Spanish life is not always likeable but it is compellingly loveable.
Christopher Howse: A Pilgrim in Spain
Spanish Politics- Spanish repression, as seen by a Basque observer writing in The Guardian. Opening para: The Spanish supreme court’s deeply unjust verdict, handing out harsh prison sentences to nine Catalan government and civil society leaders for organising a peaceful referendum on self-determination in Catalonia, is for many the sign of a country slipping towards authoritarianism and away from western European-style democracy. But truth be told, for us Basques, this kind of behaviour is nothing new. I suspect most neutrals would be sympathetic to this overview. Which infuriates the majority of Spaniards, of course. And leaves Vox party supporters both incandescent and of a revolting frame of mind.
- Europe's cocaine capitals, including Spain's. Assuming Cataluña is part of Spain.
- If I understand the diagram correctly, even the main 'bypass' road - the N550 - alongside the river will be restricted to 10kph/6mph, for all vehicles. Not so long ago, the limit there was 50. Then 40, and most recently 30. IGIMSTS. But at least this will reduce the chances of me getting killed on the wide new zebra crossing at the city end of O Burgo bridge.
- The EU won't take a decision on extension until the Labour Party supports an election. And the Labour Party won't support an election until the EU pronounces on the expected extension.
- Curiouser and curiouser, said Alice. Is there anyone sane left in UK politics?
- Ambrose Evans Pritchard takes another jaundiced look below at the Union's (failing) financial model.
- Ffart finally manages to say something indisputably true: You'll never have another president like me.
- More fun from the talented Randy Rainbow. Who's profiled here.
- We're approaching 'the end of the USA', it seems. Who knows, this might be a good thing, given how things are currently being managed.
- It is a time-honoured custom signalling approval, acclamation and enthusiasm, but students at Oxford University are to replace clapping at student union events with “silent jazz hands” amid fears that applause could trigger anxiety. Officers at the student union argued that clapping, whooping and other loud noises presented an “access issue” for some disabled students who have “anxiety disorders, sensory sensitivity and those who use hearing aids”.
- Said an (unusually sane) professor: Cultivating and displaying vulnerability has become an integral part of the kind of identity that student activists celebrate. Too true.
- Modern definitions:
- Racist hate crime: Any comment which I claim really hurts me. Especially (exclusively?) if I'm not white.
- Totally unacceptable: Anything that offends the sensibilities of at least one person in the world.
English
- HT to the BBC for telling me about 30 words/phrases that I didn't know were 'Britishisms' in use in the USA. I came across this after hearing an American using the (northern?) English word 'daft'.¡
- I mentioned dynamic pricing the other day. Researching vacuum cleaners this morning, I got this quote on Amazon Spain: Price: €9.95: Postage: €379.00. Pretty dynamic, I thought.
Mario Draghi leaves Europe near recession, in a deflation trap - and out of ammunition: Ambrose Evans Pritchard, Daily Telegraph.
Mario Draghi pledged to fight inflation. He kept his promise. Eurozone inflation is stone dead
Mario Draghi essentially failed.
The outgoing president of the European Central Bank was brave, tenacious and skillful. He secured consent from Berlin for a rescue of the disintegrating Italian and Spanish debt markets in 2012. In that sense he saved the euro.
But for all his accomplishments he does not bequeath a safely constructed monetary union to Christine Lagarde, his unlucky successor. The task was too great. The damage from the Trichet dark age and austerity overkill ran too deep.
German and North European refusal to countenance fiscal union - albeit for valid constitutional reasons - leaves the euro an orphan currency with no pan-EMU budgetary mechanisms to counter economic shocks.
At the end of his eight-year term the ECB has failed to hit its inflation target - “below, but close to, 2pc over the medium term” - by a wide margin. The headline rate has been slipping away from him over the past year and is now back to 0.9pc, almost as if quantitative easing had never happened.
There is no safe buffer left. The institution under his watch has failed to achieve its central policy mandate. The icy grip of deflation is closing in again as inflation expectations collapse to euro-era lows and the market prices in perma-slump through the 2020s.
The roots of this go back almost a decade when the ECB began to tighten monetary policy too soon. It caused a double-dip recession and detonated the eurozone crisis. It then waited too long to start asset purchases. The virus took hold.
