Wall Street Journal report on Spain gets furious reaction

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This topic contains 24 replies, has 9 voices, and was last updated by Profile photo of Anonymous Anonymous 6 years, 1 month ago.

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  • #55883
    Profile photo of Anonymous
    Anonymous
    Participant

    This WSJ video report on Spain was widely discussed in the Spanish press over the weekend. Most of the commentary was indignant. For my part I don’t think the quality of the analysis is very good – the WSJ should do better – but some valid points are made. Spain doesn’t like being criticised, even when it is justified.

    Watch the report here:
    http://online.wsj.com/video/cutting-back-spain-hits-hard-times/D0E90E8A-D94E-4C1F-A05F-953F3FA6BD5B.html

  • #101009
    Profile photo of Anonymous
    Anonymous
    Participant

    “Spain doesn’t like being criticised, even when it is justified.”
    Here lies the problem. As a nation that shows lack maturity & confidence. If one does accept their shorcomings than one cannot improve.

  • #101010
    Profile photo of Anonymous
    Anonymous
    Participant

    So tell me: Who likes being criticised, justified or not?

  • #101012
    Profile photo of Anonymous
    Anonymous
    Participant

    @marjal wrote:

    So tell me: Who likes being criticised, justified or not?

    The English love it.

  • #101014
    Profile photo of peterhun
    peterhun
    Participant

    Accepting criticism and adjusting to it is essential part of improvement. Its one reason why the British have succeeded for so long and why the Mediterranean countries have been in terminal decline for centuries.

  • #101015
    Profile photo of Anonymous
    Anonymous
    Participant

    Well said Peter! 😀

  • #101017
    Profile photo of logan
    logan
    Participant

    The best thing about that video were the street buskers! Superficial comment for an American audience.

  • #101018
    Profile photo of Anonymous
    Anonymous
    Participant

    The report asks:

    “If Spain’s economic woes intensify, is the country too big to fail or too big to save?”

    An interesting question.

  • #101019
    Profile photo of logan
    logan
    Participant

    @charlie wrote:

    The report asks:

    “If Spain’s economic woes intensify, is the country too big to fail or too big to save?”

    An interesting question.

    There is no question of failure. There is an EU bailout fund waiting to prevent the country from defaulting on it’s debts and to help finance recovery. A more likely scenario is Eurozone failure and a break up of the single currency. Roll on that day. 😀

  • #101029
    Profile photo of Anonymous
    Anonymous
    Participant

    “So tell me: Who likes being criticised, justified or not?”
    Only those who lacks maturity & self confidence. Construtive OK, degrading no.

  • #101031
    Profile photo of logan
    logan
    Participant

    In Latin and Arab culture criticism is regarded at best as impertinent and at worst insulting. Culture is not something you can dismiss simply as a sign of immaturity or lack of self confidence. Culture is the structure which binds communities and societies together and is always the most difficult factor to change.
    A failure to understand cultural differences in diverse countries says more about you than them.

  • #101038
    Profile photo of rt21
    rt21
    Participant

    “There is an EU bailout fund waiting to prevent the country from defaulting on it’s debts and to help finance recovery”

    I was under the impression that it was a eurozone rather than an E.U. bailout fund and that whilst it was intended to prevent a eurozone country defaulting on its debts the real aim was to prevent any turbulence and disruption hitting the value of the euro. If the likes of Germany felt that a breakup of the euro was likely in circumstances where Spain was on the point of default then eurozone members might review their position and strategy on bailing out Spain. It might then be left to the wider community to pick up the pieces

    Richard

  • #101039
    Profile photo of peterhun
    peterhun
    Participant

    Actually its EU, some none Euro countries contribute and are offered protection by it. I believe the UK contributes (comparative little) but isn’t offered any protection in return.

