Spanish life is not always likeable but it is compellingly loveable.
- Christopher Howse: A Pilgrim in Spain.
- Christopher Howse: A Pilgrim in Spain.
If you've arrived here because of an interest in Galicia or Pontevedra, see my web page here. Garish but informative.
Matters Hamburg
- Of all the hundreds of cyclists I've seen here, not one of them has been wearing the ludicrous garments that many Spaniards seem to think essential for this activity. At least at weekends. In fact, I don't think I've seen anyone even wearing a helmet. So, I guess that's not compulsory in this rule-obeying country.
- Yesterday, I spent most of the morning in the Maritime Musuem, where there are 9 floors('decks') and more model ships – from tiny to huge - than I'd have believed existed in the entire world, never mind just Hamburg or Germany. Very impressive.
- The good news is that my Visa card was finally accepted somewhere, at said museum.
- I'm quite sure that few readers will be interested to see it but my old friend has insisted I post this foto of where Angela Merkel lived here in Hamburg - very close to his flat - for the early years of her life:-
Matters Spanish/Galician
- Has Spain unearthed the secret to a long and happy life? asks the writer of the first article below.
- More immediately, what now for the newish minority (socialist) government, whose honeymoon is well and truly over? Will it survive? Will it even get its budget through? Will it really emerge as the most voted-for party if new elections are held? See a relevant Guardian article here.
- An EU parliament decision outlawing fascist groups has naturally gone down badly with Spain's far right. In particular with Franco's family. They might have a point about free speech.
- If you're resident in Spain but not on your local padrón, then perhaps – as it says here - you need to think about this.
Matters EU
- The Brussels-Rome brinkmanship will go on for months, says Ambrose Evans Pritchard, and The EU's unstoppable showdown with Italy risks a market crash and a euro break-up. See his (pessimitic?) article on this below.
Spanish
- Word of the Day: One which you need to be careful about – Caliente.
- Here's a list of just a few Spanish expressions which centre on the world cajones:-
© [David] Colin Davies: 26.10.18
THE ARTICLES
Has Spain unearthed the secret to a long and happy life?: Annie Bennett
Not that the Spanish need any justification for devouring Ibérico ham at every opportunity, knocking back a glass or two of wine with lunch or having dinner when many other nations are going to bed, but it must be nice to know that these and other habits are contributing to a longer and no doubt more enjoyable life.
According to a report by the Institute for Health Metrics and Evaluation, which has just been published in The Lancet, Spaniards are set to have the best life expectancy in the world by 2040, nudging ahead of the Japanese, to reach an average of 85.8 years. In the UK, we can only expect to get to the age of 83.3, despite our obsession with counting calories, steps and portions of fruit and vegetables.
Of course, I’m not saying Spanish people don’t do that too – there is a huge diet and fitness industry – but in general they have a much more relaxed attitude when it comes to eating and drinking.
While the Mediterranean diet undoubtedly plays a big part, a key factor is likely to be the free healthcare system. Within Spain, it is the Madrilenians who top the life expectancy table, probably because of the access to several of the best hospitals in the country, together with a greater percentage of high incomes. The Spanish capital also has one of the worst pollution problems though, which the study shows can shave years of your life. I just think if more people took a leaf out of the Madrilenians book and wrote off entire afternoons to sit on a sunny pavement terrace drinking wine, both health and happiness levels would soar. That’s my theory anyway and I’ve been merrily sticking to it for a few decades now.
After Madrid, the next two parts of Spain in the ranking are the neighbouring regions of La Rioja and Navarra, where the cuisines feature a lot more vegetables than other areas. And they produce and drink a lot of excellent wine of course. Go on a holiday where you walk or cycle from vineyard to vineyard and you could call it a health break. None of these top three is actually on the Mediterranean, by the way, but they still eat loads of fresh fish, which is zoomed from the coast in refrigerated lorries and planes, a more sophisticated version of what muleteers were doing centuries ago.
