Wednesday, October 26, 2016

Pontevedra Pensées: 26.10.16


The Impact of Brexit: Here's a considered view of how Spanish-British relations will be affected.

Spanish Banks: Here's how they rate for solvency. Or did when the assessments were made. I see that my bank, Banco Popular, does badly but that Bancopopular-e does well. Beyond me. Anyway, the latter now appears to be called Wizink, or something stupid like that.

Thieves: Here's one bullish way to deal with them.


The Future?: The head of United Left (IU) party – a coalition that includes the Communist Party and green groups - has said that IU will 'actively participate' in protests which will follow the installation of a right-of-centre minority PP government. As my own view is that only a popular revolt will bring about real change in Spain, I'll be watching events with keen interest. But probably not taking part in anything that happens on the streets.


A Poverty Machine?: Here's an extract from the Daily Telegraph article at the end of this post: We are all tediously aware of how the euro-zone has been a financial disaster. But it is now starting to become clear that it is a social disaster as well. What often gets lost in the discussion of growth rates, bail-outs and banking harmonisation is that the eurozone is turning into a poverty machine.


Brexit: See the second Telegraph article at the end of this post for a common sense Scandinavian perspective.


RT TV: I've mentioned they always have a a handy Western 'expert' to trash US/EU/UK attitudes and actions. Specifically, I've cited one Adam Garrie, who's billed as political commentator but, in fact, is merely some guy who writes pro-Russian crap in a personal blog. Which is turning out to be a good career choice, it seems. Wish I'd thought of it. Anyway, here's his Linkedin profile. If you google him, you'll see from his blog foto that he thinks he's Oscar Wilde. What a prat.


El Bierzo: This is the region in NW Castilla y León where some of the best godello(white) and mencia(red) wines come from. Here's a nice El País article on it. West of Bierzo lies the Valdeorras region of Galicia, where the very best stuff comes from.

Percebes: Reader David has kindly sent me this video of Gordon Ramsay eulogising these awful things. He cites a price of €300 a kilo, reflecting the dangers involved in harvesting them from rough seas. Yes, well . . . If I go down to the market this morning, they'll be around €30-35 a kilo. They reach the price heights only at Christmas, when the locals just have to have them on their big family meals menus. By the way, you'd think Ramsay could at least get the fucking pronunciation right. To use a favourite word of his.


The Weather: I thought I'd do a long hillclimb section of the newish Camino Espiritual today but it's so warm - an unseasonal 26 degrees  - I'm giving it a miss until next week.


Moths: Last winter I put all my pullovers in large plastic boxes to keep these buggers away from them. This seemed effective but I took out a pullover this week and you've guessed the rest. Apparently the eggs can survive for years until they turn into voracious bloody grubs. Anyone know of a solution?

British Commercial TV: Is it me or is every ad on British TV these days for either a credit check outfit or bloody funeral companies? One good outcome – I now reach for the mute button on the remote the second the ads begin.


Religions: The trouble with having faith in a god is that He/She/It has never been crystal clear about what is wanted of His/Her/Its adherents. Hence schisms. In Christianity alone there are over 200 denominations, each claiming to be the right one. The longest-standing of these – the Catholic Church – got shut of all its competitors rather ruthlessly in the early centuries of the new religion but these days, thank Gods, all Christian communions live alongside each other in relative peace. Rather less so in the Islamic world, of course. But, anyway, if you flick through the God channels on British TV, you'll find a vast array of odd names for the innumerable churches but I rather like this one I came across yesterday in Private Eye: The Debre-Genet Holy Trinity Ethiopian Orthodox Tewahedo Church. Which might or might not be the same thing as The Debre Genet MedhaneAlem Ethiopian Orthodox Tewahedo Church. Or the DGMEOTC as it's known to its friends. But probably not.


This is a house in the street where I park my car before walking across the bridge into town. It was empty for years and is now being renovated. My impression is that a group of workers comes along every few weeks, spends a few days there and then disappears. So, it could be quite a while before the new owners move in. Not that such project mis-management is unique to Spain, of course.


Old Stars: Looking for something else, I came across this foto from 2010. It's a gallery of bankers who'd been ordered to pay back the sums cited. Which total well over €100m. And this is only the amounts they'd been ordered to return, not necessarily all that they stole. All but 2 of these crooks worked in regional/local saving banks (caja/caixas), run by local politicians for the benefit of themselves and their family and friends. And one of them (Rato) was The Minister of Economy in a PP government and then the head of the IMF. The top line comprises directors in 2 of Galicia's caixas, both long gone.

