- This topic has 87 replies, 7 voices, and was last updated 7 years, 7 months ago by
.
-
Posts
-
-
I thought I would share with you this interesting article from Reuters. Tighten your belts folks depression is coming to a place near you:
MADRID (Reuters) – Spain’s new government will unleash a wave of spending cuts and strengthen economic reforms in the first months of its legislature, moves that will throw the economy back into recession and send unemployment higher before making things better.
Polls show the centre-right People’s Party storming to an absolute majority in the parliamentary election on November 20, sweeping aside the seven-year-old Socialist government blamed for a deepening crisis and high unemployment.
The task facing the PP will be to assure markets that Spain will continue to do everything to meet its pledges to shrink the deficit.
But a much deeper reform of the labour market, which the PP plans, and even tougher cuts needed to meet deficit targets in the year ahead, will help push the economy into recession, and send the 21.5 percent unemployment rate higher in the short-term.
“The first half of the year will be hard because they will have to cut brutally. It will be the hardest we’ve seen in the crisis,” said Pablo Vazquez, director of economic think-tank FEDEA.
He believes the PP must take radical moves to make Spain more competitive. Tough labour laws, high severance pay to lay off workers, high regulatory compliance costs and salaries tied to inflation all make Spanish companies less competitive.
“It will be a painful process, but if it’s done well Spain will come out of it stronger and it well help the euro zone.”
EXACERBATING THE DOWNTURN
He said a short-lived recession was possible over the coming quarters, in line with other euro zone countries, although Spain’s economy will be hit further by new cuts and reforms.
Even PP think-tank FAES recognised that Spain’s economy will not see decent growth until after 2012 and 2013.
PP leader Mariano Rajoy has warned he will “take the scissors to everything except public pensions, health and education.”
Top of the agenda, he said, would be a restructuring of government administrations, including the possible closure of public foundations and works, with a freeze on hiring too.
The economy stagnated in the third quarter and many analysts now forecast a contraction by year’s end as a global downturn bites into exports that had supported a feeble recovery.
In 2008 Spain’s economy fell into a recession that was fiercer than that in other European countries thanks to the bursting of a housing and construction boom. Unemployment soared from 8.6 percent at the end of 2007 to more than 21 percent currently.
For a decade previously Spaniards had piled into a booming housing sector in a binge fuelled on cheap bank credit at a time when low euro zone interest rates stimulated prices in southern European countries.
Banks also gobbled up large swathes of property and then got dumped with even more when the crisis forced land developers and Spanish families to hand over the keys when they could not keep up with payments.
The PP has said it will intensify a restructuring of the banking sector to ensure markets have confidence in the country’s banks, and capital flows again to businesses.
The Socialist government and the country’s 17 autonomous regions got carried away with a spending spree too, pushing up the public deficit to 11.2 percent of economic output in 2009.
HEFTY CUTS, MORE REFORM TO COME
With analysts predicting some slippage of the government’s public deficit target this year of 6 percent of gross domestic product, even steeper cuts next year are inevitable if an optimistic target of 4.4 percent in 2012 is to be met.
The Socialists constructed the target on a forecast for the economy to expand by 2.3 percent next year, but now analysts see the economy growing by only half that much.
While Rajoy has ruled out cuts to education and the health system, other PP leaders have made cuts in those areas in autonomous regions they control, sparking protests.
“The new government will need to explain clearly that the measures they take will not solve things in the short-term, but they would help the economy recover in the medium term,” said Miguel Cardoso, chief economist for BBVA Research.
Both parties have largely avoided explicit references to the deepening euro zone crisis while on the campaign trail, preferring to focus on the primary concern of Spanish voters: unemployment.
But Rajoy’s economic team believes cuts will generate market confidence and bring down government borrowing costs, which have shot up close to unsustainable levels. That in turn will open up credit between banks and businesses and spur economic growth.
Cardoso said reforms should be carried out to help stimulate business growth, by reducing the costs of opening a business.
Indeed, the PP has said it will cut business tax by 5 percentage points and encourage profits to be reinvested in to modernizing businesses. A PP win is viewed largely positively by business groups and the small to mid-size companies that form the backbone of the economy.
“A likely PP win, given the party’s past in helping business, gives us a slight hope of a change in the economic cycle. But job losses, with close to five million out of work, will hit family spending even harder and make it difficult for small companies to find profitable areas to grow,” said Inigo Ibanez, head of Censor, a small consulting business in Madrid.
Labour unions are sceptical that cuts are the answer, and say European capital Brussels is dictating policy for Spain.
“From what the PP has announced they will do so far it is nothing more than the continuation of policies that are leading Europe towards disaster,” said Javier Doz of Spain’s largest union federation CCOO.
He said a radical change would need to be seen to stimulate growth, but wants the PP to force businesses to commit to hiring in exchange for wage moderation and a weakening in union power to negotiate wages
-
-
-
@GarySFBCN wrote:
I thought I would share with you this interesting article from Reuters. Tighten your belts folks depression is coming to a place near you
Depression and civil unrest. Cutting taxes and ‘austerity measures’ do not increase employment.
I disagree. The private sector is a much more efficient generator of wealth and therefore jobs. Taxing it and impeding it with bureaucracy just to keep a few funcionarios in work is what has helped get Spain into this situation. Spain needs to reform the state but it needs to be done with monetary stimulus to soften the blow and compensate for the deflationary effects. Therein lies the problem.
-
I disagree. The private sector is a much more efficient generator of wealth and therefore jobs.
This is a myth. These days, wealth is moved to off-shore or Swiss bank accounts, or invested in things. Taxes now in the US have are as low as they were in 1958. And yet our employment rate has not improved. Things have gotten much worse – the economic disparity is out of control. There will be no middle class if the trend continues.
Time and time and time again we have witnessed how austerity measures do not solve unemployment problems.
-
It’s strange to read in all the PP publicity that there is no mention of tax rises, either personal or corporate. I think this is insulting the intelligence of the electorate in Spain. They are afraid the reality will frighten the children. Taxes will have to rise, someone has to pay for the rising cost of borrowing.
Until Germany allows the ECB to lend directly to countries instead of private banks and intervening in the bond markets. Yields will continue to rise until these EU countries get their economies back on track.
Austerity seems to be the only club in the PP bag right now and I don’t believe it. They will need to do much more. -
@logan wrote:
It’s strange to read in all the PP publicity that there is no mention of tax rises, either personal or corporate. I think this is insulting the intelligence of the electorate in Spain. They are afraid the reality will frighten the children. Taxes will have to rise, someone has to pay for the rising cost of borrowing.
Until Germany allows the ECB to lend directly to countries instead of private banks and intervening in the bond markets. Yields will continue to rise until these EU countries get their economies back on track.
Austerity seems to be the only club in the PP bag right now and I don’t believe it. They will need to do much more.Yes Rajoy is even promising to reintroduce the tax rebate for paying off your mortgage. I don’t see how he can make a case for that when he’s meant to be reducing the deficit. He must realise that he’s going to be under the microscope as soon as he gets in – it’s not even his call really – any doubts about his ability to cut the deficit and he goes the same way as Papandereu and Berlusconi.