Whenever I’m asked about the differences between living in the UK and Spain, the importance of meal times is always near the top of my list. If you arrange to meet someone at two or three o’clock in Spain, you are going to have lunch, no question about it. And if you meet between nine and 11 at night, you are having dinner together, or at least going to a few tapas bars. Eating proper meals is still a big part of Spanish life and means less mindless grazing.
Big family lunches at weekends are as popular as ever, whether in the home or at a restaurant, with three, four or even five generations getting together around the table for a meal that is likely to last several hours. The benefits of this are not just about the food – which is likely to be traditional – but also the mood-boosting effect of spending time with loved ones. A strong family structure means older people get more support – often living with their adult children – which means they are less likely to miss meals and health problems are spotted earlier.
But please don’t feel guilty as you open your pizza box on the sofa tonight, as all the big fast food chains are present throughout Spain and show no signs of going out of business any time soon. Maybe Spaniards are living longer because they spend more time outside and sometimes take siestas on hot summer afternoons. Probably worth giving it go if you ask me, just to be on the safe side.
2. The EU's unstoppable showdown with Italy risks a market crash and a euro break-up: Ambrose Evans Pritchard, the Daily Telegraph
Do not assume that Italy’s insurgent coalition will capitulate to EU demands if risk spreads on Italian debt blow through the fatal line of 400 basis points.
The European Commission’s strategy of ‘controlled escalation’ relies on tacit collusion with bond vigilantes and hedge funds to ratchet up the pressure. The method is to squeeze the capital buffers of Italian banks and ultimately to set off a deposit run, hoping that such financial vandalism does not set off contagion to Portugal, Spain, and Greece.
This is a dangerous game to play unless you can be sure that the Lega-Five Star alliance will back down rather than resort to radical measures in self-defence. The obvious risk is that Italy’s budget fight with Brussels will cause a pan-European financial crisis before either side blinks.
“Brussels can keep sending its silly letters until Christmas. Our budget is not going to change. The gentlemen speculators will just have to get used to it, because we will not retreat,” said Lega strongman, Matteo Salvini, relishing a political knife-fight with the EU all the way to the European elections next May. “If the EU insists on dishing out these slaps in the face, I might be tempted to give even more money to the Italian people,” he said.
Giancarlo Giorgetti, the Lega elder statesman and Italy’s ‘shadow’ premier, stated on Tuesday night that if the spreads rise to 400 - from the current ‘amber’ zone of 322 - it will erode the balance sheets of the banks and force government intervention. “Recapitalization will be needed. We will have to act quickly,” he said.
This was interpreted by the EU and by many in the markets to mean that Italy is nervous and will rescind its fiscal plans if pushed hard enough. Lega sources tell me the exact opposite: that the coalition will not stand idly by if the EU tries to engineer a credit squeeze that slowly asphyxiates the real economy. “We’re no longer supine and submissive when it comes to Europe,” said Mr Giorgetti.
They will take a leaf from the US Treasury’s 2008 ‘TARP’ programme, which involved buying $105bn of prefered stock in eight Americans banks. This was painful for bank shareholders but it greatly reduced the intensity of the credit crunch for borrowers and business.
Above all, the Lega and the Five Star ‘Grillini’ have learned the lesson of Greece: that the eurozone’s enforcement tool is to dial down liquidity for the banking system until the ATM machines run out of money. Once you go down that path you are doomed. Brussels will run the clock on you.
My guess is that if the coalition reaches the point of a home-grown ‘TARP’ for the banks in defiance of the EU’s banking rules, it is a natural progression for them to activate their ‘minibot’ scheme for a parallel currency when needed.
This is a form of scrip to pay state contractors and household rebates, useable for tax purposes. It is what California did in 2008 to inject liquidity, with the crucial difference that the minibot is also designed to be self-defence instrument and a lira in waiting.
Brussels is right that Italy’s calculated defiance is a fundamental challenge to the budgetary structure of monetary union, “a particularly serious non-compliance”.
France and Spain breached the revamped Stability Pact with mellifluous promises for year after year - as did previous Italian governments - but they did not contest the authority of the EU itself.
