The Spanish Challenge: 18/04/2012

Hello loyal reader,


If you’re into economic theory and ideas with lots of common sense and would like an explanation of what’s going on, head over to Ray Dalio’s website and read his “[Template for Understanding (pdf)][pdf]“. Dalio is the boss of what some call the most successful hedge fund in the world, so I imagine he can teach us a thing or two.


1. **27,000 SPANIARDS JUMPED SHIP IN Q1**. Capital is not the only thing flying quickly away from Spain, as we saw yesterday. Spaniards are also leaving as quickly as possible. 27,000 Spaniards abandoned the great ship Spain during Q1 2012. If we add them to the 300,000 from last year, we have…a lot of folk who think there’s bugger-all to be done here and that it’s much better to go and live in some other nation that is more likely to offer them a decent future. ([ABC][27000])

2. **SPAIN—WILTING ECONOMY—FRANCO**. Bloomberg wins the headline–of–the–day prize for an opinion article written by Aznar’s former Foreign Minister Ana Palacio: “*Franco’s labor laws offered workers rock-solid job security and strong collective-bargaining rights. These were critical elements of welfare systems that were adopted by fascist — or national socialist — regimes around Europe, as they sought to maintain social harmony in the absence of democracy.*” ([Bloomberg][franco])

3. **SPANISH BANKS “GORGING”** While you’re over at Bloomberg, watch this little video on how Spanish banks are ‘gorging’ on a feast of Spanish sovereign debt: “*Holdings of Spanish government debt by lenders based in the country jumped 26 percent in two months, to 220 billion euros…*” ([Bloomberg][gorging])

4. **FORGET ABOUT A 3%DEFICIT IN 2013**. The IMF, like so many others, doesn’t believe it will happen. The Spanish government said that Spain in 2013, without fail, whatever needed to be cut, would reach 3% next year. The IMF doesn’t believe we’ll reach that figure until 2018, which is quite a long time after the next general elections, which means that no-one has a clue whether Spain will really be able to reduce its deficit so much or not. Meanwhile, I suppose, the economy will continue to sink… ([El País][fmi])

5. **UNPAID LOANS: +8,2%**. The number of unpaid, or unpayable, loans in Spain is rising to new historic levels. We now owe €143.2 billion that we can’t pay. Historic deleveraging is taking place on the Iberian peninsula, at every level. The total owed is 1.736 TRILLION euros. ([Expansión][morosidad])

6. **3,918,986 UNPAID GOVERNMENT INVOICES**. Good God, we all knew that the issue of Spain’s regions, town halls and unpaid bills was a piss–take that had caused thousands of businesses all over the country to close, but I didn’t expect it to be THIS BAD. 4 million unpaid invoices, in 14 Spanish regions, to the tune of €17.3 BILLION. The system is absolutely rotten… ([Expansión][facturas])

7. **REGIONAL DIPLOMATIC OVERKILL**. We have too much regional stuff in Spain: regional airports, regional TV stations, corrupt politicians, nepotism, official cars, and now we find out that we have too many regional trade offices abroad. There are 160 of them, compared to 118 national embassies. Unbelievable. ([Libertad Digital][166])

8. **OWN BRAND GOODS OWN 35% OF MARKET**. According to a new report, almost a quarter of Spaniards choose cheaper products thanks to the economic crisis and these now represent 35% of the total amount of supermarket goods purchased in Spain. Government cut follows government cut and no-one knows when all of this is going to end… ([ABC][marcasblancas])

9. **SICK PENSIONERS TO PAY FOR MEDICINE**. Workers too. Almost everyone gets to pay more for their medicine. 10% more. “*We’re moving from a system in which people pay according to their age to another in which people pay according to their income.*” Didn’t the PP say that is exactly what they were NOT going to do before they won the elections? ([El País][10%])

10. **KING APOLOGISES**. Which is probably the least he can do after his piss-up in Botswana. Still, it’s not every day you see a reigning monarch apologizing to his subjects in public, as soon as he walks out of the hospital door: “*I’m very sorry, I was wrong. It won’t happen again.*” He must be a very worried chap right now. ([RTVE][rey])

11. **COLONEL CHARGED WITH SLANDERING THE CROWN** What he really wouldn’t want to happen is for foreign investors to start relating the economic crisis in Spain with words like ‘Franco’—like former minister Ana Palacio has just done on Bloomberg—or for them to start seeing regional headlines (*those bolshy Spanish regions*) that mix other words like ‘Colonel’, ‘King’, ‘crown’ and ‘slander’. In the Canary Islands, in fact, they have just charged Colonel Martínez Inglés with slander and libel against the Crown. Something to do with ‘*Charlemagne’s right testicle*’ and ‘’*Genocidal Franco’s perfidious cuff*’. ([Canarias Semanal][coronel])

Thanks for reading.

Regards from Murcia,





  • Andrew

    As a resident pensioner I am happy to pay a prescription charge – but how do they plan to decide which category I come in? I don’t get a spanish pension and only the hacienda knows my income? Is this another job creation scheme for public servants or a genuine revenue raising scheme? Surely a single charge of 10% for all pensioners with a maximum limit and a facility to gain exemptions for chronic illness or real poverty would be more effective.