-
@Chopera wrote:
Yes Rajoy is even promising to reintroduce the tax rebate for paying off your mortgage. I don’t see how he can make a case for that when he’s meant to be reducing the deficit. He must realise that he’s going to be under the microscope as soon as he gets in – it’s not even his call really – any doubts about his ability to cut the deficit and he goes the same way as Papandereu and Berlusconi.
Abolishing mortgage tax credit was about the only sensible thing the PSEO did.
If I could vote in a Spanish general election I wouldn’t know who to vote for.
But you are right Chopera. Rayoj can say what he likes before the election, but afterwards he will do what he is told by the powers that be or else.
-
@GarySFBCN wrote:
I disagree. The private sector is a much more efficient generator of wealth and therefore jobs.
This is a myth. These days, wealth is moved to off-shore or Swiss bank accounts, or invested in things. Taxes now in the US have are as low as they were in 1958. And yet our employment rate has not improved. Things have gotten much worse – the economic disparity is out of control. There will be no middle class if the trend continues.
Time and time and time again we have witnessed how austerity measures do not solve unemployment problems.
Regardless of where the wealth ends up (and I don’t see a problem with it being “invested in things”) the fact is that in most of the major economies the public sector does not create any wealth at all – it is almost entirely funded by either taxing the private sector, or selling off national assets to the private sector. The state exists on taking money from the private sector, it doesn’t invent anything and it doesn’t sell anything. Without the private sector the state would not be able to exist. If the private sector is unable to fund the state (which is currently the case) then the only solution is to reduce the size of the state.
-
@mark wrote:
Rayoj can say what he likes before the election, but afterwards he will do what he is told by the powers that be or else.
Or more likely the bond markets first then the ‘thugs’ of Europe with a Putsch in rapid succession.
-
@logan wrote:
@mark wrote:
Rayoj can say what he likes before the election, but afterwards he will do what he is told by the powers that be or else.
Or more likely the bond markets first then the ‘thugs’ of Europe with a Putsch in rapid succession.
Spanish bond yields currently at 6%. It’s déjà vu all over again 😀 😯 😕 🙁 😥
-
Today Mrs Merkle made a significant speech to her own party conference. If you strip out the rhetoric about “the worst crisis since World War 11” and “Europe cannot survive without the Euro” you will begin to see her clear political intention.
That is further integration and a financial and fiscal union within Europe or rather the Eurozone.
What that actually means is greater domination by Germany, forcing the peripheral states such as Spain to run their economies only in ways politically acceptable to Germany.
Much of southern Europe’s electorate may believe on one hand that this is no bad thing, until they understand that their old consumerist habits and cultural life are completely out of sink with the Germanic ideal of thrift, hard work and saving.
I will suggest if these proposed reforms by Merkle & Co are implemented in the Eurozone their cultural choices and ‘lazy Latin bad habits’ will be at an end.
What we will be left with is a homogeneous Eurozone, whose economies perform directly under the direction and control of Brussels and Frankfurt.
Perhaps that’s a good thing. Spain has long indulged in a party they could not afford with someone else’s money.
In this scenario then it matters little how the Spanish vote on 20th November. In fact Spain is already there and this coming general election is a none event and will change absolutely nothing within the country itself.
Such then is the brave new undemocratic world of Europe. Do as we say or else.
How long the Spanish, Italians or Greeks will go on accepting that is anyone’s guess. -
@logan wrote:
…Spain has long indulged in a party they could not afford with someone else’s money…
True to an extent but I tend to go with the following article’s argument that even if Spain had been more careful with her spending, and had made the reforms she now finds herself obliged to make, it would have made little difference.
http://streetlightblog.blogspot.com/2011/09/what-really-caused-eurozone-crisis-part.html
Here’s the conclusion:
So… What Really Caused the Crisis?
Putting it all together, it seems that the EZ crisis is more consistent with the systemic causes view than the local causes view. In other words, while they didn’t necessarily make the right decision every time, the peripheral EZ countries were up against powerful exogenous forces – capital flow bonanzas and sudden stops – that tended to push them toward financial crisis. They were playing against a stacked deck.
It’s useful to reevaluate the macroeconomic history of peripheral Europe in light of this interpretation. Rather than large current account deficits being the result of fiscal mismanagement or excessive consumption, the current account deficits were the necessary and unavoidable counterpart to the surge in capital flows from the EZ core. Rather than above-average inflation rates and deteriorating competitiveness being signs of labor market inefficiencies or lax fiscal policies in the peripheral countries, appreciating real exchange rates were inevitable as the mechanism by which those current account deficits were effected.
The eurozone debt crisis is big enough that there’s plenty of blame to go around, and some of it certainly should go to the crisis countries themselves. But it must also be recognized that as soon as those countries adopted the euro, powerful forces were set in motion that made a financial crisis likely, and very possibly unavoidable, no matter what the governments of the peripheral euro countries did. Irresponsible behavior by the periphery countries did not set the stage for the eurozone crisis; the common currency itself did.
-
-
Public sector not only does not create wealth. It also acts as a hinderance in creating wealth. PP may offer the tax credit for housing etc. Let us not forget in any economy/economical cycle Taxes are giving with one hand & taken with the other.
By offering this credit it may help shift some of the unsold properties & the tax credit could be less than the bail out amount required.
-
-
@GarySFBCN wrote:
Wealth does not equal jobs. The State needs to facilitate the creation of jobs. The State has no business facilitating the creation of wealth.
Tax policy in the US provides us with a good example. It has created and concentrated wealth. It has not created more jobs.
And jobs do not equal wealth.
I am quite capable of employing someone to clean my house, fix my washing machine, or taxi me back from the pub without any help from the state. You do not need the state to create these jobs. It might be the case that some services are better off being regulated by the state, to an extent, but meaningful jobs are created when somebody does something or makes something that meets a demand. Of course you could have a state that tries to meet demand, e.g. by running airlines, car manufacturing, etc, but experience shows that this is both inefficient and immoral, and best left to the private sector.
-
Completely agree. The problem is Europe is hooked on public sector employment in order to enforce and regulate state control and pay off political favours.
In France this is a created art form with the public sector controlling almost every aspect of life. France has 8 million public sector workers most of them with life time contracts.
Public sector employment are the jobs almost everyone who lacks real ambition and drive wants, security, decent pensions and an easy regular life.
Public sector unions are among the most powerful in Europe and can bring governments to their knees.
Apart from Germany and Holland the remainder of the Eurozone nations have a top heavy public sector, sucking the life blood from private enterprise and meddling in areas of the economy they don’t fully understand. -
@Chopera wrote:
@logan wrote:
Spanish bond yields currently at 6%. It’s déjà vu all over again 😀 😯 😕 🙁 😥
Now up to 6.27%. Italy at 6.88%.
http://ftalphaville.ft.com/blog/2011/11/15/747051/dios-mio-redux/
-
I am quite capable of employing someone to clean my house, fix my washing machine, or taxi me back from the pub without any help from the state. You do not need the state to create these jobs. It might be the case that some services are better off being regulated by the state, to an extent, but meaningful jobs are created when somebody does something or makes something that meets a demand. Of course you could have a state that tries to meet demand, e.g. by running airlines, car manufacturing, etc, but experience shows that this is both inefficient and immoral, and best left to the private sector.