This clash is elemental. Failure to act would undermine German and Dutch political consent for the euro, and create a different kind of crisis. Given the current structure of the EU it had to reject the Lega-Five Star budget and set in motion its full punitive machinery for the first time, even if a budget deviation of 1.4pc of GDP is neither here nor there in macro-economic terms.
Yet Italy is right that the Stability Pact and the Fiscal Compact are an absurdity with no foundation in economic science, and have a contractionary bias that leaves high-debt legacy states in a deflationary cul de sac.
The rules are an unworkable attempt by lawyers to overcome the original sin of binding incompatible economies together in a single currency half a century too soon and then allowing a massive North-South chasm in real exchange rates to build up for fifteen years.
And no, the fact that Spain or Portugal may have clawed back some ground with real wage cuts and an internal devaluation does not correct the deeper misalignment. This will become obvious again in the next global downturn.
The Lega-Grillini are right to put an end to this ideological make-believe and to demolish the self-serving German narrative of how monetary union should be run.
They are right to present the EU with an ultimatum: either accept the imperative of fiscal union and shared debt - with a genuine central bank acting as a lender-of-last resort, rather than as a political enforcer - or risk euro rupture.
“We are the last defence of the social rights of the Italian people. We know that if we surrender, we’d quickly see the return of the pro-bank and pro-austerity ‘experts’. So we will not surrender,” said Five Star leader Luigi di Maio.
The EU will now raise the heat with moves towards the ‘excessive deficit procedure’. This could culminate in a fine of 0.2pc of Italian GDP, and a cut in EU structural funds. Should Brussels ever dare to do this, Mr Salvini would retaliate by withholding Italian payments into the EU budget. Unlike Greece, Italy is a net contributor.
Brussels calculates that economic fear will erode the poll ratings of the Lega and Grillini as the spreads rise, strengthening the hand of the pro-EU ‘poteri forti’ in the Italian establishment. Family wealth managers CFO Sim in Milan said it is dealing with a wave of requests from Italians with €200,000 or €300,000 in liquid savings asking for advice in how to set up accounts in Switzerland. They fear the Greek treatment.
You can see the contours of a blow-up as the European Central Bank prepares to halt its QE bond purchase at the end of the year. Italy must roll over or fund €400bn of bonds in 2019 with no automatic back-stop buyer for its debt.
Italian banks are already shut out of the European funding markets and cannot raise fresh capital at viable cost. The old ‘doom-loop’ of sovereigns and banks dragging each other down is again on stark display.
Monte dei Paschi di Sienna and Genoa’s Carige will both need to raise capital if spreads hit 400. Their share prices fell to record lows on Wednesday. Others will succumb at 500. Almost the entire banking system would have to be recapitalized at 600.
Societe Generale says every 100 point rise in spreads cuts the core CET1 capital ratios of the banks by 21-26 points. Insurers are being drawn into the maelstrom. Generali owns €60bn of Italian state bonds, equal to 2.5 times its equity.
Yet for the Italian people as a whole, the spreads have lost their psychological power in the years since the ECB used the bond markets to topple premier Silvio Berlusconi in 2011. That episode has been vividly described by former ECB governor Athanasios Orphanides.
“They threaten governments that misbehave with financial destruction. They cut off refinancing and threaten to kill the banking system. They create a roll-over crisis in the bond market. This what happened to Italy in 2011,” he said.
Italians put up with the ‘coup d’etat’ at the time believing that the experiment of an EU commissar imposed by Brussels would at least pull Italy out of economic recession. Instead austerity overkill made matters worse. It caused the debt ratio to rise even faster through the denominator effect. “Nobody is fooled by the spreads any more,” said Claudio Borghi, the Lega’s economics chief.
This time the Lega and Grillini have been warning from the rooftops well in advance that the spreads would be used to try to break the new government. The public is partially innocculated. It will therefore take a high dosage of spread warfare to achieve effect.
Investors must assume that this Brussels-Rome brinkmanship will go on for months, and the stakes are huge. Italy’s sovereign debt is €2.3 trillion. The exposure of French banks alone amounts to 11pc of France’s GDP. The Bank of Italy ‘owes’ a further €492bn via the ECB’s Target2 payment system which converts into Lira under Lex Monetae in a euro break-up.
