The
Spanish for 'pub' is pub. But it's not pronounced 'pub'. For
reasons known only to them the Spanish say paf. This
is now my preferred way of dealing with this:-
Look,
'pub' is short for 'public house'. Say 'public house'.
Poobleek
'owse.
OK.
Now just say 'public'-
Poobleek.
OK.
Now shorten that to the first syllable.
Poob.
There
you go! Now you've (almost) got it. Stick with that and I won't be tempted to
ram a fist in your face.
Perhaps
inspired by those Spaniards who protest by breaking into song in a
bank or the town square, here's the British Austerity Allstars performing a
little ditty entitled. Bugger the Bankers. Catchy chorus.
The
'Misery Index' is a number gained by adding the unemployment
percentage to the inflation rate. This turns out to be one chart Spain
dominates. But it's not all bad news; with the accession of Croatia
this year, Spain may well be knocked off the top spot. Not that this
will solve any problems here, of course. But it will, as the author put
its, highlight what the EU does best – Spreading misery for the
common good.
I
heard some other disturbing numbers today, in the first sentence of a
BBC podcast:- A survey published last year revealed that 24% of
the French population holds anti-semitic views. The figure for
Hungary is 63%. Most shocking of all, in Spain 72% of the people are
willing to admit they are anti-Jew. I've no idea why this number
should be so high in Spain. After all, it's not as if Jews or Judaism
have high profiles here. Frankly, they couldn't be lower. Albeit a little higher than in 1493. I suppose
the only positive(?) aspect is that the number for gypsies would
certainly be higher. Approaching 100%, I suspect.
More
depressing numbers . . . Here (below) is our Ambrose again,
commenting on recent economic data from Spain, he feels calls into
question Madrid’s high-risk strategy of refusing an EU-IMF rescue.
Finally
. . . I'm off to Hamburg for a few days tomorrow. Booking the flight with Lufthansa has been as easy and as efficient as you'd expect it
to be, with the whole process clearly designed with the customer in
mind. Almost a pleasure. But, then, it's not Ryanair. Or Iberia. Or
even Renfe. That's a bit unfair; I booked a train ticket this evening
without problems. Until it came to the (new) chip and pin machine.
Back to the old piece of paper to sign.
Over to Ambrose . . .
Spain's
crisis strategy under fire as economy buckles again.
Spain’s
economy has tipped into an accelerating downturn as sales data and
the money supply flash serious warnings, calling into question
Madrid’s high-risk strategy of refusing an EU-IMF rescue.
The
country’s retail sales plunged 10.7% in December from a year
earlier as austerity bites deeper, one of the worst months since the
crisis began.
The
Spanish car lobby (Anfac) said the country’s output of vehicles has
fallen below 2m for the first time since 1993, crashing 17% last
year. The industry has shrunk by a third since the boom.
Ominously,
car exports plunged even faster at 18%, dimming hopes that foreign
trade can lift the economy out of slump as internal demand shrinks.
While Spanish exports have been a bright spot over the past three
years - keeping pace with German exports - the momentum has faltered
due to lack of investment.
Citigroup
said it now expects Spain's economy to contract by 2.2% this year and
another 2% in 2014, pushing unemployment to 28%
.
The
effects of the slump will overpower any gains from fiscal austerity.
The bank said public debt will surge from 88% to 110% of GDP in just
two years.
Professor
Luis Garicano from the London School of Economics said the recovery
of EMU sovereign debt markets has not fed through to the real
economy, leaving Spanish firms starved of credit and investment.
“Credit constraints are forcing Spanish companies to eat up their
future,” he said.
The
loan crunch has put Spanish firms at a “severe competitive
disadvantage” with rivals in the EMU-core, further widening the
North-South gap. German firms such as Volkswagen are conquering
market share across southern Europe by offering cheap credit for
sales.
There
has been little relief for Spanish firms since the European Central
Bank agreed to back-stop Spanish debt in the summer. Private loans
contracted by a further €30bn in December alone, even after
stripping out distortions.
Prof
Garicano said Brussels has made matters worse by forcing the pace of
bank deleveraging under the terms of Spain’s bank rescue. “It is
too fast. There is a gigantic financial multiplier at work,” he
said.
Premier
Mariano Rajoy has so far resisted a full rescue from the EU bail-out
fund (ESM), fearing a political backlash and loss of sovereignty. Yet
the ECB cannot purchase Spanish debt until Madrid pulls the trigger
and signs a "memorandum".
Mr
Rajoy’s team believe the 250 basis point drop in yields on Spanish
bonds since July is enough to restore confidence and drive growth,
but economists say this falls far short of actual purchases of debt.
Julian
Callow from Barclays said the ECB’s Mario Draghi is “itching”
to buy Club Med bonds, seeing this as a way of targeting monetary
stimulus on the countries in trouble - without an causing
inflationary spillover in Germany - but he is paralised until Madrid
relents.
The
current calm may be misleading. Spanish yields have fallen largely
because local banks have gorged on Spanish bonds, now deemed safe.
This has diverted lending from firms and further entwined the banking
system with the sovereign state. This defeats the purpose of EU
strategy, which is to break the “vicious circle”.
Monetarists
say Spain’s money supply is buckling again after a brief respite in
the early autumn, giving an early warning alert of further trouble
this year. A key gauge - real six-month M1 - fell 4.5pc in December,
while broad M3 has also begun to roll over.
“The
ECB must be given the pretext to buy the bonds,” said Tim Congdon
from International Monetary Research. “The critical issue is to
raise the quantity of money in Spain. In order to do that the ECB
must actually buy things and not just lower rates. They don’t seem
to understand this in Madrid. It makes you want to cry,” he said.
Mr
Rajoy on Tuesday unveiled a plan of “micro-policies” to revive
growth, but the overall setting of fiscal policy is yet further
tightening to meet EU deficit targets.
Olli
Rehn, the EU economics commissioner, said Brussels is drawing up
plans for a “convergence instrument” to help steer investment to
crisis countries as a reward for good conduct. But the scheme will
not be ready for up to 18 months and is unlikely to be large enough
to turn the tide.
Mr
Rehn signalled that Madrid may be given more time to cut its deficit.
"If there has been a serious deterioration in the economy, we
can propose an extension of a country's adjustment path… That's
what we did last year in the case of Spain," he said.
The
Spanish authorities and the Commission are betting that Spain’s
policy of “internal devaluation” and wage cuts within EMU will
slash unit labour costs enough to claw back competitiveness, but this
is a risky strategy that may overlook the lasting damage to the
productive economy - a concept known as "hysteresis".
The
US Conference Board said in a report on Tuesday that overkill could
backfire in the end. “There is a danger that a drastic lowering of
labour costs for an extended period of time could trigger an economic
downward spiral,” it said.
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