I understand now our differences now. When I wrote that the state is responsible for creating jobs you assumed that I meant public-sector jobs. No, I meant that the government is responsible for job creation, not necessarily creating government jobs. Here in California, we voted to invest hundreds of millions of dollars in the ‘bio-tech’ industry. To me, that is the government creating jobs. Some of that money goes to private companies and some goes to State agencies.
And frankly, I think that all economic systems are problematic, and the best way of dealing with that is for the pendulum to swing every 15 years or so, when corruption becomes endemic.
We’ve had so many scandals in our private sector here in the US that I am hopeful that we do have more industries taken over by the government. But only until corruption sets-in, then privatize until corruption sets-in, etc.
-
@GarySFBCN wrote:
I understand now our differences now. When I wrote that the state is responsible for creating jobs you assumed that I meant public-sector jobs. No, I meant that the government is responsible for job creation, not necessarily creating government jobs. Here in California, we voted to invest hundreds of millions of dollars in the ‘bio-tech’ industry. To me, that is the government creating jobs. Some of that money goes to private companies and some goes to State agencies.
No I thought you were refering to both private and public sector jobs. In California those who were interested in investing in bio-tech could have alternatively placed their money in a private fund to develop that sector. And if it paid off they would have got a good return on their investment. It didn’t have to be done via the state. In choosing to use the state to handle the investment money was also forcibly taken from those who did not want to invest in that sector via taxation, while at the same time those who did want to invest in that sector would not have received the same kind of returns. On the face of it it seems that using the private sector to handle the investment would have been fairer in that it would have allowed only those who were interested in developing that sector to place their money where their mouth is, and reap any rewards, while leaving those not interested in investing in that sector to do something else with their money.
@GarySFBCN wrote:
And frankly, I think that all economic systems are problematic, and the best way of dealing with that is for the pendulum to swing every 15 years or so, when corruption becomes endemic.
We’ve had so many scandals in our private sector here in the US that I am hopeful that we do have more industries taken over by the government. But only until corruption sets-in, then privatize until corruption sets-in, etc.
While I agree that the private sector does suffer from corruption, I’m not convinced that it is any less corrupt than the state, and the private sector is certainly less violent than the state. I think what is needed is improved regulation of the private sector rather than state ownership (it has been tried many times before and has never worked).
-
Writing that money was ‘forcibly taken’ is so idiotic, and it means that I’m trough discussing this with you. The governor did not knock on every door and force people at gunpoint to deliver money.
FYI, I consider libertarianism a mental illness. It was heartening to read that Ayn Rand spent her final years being a welfare leech, 100% dependent upon the state – that she so despised – for everything.
In your world, private industry works better than government. In my world (and the real world), private industry is as incompetent and criminal as the State.
We’re never going to agree on this.
-
@GarySFBCN wrote:
Writing that money was ‘forcibly taken’ is so idiotic, and it means that I’m trough discussing this with you. The governor did not knock on every door and force people at gunpoint to deliver money.
FYI, I consider libertarianism a mental illness. It was heartening to read that Ayn Rand spent her final years being a welfare leech, 100% dependent upon the state – that she so despised – for everything.
In your world, private industry works better than government. In my world (and the real world), private industry is as incompetent and criminal as the State.
We’re never going to agree on this.
Errr … you may not realise this.. but if you don’t pay your taxes you go to prison. The threat of which is force enough. And if you resist going to prison then physical force will be used. Do I really have to explain this to you? I mean how the hell do you think taxes are raised? Do you think the governer stands outside Walmart shaking a charity box?
It’s sad that you don’t have the maturity to discuss this in an open and constructive way and have resorted to throwing a few names and running away. Sometimes you can learn a few things from this type of debate, irrespective of whether people agree or not
(BTW I’ve no idea who Ayn Rand is and “libertarianism” is an American label that doesn’t mean a great deal to me. I consider myself more of a liberal – in the classic, European sense)
-
Methinks this exchange of posts illustrates well why Americans will never understand Europeans and vice versa.
The gulf is much wider than just the Atlantic Ocean.
When you listen to American Politicians discussing foreign policy their limited understanding of cultural differences in the world is always transparent.
Perhaps the insular nature of America and the difficulty Europeans have in penetrating just what makes Americans tick is to blame.
I have some friends in America, know them for years but I have absolutely no idea who they actually are. 🙂 -
More years ago than I care to remember, I was offered an opportunity through to live in San Fran. In many ways it would have been fantastic. Much more money and working as a techie in Silcon Valley at the birth of the internet would have opened up so many opportunities.
I declined the offer as I felt then, indeed still do, very European. At the time I said that I could much more easily settle in a European country where I didn’t speak the language than in the US where I did. Little did I realise at that time that it would actually come to pass 😯
To me, there is a huge difference in US and European cultures and outlook on life. This is not to criticise one or praise the other. They both have their merits and downsides.
-
In line with what has already been said, Bloomberg are now reporting that the banks will have to face up to their losses.
Spain Set to Purge Banks of Property Hangover
http://www.bloomberg.com/news/2011-11-16/spain-set-to-purge-banks-of-real-estate-hangover-euro-credit.htmlThis might be easier said than done. As demonstrated recently by the Santander assett sale falling through, the gap between buyers and sellers is still very wide.
-
Quote from Bloomberg article:
“It would be simple for the Bank of Spain to oblige them to put a market value on their real estate portfolio, and immediately it would become clear that they all need capital.”
It would also become very clear how many of these Spanish banks are in reality insolvent. Their property portfolios are hopelessly overvalued in today’s market.
I doubt the new government will bite on that particular bullet despite these pledges. The fall out would be too severe. Fudging it in true EU style is more likely. -
Methinks this exchange of posts illustrates well why Americans will never understand Europeans and vice versa. The gulf is much wider than just the Atlantic Ocean. When you listen to American Politicians discussing foreign policy their limited understanding of cultural differences in the world is always transparent. Perhaps the insular nature of America and the difficulty Europeans have in penetrating just what makes Americans tick is to blame. I have some friends in America, know them for years but I have absolutely no idea who they actually are.
I don’t disagree with your assessment at all, except for there are some Americans who do have an understanding of cultural differences, etc., but they are a minority. Part of this is due to laziness and part is due to the perception that we do not need to understand other cultures as we are the big fish in the pond. But the US is within a continent with Canada (not much cultural difference there) and Mexico. We do not have 20 different ‘first world’ countries to which one can actually drive in less that 5-10 hours. Hence the ‘cultural’ exchange is non-existent and doesn’t have the same relative importance as it does within Europe.
As for my cutting off the discussion, when you all refer to the VAT, do you include ‘forcibly taken’ in the same statement? Is money forcibly taken to build a bridge or maintain a hospital? Is that truly an apt characterization?
Finally, someone doesn’t know who Ayn Rand is is just ignorant. In secondary school, we had to read the ‘classics’ including novels written by Hugo, Dickens and Rand – this from our “inferior” eduction system.
-
@GarySFBCN wrote:
Finally, someone doesn’t know who Ayn Rand is is just ignorant. In secondary school, we had to read the ‘classics’ including novels written by Hugo, Dickens and Rand – this from our “inferior” eduction system.
