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The FT has published an upbeat interview with Mariano Rajoy today. Whilst I realise it’s the job of politicians to spin good news to paint themselves in shining light, I do think he is doing a good job. Most financial analysts believe the same. It’s going too far to suggest Spain has turned a corner but market confidence is slowly returning to the economy.
That’s not the same thing as the housing market recovering however. 🙁 More that the government is taxing people so hard revenues have increased by 4%, budget targets for 2012 have been met and the bond markets going easy.
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(for those without an FT subscription)
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I’ve been impressed with Rajoy, and his calmness, not a trait usually associated with Spanish people. Like Cameron, his first visit on being elected was to Berlin, the cradle of austerity.
Although only a year in, exports are up and unemployment down (slightly, recently). The silly labour laws are being overhauled at long last.
I’ve mentioned a turning point and green shoots, perhaps optimistically, but I think it could happen even as early as later this year, if not, definitely during the next one.
I was going to write that, like Merkel, he wasn’t rushing his troops into the north African desert, but this morning’s news says otherwise. I suppose North-West-Africa is a European problem, historically and geographically.
When wars threaten, all sensible economic predictions are pointless.
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@Rocker wrote:
definitely during the next one.
I don’t share that optimism. I read politicians predicting a return to modest growth in 2014 and ask how do they know that? In truth they don’t. Politics is about many things including projecting confidence in their own policies to keep the electorate on side.
The world has changed since the recession began in late 2007. The economic rise of China, India and the far east including Indonesia has been a quiet but spectacular revolution. China is expected to very soon over take the US as the worlds largest economy.
Economic growth in the west is no longer a given just because we have enjoyed post war booms for so long. For western countries to grow they have to compete successfully in the global market place. Unfortunately Europe is burdened with to much restrictive social practice both in society, industry and commercial markets. High labour costs and employment protection both very desirable but which evolved in times when the west was a dominant player in the world and are now completely obsolete.
Substantial across the board reform is essential. Yet we see little evidence of it especially in core Europe. Germany did reform to a certain degree a decade ago and has enjoyed consequent growth. However even their economy is now slowing down rapidly with the arrival of market saturation which creates weaker demand. There is a limit to the number of Mercedes and BMW they can continue selling to China. Yet we in the west have a voracious appetite for the cheap goods made there that used to be made here.
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@logan wrote:
@Rocker wrote:
definitely during the next one.
I don’t share that optimism. I read politicians predicting a return to modest growth in 2014 and ask how do they know that? In truth they don’t. Politics is about many things including projecting confidence in their own policies to keep the electorate on side.
The world has changed since the recession began in late 2007. The economic rise of China, India and the far east including Indonesia has been a quiet but spectacular revolution. China is expected to very soon over take the US as the worlds largest economy.
Economic growth in the west is no longer a given just because we have enjoyed post war booms for so long. For western countries to grow they have to compete successfully in the global market place. Unfortunately Europe is burdened with to much restrictive social practice both in society, industry and commercial markets. High labour costs and employment protection both very desirable but which evolved in times when the west was a dominant player in the world and are now completely obsolete.
Substantial across the board reform is essential. Yet we see little evidence of it especially in core Europe. Germany did reform to a certain degree a decade ago and has enjoyed consequent growth. However even their economy is now slowing down rapidly with the arrival of market saturation which creates weaker demand. There is a limit to the number of Mercedes and BMW they can continue selling to China. Yet we in the west have a voracious appetite for the cheap goods made there that used to be made here.
On a global basis, your assessment is a sound one that I agree with, but on Europe we probably differ because of different political views, not that I consider mine to be particularly strong except when it comes to nationalism, which I oppose.
Europe is overloaded with regulations to prevent individual government’s excesses in order to preserve individual freedom, the European Court of Human Rights being the best example. Individual governments hate it, especially the UK, because when they try and sneak in unfair legislation to favour their own, particular cause, the Court blocks it.
The Tories hate the legislation which prevents them getting the plebs to work longer hours, it’s against Tory tradition. You can go all round the houses, but that’s the truth of it.
I listened to a spokesman for the ‘start afresh’ movement yesterday, listing all the things they want the EU to agree to in order to keep the UK aboard. All they really want is the power to keep their uppity serfs in order.
It won’t work, the rest of the EU has enshrined individual and workers’ rights in their constitution, the whole thing might be a cumbersome mess at times but at least it’s fair. Or fairer.
