“I know about economics. I’m not an economist but I know about economics and I have aides whom I consult.” This comment, made during a recent television interview, is not very reassuring coming from a man who aspires to become Spain’s prime minister in the near future. But then Mariano Rajoy is rarely unequivocal in his handling of the conservative Popular Party (PP) he leads. According to many, his reluctance to be clear-cut and firm is typical of the ambiguous Galician character. One obvious example is Rajoy’s management of the ongoing corruption scandal rocking his party. The lack of a clear policy on this has meant that some PP politicians facing investigation for the Gürtel … [Read more...] about The mystery of Rajoy and the Spanish economy
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Political turmoil threatens to rock Spain’s recovery
Only a few weeks ago, the big argument raging about Spain was whether or not it was “the next Greece”. The size of its deficit, difficulties in getting the economy growing again and its harsh treatment at the hands of international markets all made it look like the prize candidate for the EU’s next massive bailout. Many observers suspected a visit by IMF head Dominique Strauss-Khan to Madrid in June was the prelude to just such a move as José Luis Rodríguez Zapatero’s handling of the economy came under immense scrutiny. Now, however, the situation is slightly different. The bailout has not transpired and while the country has certainly not emerged blinking in the sunlight of market … [Read more...] about Political turmoil threatens to rock Spain’s recovery
The story behind the story: newspaper country reports (Audio)
Country Reports An article Qorreo published called Madrid: capital of the special advertising section drew a particularly strong response. In this audio clip Nick Lyne, who wrote it, discusses the story and some of the background to the murky world of newspaper country reports. … [Read more...] about The story behind the story: newspaper country reports (Audio)
Ideology is first casualty of Spain’s economic crisis
The day José Luis Rodríguez Zapatero’s dream ended was not even marked by a speech from the unlikely new champion of glum realism. As Congress in Madrid debated in late May cutbacks effectively imposed by Frankfurt and Brussels, the Spanish prime minister, who had tended his very personal flame of optimism with so many smiling words, saw his political future turn to ashes without even taking the stand. The Socialist who had vowed to bring the benefits of economically successful Spain to the disadvantaged now looked on as Catalan nationalist Antoni Duran i Lleida announced that his bloc would save the government in the vote to cut public workers’ wages and freeze pensions, but declared that … [Read more...] about Ideology is first casualty of Spain’s economic crisis
Spain’s cajas bank on reform
Topping off a couple of months of frenetic activity intended to guarantee the future of the Spanish cajas de ahorros were three events at the end of July. Their chronological order is important: 1) July 21 - the approval by Congress of the LORCA, the new legislation governing the cajas which includes mechanisms allowing these savings banks to sell equity shares in themselves. 2) July 23 - the announcement on the part of Banca Cívica (the fruit of a partial merger of Caja Navarra, CajaCanarias and Caja de Burgos) that they would be availing themselves of this opportunity by signing a letter of intent with the very large and high profile American investment fund, JC Flowers & Co. The … [Read more...] about Spain’s cajas bank on reform
Not yet a Greek tragedy, but still a Spanish drama
“Complete insanity” is how Prime Minister José Luis Rodríguez Zapatero summed up speculation that his government had approached the International Monetary Fund to request a €280-billion bailout. “These rumours can increase differences and hurt the interests of our country, which is simply intolerable and of course we intend to fight it,” he told reporters in Brussels ahead of an emergency summit among leaders of countries using the euro currency. The IMF also denied the speculation. The rumours that Spain was looking for help started circulating after the European Union and the IMF agreed on Sunday to the first bailout of a euro-zone country, giving Greece a €110-billion loan over … [Read more...] about Not yet a Greek tragedy, but still a Spanish drama
What now for the “PIGS”?
Spanish savings bank La Caixa recently brought to market a €1-billion issue of three-year cédulas territoriales at 70 basis points over similar sovereign debt. As for the investors – 49 percent of these securities backed by loans to Spanish public administrations were picked up by German or British parties and 36 percent by locals. Given the horrific recent treatment of Greek debt, this benign event probably invites a closer look at the tenets behind the classification of a nation as one of the “PIGS” - as if the mere fact that Spanish sovereign 10-years are yielding approximately the same as when the crisis broke last December, whilst the Italian equivalent pays investors 10 basis points … [Read more...] about What now for the “PIGS”?
Lost at sea in the fight against digital piracy
In recent years, Spain has won itself the dubious honour of being labelled a haven for illegal downloading, to such an extent that international distributors have voiced doubts about continuing to supply the country with material such as DVDs. The government has attempted to tackle this issue with a raft of anti-piracy measures. Known as the Sinde Law, after Culture Minister Ángeles González Sinde, they were confusingly tacked onto an Economic Sustainability Law unveiled last year. The specific details of the legislation were not approved until March and Congress is expected to put the act into effect over the next couple of months. Production companies, content providers and the … [Read more...] about Lost at sea in the fight against digital piracy
Time to end Spain’s labour market apartheid
Take a look at a crowded street in any Spanish city and you will see two classes of workers. You won’t be able to distinguish them by their clothes, their skin colour or their schooling. But when they show up for work, receive their payslips at the end of the month or think about their future, they are very different. One group, let’s call them the fijos, feel more secure and more confident. With fixed contracts from their employers, they know they can’t be laid off easily - or cheaply - even in the current recession-bound economy. They don’t have to worry about their bosses renewing their contracts every month, every six months or every year. They may get training to advance their … [Read more...] about Time to end Spain’s labour market apartheid
History repeats in Portugal
Walk the streets of any Portuguese city and sooner or later you will come across a scene that seems unchanged for decades: shoe-shiners on Lisbon’s Avenida da Libertade, elderly ladies hanging laundry from tumbledown balconies in old Porto or fish sun-drying on the beach in Nazaré. One of Europe’s most unassuming and introverted countries, Portugal is a place where the past is gazed upon with a sense of melancholy – until, of course, the past comes back with a bite. Since late January, Portugal has taken a battering on international markets, as its bond prices have plunged and ratings agencies have threatened to cut the country’s credit grade amid fears over rising budget deficits and … [Read more...] about History repeats in Portugal