  • #101040
    Profile photo of logan
    logan
    Participant

    Yes the fund is principally Eurozone but I believe Sweden and Denmark made contributions. The main aim was to calm the markets and support the Euro and it has worked. Investors have more confidence that investing in EZ sovereign debt will not produce an unwanted ‘haircut’. The value of the fund is over €800bn enough to bail out Spain. However with repeated downgrades by credit agencies the cost of sovereign debt is set to rise for the PIIGS piling on interest payments. Ireland is an example of where a default or bail out will likely be necessary in the New Year. If other countries like Spain also need support the fund will soon be exhausted
    Why the markets are bullish currently with the Euro is a mystery to me. Germany is powering ahead but the remaining EZ countries are in the mire and likely to stay there for some time.

  • #101056
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    Anonymous
    Participant

    @logan wrote:

    Why the markets are bullish currently with the Euro is a mystery to me. Germany is powering ahead but the remaining EZ countries are in the mire and likely to stay there for some time.

    PureFX website has this explanation:

    quote:

    GBPEUR
    You would be forgiven for assuming that the euro would weaken following news about Anglo Irish Bank being downgraded by Moodys to just one above junk status.
    Along with the Irish Government announcing it needs €35bn to rescue the Irish banking system. However in contrast the euro has gained substantially against both the pound as US dollar. Why? Well clearly we cannot be sure but there is evidence that the euro is being used to fund carry trades (the process of buying one currency, then using it to purchase another higher yielding currency like the Australian dollar).
    Also China has been purchasing Greek debt, which would explain the recent rise in value of the euro against lacklustre economic performance.

  • #101057
    Profile photo of logan
    logan
    Participant

    Yup that makes sense, thanks. 😀

  • #101077
    Profile photo of Anonymous
    Anonymous
    Participant

    Charlie.
    A few facts re the Irish State financial position.
    Serious I agree but not in any way as serious as some of the media would like us to believe.
    Bad news will always get the headlines – good news rarely gets them!
    The cost of saving the bond holders – including the sub bond holders – across ALL the Irish financial institutions in trouble is
    circa 50 Billion Euro.
    Anglo Irish Bank alone is costing circa 35 Billion Euro!
    Meanwhile the possibility of Ireland Inc defaulting is always a possibility but the Government holds very large cash reserves as a funding buffer that amount to roughly 15 per cent of GDP.
    This means that liquidity does not become an issue.
    Furthermore, the Irish National Pension Reserve Fund offers the Government further liquid resources as a buffer that amount to roughly 12 per cent of GDP.
    Thus, an immediate default is simply out of the question.
    The Irish unemployment rate is presently 13.8%. It has been much higher in the past.
    I understand Spain’s unemployment rate is circa 20%.
    One interesting fact is Exports are doing very well.
    However the real problem just now on a day to day basis is, because of all the uncertainty, people are saving more than ever before and the Government is trying to get the populace to spend again and reinvigorate the domestic economy.
    In summary, those of us who live a large part of our lives in Ireland, recognise our financial position is serioius but I hope the above facts will provide those of you who live elsewhere a better understanding of the Irish financial situation.

    seamus kilcock

  • #101079
    Profile photo of logan
    logan
    Participant

    The principal problem for Ireland is one of market confidence. The markets believe there is a strong possibility Ireland may be forced to default on it’s debt.
    It already has a national debt approaching €90bn, almost 60% of GDP and with the further €50bn required to bail out its broken institutions you can see why. Moody’s and Fitch have recently downgraded it’s sovereign debt and given it a negative outlook. That increases the debt yields and the costs of servicing it.
    Add to that the fact that the Irish population has the highest household debt level relative to income in the western world, a very generous and unsustainable state welfare system and a bankrupt banking system the outlook for the country is bleak indeed. Unemployment is currently 13.7% and its difficult to see where future growth will come from given the urgent need for further austerity programs.
    The good news comes from the acceptance of the Irish people for drastic cuts in public services, so civil unrest is minimum. Unlike the remainder of the European population who seem to believe they have a divine right to prosperity.

