Wednesday, July 13, 2011

Europe and The Spanish Economy again:

Skip down a few paragraphs if this is of no interest . . .

Some-body – maybe the European Central Bank, maybe its Chinese equivalent - dragged Europe back from the brink early Tuesday morning by buying Spanish and Italian debt, when few others wanted it apparently. How long the relief lasts is anyone's guess. And most of the divinations are negative.

Here in Spain, yesterday saw a brief postponement of one the country's two imminent savings bank flotations. For one thing, this will give investors more time to digest the results of the new, tougher bank-stress tests, due to be published late on Friday. Two or three Spanish savings banks (cajas) are expected to fail these but hopefully neither of those about to go to the market. The bigger of the two flotations, by far, is that for Bankia, which is scheduled for a listing next Monday. Meanwhile, (potential) investors are demanding to know more about real estate exposure and its reliance on wholesale funding, given a 160% loan-to-deposit ratio. Let's hope all goes well enough. A failure doesn't bear thinking about. As for the cajas generally, the Spanish government has given them until the end of July to raise enough cash to meet capital requirements or face full nationalisation. Meaning a loss of local power to Madrid, I guess.

Anyway, today was going going to be yet another critical day for Europe, so I wonder how it went.

At the presidential level, the gloves are finally off. Sr Zapatero – who most think should be owning up to a sinfin of his own mistakes - has accused Mrs Merkel of being responsible for the siege which Spain is struggling to deal with. I guess this is because “Berlin has so far refused to pick up the baton. It has until now blocked use of funds or the European Financial Stability Facility for capping yields by purchasing the bonds preemptively on the open market. German leaders view such an ('illegal') move as start of the slippery slope towards fiscal union and a change in the EU's constitutional structure.”

Sometimes – well, quite often these days – I wonder how anyone could ever have believed a committee of 15-27 presidents or finance ministers could arrive at quick, unilateral decisions in the midst of any old crisis. Never mind a truly existential one. As it is . . . "The response of the EU authorities has been denial and impotence in equal doses. There have been ludicrous attacks on the rating agencies: they want to throw the thermometer out of the window as the temperature rises."

Last word . . . China's role has been crucial but some fear she will eventually run out of patience with European squabbles and mismanagement. “When China stops buying Spanish bonds, it will mark an important inflection point in the European debt crisis.", said some knowledgeable soul.

Back down on earth and reverting to my experience with Vodafone . . . I'm actually prepared to believe the girl who gave me at least three false assurances wasn't strictly lying. I put her actions down to three things:-1. The complexity of the offerings from this and every other phone company; 2. The lack of clarity/training she will have had from head office; and 3. The tendency of the Spanish to save face by saying anything that comes into their head when they don't really know the answer to a query - even if this totally conflicts with what they said previously. Which they can't, of course, remember. Part of the Moorish legacy, in my tendentious view.

On this theme, I asked a close expat friend who's in business here how he survives (and, indeed, prospers) when I doubt that I could. His ex cuffo response:-
  • You're spot on with the view that they say whatever comes into their heads
  • I always know what they're going to say
  • Nothing I'm told is ever true. I don't believe anything I'm told. I never trust a word.
  • There's no malice in what they say; it's just the way things are.
  • I succeed because I know the rules and play the game, but better than them.
So, there you have it folks – the keys to success here in Galicia at least. And possibly in Spain at large. Perhaps my friend should run a training course for entrepreneurial expats. Though I suspect I've just given away all his stock-in-trade.

Some good bad news . . . “Spanish underlying inflation slowed in June as retailers slashed prices to lure consumers suffering from the highest unemployment rate in Europe. . . . Spanish consumers are reining in spending as the economy struggles to emerge from a three-year slump that pushed the unemployment rate to 21%”.

Click here for a list of the top 50 property bargains of the moment around Spain, with reductions between 32 and 64%. Only one of them (no. 29) is in Galicia I note.

And click here for a nice piece from IberoSphere on Laurie Lee's Spanish trilogy.

Which reminds me . . . I re-watched the film “The Pride and the Passion” the other night and realised it begins in Galicia, with scenes of Santiago Cathedral, Obradoira Square and the Hotel de los Reyos Católicos. Later on, it moves to Ávila, though my suspicion is the real location in one scene was the Escorial outside Madrid.

And here's Brit chef, Rick Stein, on tapas in Spain. As he rightly says, nothing sold as tapas in the UK much resembles the real thing.

Finally . . . As, I have to say something about the News International saga, click here for a interesting perspective on what Rupert Murdoch really wants. And what Cameron is said to fear . .

Finally, finally . . . Sorry for saying Family Man yesterday, when I meant Family Guy. Fellow aficionados won't have minded, I'm sure.


CafeMark said...

Hello Colin. I have to say I'm 100% in agreement with you (and Rick). You don't get decent tapas bars in the UK. There again I suspect decent fish n chip shops are scarce in Iberia.. but I may be wrong. Another link here that may interest you - claims to have the 50 startups most likely to succeed - and there are two enterprises from Pontevedra Be nice to see how Bluemobility and Promove progress. Or not?

Ferrolano said...

An interesting list of discounted properties and I have to wonder if the builders and developers are still making a profit as I can’t believe that they will sell at a loss. And, if they are making a profit, albeit small, this does indicate the millions of indecent Euros made by the same folk during the boom years!

Both in the UK and the US, I have found a few (very few!) decent “tapas” bars and generally being run by Spaniards. The problem being when you return a year or so later to find that it has closed or changed hands. Good while it lasted.

And yes, I have seen that a lot of people in the US like Fox News, in part because they can’t stand CNN, often referred to as the “Communist News Network? – it all comes down to your political view point.

Colin said...


Well, I'm delighted to hear of 2 Pontevedra companies being in the last and will try to keep a look out for them. I certainly wish them well.

There are no good OR bad fish and chips shops in Spain, I suspect. But lots of bad "tapas bars" in the UK.

Though, on reflection, some Brits must have a F&C shop down in a southern ghetto.

CafeMark said...

Maybe just a load of mediocre ones then! Although I suppose you could argue the Costas (and Playa de las Americas) isn't "really" Spain.

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