Edward Hugh (1): the Spanish Economy
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Tuesday, December 22, 2009Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.
Interview language: English | Length: min | Download the mp3 file (subscribers only)
Edward Hugh is an independent economist based in Barcelona. He is also a prolific blogger and is frequently quoted in the English-speaking financial press as a reliable source on what’s going on in Spain as the recession continues to unfold.
I have been following Edward’s work since the summer, mostly via his very active Facebook page, and thought it would be a great idea to do a podcast with him about the current state of the Spanish economy and some other important events which are affecting it right now.
Fortunately for us, Edward thought it would be a great idea too.
There is so much we could have talked about given the state of things, so we have floated the idea of doing a more regular podcast in 2010 to provide comment and analysis on the latest economic stories and trends from Spain, as well as further explaining some important individual aspects of what’s happening.
In this first 40-minute podcast, we chat about the following topics:
- How does what’s happened in Dubai affect the economic situation in Greece, Spain and the EU?
- Are left- or right-wing political parties causing or solving more problems during the recession?
- Will the Germans, the French or the EU be able to bailout several European countries at the same time if there are several sovereign defaults?
- Are the ECB and the EU trying to pre-empt the IMF in Greece and Spain?
- What are the underlying structural problems with the eurozone funding plan?
- Why is the ECB channelling funds through monetary and financial institutions to buy up government debt in the eurozone?
- How the ECB is trying to use a carrot and stick approach with eurozone governments to control national government deficits and public policy?
- Is IMF intervention now inevitable in Greece?
- Will the ECB will try to play politics and pressure Zapatero in the run up to the 2012 general elections in Spain?
- Is the situation in Spain similar to the situation in Greece?
- Why don’t Zapatero and the Spanish government seem to be reacting?
- Why is there no coherent plan to get Spain back on its feet?
- What is going on with Spanish banks?
- Will unemployment in Spain reach 25% by the end of 2010?
- Which is more important in Spanish economics: image or hard data?
- Will it be possible for the Spanish government to reduce the deficit from over 10% of GDP to less than 3% by 2012 or 2013?
- What state will the Spanish economy be in by the end of 2010?
- What will happen to Spain when the ECB raises eurozone interest rates?
- Might Spain soon be in a worse economic position than Greece?
- What the ratings agencies are trying to achieve with their warnings on Spain?
- Why won’t the Spanish government tell the Spanish people the truth about what’s going on with the Spanish economy?
- Is Zapatero really the biggest problem for the Spanish economy right now?
Please leave your comments for Edward below when you finish listening.
(…)
Edward Hugh is an independent economist based in Barcelona. He is also a prolific blogger and is frequently quoted in the English-speaking financial press as a reliable source on what’s going on in Spain as the recession continues to unfold.
I have been following Edward’s work since the summer, mostly via his very active Facebook page, and thought it would be a great idea to do a podcast with him about the current state of the Spanish economy and some other important events which are affecting it right now.
Fortunately for us, Edward thought it would be a great idea too.
There is so much we could have talked about given the state of things, so we have floated the idea of doing a more regular podcast in 2010 to provide comment and analysis on the latest economic stories and trends from Spain, as well as further explaining some important individual aspects of what’s happening.
In this first 40-minute podcast, we chat about the following topics:
- How does what’s happened in Dubai affect the economic situation in Greece, Spain and the EU?
- Are left- or right-wing political parties causing or solving more problems during the recession?
- Will the Germans, the French or the EU be able to bailout several European countries at the same time if there are several sovereign defaults?
- Are the ECB and the EU trying to pre-empt the IMF in Greece and Spain?
- What are the underlying structural problems with the eurozone funding plan?
- Why is the ECB channelling funds through monetary and financial institutions to buy up government debt in the eurozone?
- How the ECB is trying to use a carrot and stick approach with eurozone governments to control national government deficits and public policy?
- Is IMF intervention now inevitable in Greece?
- Will the ECB will try to play politics and pressure Zapatero in the run up to the 2012 general elections in Spain?
- Is the situation in Spain similar to the situation in Greece?
- Why don’t Zapatero and the Spanish government seem to be reacting?
- Why is there no coherent plan to get Spain back on its feet?
- What is going on with Spanish banks?
- Will unemployment in Spain reach 25% by the end of 2010?
- Which is more important in Spanish economics: image or hard data?
- Will it be possible for the Spanish government to reduce the deficit from over 10% of GDP to less than 3% by 2012 or 2013?
- What state will the Spanish economy be in by the end of 2010?
- What will happen to Spain when the ECB raises eurozone interest rates?
- Might Spain soon be in a worse economic position than Greece?
- What the ratings agencies are trying to achieve with their warnings on Spain?
- Why won’t the Spanish government tell the Spanish people the truth about what’s going on with the Spanish economy?
- Is Zapatero really the biggest problem for the Spanish economy right now?
Please leave your comments for Edward below when you finish listening.
Tim
22/12/2009
As Bart Simpson might say: “Whoa Mama!” That was a great interview thanks to both Matthew and Edward for putting it together. Between this interview and Edward’s Facebook posting today I need to do some serious thinking. Thank-you.
Matthew Bennett
22/12/2009
Hi Tim, glad you enjoyed it! Let us know what you came up with when you’ve finished thinking!
Chris
23/12/2009
That was a very interesting interview with good questions and answers. Many points were raised and I agree with virtually all of Edward’s analysis and predictions. The only uncertainty could be the timing of all of this since factors such as when interest rates might begin to rise or when (if ever) the government might actually address the roots of the problems are impossible to know.