As Mr Borghi told me earlier this month, the EU managed to turn a minor problem in Greece into an epic disaster by their own mismanagement. If they repeat the mistake in Italy, it will be “a thousand times worse”.
My question to Europe’s leaders is what will happen to the EU Project if their determination to press on with the same rigid status quo leads to a hard Italian default and a hard Brexit at the same. Would any of it survive a twin financial shock of such magnitude?
Do not assume that Italy’s insurgent coalition will capitulate to EU demands if risk spreads on Italian debt blow through the fatal line of 400 basis points.
The European Commission’s strategy of ‘controlled escalation’ relies on tacit collusion with bond vigilantes and hedge funds to ratchet up the pressure. The method is to squeeze the capital buffers of Italian banks and ultimately to set off a deposit run, hoping that such financial vandalism does not set off contagion to Portugal, Spain, and Greece.
This is a dangerous game to play unless you can be sure that the Lega-Five Star alliance will back down rather than resort to radical measures in self-defence. The obvious risk is that Italy’s budget fight with Brussels will cause a pan-European financial crisis before either side blinks.
“Brussels can keep sending its silly letters until Christmas. Our budget is not going to change. The gentlemen speculators will just have to get used to it, because we will not retreat,” said Lega strongman, Matteo Salvini, relishing a political knife-fight with the EU all the way to the European elections next May. “If the EU insists on dishing out these slaps in the face, I might be tempted to give even more money to the Italian people,” he said.
Giancarlo Giorgetti, the Lega elder statesman and Italy’s ‘shadow’ premier, stated on Tuesday night that if the spreads rise to 400 - from the current ‘amber’ zone of 322 - it will erode the balance sheets of the banks and force government intervention. “Recapitalization will be needed. We will have to act quickly,” he said.
This was interpreted by the EU and by many in the markets to mean that Italy is nervous and will rescind its fiscal plans if pushed hard enough. Lega sources tell me the exact opposite: that the coalition will not stand idly by if the EU tries to engineer a credit squeeze that slowly asphyxiates the real economy. “We’re no longer supine and submissive when it comes to Europe,” said Mr Giorgetti.
They will take a leaf from the US Treasury’s 2008 ‘TARP’ programme, which involved buying $105bn of prefered stock in eight Americans banks. This was painful for bank shareholders but it greatly reduced the intensity of the credit crunch for borrowers and business.
Above all, the Lega and the Five Star ‘Grillini’ have learned the lesson of Greece: that the eurozone’s enforcement tool is to dial down liquidity for the banking system until the ATM machines run out of money. Once you go down that path you are doomed. Brussels will run the clock on you.
My guess is that if the coalition reaches the point of a home-grown ‘TARP’ for the banks in defiance of the EU’s banking rules, it is a natural progression for them to activate their ‘minibot’ scheme for a parallel currency when needed.
This is a form of scrip to pay state contractors and household rebates, useable for tax purposes. It is what California did in 2008 to inject liquidity, with the crucial difference that the minibot is also designed to be self-defence instrument and a lira in waiting.
Brussels is right that Italy’s calculated defiance is a fundamental challenge to the budgetary structure of monetary union, “a particularly serious non-compliance”.
France and Spain breached the revamped Stability Pact with mellifluous promises for year after year - as did previous Italian governments - but they did not contest the authority of the EU itself.
This clash is elemental. Failure to act would undermine German and Dutch political consent for the euro, and create a different kind of crisis. Given the current structure of the EU it had to reject the Lega-Five Star budget and set in motion its full punitive machinery for the first time, even if a budget deviation of 1.4pc of GDP is neither here nor there in macro-economic terms.
Yet Italy is right that the Stability Pact and the Fiscal Compact are an absurdity with no foundation in economic science, and have a contractionary bias that leaves high-debt legacy states in a deflationary cul de sac.
The rules are an unworkable attempt by lawyers to overcome the original sin of binding incompatible economies together in a single currency half a century too soon and then allowing a massive North-South chasm in real exchange rates to build up for fifteen years.
