Spare a thought for Spain this Christmas

Friday, 21 December, 2012 0 Comments

The much-criticized, scandal-prone BBC Newsnight does a lot to salvage its tattered reputation in this excellent documentary by Paul Mason, the programme’s economics editor. From dictatorship to democracy, from construction boom to cataclysmic bust, the rise and fall of Spain is an epic story of hubris, greed, madness and suffering.

What’s the end game? Read Euro Negative Yield Hits Jobless Spaniard to Munich Fund Manager by Ben Sills and Oliver Suess of Bloomberg.

Catalonia is talking the talk

Thursday, 27 September, 2012

Those who thought up the euro never imagined that their beloved project would boost Catalan separatism, but the single currency is a gift that keeps on giving. For radical Catalans, the euro crisis has turned into a Heaven-sent opportunity to point out that the Spanish system effectively transfers funds from their prosperous region to the […]

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The pain in Spain

Wednesday, 26 September, 2012

On the very day that the Spanish Prime Minister, Mariano Rajoy, addressed the UN General Assembly in New York and expressed strong support for the porridge of “multilateralism” and what Spain terms “the Gibraltar dispute“, the New York Times focused on the country’s reality with the headline, “Hunger Rises as Spain’s Economy Worsens“. Readers were […]

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Democracy loses in struggle to save euro

Wednesday, 12 September, 2012

“Since 1945, the central idea of the European project was never again to leave a powerful and aggrieved Germany isolated at the centre of Europe. We are now dangerously close to that point.” So writes Gideon Rachman in the Financial Times. Now, we wait for Germany’s Bundesverfassungsgericht (the Federal Constitutional Court) to deliver its verdict […]

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Julio Vildosola is leaving Spain with his savings

Tuesday, 4 September, 2012

“After working six years as a senior executive for a multinational payroll-processing company in Barcelona, Spain, Mr. Vildosola is cutting his professional and financial ties with his troubled homeland. He has moved his family to a village near Cambridge, England, where he will take the reins at a small software company, and he has transferred […]

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Better a horrible end than horror without end

Friday, 10 August, 2012

There’s a German saying, Lieber ein Ende mit Schrecken als ein Schrecken ohne Ende (“Better a horrible end than horror without end”), that’s storming up the local charts and the current Economist cover brilliantly expresses the mood behind its popularity. Then there’s the Merkel memorandum.

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Leaving the euro: a practical guide

Friday, 6 July, 2012

The Economist and Daily Telegraph columnist Roger Bootle has won the £250,000 Wolfson Prize for Economics for devising the “smoothest” plan for a break-up of the eurozone. According to Bootle, the optimal solution would involve a northern monetary union centered on Germany, and including Austria, the Netherlands and Luxembourg, and maybe Finland and Belgium. Given […]

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The EU Fab Four sings the blues

Tuesday, 26 June, 2012

Walter Russell Mead: “The ‘Fab Four’ (Spain’s Mariano Rajoy, France’s Francois Hollande, Germany’s Angela Merkel and Italy’s Mario Monti) reaffirmed a pre-existing agreement to make some mostly symbolic adjustments to European policy, whomping up an air souffle that the Club Med countries plus France can claim is a “growth” package, but it is mostly made […]

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The euro war of words

Tuesday, 12 June, 2012

The cover of the current issue of The Economist, which castigates Germany for its reluctance to become more engaged in efforts to refloat the global economy, didn’t go down well in Düsseldorf, where the country’s leading business newspaper, Handelsblatt, is headquartered. It responded with a featured titled Original oder Fälschung? (original or fake?) and an […]

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It’s time for Michael Lewis to visit Madrid

Thursday, 7 June, 2012

What’s happening in Spain? Depending on who and what and where one reads, Spanish banks have lost between €300 billion and €1 trillion and the situation is so frightening and overwhelming that no one believes a single word that the government in Madrid is saying anymore. Time to send in Michael Lewis, we say. Perhaps because he’s an “outsider”, the Vanity Fair writer has the courage to see through the numbers and the lies in a way that European journalists cannot or will not. The result is remarkable clarity. Two examples:

“The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true.” Beware of Greeks Bearing Bonds

“Since 2000, lending to construction and real estate had risen from 8 percent of Irish bank lending (the European norm) to 28 percent. One hundred billion euros — or basically the sum total of all Irish public bank deposits — had been handed over to Irish property developers and speculators. By 2007, Irish banks were lending 40 percent more to property developers than they had to the entire Irish population seven years earlier.” When Irish Eyes Are Crying

The agonizing decision facing German Chancellor Angela Merkel now is whether to support Spain, and thus risk German stability and integrity, or let it pay the price for handing over its economy to property speculators. Merkel would be on solid ground at home if she supported deposit guarantees that would protect Spanish savers, but that’s as far as it goes. The Spanish banking system is broken and cannot be shored up. The greed, corruption and incompetence that led to this sad state of affairs is perfect material for a Michael Lewis masterpiece. Bring it on.

Euroland: The new plutocracy

Wednesday, 30 May, 2012

The euro rises and falls In the light of recent events, it’s easy to laugh at the hubris expressed by the German newsweekly, Der Spiegel, 10 years ago when it titled its first issue of 2002, “Euroland: The new plutocracy“. There is something absurdly amusing about the magazine’s story on how the euro was conquering the UK. “Lots of British retailers accept the new currency,” gullible readers were informed. That was very much then. Today, British newspaper readers are waking up to headlines that read “Europe’s debtors must pawn their gold for Eurobond Redemption” and “Eurozone crisis: Spanish fears send euro near to two-year low against dollar“. Not exactly the kind of headlines the ardent advocates of Euroland imagined a decade ago when they dreamed of stealthily engulfing those stubborn islanders with their shiny new currency, eh?

Of course, the 2002 Der Spiegel cover has to be seen in context as the magazine is famous for mood swings that see it regularly lurching from virulent anti-Americanism to pathetic, parochial nationalism embellished with lots of leftist nonsense. Ultimately, Der Spiegel is populist and opportunistic and with Thilo Sarrazin’s Europa braucht den Euro nicht topping the German bestseller list, it won’t be long now before the magazine goes with the flow and delivers the coup de grâce to its former plutocratic love child.