Why should any European have read an America author who is integral to the definition of America but utterly irrelevant to the rest of the world? She is part of American culture and you are demonstrating that exact lack of understanding of the Europeans by assuming she is part of theirs.
You have to remember that the whole economical philosophies that exist in America simply don’t exist in Europe, we don’t even view the words as having the same meaning, liberal and conservative are not comparable in American English and British English. Its probably true that the English understand the French, Germans and Spanish better than they understand the Americans.
I think its fair to say Ayn Rand and here works are pretty unknown outside the USA. I’d classify Atlas Shrugged as garbage and propaganda and it probably explains the screwed up world view of Americans today.
-
Why should any European have read an America author who is integral to the definition of America but utterly irrelevant to the rest of the world? She is part of American culture and you are demonstrating that exact lack of understanding of the Europeans by assuming she is part of theirs.
Wow. In one post, the oft written screed that Americans are ‘culturally unaware’ is repeated and in another, the above question is asked. Why then, outside of the UK, should anyone read Dickens?
If you can’t see that, regardless of the labels, the underlying concepts are identical, then I surrender. It appears that European cultural unawareness is OK, but American unawareness is a problem.
That idea that taxes are ‘forceably taken’ (meaning with force) and I seem to be the only person here challenging that idea speaks volumes.
-
@GarySFBCN wrote:
Why should any European have read an America author who is integral to the definition of America but utterly irrelevant to the rest of the world? She is part of American culture and you are demonstrating that exact lack of understanding of the Europeans by assuming she is part of theirs.
Wow. In one post, the oft written screed that Americans are ‘culturally unaware’ is repeated and in another, the above question is asked. Why then, outside of the UK, should anyone read Dickens?
If you can’t see that, regardless of the labels, the underlying concepts are identical, then I surrender. It appears that European cultural unawareness is OK, but American unawareness is a problem.
That idea that taxes are ‘forceably taken’ (meaning with force) and I seem to be the only person here challenging that idea speaks volumes.
If there is something I really admire about “americans” is just that idea that no one should mess with their lives. The sad part is though that they are always duped by war hawks in their elections, war hawks that drum up “patriotic” feelings instead of sound politics like for example Ron Paul and Huntsman. Sadly big corporations decide the outcome in your democratic elections. In that sense many european countries are infront. I want to adopt Ron Paul and have him run the show in Sweden but I doubt he would ever leave the country he loves. =)
In europe no one even questions taxes and fees. On the contrary it seems that many seem to think that higher taxes are a sign of a better society. We are very much in need of feeling taken care off.
-
@GarySFBCN wrote:
That idea that taxes are ‘forceably taken’ (meaning with force) and I seem to be the only person here challenging that idea speaks volumes.
Europeans see the payment of taxes as a necessary contribution to their societies not forcible extraction. If you want a decent society you have to make a contribution. That’s well understood.
Europe has a long tradition of social democracy and providing a basic social net for the very poorest. Europeans demand a good standard of healthcare and education funded by the state and not for private profit.
Social welfare running alongside private enterprise which creates the wealth and provides the tax revenues.
It’s a social democratic partnership not ‘forcible taxation’, which for me personally is an odd phrase.
That concept does not exist in Europe even though we may grumble about the level of taxation and try to legally minimise our exposure, most Europeans accept the imperative.
That acceptance however is dependent on how government distribute that tax revenue.
In America the level of defence spending for example would be unacceptable, as would the US healthcare system which profits principally insurance companies and produces suffering and poor health among the most vulnerable. -
@GarySFBCN wrote:
Why should any European have read an America author who is integral to the definition of America but utterly irrelevant to the rest of the world? She is part of American culture and you are demonstrating that exact lack of understanding of the Europeans by assuming she is part of theirs.
Wow. In one post, the oft written screed that Americans are ‘culturally unaware’ is repeated and in another, the above question is asked. Why then, outside of the UK, should anyone read Dickens?
If you can’t see that, regardless of the labels, the underlying concepts are identical, then I surrender. It appears that European cultural unawareness is OK, but American unawareness is a problem.
Before you go off on another rant, can I point out that we are discussing that Europeans and Americans don’t understand each other. For instance, you compare Ayn Rand to Dickens; well we Europeans are on such a different wavelength that we didn’t even realise that her writing were part of any culture or could be considered to be cultural. Why would a rather odd woman’s sci-fi ravings, based on a ridiculous concept, be so important to anyone? She reminds me of L. Ron Hubbard, who many people will have heard of, in the UK at least. Non English speakers will read their own countries authors and base their culture on that.
Can you try an imagine a world where the writings (propaganda) of Ayn Rand doesn’t exist and the mindset it produced doesn’t exist, because that is everywhere outside of the USA.
That idea that taxes are ‘forceably taken’ (meaning with force)
Are taxes voluntary? What happens if you refuse to pay them?
-
@GarySFBCN wrote:
I don’t disagree with your assessment at all, except for there are some Americans who do have an understanding of cultural differences, etc., but they are a minority. Part of this is due to laziness and part is due to the perception that we do not need to understand other cultures as we are the big fish in the pond. But the US is within a continent with Canada (not much cultural difference there) and Mexico. We do not have 20 different ‘first world’ countries to which one can actually drive in less that 5-10 hours. Hence the ‘cultural’ exchange is non-existent and doesn’t have the same relative importance as it does within Europe.
As for my cutting off the discussion, when you all refer to the VAT, do you include ‘forcibly taken’ in the same statement? Is money forcibly taken to build a bridge or maintain a hospital? Is that truly an apt characterization?
Finally, someone doesn’t know who Ayn Rand is is just ignorant. In secondary school, we had to read the ‘classics’ including novels written by Hugo, Dickens and Rand – this from our “inferior” eduction system.
Do you care to provide an argument for why you think taxes aren’t taken by force? You accuse anybody who thinks that they are taken by force of being idiotic, so come on, enlighten me!
Also I’ve looked at the wiki entry for Ayn Rand and it does indeed appear she is pretty irrelevant outside of US political circles. If there are some important ideas of hers that you think I should be aware of then I’d be most grateful if you could share them. There are plenty of writers and thinkers I am ignorant of (after spending 8 years in Spain I am ashamed of not having read anything by Cervantes for example) but I fail to see why Ayn Rand should be high up on my list of “must reads”. Also I wouldn’t accuse you of being ignorant if you hadn’t read Dickens: I don’t assume that because he’s an important figure in my culture then he has to be in yours. That would be just plain arrogant and short sighted of me.
-
Wiki quote:-
Ayn Rand advocated rational egoism, the individualism, and capitalism laissez-faire, arguing that it is the only economic system that allows human beings to live as a human being, ie using their faculty of reason. Consequently, totally rejected socialism, altruism and religion.I can see why the ideas of Rand might appeal to Americans. Her economic philosophy is pure Adam Smith and Milton Friedman. I would go some way in agreeing with her on that but her writings and ideas were not critically well received at the time. I doubt she could be considered as essential reading.
As novelists I would not describe her in the same breath with Victor Hugo or Charles Dickens although that may be unfair having read much of the latter but never Rand.
I might well repair that gap but I suspect disappointment.
Rand’s economic ideas will not transfer to Europe and especially Eurozone countries. Britain tried a form of it under Margaret Thatcher but eventually it became politically unacceptable.