Matthew’s last question has also had me perplexed for ages. Why is the government not doing anything and pretending that everything is on the mend when virtually all economic advisors and institutions are saying the opposite? I think the answer is basically political not economic. Measures required now, which I think will finally be taken once the ECB/IMF impose conditions for bailing out Spain, would make the Socialist government more unpopular among its own massive captive vote. Reforms will include such things as reducing public expenditure, i.e. taking on the funcionarios at national, regional and local levels and implementing labour reforms which would mean falling out with their Trade Union friends and so on. I believe they think the best chance of staying in power is by not losing the traditional vote. Any idea of winning an election based on economic performance has long gone.
paul monahan
23/12/2009
good interview !! “Why won’t the Spanish government tell the Spanish people the truthabout what’s going on with the Spanish economy?” the Spanish people know what’s going on really; they just don’t want to face up to the music – ie that they need to work harder for the same wage and that they need to accept a major overhaul to the employment market; especially making the contracts fairer to the employee and cutting back the ridiculously punitive dismissal remuneration ……. this requires a change in the “pysche” of the Spanish worker which will only be achieved if the suffering really gets serious !!!! so lets get used to stagnation, strikes, high unemployment and misery !!! happy holidays by the way!!!!!!!!
Mark Sharwood-Walker
24/12/2009
Great blog (s), great pod cast. I’ve read a couple of articles in the FT this week quoting figures of €100,000.00′s for moving statues and building new roundabouts from the Plan E. A country in complete denial. 2010 and beyond will be V E R Y painful for Spain. In the medium term I expect Spain to exit the euro as all this country really has is wind turbines, an incomplete high speed rail network and tourism. All this talk of (re) educating people. To do what exactly? And as for the housing market? Over for a least a decade.
Angel Martin
25/12/2009
Dear Matthew, It would be of great help to be able to download the podcast in .mp3 format, so that we can listen to it while we are driving, walking, in the bus… Many people don’t have enough time to be 40 mins here listening to it. Many thanks
Chris
26/12/2009
Mark S-W:
Yes, that just about sums it up but can Spain in fact leave Euro currency? Something to do with German bonds and pensions I think. Zapatero has a ‘new plan’ to invest €5bil in new sustainable economies but even if this is effectively implemented, the benefits for the national economy will not be seen for 3-5 years, well outside the time frame available. Of course, in 2006 when the coffers were full, something along these lines but much bigger could have been conceived to offset the inevitable crash in the building sector.
But sadly, no such thing. Instead we’ve seen billions of Euros squandered on the baby-cheque, the long-running €400 farce, subsidies for car companies which are not even Spanish and the truly amazing Plan-E. Roundabouts are now a major hazard in my town (Castellón) because mini-parks, fountains and trees have been erected in the middle of them obstructing drivers’ vision. How long will it be before Spaniards incorporate the English word ‘bailout’ into their own vocabulary because all roads seem to be leading in that direction?
Joe
04/01/2010
Click on my name to get the link to the MP3 file (it’s also buried in the HTML source of this webpage).
Matthew Bennett
04/01/2010
Happy New Year everyone! Thanks for all your kind comments.
@Chris: I’ve got some thoughts waiting for another post on what ZP is trying to do and where he is spending ‘his’ money. Let’s follow the money a bit, and that will tell us what he’s really trying to do politically, recession or not. Where do you see him spending it?
@Paul: the question of deeper changes required in Spanish attitudes to work and business, generalisations notwithstanding, has also come up more than once and with more than one commentator. What do you think needs to change?
@Mark: spot-on! What exactly is supposed to replace construction/housing and what exactly is everyone supposed to retrain as? There is clearly no coherent plan here.
@Angel, Joe: Joe is quite right, of course – if you are so technically inclined – but I’ve added a link to the top of the post as well so you can download the interview and listen as much as you like on your mp3 player in the car or on iTunes.
DBO
06/01/2010
Can’t we collect some money and hire a spanish translator for Edwards SEW-blog? Following his blog for more than 2-years I bet at the end it will be much cheaper for all of us if the Spaniards know more about their/our economic disaster… ;-(
I would give 5 Euro.
Matthew Bennett
06/01/2010
@DBO That would be an interesting project to work on :-). Great suggestion…
Chris
14/01/2010
That is an interesting suggestion. Zapatero has stated on several occasions that he wants young Spaniards to be fluent in English within the next ten years and that some important changes in Spain’s education system are necessary in order to achieve that goal. However, if he were able to read and understand Edward’s SEW, he might well have second thoughts about this ! Of course, he and his education department have done nothing to actually implement this idea and again it’s another example of Zapatero waffling about something without actually doing anything.
Jeff Sipe
10/06/2010
I find it hard to believe that the problems we are facing today, are not similar to the early 20th Century, that is, the “standards” of economic commerce are not transparent enough or at-all to understand or see, and cannot be accounted for in any normal econmomic formula.
The sourcing capital or stock of a company, single country, or conglomerate of countries/companies … has reserves that are not able to be easily valued or accounted, not to mention derivative cross-selling. Hence, it is anyone's guess as to true volume, true value, and true creditability of economic entities, which is everything that is bartered, traded, or bought/sold.
So once the United States and France in the 1930's changed to a fiat standard, off gold-silver, what “guess” set the value of gold? Silver? The Dollar?
The question isn't the current direction or the current value, it is who is next to pull the “excalibur sword” from the stone set by Luther Pendragon!