Saturday, May 29, 2010

Yesterday and today were spent in picking up friends and guiding them round the many delights of the twin fortress cities of Tui in Spain and Valenca in Portugal. Not to mention re-picking up the couple whose plane never made it to Vigo on Saturday, after it broke down on the tarmac at Manchester airport.

So, not much time for reading or writing. Though I did manage to read a rather self-congratulatory piece on the Spanish economy by Edward Hugh. From which I’ve lifted these depressing observations:-

The principal difficulty facing the Spanish economy at the present time is that while the emergency measures have served to buy time, this time has not been wisely employed, and the measures have simply served to exacerbate the underlying structural problems rather than resolve them.

The need to restore order to Spain’s public finances will mean the adjustment will be even more painful than generally envisaged, and the impact of the correction on the economy generally will be more severe. Thus, it is rather unlikely that the Spanish economy will grow in 2011 as many expect.

To conclude, Spain stands at a crossroads, and important decisions need to be taken. A fiscal adjustment is necessary but the country also needs a competitiveness adjustment in the form of a substantial reduction in the wage and price level (possibly by 20%). If this is not implemented the dynamic of Spain’s debt will surely become unsustainable. Spain has two – and only – choices at this point. It can follow Finland’s example in the 1990s, take the bull by the horns and use the present crisis as an opportunity to transform the Spanish economy into a new economic miracle, or it can remain in denial about the severity of the problem, let things drift until they can do so no longer, and then follow Argentina down the road of ruin and despair. 

To cite the words of the latest IMF report: “Such a comprehensive strategy would be helped by broad political and social support, and time is of the essence.” Ladies and gentlemen, enough is enough. Nearly three years have now been wasted, and it is time to act.

You can, if you want, read the rest of the article here.

So, today finally sees the start of the Grand March to Santiago, albeit through the industrial hinterland of Porriño. Of which, more anon. Meanwhile, I leave you with this sentence from the brochure to Tui's fortress-cum- cathedral, one of many such - The floor of the church, in the form of a Latin cross, is essentially Romanesque, with cruise or transept and walls closing in this style.

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