The reason laissez-faire capitalism does not work in Europe is because it leaves too many people behind who end up in poverty. Americans despite their evident religious zeal can ignore that. Europeans can not. -
-
Ardun: I want to adopt Ron Paul and have him run the show in Sweden but I doubt he would ever leave the country he loves. =)
You do of course realize that Ron Paul is a libertarian, which is the underlying and appealing-but-unrealistic philosophy of Ayn Rand, no?
Logan: The reason laissez-faire capitalism does not work in Europe is because it leaves too many people behind who end up in poverty. Americans despite their evident religious zeal can ignore that. Europeans can not.
“Laissez-faire” capitalism does not work anywhere. Neither does strict socialism. Neither does the implementation of any economic system when those who preside over that system choose to adhere to strict dogma and ignore the reality of despair of those who are ‘left out’ and the corruption among some who thrive. And under any system, when these disparate groups grow – when the numbers of people who live in constant despair increase and at the same time, the numbers of successful but corrupt people increase to the point at which together they are a majority of all people, instability arrives and revolution is not far behind.
Logan: It’s a social democratic partnership not ‘forcible taxation’, which for me personally is an odd phrase.
Thank you. I agree with everything in your post.
Katy:Very interesting, but what has all this got to do with the Spanish election
Sadly, I fear that Spain could resemble Dickens’ England if PP wins and follows Rand’s philosophy.
-
@GarySFBCN wrote:
…
Logan: The reason laissez-faire capitalism does not work in Europe is because it leaves too many people behind who end up in poverty. Americans despite their evident religious zeal can ignore that. Europeans can not.
“Laissez-faire” capitalism does not work anywhere. Neither does strict socialism. Neither does the implementation of any economic system when those who preside over that system choose to adhere to strict dogma and ignore the reality of despair of those who are ‘left out’ and the corruption among some who thrive. And under any system, when these disparate groups grow – when the numbers of people who live in constant despair increase and at the same time, the numbers of successful but corrupt people increase to the point at which together they are a majority of all people, instability arrives and revolution is not far behind.
Yes I agree with this. As I mentioned way back in this thread, capitalism needs some kind of regulation because it’s prone to corruption which can then lead to oppression. You’d hope that the medical profession would be regulated so why not the banks for example? We’ve just seen how much damage they can potentially cause to people’s lives when left to their own devices.
@GarySFBCN wrote:
…
Logan: It’s a social democratic partnership not ‘forcible taxation’, which for me personally is an odd phrase.
Thank you. I agree with everything in your post.
People often don’t think of taxation as being forced upon them because most of it is taken covertly. Income tax is taken before people get paid, tax on investment returns is taken at source, VAT is included within the marked price of goods, etc. Also people are somewhat resigned to paying taxes from the moment they enter the big wide world, and they assume it’s “ok” because everybody else has to pay them as well. But that doesn’t alter the fact that you cannot refuse to pay taxes without the threat of legal action being taken.
It becomes more apparent (or at least it should do) that taxes are forced upon people when they start to see them being spent on things they don’t want them to be spent on. A good example is the recent bank bailouts: the entire financial system was under threat by banks having become too big to fail and money was needed to prevent them from collapsing – where was it going to come from? Did anyone voluntarily come forward and offer to pay up the billions needed? No the failing banks were bought by their respective governments, i.e. the tax payer, because ultimately the tax payer has no choice in the matter.
-
The is no evidence at all the PP in Spain will adopt monetary policies and introduce laissez-faire capitalism.
What they have to do as a matter of urgency is reduce the Spanish deficit.In addition reduce Spain ludicrous labour protection laws, encourage job creation and encourage small business enterprise by the abolition of draconian social payments.
The PP have also pledged to leave free social health care, pensions and education spending at present levels.
That’s why I question how they think it will be possible to do that and service the deficit without substantially raising taxes.
http://www.guardian.co.uk/business/2011/nov/17/spain-eu-ecb-help-bond-yields-rise?intcmp=239Spain will have to suffer years of austerity to turn this catastrophic economic situation around. However even with the most pessimistic outcome I cannot see the country descending to something resembling ‘Dickensian London’.
The Spanish people are optimists in nature and very adaptable survivors. I’m confident Spain will emerge stronger, it will just take many years to do it.
-
@GarySFBCN wrote:
Ardun: I want to adopt Ron Paul and have him run the show in Sweden but I doubt he would ever leave the country he loves. =)
You do of course realize that Ron Paul is a libertarian, which is the underlying and appealing-but-unrealistic philosophy of Ayn Rand, no?
So what if he is a libertarian? It’s enough to see the grass root support he is getting to understand that he is the real deal and not only a flipflopper like the rest of the politicians that changes views just according to what the voters wants. He stands firm in his beliefs. This is the man that lobbying groups have labeled as Dr.NO and they don’t even dare to knock on his door in Washington DC because they know it’s a waste of time. One of the few republican candidate that is against torture. He will not bribe his voters with bad solutions like the rest. He predicted the housing bubble and the financial crisis and have also done so in the past. http://www.youtube.com/watch?v=_ZzK2LrbWoM&feature=related
The media is basicly ignoring him http://www.youtube.com/watch?v=GRSJfej-RAY&feature=related
He is against offensive wars “Also have the strongest support amongst soldiers and veterans”. When this old quirky man speaks he oozes of belief, smartness and honesty. He understands the faulty banking system and has a solution for it. When all of the other republicans “lead by Newt” where trying to get Clinton for lying about his sex affair with Lewinski Ron Paul was furious about it because it was so silly. He instead thought they should go after him because he broke the law about starting wars without the approval from congress. http://www.youtube.com/watch?v=6ldfDCSG6DQ
He is a winner. Just look at those silly puppets with their 2-5 childrens. Ron Paul always delivers an asswhopping. http://www.youtube.com/watch?v=P16g5BfxxDQ If you don’t get it he was pissed of that the discussion was headed in that direction.
http://www.youtube.com/watch?v=FG_HuFtP8w8 How america is waging wars and how it should be done.
http://www.youtube.com/watch?v=L6D3uPLlCu8&feature=related “The Ron Paul Revolution”
Basicly tied with Newt in the last poll with 1% less votes than him! I don’t believe in god I believe in Dr. Ron Paul! 😀
-
Can we stick to the thread folks, this is getting silly. 🙁
Good overview of the electoral situation here.
http://www.bloomberg.com/news/2011-11-18/spain-to-vote-for-cuts-as-polls-see-rajoy-win.html -
Spain will have to suffer years of austerity to turn this catastrophic economic situation around. However even with the most pessimistic outcome I cannot see the country descending to something resembling ‘Dickensian London’.
The Spanish people are optimists in nature and very adaptable survivors. I’m confident Spain will emerge stronger, it will just take many years to do it.
I hope your assessment is correct. I guess it depends upon the fairness of who will be doing the most suffering.
-
Benalup in Andalucia holds the dubious title as the poorest town in Spain right now. The town typifies the boom to bust crazy scenario that Spain indulged in over the last decade with cheap easy credit.
This story puts into perspective just how difficult, if not impossible the task facing the new Spanish government is likely to be.
http://www.guardian.co.uk/world/2011/nov/20/spain-benalup-unemployment-euro-crisis
-
I sincerely hope that the new government of Spain succeeds in fixing the economy.
