Sunday, March 26, 2017

Thoughts from Galicia: 26.3.17

There's an article from Don Quijones at the end of this post. It's essentially about Italy's economic woes but it refers to some aspects of the Spanish micro scene, as I am wont to call it. Worrying. Unless you're a well-paid pensioner. I've highlighted (highlit?) the Spanish references.

Changing Spain?: At least here in Pontevedra, something is finally being done to reduce the numerous frivolous claims that contribute to the infamously slow and inefficient institution which is the Spanish judicial system. Until recently, it cost you nothing to initiate a suit against, say, a neighbour and the result was inevitable - making a dununcia became a national pastime. But now there's a cost and the number of suits has plummeted.

Here in Galicia, I think we've reached the end of the series of burnt Lenten offerings in the local towns and villages. These have been staggered over the last 3 weeks and have included large effigies of a parrot (Pontevedra), a mackerel, a sardine, a frog, a mussel, and a cockerel. I guess this makes sense to someone. Just an excuse to have fun, really.

Spanish Language Corner: I think I've noted before that Spanish uses several verbs where English would simply use the relevant bit of the verb to be. Viz:-
Recently, I think I came across another one - Ir - 'to go'. As in Este año Ferrari va en serio. 'This year Ferrari is serious'. Unless it means something else, of course. Comments/additions welcome.

I read that Pontevedra has the highest ratio of pet dogs in Galicia. Most of them seem to be more a fashion statement than a mascota and - being pugs and French bulldogs - are remarkably ugly. Their owners should be taken out and shot. Or given over to a pack of hungry wild dogs. Just a thought.

There's a second article below, on the communiqué of the EU's 27 leaders. It makes interesting reading for those of us who think the institution is moribund.

The Republican healthcare debacle in the USA has, at least, provided some good belly laughs. First, there was Trump's claim -  preposterous even by his standards - that it was all the fault of the Democrats. Secondly, we've witnessed one the country's most prominent evangelists saying on Thursday that God would ensure Trump got the Act through the Senate. When, fact, he didn't even try to. One wonders whether Trump is really totally unaware of reality or just deluded. Either way, we have a new definition of 'trump' - A busted flush. How can he possibly survive for 4 years?

Today's cartoon:-


Italy at the Grim Edge of a Global Problem

This trend is not your friend.

Don Quijones

To be young, gifted, educated and Italian is no guarantee of financial security these days. As a new report by the Bruno Visentini Foundation shows, the average 20-year-old will have 18 years to wait before living independently — meaning, among other things, having a home, a steady income, and the ability to support a family. That’s almost twice as long as it took Italians who turned 20 in 2004.

A Worsening Trend

Eurostat statistics in October 2016 showed that less than a third of under-35s in Italy had left their parental home, a figure 20 percentage points higher than the European average. The trend is expected to worsen as the economy continues to struggle. Researchers said that for Italians who turn 20 in 2030, it will take an average of 28 years to be able to live independently. In other words, many of Italy’s children today won’t have “grown up” until they’re nearing their 50s.

That raises an obvious question: if Italy’s future generation of workers are expected to struggle to support themselves and their children until they’re well into their forties, how will they possibly be able to support the burgeoning ranks of baby boomers reaching retirement age (a staggeringly low 58 for men and 53 for women), let alone service the over €2 trillion of public debt the Italian government has accumulated (and which doesn’t include the untold billions it hopes to splash out on saving the banks)?

The trend could also have major implications for Italy’s huge stock of non-performing loans, which, unless resolved soon, threatens to overwhelm the country’s banking system. If most young Italians are not financially independent, who will buy the foreclosed homes and other properties that will flood the market once the soured loans and mortgages are finally removed from banks’ balance sheets?

As happened in Spain and other crisis-hit countries, global private equity funds will probably pick up much of the slack by buying up huge tranches of foreclosed or unoccupied properties, as well as occupied social housing units, at knock-down prices, but whether they’ll actually be able to rent the properties they buy or unload them at a profit is a whole other matter, what with most young Italians forced (or choosing) to stay at home with their parents.

At the Grim Edge of a Global Problem

Youth unemployment is a global problem that is already having a major impact on societies and their ability to finance their needs. Youth unemployment is a staggering 54% in Southern Africa. In Greece, it’s 46%, in Spain, 42%, in Italy, 40%, and Iran, 30%.

Averaged across OECD countries, 14.6% of all youth (some 40 million people) were so-called NEETs (Not in Education, Employment, or Training) in 2015. In Southern Europe the share was sharply higher, with between one-quarter and one-fifth of all young people out of work and not in education in Greece, Italy, and Spain.

In Italy the main reason why so few young Italians are financially independent is they can’t afford it. Of the 15 western European nations ranked in the 2016 Global 50 Remuneration Planning Report, Italy boasted the lowest average salary for full-time jobs aimed at recent graduates: €27,400 a year. That compares to €83,600 in top-placed Switzerland, €51,400 a year in second-ranked Denmark, and €45,800 a year in Germany and Norway.

