Society Magazine

A View from Spain

Posted on the 26 February 2013 by Davidduff

In response to one of his comments, I asked my regular commenter, Ortega, to provide a 'sitrep' on current Spanish affairs.  He was kind enough to send in this as a comment to a post down below but I thought it worthwhile publishing it as a guest post because I think some of you will find it interesting.  I should add that I have slightly altered one or two bits of Ortega's excellent English in order to make it more fluent.  Muchas gracias, Ortega.

So you choose knowledge of the Spanish situation over kitchen pleasures? Well, I can't say that in neither one case nor the other I'm the most appropriate man, but I'll try to do my best.

First, about Spain, as about anything else, I'm afraid, do not believe what you read in the papers or see in TV. My trust in the BBC (please, do not laugh) was shaken many years ago when I saw its information about Spain and I guessed they do the same all over the world.

The crisis here is the usual case that comes when cheap credit (the rates went down when we became EU members) does not force devaluation of the money, since the peseta had left place for the euro. That brings always some bubble of one kind or another, and in Spain it went to the house market, because of historical reasons (here the houses are seldom rented and the construction business was a well prepared one). Prices went up at 15% year after year while the credits were actually free (interest rate being equal to inflation rate), making everyone think: why not? After all, house prices never fall, as everybody knows. Of course, the Government, who  were making a lot of money in taxes from this situation (plus dubious money coming from allowing to build on land previously not permitted), was able to expend as a mad man. No idea of saving for hard times: that does not give you votes.

When all that ended, as all bubbles eventually do, it brought the bankruptcy not of the banks themselves alone (they became the owners of hundreds of thousands of houses nobody wanted) but of the State, who, lacking the money coming from taxes, had to borrow at a rate higher every passing day and to reduce the expending. Somehow people felt less sympathetic to that than to the previous madness.

On the other hand, you must have in mind that here the jobless rate is always high. In the best of times, it was still about 7 or 8%. And so, while the British GDP has fallen as much as the Spanish one, you have today the same employment level as before the crisis while our jobless rate is today above 25% of the working population (wich is always lower here than in other European countries).

So, it is true that many people are having a hard time. Many do not have a job and quite a lot of them are losing the houses they bought with money they didn't have (the original idea was: even if I can't pay, I shall sell the house at a higher price and still make money). But the contrary is happening. After the Spanish law, when you cannot pay your debt, the bank takes your home, but you still owe the bank if the house price is lower than the whole amount of the debt. In this way, you found yourself homeless and still owing money.

Why not a revolution then, you seem to ask. Well, contrary to the general idea, Spain is a middle class country (that is Franco's regime only lasting legacy) and revolutions usually happen when people feel they have nothing to lose (as counter revolutions when rich people feel they have everything to lose). And you must add also what we call 'black economy', that  can represent as much as a 20% of the Spanish GDP. I do not know anybody, and I know quite a few, that while receiving money for being jobless is not working at the same time.

The question, in my opinion, rests more in the long term and the way the EU will go. Today, it is seen as a bad marriage: nobody would do it again but the divorce is even worse. Maybe will come the day when the option will be: Germany paying (forever) a part of its GDP to the EU  (including the already falling France) or the economies in the south will keep on going as bad as today for a long, long time. Then we will see.

Maybe next time I'll explain you how to make a decent paella. Less reason to cry there, even if you are a begginer.

The information concerning the black economy confirms my suspicions because I could not believe that a nation suffering the sort of reported levels of 'unemployment' would put up with it for so long.  I guess the same thing is happening in Greece.

Now the spotlight shifts to Italy which, in effect, finds itself without a government.  I guess there will be another election soon - or Brussels-Berlin will step in and appoint another 'Governor-General'!  I still believe that Italy is the keystone to the EU edifice - take it away and the whole thing collapses.  'Do it Italy!'


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