My fear is that even reasonable measures will be presented as being punitive, that working people (and those needing work) are to blame for this mess.
And I’m predicting that 2012 will see 10 times the number people joining the Indignados.
-
Rajoy has warned the Spanish people in his acceptance speech that ‘times are going to be very difficult’. I think that’s a statement of the obvious, times are already hard for most Spaniards.
I don’t think it matters one jot which government is elected in Spain. The country is no longer governed by the parliament in Madrid but by the Eurocrats in Brussels, Germany and Paris.
It has been interesting to note that during these very staged elections in Spain there has been a complete absence of any anti European sentiment. The Spanish people seem to believe for some odd reason that the European Union and the Eurozone is their salvation rather than being the cause of their misery. -
I suspect we’ll soon start hearing stories of previously hidden debt being exposed by the incoming PP politicians. However it’s a tricky situation for them: politically they need to make out that the country’s finances have been left in a terrible state by the PSOE, and they need to do so quite soon as there’s a time limit for how long a new government can keep blaming the previous one. However if they do so they are going to frighten the markets and increase Spanish borrowing costs even more.
-
-
The Spanish people seem to believe for some odd reason that the European Union and the Eurozone is their salvation rather than being the cause of their misery.
While my contact with Spaniards is limited to my family and friends in Barcelona and Jaen, they seem to see the EU as a ‘greater good’ that sometimes benefits them and other times is not so good for them.
-
The EU has been really good for Spain the euro not so much. Spain, Greece, Irland and France have gotten so much money from the rest of the countries that its not even funny. It would be weird if Spain and it’s people didn’t appreciate that.
The best thing with the elections is that hopefully the new government will try to find all the hidden dirt as fast as possible. The banks needs to be forced to put honest valuations on their stocks.
-
I agree Spain did well in the early years of EU membership. They negotiated very generous terms including a 7 year exemption from making any budget contributions.
However the EU giveth and the EU taketh away. The burden of membership especially in the Eurozone has now sapped away any benefits it received. It now has to contribute substantially funds it does not have.
It does not have it’s own currency, interest rates or a central bank able to print money. It’s forced to borrow on the international bond markets at rates close to 7%.
The country gave up all the effective leavers of political and economic power simply to participate in someone else’s political vision.
Please tell me how that’s any use at all to any sovereign nation who never had a previous history of co-operation with anyone except Nazi Germany. 🙁
The perception of Spain’s population is that the EU is good for them.
It’s a bit like faith in a particular foul tasting medicinal remedy. You go on believing it’s doing you good until one day you start to question it.
The Spanish have yet to arrive at that particular fork in the road. -
I always thought of those countries that received all those generous EU handouts as being similar to people caught in a benefits trap, i.e. people who can’t take that first job to lift them out of unemployment because they get more income from government handouts. Except in the case of countries like Spain they were unable to liberalise and diversify their economies because they were getting subsidised by the EU to build things that nobody wanted.
-
-
There are reports in the media that one of Rajoy’s first moves when coming to power on 20th December will be to force all bank’s real estate portfolios into a government sponsored ‘bad bank’.
http://www.bloomberg.com/news/2011-11-25/spain-s-rajoy-said-to-ask-academics-for-proposals-on-creating-a-bad-bank.html
This will allow the restructuring of Spanish banks which is badly needed.
The question then remains what will happen to these portfolios and how much will it cost.
I think the move make sense since it’s perfectly clear no one in the market has any intention of trying to negotiate a purchase from a bank. Those that have tried soon give up.
Spanish Banks are completely uninterested in any form of real negotiation and stick to their own perverse belief of value. -
I think the move make sense since it’s perfectly clear no one in the market has any intention of trying to negotiate a purchase from a bank. Those that have tried soon give up.
Spanish Banks are completely uninterested in any form of real negotiation and stick to their own perverse belief of value.Where are the arrests, trials and imprisonment of the bankers? When are all of their assets confiscated?
All of the solutions, enacted and proposed, penalize working people (pensions, salaries, etc.) and do nothing to penalize those criminals of high finance, and there is nothing to prevent them from doing the same thing again, even in a different industry sector.
Sorry, but if the ECB and taxes from working people are expected to fund this ‘bad bank’, and nothing is done to punish those who perpetuated the need for this bad bank, watch for large scale civil unrest.
-
My interest is solely from the investment perspective. If the new Spanish government manage to take these property assets from the banks at sensible values then consequently an opportunity may arise. The government will want to off load these assets at a price more representative of market values.
Spain is a country which tolerates corruption among it’s public officials and bankers. Little happens to those responsible. Some have been dealt with but in minor ways like pension rights being removed.
The countries just like that, it’s a cultural thing. -
Well Spaniards have been tolerant, but that was before the proposed changes in pensions, the proposed lowering of already-low salaries, etc. But we’ll know soon enough. Wide-spread civil unrest will threaten the euro and cause property values to drop below the proper ‘correction’ levels. And then all hell will break loose.
Here’s a different perspective on how to handle ‘the crisis’:
-
-
Without empathising the point too much, I live in Spain and have done for many years. It doesn’t mean that I know any more than a commentator writing from somewhere far away, like the UK, but I don’t have to read the Telegraph (though I do) to judge the local mood.
Spanish people, like most Europeans, realise that the socialists have failed them. The map of Europe is turning blue.
In Spain it is all about jobs. They’ve voted for Rajoy to reduce their ridiculous unemployment levels. Ordinary people don’t give a toss about the inner workings of the EU, or corruption on their door step, or whether the UK is in, or out, or disappears altogether; they want jobs.
-
Ordinary people don’t give a toss about the inner workings of the EU, or corruption on their door step, or whether the UK is in, or out, or disappears altogether; they want jobs.
OK, while I am legally a resident in Spain, I’m confident that I don’t have your years of experience in Spain. But the Indignados, while lacking cohesion, are an indication of things to come, especially major cities.
I don’t think ‘business as usual’ is going to work in most countries affected by the economy. Here in the US, the ‘Occupy’ groups, also lacking cohesion and consistent messages, have changed ‘the conversation.’ The mighty Bank of America dropped their plan to charge $5 a month for debit cards. Same with Wells Fargo. There are other indications that Occupy groups are having some success.
-
@GarySFBCN wrote:
Ordinary people don’t give a toss about the inner workings of the EU, or corruption on their door step, or whether the UK is in, or out, or disappears altogether; they want jobs.
OK, while I am legally a resident in Spain, I’m confident that I don’t have your years of experience in Spain. But the Indignados, while lacking cohesion, are an indication of things to come, especially major cities.
I don’t think ‘business as usual’ is going to work in most countries affected by the economy. Here in the US, the ‘Occupy’ groups, also lacking cohesion and consistent messages, have changed ‘the conversation.’ The mighty Bank of America dropped their plan to charge $5 a month for debit cards. Same with Wells Fargo. There are other indications that Occupy groups are having some success.
My long years in Spain are mostly irrelevant to the bigger picture; I was going to emigrate to the Land of the Free quite recently but some things got in the way.
The Indignados are but inches away from their cousins across the Med, Spain is closer to Tunesia than Thueringen. Maybe Bavaria is easier on the palate.
