So, the Germans blinked and, as expected, accepted the principle of an in-house rescue for the troubled members of the EU. You might say that politics has triumphed over economics but the fact that the German banks were very exposed to default – especially in Spain – might well give the lie to this.
Possibly not the best of timing but here’s a British eurosceptic view on the current financial stresses of the EU. The author writes that “If the euro is to survive, then austerity on a scale that is only just beginning to be seen in Ireland may have to become common around Club Med, and elsewhere.” Maybe but there’s not much sign of that yet here in Spain, at least as regards wage deflation. Representatives of the government, the unions and the business community have just agreed to cap wage increases at 1.0%, 2.0% and 2.5% over the next 3 years. But more, if inflation rockets up. Of course, in reality, the markets will decide and, in practice, this agreement may have as much relevance as the annual price dictated by the Galician Xunta for the wholesale price of grapes.
Meanwhile, one wonders where moral hazard is in all this. And whether the Irish are asking themselves why they bothered to initiate austerity measures last year when they could have waited for the EU 7th Cavalry to come to the rescue and give them an easier ride out of the hole.
Bloody ‘ell! I’ve just seen that our Ambrose is echoing me again! - “Germany's apparent backing for a bail-out comes despite worries that it will lead to the breakdown of fiscal discipline across the Club Med region. It also raises troubling questions of fairness. Ireland has tackled its own crisis by slashing wages and going far beyond any measure so far offered by Greece, yet Dublin has not received help.” I wish he’d get his own ideas.
The other question that occurs to me is whether German taxpayers, for example, have any real idea of where their money is going. In the article cited above, Simon Heffer refers to the ‘poorer’ countries of Southern Europe and appears to include Spain in this description. Well, everything is relative and there must be some poor bits of Spain. But I’ve yet to see them. And I seriously doubt that the German middle class has the quality of life of the Spanish middle class. I mean, how many German families can afford a full-time maid, for example. To answer my own question, I’d guess few Germans are aware of how un-poor most Spaniards are these days. And I don’t suppose anyone in Brussels will be rushing to tell them. Wouldn't be very ‘communitarian’ to incite (justify?) resistance to EU fiscal measures.The bureucrats know best.
To come down from these heady heights to the bagatelle of daily life . . . I mentioned yesterday the 11.30 coffee rush in one of the wi-fi cafés I use of a morning. Well, I went to another one this morning, even though it’s a smoking place. This is because it’s next to the town-hall, where I wanted to check something in the municipal archives. I’ve always suspected this café was used primarily by civil servants – essentially because it doesn’t open at all at the weekends – so I guessed the coffee-breakers were all from said town-hall. This suspicion was rather endorsed at 12.00, when – reeling from the fumes – I made my way to the archives in the basement of the building and found the place deserted. Except for me and all the records. Which I could easily have torched. Or at least stolen. But I didn’t. I just resolved to return tomorrow. But not between 11.30 and 12.30.
Finally . . . Here’s a web page providing details of my rural retreat, available to rent to all those discerning souls who appreciate rustic beauty and tranquillity. And who don’t need a swimming pool. As it took me ages to fill in their form, I'd really appreciate it if some of you could just take a quick look. Anyone who wants to know more can always contact me at colindavies@terra.es
Special deals for Galician Nationalists, of course. I'm not proud.
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