  • #101088
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    Anonymous
    Participant

    I forgot to add to my post above the fact we have been fed so many lies by the Government since 2008 the figures I stated should have a ‘health warning’ added.
    As a citizen of the ROI I am very afraid if the figures I stated turn out to be worse then I have stated then no doubt the IMF/EU will be knocking on our door and taking up residence for some time.
    Then again maybe that is what our Government and Public Service Unions need to knock them into a sense of reality.
    Time will tell i.e. we will know one way or another before June 2011.
    Up to now we have acted in a responsible manner but I can assure you the populace at large is extremely angry.
    Thousands have taken their own lives – suicide if you will.
    It will not take too much more to push us over the edge – like the French/Italians/Greeks?
    It’s a hard call but being an optimist I believe we will come out of the present crises reasonably intact if only the Government would call an election and use this as a safety valve to let the electorate have its say!

  • #101090
    Profile photo of logan
    logan
    Participant

    I personally Shamus have huge respect for the way the Irish people have accepted the need for austerity and understood the difficulties the country is in. Your government has at least come clean and admitted the extent of the problems.
    The Spanish Government on the other hand continues to pretend the economy is turning upwards despite every sign to the contrary. I actually suspect Spain is in a similar plight to Ireland but will not declare the truth.

  • #101092
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    Anonymous
    Participant

    Hi Seamus – out of interest, is there a general feeling of regret in Ireland that they voted (the second time around) to join the EU?

  • #101093
    Profile photo of peterhun
    peterhun
    Participant

    @charlie wrote:

    Hi Seamus – out of interest, is there a general feeling of regret in Ireland that they voted (the second time around) to join the EU?

    I cannot understand why they would. Its what the Irish government did with membership of that and the Euro that is the problem. The fact is the EU gave Ireland billions of Euro’s and dragged it up to above the average wealth for the EU zone, its all gone a bit wrong but the Irish are still significantly richer than before.

  • #101094
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    Anonymous
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    @peterhun wrote:

    I cannot understand why they would. Its what the Irish government did with membership of that and the Euro that is the problem.

    Which is why I asked Seamus the question, seeing that he actually lives in Ireland so would be well-placed to answer it.

  • #101083
    Profile photo of logan
    logan
    Participant

    The fact Ireland is a member of the EU and EZ was not a factor in the countries downfall.
    However it is a factor in it’s ability to recovery. They need to be able to control the economic levers of power themselves. Currency and interests rates being but two. They are stuck with an EU economic policy which suits Germany and the country is now simply a passenger in a system designed entirely to benefit that nation and France. The only tangible benefit they will gain is being bailed out by the rescue fund and then be in hock to that fund for generations to come.
    The Eurozone was only ever going to work in economic terms during the good times. Now these financial disasters have arrived the system is hopelessly squeezing smaller countries in a straight jacket from which they cannot escape.
    I would imagine now the Irish would wish they had never gone near the EU but it’s all way too late in the day for regret.

  • #101098
    Profile photo of Anonymous
    Anonymous
    Participant

    Moody and Fitch and other rating agencies were giving Irish Banks top ratings into 2008.
    They got it so wrong then, why should we trust them to-day?
    They are giving an opinion – maybe it’s right or maybe it’s wrong, again!

    Ireland did not vote ever against joining the EU.
    It did require a second vote to ratify the Nice and Lisbon treaties.
    There is no general feeling of regret having joined the EU – so far.

    Ireland is away better off inside the EU and Eurozone.
    If Ireland was outside the EU/EZ it would be where Iceland is to-day? Not a pretty sight!

    Since 2007 Irish private savings has risen to an estimated 10% of disposable income in 2009.
    This is up from a low of 3% in 2007. People are so afraid of spending – just in case!

    It’s all down to a lack of confidence in our Government and its handling of the economy.
    (It’s the economy – stupid!).
    I expect the Government to fall within 6 months – they have a wafer thin majority in our Dail (Parliment) and are depending on independents to keep them in power.
    Frankly, I am one of a growing number of people in Ireland who are beginning to be of the view it might be a good thing if the IMF/EU came in and sorted out our economy once and for all.
    The IMF/EU people will not be swayed by the Unions – especially the Public Service unions who have been holding the Government, and the general populace, to ransom for the last 10 years.
    If you only knew the ‘half of it’.
    At this stage I don’t know if I should laugh or cry!

    Meanwhile my Wife and I intend travelling to our Elviria, Marbella apartment for a couple weeks of golf late Nov/early Dec!
    Anyone out there like a game?

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