Indignados, Occupy groups, people do complain when governments get it wrong, and if the world goes skint the soup in soup kitchens will taste much the same. whether in Malaga, or Blackpool.
-
@logan wrote:
😆 Whatever is he smoking, I would like some.
Yes and he’s an economist. Maybe someone should point out that we already have a debt reduction system called inflation and its normal mechanism to reduce public and private debt. The terrors of inflation are well known, ask the Germans.
-
I just hope the invisible Rajoy and his equally invisible cabinet are putting together contingency plans to escape the Euro. No use continuining to seek low interest bonds from the Germans when they’re making it clear Nein freunde! But I fear Rajoy is another bottler a la Gordon Brown, and will seek to delay making tough decisions as long as possible. Vamos a ver…
-
Surprise, surprise, the PP announce they won’t be able to affect the employment figures after all!. Now we all appreciate they’ve inheritied a very tough position, but couldn’t they have shown a little honesty in the election campaign? At least they’ve made a commitment to help out Pymes (small and medium sized companies)
http://www.muypymes.com/2011/12/12/el-pp-admite-que-en-2012-no-se-creara-empleo
-
-
It seems that spain have sold their debt at a far lower rate than recently – 4%. Maybe we’ve all got it wrong and Spain will be safe within the Euro?
http://www.forexlive.com/blog/2011/12/13/spanish-auction-results-5/
-
The initial reaction by the Spanish equity benchmark, the Ibex 35, has been a snap back higher, with the index now rising by 0.55%, to the 8,429 point level.
Of interest, and somewhat paradoxically however, some strategists are commenting that such high demand may in reality be a function of heightened risk aversion and of funds coming out of deposits and risk assets.
Its odd as the cost to insure against Spanish default is over that, around 4.5%. The cost to insure Spanish, French and Italian debt has rocketed by over 10% since Friday
As of 9am today.
Spain 453 +8 (1.7%)
Italy 573 +9 (1.6%)
France 237 +5 (2.4%)
Germany 105 -0 (-0.2%)
United Kingdom 102 +1 (1.3%)Edit: this is for 5 year bonds , the auction was for 1 year.
-
@peterhun wrote:
The initial reaction by the Spanish equity benchmark, the Ibex 35, has been a snap back higher, with the index now rising by 0.55%, to the 8,429 point level.
Of interest, and somewhat paradoxically however, some strategists are commenting that such high demand may in reality be a function of heightened risk aversion and of funds coming out of deposits and risk assets.
Its odd as the cost to insure against Spanish default is over that, around 4.5%. The cost to insure Spanish, French and Italian debt has rocketed by over 10% since Friday
As of 9am today.
Spain 453 +8 (1.7%)
Italy 573 +9 (1.6%)
France 237 +5 (2.4%)
Germany 105 -0 (-0.2%)
United Kingdom 102 +1 (1.3%)Edit: this is for 5 year bonds , the auction was for 1 year.
Yup – you’d expect one year bonds to be cheaper
-
According to this article Spanish & Italian yields have been increasing:
http://www.ft.com/intl/cms/s/0/29d579d6-24d1-11e1-ac4b-00144feabdc0.html#axzz1gPDJy3RK
Apparently the ECB has been buying Italian and Spanish bonds to push the yields back down (didn’t think the Germans were allowing them to do that)
-
-
@logan wrote:
The ECB can only buy sovereign bonds on the secondary market.
It’s not Germany alone who’s against the ECB lending directly to governments The Lisbon Treaty has a specific clause making it legally impossible. To change that a new treaty would have to be written and Germany would veto it.Thanks – I got confused with the 1 year auction mentioned previously – had me thinking that the ECB was buying from auction
-
looks like a 5 year Spanish bond sale went well today:
http://www.telegraph.co.uk/finance/economics/8958052/Spain-buoyed-by-6bn-debt-auction.html
-
@Chopera wrote:
looks like a 5 year Spanish bond sale went well today:
http://www.telegraph.co.uk/finance/economics/8958052/Spain-buoyed-by-6bn-debt-auction.html
Yes, very strange, Spanish yields are plummeting
http://www.businessinsider.com/spanish-2-year-yields-2011-12
So we’re looking now at yields of around 3.2% on an instrument that was yielding above 6% in just November.
Maybe the markets are impressed with sr Rajoy? 😆 Or perhaps there are bigger things happening that we don’t yet know about (maybe more massive fast rail line contracts like the Saudi one?)
-
-
@katy wrote:
Don’t be daft…a rail contract is like a flea on an elephants arse 😆 😉 Claims that the ECB and Spain were buying them up but who knows in this strange world! A lot of Spanish banks were downgraded yesterday.
Not sure I’d call a 8 billion contract a flea! But yes, it’s not going to pay off the yearly debt all by itself.
I’d worry about big banks (including Barclays ) if downgrading really was an issue – perhaps we’re all doomed?Fitch has slashed the credit ratings for a handful of major banks in the U.S. and Europe, sparking fears over the outlook for the world economy.
The mass downgrade heightened concerns of a new credit crunch as the global banking system struggles with massive levels of debt.
The ratings firm said it lowered the ratings for Bank of America, Barclays, BNP Paribas, Credit Suisse, Deutsche Bank, Goldman Sachs Group, Morgan Stanley and Societe Generale.
Yet despite all this doom and gloom, someone is buying up all this debt. Spain’s interest payable is plummeting! Some here have said the ECB aren’t allowed to buy the debt, but I can’t see who else is? Maybe the Italians and Greeks with their bail-outs! 😉
-
-
@DBMarcos99 wrote:
…
Yet despite all this doom and gloom, someone is buying up all this debt. Spain’s interest payable is plummeting! Some here have said the ECB aren’t allowed to buy the debt, but I can’t see who else is? Maybe the Italians and Greeks with their bail-outs! 😉To clarify – the ECB aren’t allowed to buy sovereign debt directly from Spain, Italy, etc, but they can buy it on the secondary markets. So basically the banks are buying the sovereign debt at auction with the knowledge that they can then sell it to the ECB.
I’m surprised this hasn’t been picked up on more by the media. European banks are up to their eyeballs in dodgy sovereign debt and there would be no reason for them to buy even more of it at lower interest rates unless word has got round that there’s a free bar at the ECB. I can’t believe Germany will allow this unless there is no other option, and they won’t allow it for long. It’s Quantitive Easing in secret.
-
For me, the news I’m hearing is troubling: The Baltasar Garzón case and now PP seems to be moving beyond the economy to enact their social agenda. Any thoughts regarding if PP will see any resistance to these changes? I know that it is a difficult time, but are their details about Judge Garzón that aren’t published here? It seems like a huge injustice.
According to the current version, approved in 2010, teenagers aged 16 and older can have an abortion without parental permission in some cases and don’t need to meet pre-approved circumstances, such as rape or mental illness, as long as it’s during the first trimester. The People’s Party’s reforms will reverse both changes…
…on Jan. 30, Education Minister José Ignacio Wert announced that a new law would replace the civic education curriculum that Socialist introduced in 2006, which included lessons on religious, racial, and sexual tolerance that were loudly criticized by the Catholic Church and the country’s extreme right. Mr. Wert said he would eliminate “issues that controversial and susceptible to ideological indoctrination,” although he didn’t offer more details.