I'll leave the latest cases until tomorrow.


The eurozone is turning into a poverty machine: Matthew Lynn

There are constant bank runs. The bond markets panic, and governments along its southern perimeter need bail-outs every few years. Unemployment has sky-rocketed and growth remains sluggish, no matter how many hundreds of billions of printed money the European Central Bank throws at the economy.

We are all tediously aware of how the euro-zone has been a financial disaster. But it is now starting to become clear that it is a social disaster as well. What often gets lost in the discussion of growth rates, bail-outs and banking harmonisation is that the eurozone is turning into a poverty machine.

As its economy stagnates, millions of people are falling into genuine hardship. Whether it is measured on a relative or absolute basis, rates of poverty have soared across Europe, with the worst results found in the area covered by the single currency.

There could not be a more shocking indictment of the currency’s failure, or a more potent reminder that living standards will only improve once the euro is either radically reformed or taken apart.
Eurostat, the statistical agency of the European Union, has published its latest findings on the numbers of people “at risk of poverty or social exclusion”, comparing 2008 and 2015. Across the 28 members, five countries saw really significant rises compared with the year of the financial crash. In Greece, 35.7% of people now fall into that category, compared with 28.1back in 2008, a rise of 7.6 percentage points. Cyprus was up by 5.6 points, with 28.7of people now categorised as poor. Spain was up 4.8 points, Italy up 3.2 points and even Luxembourg, hardly known for being at risk of deprivation, up three points at 18.5%

It was not so bleak everywhere. In Poland, the poverty rate went down from 30.5% to over 23%. In Romania, Bulgaria, and Latvia, there were large falls compared to the 2008 figures – in Romania for example the percentage was down by seven points to 37%.

What was the difference between the countries where poverty went up dramatically, and those where it went down? You guessed it. The largest increases were all countries within the single currency. But the decreases were all in countries outside it.

It gets worse. “At risk of poverty” is defined as living on less than 60% of the national median income. But that median income has itself fallen over the last seven years, because most countries inside the eurozone have yet to recover from the crash. In Greece, the median income has dropped from 10,800 euros a year to 7,500 now. In Spain it has not been quite so dramatic, but median income has still gone down from 13,996 euros a year to 13,352. In reality, people are getting both relatively and absolutely poorer.

There are other measures that make that clear as well. Across the EU, 8of people are defined as “severely materially deprived”, which means that they lack access to what most civilised societies regards as basic necessities – if you tick four out of nine boxes, which include not being able to afford to heat your home, eat meat or fish or a similar protein at least every other day, or pay for a phone, then you fall into that category.

Strikingly, several eurozone countries are now starting to lead on those measures. Greece, inevitably, is rising fast, with 22% of the population now falling into that category, compared with only 11back in 2008. In Italy, a country that was as prosperous as any in the world two decades ago, a shocking 11% of the population are now “materially deprived” compared with 7.5seven years ago. In Spain the rate has doubled, and in Cyprus it is up by more than 50%.

And yet if you look at countries outside the single currency, that rate is either broadly stable, as it is in the UK for example, or else falling at a respectable rate – in fast-growing Poland, for example, the numbers suffering “material deprivation” has halved in the last seven years, and, at 7.5%, is now a lot less than it is in Italy. 

That matters. The EU set itself a target of significantly reducing the key measures of poverty by 2020. It is failing miserably. Even worse, it is becoming clear that one of its own main policies, the creation of the euro, and the botched, half-hearted rescue packages that have just about held the thing together, are largely responsible.

It is hard to think of any other plausible explanation for the stark difference between poverty rates for the countries inside and outside the eurozone. Why should Greece and Spain be doing so much worse than anywhere in Eastern Europe? Or why Italy should be doing so much worse than Britain, when the two countries were at broadly similar levels of wealth in the Nineties? (Indeed, the Italians actually overtook us for a while in GDP per capita.) Even a traditionally very successful economy such as the Netherlands, which has not been caught up in any kind of financial crisis, has seen big increases in both relative and absolute poverty. 

In fact, it is not very hard to work out what has happened. First, a dysfunctional currency system has choked off economic growth, driving unemployment up to previously unbelievable levels. After countries went bankrupt and had to be bailed out, the EU, along with the ECB and the IMF, imposed austerity packages that slashed welfare systems and cut pensions. It is not surprising poverty is increasing under those conditions.

