve got stashed away somewhere. Has anyone seen any rewards for honest people? ([El Mundo][amnistia])

6. **PUBLIC SALARIES FROZEN**. Not a cent more in 2012, if you work for the state. Forget about that new car or those new toys for your children. Me thinks that the trade unions will be making announcements about this measure before the sun has set this evening, considering their threat to prolong and aggravate the level of confrontation with the government, if the government doesn’t sit down to talk. ([ABC][sueldos])

8. **LEGAL FEES OR FREE JUSTICE?**. Here’s one I don’t really understand very well. Today’s cabinet meeting has approved an increase in legal fees, whilst pretending at the same time to maintain its commitment to free justice. Individuals as well as companies will now pay more, especially if they want to appeal judicial decisions. ([Expansión][tasas])

7. **RETAIL SALES: −6.4% IN FEBRUARY**. This indicator is still in free-fall and has been going the wrong way for more than a year, at roughly the same rate each month. February’s fall is larger than January’s and is almost 2% more than last February’s slowdown. ([INE][ine])

9. **TENERIFE DOESN’T WANT OIL**. Tenerife’s local government has asked for an immediate stop to the oil prospecting which is about to take place in the waters off the Canary Islands. It says the national government is rushing things, hasn’t paid attention to Canary Islands politicians and needs to study things a bit more first. ([Europa Press][cabildo])

10. **ATHEIST PROCESSION BANNED IN MADRID** So that no-one gets the idea that social conflict in Spain ended with yesterday’s strike, Madrid’s High Court has banned an atheist march from taking place on Maundy (Easter) Thursday. I suppose they could always appeal the decision in the Supreme Court, if they can afford the new legal fees. ([El País][atea])
Thank you for reading.

Regards from Murcia,