-
The new conservative government have also announced this week that they intend to ask parliament to overturn socialist labour protection laws making it easier to hire and fire workers. Reduce redundancy compensation and other measures designed to make the labour market more flexible. Long over due in my opinion.
At the end of this governments term Spain should be a very different country to the one which was driven to the edge of bankruptcy by the last lot.
If that means a marginally less liberal society then it’s surely a price worth paying for a more stable economic one which gives young people hope for a better life.http://www.npr.org/2012/02/08/146538406/labor-law-changes-may-offer-relief-for-spains-youth
-
@logan wrote:
The new conservative government have also announced this week that they intend to ask parliament to overturn socialist labour protection laws making it easier to hire and fire workers. Reduce redundancy compensation and other measures designed to make the labour market more flexible. Long over due in my opinion.
At the end of this governments term Spain should be a very different country to the one which was driven to the edge of bankruptcy by the last lot.
If that means a marginally less liberal society then it’s surely a price worth paying for a more stable economic one which gives young people hope for a better life.http://www.npr.org/2012/02/08/146538406/labor-law-changes-may-offer-relief-for-spains-youth
Very good move by PP. I’m not surprised though since Spain have had some of the most rigid laws in the area.
-
I see that article contrasts Spanish severance conditions with that of the Germany. Maybe a comparison with the UK would be better.
1 week (5 days) for each complete year of service, rising to 1.5 weeks (7.5 days) if over 42 and capped at a maximum of £400 per week.
Only payable after 2 complete years of service.
Giving an example to drive home the comparison….
Someone on the average UK salary of £28k (as it’s being used as the benefits cap) and under 42, then he/she gets 3.7 days pay per year of service
So before the reform Spanish employment law offered a benefit 12 times greater than the UK
After the reform it’s still 9 times greater.It’s a move in the right direction, but I can’t see it making a huge difference.
-
JP1, agree with you fully not forgetting that the employer’s have to pay a higher employer’s contribution
for the employee whils’t in their employment. Making the labour unit cost uncompetative if it was not in the first instance.Spain has been a given opportunity to revolutionise the labour laws along with others laws while using the EU & the current crises as an excuse.
Will they do it ??? I do not think so & this not the first time that Spain had lacked the vision.
-
In Spain and France is cheaper to retain hopeless and lazy employees rather than sack them. That accounts sometimes for the poor personal service you receive in supermarkets and banks. Employment laws are very difficult to change because trade unions see them as a golden achievement and will fight hard to keep them.
Strikes and disruption are bound to follow the law changes in Spain. Sarkozy gave up in France the unions told him they would bring the country to it’s knees. -
The existing labour laws were certainly round before the last Spanish government – AFAIK they’ve been around for a very long time. To clarify a bit further, companies are obliged to give employees a contrato indefinido after two years – up until then they are classified as temporary workers and can be made redundant with immediate effect and with no compensation. So many compamnies simply make workers redundant before they have worked two years with them. So Spain has this split society of those who have highy privileged permanent contracts and those who move around temp contracts with no rights whatsoever.
The other problem is that once someone has a permanent contract they are extremely reluctant to change job. Most people get stale after a while in any job, and usually move on to fresh challenges. But in Spain changing job means losing built up redundancy, so people just hand around doing the same job. And since nobody moves job, very few new opportunities become available, and the labour market grinds to a halt.
-
I wasn’t speaking to the economic agenda of PP but to the social agenda, especially regarding education. Benjamin Franklin wrote, “they that can give up essential liberty to obtain a little temporary safety deserve neither.” Change “safety” to “economy recovery” and that summarizes my concern.
As for the economic reforms, they don’t seem too harsh, excepting for that they are forced sacrifice on workers, while bank CEOs, etc, continue to draw their salaries when they should be in jail.
And then there was this from the NY Times:
The legislation encourages small enterprises, in particular, to hire young employees by allowing companies with a maximum of 50 workers to claim a corporate tax break of €3,000 for each new hire under the age of 30. Should the new hire have been previously jobless, he or she will still also be able to collect 25 percent of previous unemployment benefits for a limited time, while 50 percent will go to the employer.
So this will encourage hiring young people at the expense of older workers, a shift in employment demographics, but does nothing to expand the economy. I wonder if we are going to see a business model emerge where an employer fires their long-time employees, hires young employees, gets the €3,000 tax break, gets the 50% unemployment, reduces the employee’s salary by the 25% that employee will continue to collect from unemployment, etc. etc., and then shuts down after 1 or 2 years, only to reopen as a new company?
Again, a country cannot expand their economy with austerity. There must be investment.
-
@GarySFBCN wrote:
I wasn’t speaking to the economic agenda of PP but to the social agenda, especially regarding education. Benjamin Franklin wrote, “they that can give up essential liberty to obtain a little temporary safety deserve neither.” Change “safety” to “economy recovery” and that summarizes my concern.
Again, a country cannot expand their economy with austerity. There must be investment.
In times of emergency social liberalism must be of secondary concern. In Europe right now it is just that a state of crisis. Without austerity these countries in the Eurozone will collapse and any prospect of investment will evaporate. It will be impossible for governments to raise capital, budgets would collapse and the social fabric along with it.
Expanding their economies alongside public austerity is not impossible. The private sector if given the right environment can achieve that.
It’s an illusion to believe governments create growth and jobs, business and enterprise does that. -
In times of emergency social liberalism must be of secondary concern.
Obviously, I don’t agree. In Europe, that has had more harsh dictatorships in the last 100 years than most other continents, the above quote should be reserved for use by ultra-nationalists. I’m not accusing you of being ultra-nationalist, etc.
I just question why it is even considered that we must make “choice” between the economy and human rights/liberties. We should be smarter than that.
-
Gary, I actually agree that human rights are an essential sine qua non in a democratic society. You need to clarify what you mean by ‘human rights’.
Here we are discussing government economic spending and the need for reduction and a change in employment laws passed in better economic times.
If austerity and conservative monetarist polices actually reduced human rights, presumably most democratic parliaments without hesitation would throw it out.
I don’t see Greeks or Spanish losing their human rights right now. They may be poorer and economically less privileged than before but not disenfranchised.
If countries are to live within their means an essential requirement is less of everything for most. Education, social heath care, social security et al.
Generations of Europeans have grown up confused believing these things are all human rights. They are not, someone has to earn the money to pay for them and also provide the civil security for peaceful protest.
Greece, Spain, Italy and Portugal all borrowed heavily because successive governments lacked the courage to tell their population they could not afford such advantages.
Now the chickens are home to roost and the sooner we and them face the hardships to come the better in the long run it will eventually be. -
I don’t understand what difference it makes for “society” as a whole to premier the hiring of younger instead of older? Goverment involvement in anything never works as they intend. I guess their goal is to show that they are trying to do something for the young people but shouldn’t the best thing to be to let the best worker get the job without any subsidies? This is discrimination against older people. I actually think it will back fire since younger people has a higher ability to move to other places for a while when times are rough. Encourage them to work abroad for awhile and when things pick up they will come back.
-
- The forum ‘Spanish Real Estate Chatter’ is closed to new topics and replies.