And no, the fact that Spain or Portugal may have clawed back some ground with real wage cuts and an internal devaluation does not correct the deeper misalignment. This will become obvious again in the next global downturn.
The Lega-Grillini are right to put an end to this ideological make-believe and to demolish the self-serving German narrative of how monetary union should be run.
They are right to present the EU with an ultimatum: either accept the imperative of fiscal union and shared debt - with a genuine central bank acting as a lender-of-last resort, rather than as a political enforcer - or risk euro rupture.
“We are the last defence of the social rights of the Italian people. We know that if we surrender, we’d quickly see the return of the pro-bank and pro-austerity ‘experts’. So we will not surrender,” said Five Star leader Luigi di Maio.
The EU will now raise the heat with moves towards the ‘excessive deficit procedure’. This could culminate in a fine of 0.2pc of Italian GDP, and a cut in EU structural funds. Should Brussels ever dare to do this, Mr Salvini would retaliate by withholding Italian payments into the EU budget. Unlike Greece, Italy is a net contributor.
Brussels calculates that economic fear will erode the poll ratings of the Lega and Grillini as the spreads rise, strengthening the hand of the pro-EU ‘poteri forti’ in the Italian establishment. Family wealth managers CFO Sim in Milan said it is dealing with a wave of requests from Italians with €200,000 or €300,000 in liquid savings asking for advice in how to set up accounts in Switzerland. They fear the Greek treatment.
You can see the contours of a blow-up as the European Central Bank prepares to halt its QE bond purchase at the end of the year. Italy must roll over or fund €400bn of bonds in 2019 with no automatic back-stop buyer for its debt.
Italian banks are already shut out of the European funding markets and cannot raise fresh capital at viable cost. The old ‘doom-loop’ of sovereigns and banks dragging each other down is again on stark display.
Monte dei Paschi di Sienna and Genoa’s Carige will both need to raise capital if spreads hit 400. Their share prices fell to record lows on Wednesday. Others will succumb at 500. Almost the entire banking system would have to be recapitalized at 600.
Societe Generale says every 100 point rise in spreads cuts the core CET1 capital ratios of the banks by 21-26 points. Insurers are being drawn into the maelstrom. Generali owns €60bn of Italian state bonds, equal to 2.5 times its equity.
Yet for the Italian people as a whole, the spreads have lost their psychological power in the years since the ECB used the bond markets to topple premier Silvio Berlusconi in 2011. That episode has been vividly described by former ECB governor Athanasios Orphanides.
“They threaten governments that misbehave with financial destruction. They cut off refinancing and threaten to kill the banking system. They create a roll-over crisis in the bond market. This what happened to Italy in 2011,” he said.
Italians put up with the ‘coup d’etat’ at the time believing that the experiment of an EU commissar imposed by Brussels would at least pull Italy out of economic recession. Instead austerity overkill made matters worse. It caused the debt ratio to rise even faster through the denominator effect. “Nobody is fooled by the spreads any more,” said Claudio Borghi, the Lega’s economics chief.
This time the Lega and Grillini have been warning from the rooftops well in advance that the spreads would be used to try to break the new government. The public is partially innocculated. It will therefore take a high dosage of spread warfare to achieve effect.
Investors must assume that this Brussels-Rome brinkmanship will go on for months, and the stakes are huge. Italy’s sovereign debt is €2.3 trillion. The exposure of French banks alone amounts to 11pc of France’s GDP. The Bank of Italy ‘owes’ a further €492bn via the ECB’s Target2 payment system which converts into Lira under Lex Monetae in a euro break-up.
As Mr Borghi told me earlier this month, the EU managed to turn a minor problem in Greece into an epic disaster by their own mismanagement. If they repeat the mistake in Italy, it will be “a thousand times worse”.
My question to Europe’s leaders is what will happen to the EU Project if their determination to press on with the same rigid status quo leads to a hard Italian default and a hard Brexit at the same. Would any of it survive a twin financial shock of such magnitude?
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