Even in Spain, a country that has broken the 20% unemployment barrier three times in the last 30 years and which has been described by one Spanish economics professor as the “worst labor market on Earth,” recent graduates can expect to take home €3,000 more a year than their Italian counterparts.

The €1,000-a-month Dream

For unskilled workers, in Spain, Italy and Greece, the jobs reality is even bleaker. In Spain ten years ago, “mileurista” — a term to denote someone earning €1,000 a month — was coined to highlight the plight of young workers with low-paid jobs that could never dream of owning their own flat. Today, with a youth unemployment rate of over 40%, becoming a “milleurista” has become something to aspire to.

The alternative is the eternal internship carousel. In the complete absence of any kind of inspection regime, young workers are being shifted from one internship contract to another where they put in full-time shifts day after day in exchange for little more than their lunch money and bus fare home. Few of them will ever get hired full-time, and those that are, are invariably given a short-term contract that, once expired, is replaced by yet another.

Yet somehow Spain’s new generation of unemployed, underemployed, badly paid, or “ni-nis” (NEETs) will soon be expected to maintain over eight million pensioners, who are living longer than ever and are used to earning an average state pension of €906 a month, the second highest (as a percentage of final salary) in Europe after Greece. As Spanish economist Juan Torres López writes, the idea that Spain’s youngest workers will be able to support the country’s swelling ranks of pensioners is risible, especially with Spain’s government pilfering the Social Security fund for other purposes like there’s no tomorrow.

The same goes for Italy whose crisis, in many ways, has barely begun. As in Spain, many of the country’s most gifted young workers will continue to migrate to better performing economies such as Germany, Switzerland, and the UK. With the many programs offering study and work opportunities to young people abroad, such as Erasmus+, “the choice is not so much whether to leave, but whether to stay,” according to a report by Fondazione Migrantes.

For companies in Northern Europe, the mass exodus of young talent from the South means cheaper labor while the governments pick up the income tax. But for countries like Italy and Spain it represents a hemorrhage of talent and skill, much of which was developed with public funds, with no corresponding return. And in that manner, the fiscal health of economies in Europe’s South, already pushed to the limit, will continue to decline. 

The European Union's failure to be more pragmatic is its downfall – and poses the greatest risk for its future

Peter Foster. The Telegraph

Whatever your views on Brexit, there was no escaping the historic nature of the moment yesterday as, one by one, 27 European leaders trooped up to the rostrum to sign the Rome Declaration setting out a blueprint for the next decade of the European Union.

The absence of the British Prime Minister among the familiar crocodile of EU leaders suddenly brought home the real the consequence of last June’s vote – consequences that will become yet more real on Wednesday when Theresa May hands over formal notice of the UK’s intention to quit.

Remainers will have felt a sharp pang of loss at the sight of Britain absent from the top table of European politics; leavers an equal frisson of excitement at what Britain might achieve once liberated from the squabbles of a dysfunctional political union.

And squabbles have indeed been on display in recent weeks as Europe tried to agree on a 1,000-word text that ultimately represents the lowest common denominator of current EU ambition.

The leaders proclaimed a Union that was “undivided and indivisible”, but all the calls for unity belied the reality that on most of the fundamental issues – on immigration and the euro, on budgets and bailouts and indeed on the pace of future union itself – there is precious little agreement.

After a decade of austerity and upheaval in the Middle East, Europe finds itself gripped by a resurgence of nationalism and divided from east to west, from north to south in a manner that has forced Brussels to confront the limits of its ability to over-write the desires of the nation state.  

Poland and Hungary fume that Brussels should tell it how to run its democracy, while impoverished Greece demands the same social rights and dignities for its pensioners as those afforded by rich Germans and Dutch. France remains stubbornly unreformed; Italy wants more help, too.

The frescoes of feuding Roman families in Michelangelo's magnificent Palazzo dei Conservatori on Rome's Capitoline hill therefore provided the perfect setting for the signing of a bloodless document that was made grey with the language of diplomacy and lacked a bold prescription for the future.

Gone was any talk of an “ever closer union” and in its place was a tortuously constructed promise to work at “different paces and intensity where necessary, while moving in the same direction, as we have done in the past”. A sentence that makes one dizzy just reading it.

Britain should take no pleasure from any of this, even if there is a temptation to say that “we told you so”. Mrs May is correct to wish Europe well, even if we've had enough; it is the destination, after all, for nearly half of Britain’s exports, the place where a million Brits live and work and where countless more do business and take their holidays.

What Britain should hope for instead is a new realism in Europe – a deeper recognition that the project needs rethinking among much more flexible lines if it is to accommodate the new political realities thrown up by austerity and terror.

As a host of global challenges bring national identity back into focus, it is apparent that the disgruntlement with the EU is not a public relations problem, as many in Brussels seem to believe, but something much more fundamental and structural.

To restore public confidence, Europe needs to give up on some of its grander designs, return more power to nation states, accept national differences and focus on collaboration between capitals on issues such as trade, climate change, immigration, data-flows and border security where there is a clear mutual interest.

In the end, failure to take a more pragmatic approach – and that includes towards Britain’s request to be a good neighbour outside the EU after Brexit – is what presents the greatest risk to the European Union as it contemplates the decade to come.

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