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@Chopera: qoute from google
“Mr Rajoy offers a sharp contrast to more flamboyant predecessors, the outspoken José María Aznar or Felipe González, the charismatic socialist”
Jose Maria Aznar, flamboyant ????? queeeeeeeeeeeeeeeee. He would make Manual look like a Rock star akin to people like Jagger & Freddie Mercury. I think they meant Jose maria Olazabal.
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I agree Europe is a fairer society than most others the block trades with. However that is my point. Unfortunately to become fairer you lose the competitive edge. Our societies have to decide if they want fairness or jobs.
In order to find economic growth alternatives need to be found. One example is to produce high quality luxury items other countries cannot copy. Goods people in China, the far east and the US actually want to buy. That has happened to a certain extent. Luxury brands are enjoying a boom. However material such as steel, coal, railway manufacturing and the old smoke stack industries which were responsible for most of Europe’s historic growth. These have all gone or been drastically reduced largely because of high labour costs and the developing ability to be reproduce elsewhere.
In believing growth will return you need to see where that growth will acutally come from. The view is far from clear.
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Quality luxury items ??? Here are two examples
1)My friends sister workd for Prada quality control. She spends have the year in China to impliment quality control..
2) I bought a shirt at Milan airport. A well known brand starting with C, cost €178.00. I just fell in love with the shirt and expected to be made by, well known/respected family of shirt makers. It turned out to be made in Moldova. The person working on my shirt would have been lucky enough to get €5 an hour.
The above example is just to stress that these Countries are making luxury items.The only thing missing at the moment is their own brand name. No doubt this will come.
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Thinking about fairness or jobs: It sounds horrible and capitalistic, but rings true, unfortunately. Our High Street is being decimated by large closures, closures of companies which have existed since the year dot. They didn’t move with the times, the internet, while Amazon came along and stole their trade and people could no longer be bothered to look for non-existent parking places before trudging along cold streets being accosted by beggars.
It’s just as bad in Spain, we negotiated two large supermarkets today to stock up for the week and weren’t just troubled by beggars but pickpockets too, I think their professions are interchangeable. Both supermarkets do home delivery at a small cost and we are considering using it, even though we would miss out on the important coffee experience while out. We could go out separately for that, couldn’t we?
Maybe the world is getting to be a harsher place and Darwin was right all along. Ryan Air and Easy Jet may make for cheaper travel, but is it worth the loss of dignity when entering the cattle market? They’ll supply the so-called air hostesses with stun guns and cattle prodders before much longer. (And whisky in a plastic pouch?)
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I’ve used both many times because the UK airports I fly into don’t have the national carriers on those routes. Maybe I’m complaining too much, after all, it’s only a couple of hours in hell and I could easily have another couple of hours on the M25, an even bigger hell.
I don’t know about not using an airline because you don’t like the owner, or vice versa, I like Richard Branson but when I fly to America I don’t go out of my way to book with Virgin Atlantic, good as they are.
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@Rocker wrote:
I’ve used both many times because the UK airports I fly into don’t have the national carriers on those routes. Maybe I’m complaining too much, after all, it’s only a couple of hours in hell and I could easily have another couple of hours on the M25, an even bigger hell.
I don’t know about not using an airline because you don’t like the owner, or vice versa, I like Richard Branson but when I fly to America I don’t go out of my way to book with Virgin Atlantic, good as they are.
Don’t like sitting with the plebs eh?
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Back to Rajoy, and I have to admire his staying power. Several times last year it looked like meltdown or Euro expulsion, but he kept on going. Now it’s looking like the big bailout will be avoided ( a hugely successful bond sale today – http://www.bloomberg.com/news/2013-01-22/spain-sold-7-billion-euros-in-10-year-bonds-via-banks.html ) and more analysts are coming around to the prediction that Spain’s economy will start growing again by the end of 2013.
In fact, it’s looking more likely that he’ll be brought down by internal politics, and not economic issues…. -
On the airlines. I feel that cheap does not have to be nasty. The non frill airlines instead of lifting their game and provide an alternative have lower their game.
In defence of the airlines. We must not forget the very large percentage of tax that is creamed off in the name of saving the planet. As usual Joe Public blame the service or the product provider. It maybe airline ticket or a litre of petrol.
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