Mr Draghi had to clear the institution of its inflation-nutters and neanderthals. He had to persuade a deeply resistant governing council to acknowledge the threat. He had to trickle out new measures such TLRO cheap loans for banks, talking up his "bazookas" to please the markets, while talking them down in Germany to appease critics. His magic was pulling off that double act.
By the time he was strong enough to launch QE, it was already too late. The ECB has since had to push its balance sheet to 43pc of GDP - beyond extremes ever reached by the US Federal Reserve and the Bank of England - yet it is still not enough. The eurozone has slithered into the "Japanisation" trap anyway.
Mr Draghi unwisely declared total victory over deflation last year. The ECB then halted stimulus before economic recovery had reached escape velocity and at a time when eurozone money supply growth was already flagging trouble.
This unforced error - probably the result of German pressure - guaranteed a relapse. It has left the currency bloc vulnerable to the slightest external shock. It means that the ECB is now having to resort to even more extreme measures to repair the damage, the pattern of the last decade.
As the economy slips back towards recession we can now see that the eurozone crisis was never cured. It has merely been remission of the last three years, thanks to QE, a cheaper euro, and the end of austerity. The structural malaise remains. The zone is chronically incapable of generating its own self-sustaining demand and is therefore the chief casualty of the US-China trade war.
Mr Draghi’s "Hail Mary" package of stimulus last month is a strange way to end his tenure. It was rammed through by his inner circle at the Eurotower against the advice of his own staff experts and against the fierce resistance of the monetary hawks.
Governors accounting for the lion’s share of eurozone GDP dissented, including the central bank chiefs of Germany and France. He stretched the consent of the ECB’s council to breaking point - earning the epithet Count Draghila on the front page of Bild Zeitung - and he did so for a financial purpose that is no longer clear.
The cut in interest rates to minus 0.5pc takes monetary union into treacherous waters. Academic literature suggests this may already be hitting the "reversal rate" where it does more harm than good.
It is harder for insurers to match their liabilities. It erodes the net interest margin for banks and is slowly destroying the business model of the small German savings banks that provide 90pc of credit to the Mittelstand family firms.
The eurozone’s household savings rate has jumped a full percentage point to 13.3pc over the past year. In Germany it has surged to 18.1pc. Households are putting aside more money to meet their targets. This is contractionary.
Fresh QE is unlikely to achieve much. Little more juice can be extracted by pushing down from the yield curve. The entire German and Dutch debt structure out to 20 years is trading at negative yields, and likewise French, Belgian, Finnish, and Austrian debt out to 10 years, and even Spanish yields out to seven years.
You could say it is the opposite problem from the debt crisis he inherited but the most deformed bond market in history is not a stable equilibrium either. Mr Draghi has jumped from the frying pan into the freezer.
The ECB can in theory buy more corporate debt but it is reaching political limits. The direct financing of public spending - or helicopter money - breaches the Lisbon Treaty and would be challenged in the German courts. In practical terms, monetary policy is exhausted. Mr Draghi leaves the larder bare and the problem unsolved.
His final press conference was a plea for government spending to fight the slowdown, and the creation of a eurozone treasury to shore up monetary union. Neither are happening. Brussels this week admonished France, Italy, and Spain for exceeding budget deficit targets.
Mr Draghi will be remembered for “whatever it takes”, his rescue pledge at the height of the EMU crisis in 2012. We forget now that markets did not at first believe him. They doubted whether the ECB was in fact stepping up to its responsibility as a lender of last resort after having let the fire rage for two years and allowed contagion to engulf southern Europe.
The mood did not change until the ECB council meeting days later when traders learned that Germany’s board member had backed the plan. In other words, Berlin had lifted its veto.
Mr Draghi cultivates the impression that his magical words saved Europe. I hate to ruin a nice fairy tale but I heard the head of the German finance ministry say at a closed-door meeting three weeks earlier that “something big” was about to happen, and for good measure that “nothing flies in the eurozone without German permission”.
The plan to back-stop Italy and Spain was a coordinated move by Frankfurt and Berlin. It happened because Angela Merkel feared the imminent collapse of the euro and an epic default. Letting the ECB buy bonds - under strict conditions - was the path of least resistance.
This is not to belittle the role of Mr Draghi. His diplomacy was superb. Let him keep the credit if that is what the world wants to believe.
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