In the financial markets, there is an endless focus on the state of the banking system within the eurozone, on rising budget deficits, and on the risk of deflation and the havoc it might play on asset prices. But in the end, the financial crisis does not matter that much. It can be fixed with bail-outs and by printing more money. Even if it can’t, it just means some banks and investment funds will be worse off. 

But the fact that poverty levels are rising so fast in what were prosperous countries is shocking. There is no sign of that rise slowing down – indeed, in countries such as Greece and Italy, it is accelerating. What were once dirt-poor countries, such as Bulgaria, or middle income countries like Poland, are fast over-taking what used to be developed Europe.

Not being able to afford a phone, or to eat meat three times a week, is no fun. But thanks to the euro that is now the fate of millions of Europeans – and it will not change until the currency is taken apart.

Sweden holds out olive branch to Brexit Britain Ambrose Evans-Pritchard

Sweden has warned that it would be a serious mistake to chastise Britain for voting to leave the EU, appealing instead for an amicable settlement to minimise damage for both sides.

“The softer the Brexit, the better. We’re an open country and we are in favour of free trade, and we want to see a solution that is as beneficial as possible for everybody,” said Magdalena Andersson, the Swedish finance minister.

The olive branch from Stockholm reflects the shared view of the Nordic bloc that there is nothing to be gained from a fractious divorce between Britain and the EU. 

The EU itself needs to tread with care since there are large eurosceptic movements in Sweden, Denmark, and Finland. A hard-line stance that ignored the concerns of the Scandinavian bloc would risk opening fresh rifts within an already badly-fractured Union.

The comments came as Swedish companies start to feel the chilling effect of the referendum campaign in Britain and the sharp fall in sterling. Data released this week show that Swedish exports to Britain are in free-fall, with a drop of 19% over the period from January to July compared to the same period a year ago.

The pound has fallen 15% against the Swedish krona this year, suffocating exports. Pharmaceuticals fell 38%, chemicals 23%, and paper goods 15%. “It’s amazing. If this persists, it will lead to fewer jobs in Sweden,” said Andres Hatzigeorgiou form the Stockholm Chamber of Commerce, speaking to Dagens Industri.

While part of the drop is a mechanical effect due to the stronger Krona, it also suggests that export profit margins are collapsing. This squeeze would be even more severe if a hard Brexit led to a yet weaker pound and to the erection of tariff barriers.

There are over 1,000 Swedish companies operating in Britain, employing 100,000 people, from Saab, Scania, and Electrolux, to Skype and Ericsson, to Ikea and H&M.  “They’re worried about potential trade barriers and tariffs, and about the Swedish personnel,” said Ms Andersson.

“A weak British pound affects Swedish exports companies, and that could of course affect the Swedish economy,” she said. Britain is the country’s third biggest foreign market.

The minister said the initial anger in EU capitals over Brexit has faded but the bloc cannot retreat from the ‘four freedoms’ of goods, service, capital, and movement of persons that come with unfettered access to the single market – though critics points out that this is not in the case with Ukraine, Georgia, Turkey, and other states in the EU’s near abroad that are categorically denied the right of free movement of by the EU itself.

 “Sentiments have calmed down a bit during the last few months, but there can be no cherry picking. You can’t just pick the cherries you like,” she said.

The warnings on cherry-picking are part of the joint script agreed by the EU-27 states but it is unclear what this mantra means in practice. Britain has a complex set of diplomatic, defence, and security ties that go far beyond the one-dimensional issue of the single market. It is ultimately implausible to imagine that Britain could be treated like any other ‘third country’ in trade talks, as if it were in Latin America or Africa.

Mrs Andersson hinted that there may be some leeway for creative statecraft once Article 50 is triggered and the picture becomes clearer. “We have to know what the British government wants, what is their idea of a new relationship with the EU, and then we can start discussing from there. This is all part of the negotiations,” she said.

“I can imagine there might be some cherry-picking within that. We should definitely not underestimate the complexity of the issue, and also the consequences,” she said.


Sierra said...

This is "The Telegraph" with the headline, "Heathrow approval shows Britain is ready for take-off" - the best guess is completion in 2028!

Perry said...

Colin's pullovers. Merthballs.

If you've got one moth ball in one hand & another moth ball in the other hand, what have you got?

A bloody great moth. Boom, boom. I'll get my coat!

Colin Davies said...

@Sierra. Yes, indeed. And this after at least 10 years of dithering already!

Search This Blog