Spain Economy

pavb2

http://www.bbc.co.uk/i/b01pgqpn/

Don't know if we can use BBC player here but I was fascinated by the documentary 'This World' which explained Spain's economic meltdown.

Paul Mason travels to Spain to investigate how this once thriving economy has become the latest casualty of the Eurozone crisis.

Greece, Ireland and Portugal have all received massive bailouts with strict conditions. But Spain is different. One of the largest economies in the world, for nearly twenty years "cool Espana" meant cutting edge architecture, the world's best restaurants and the magic of Barcelona Football Club. Spain was a European success story.

For BBC Two's award-winning strand This World, Mason reveals how the transition to democracy after Franco's dictatorship created a financial and political system that left the country vulnerable to catastrophe when the world economic crisis struck in 2008. One of the keenest advocates of the European single currency, Spain is now the biggest victim of the Eurozone crash with youth unemployment running at more than 50%.

Interviewing key players, including former prime minister Felipe Gonzalez and European commissioner Joaquin Almunia, Mason reveals how Spain's extraordinary credit and construction boom has collapsed, leaving millions facing poverty and the politicians still bickering about a massive potential bail out.


Building boom 750k houses built compared to previous average of 250k

Large scale corruption for rezoning of land

Banks lending out of control and the inability to foresee the consequences and take corrective action after America's sub prime market collapse.

Public money spent on 'white elephant' signature projects rather than infrastructure schools etc

Enthusiastic support of the EU and Euro to avail of low interest rates but inability to devalue currency when the bust came.

Banks exposed to property markets overvalued developments on their books to mask the depth of the problem.

6 bad banks almalgamated in fanfare of publicity. End result one large bad bank.

An attempt to kick start economy by borrowing to invest in public infrastructure failed, hence austerity

One interesting comment was that Irl, Port & Greece had suffered a 'humiliating' bailout and Spain would not accept similar but was willing to threaten the stability of the Euro by default.

So many similarities to our situation albeit on a larger scale. Unemployment is high but unemployment payments stop after 2 years

AllGunsBlazing

Saw this as well.

Valencia in particular really threw the money around like it was going out fashion.

Sponge Bob

Extremely like our situation except that their banks were better capitalsed and lasted years longer than ours. Instead of Ghost Estates Spain had Ghost Towns with TGV stations....and Closed Down International Airports serving nobody.

EG Sesena and Madrid Sur Airport

http://www.dailymail.co.uk/news/article-2170886/Spains-ghost-airport-The-1BILLION-transport-hub-closed-just-years-thats-falling-rack-ruin.html

http://www.guardian.co.uk/world/2011/mar/28/residents-trapped-spanish-ghost-towns

carlop

A major difference in the Spanish case is the powers granted to its autonomous regions and the rivalry they have with each other. If Barcelona got the Olympics, Valencia decided it needed a new conference centre. If Valencia got a new conference centre, Alicante built a new harbour etc.

Due to its complex history, central government was very reluctant to restrict and castigate the spending of the autonomous regions, and funded by the 'cajas,' a bit like county council-owned building societies, these obviously unsustainable white elephant projects were allowed to flourish.

Of course it must be pointed out that not all the infrastructural projects built were failures, Madrid's public transport system is one of, if not the best in Europe.

pavb2

I suppose it's the same systemic problems as Ireland that caused it but on a much grander scale. When you watch the documentary charting the failure step by step with the benefit of hindsight it all seems so glaringly obvious we were all on the road to ruin.

Scortho

Sponge Bob wrote: »

Extremely like our situation except that their banks were better capitalsed and lasted years longer than ours. Instead of Ghost Estates Spain had Ghost Towns with TGV stations....and Closed Down International Airports serving nobody.

EG Sesena and Madrid Sur Airport

http://www.dailymail.co.uk/news/article-2170886/Spains-ghost-airport-The-1BILLION-transport-hub-closed-just-years-thats-falling-rack-ruin.html

http://www.guardian.co.uk/world/2011/mar/28/residents-trapped-spanish-ghost-towns

Wonder how much they'd charged Ryanair to land there?
It would make a perfect hub for them especially with it being 50 mins from Madrid by train.

Farmer Pudsey

pavb2 wrote: »

http://www.bbc.co.uk/i/b01pgqpn/
Building boom 750k houses built compared to previous average of 250k

Large scale corruption for rezoning of land

Banks lending out of control and the inability to foresee the consequences and take corrective action after America's sub prime market collapse.

Public money spent on 'white elephant' signature projects rather than infrastructure schools etc

Enthusiastic support of the EU and Euro to avail of low interest rates but inability to devalue currency when the bust came.

Banks exposed to property markets overvalued developments on their books to mask the depth of the problem.

6 bad banks almalgamated in fanfare of publicity. End result one large bad bank.

An attempt to kick start economy by borrowing to invest in public infrastructure failed, hence austerity

One interesting comment was that Irl, Port & Greece had suffered a 'humiliating' bailout and Spain would not accept similar but was willing to threaten the stability of the Euro by default.

So many similarities to our situation albeit on a larger scale. Unemployment is high but unemployment payments stop after 2 years

Most of the above could be signed off as Irish with the figures slightly different except as we were a basket case we were not allowed to stimulate the economy. The two thing that might save Spain are at the end it refused to accept a bailout on the conditions proposed and it has limited welfare so after 2 years when welfare runs out workers will have to accept what is on offer. This may allow the economy to self start on low wages.

carlop

Scortho wrote: »

Wonder how much they'd charged Ryanair to land there?
It would make a perfect hub for them especially with it being 50 mins from Madrid by train.

EuroVegas has been given the go ahead to be built in Alcorcon which is a suburb in the south of the city. If they have any sense they'll promote Ciudad Real as the main airport to access it, as to get from the main airport in Madrid to Alcorcon would take at least an hour.

That would require sensible, logical thinking, something that has been glaringly lacking from Spanish politics for a long time.

Also, it's 50 minutes by train on the very expensive high-speed AVE. By car or bus, I think it would be closer to 2 hours.

Waitsian

Farmer Pudsey wrote: »

...it has limited welfare so after 2 years when welfare runs out workers will have to accept what is on offer. This may allow the economy to self start on low wages.

Will they indeed? Workers in what is called Spain have a history of doing otherwise...

Time will tell.

not yet

mod9maple wrote: »

Will they indeed? Workers in what is called Spain have a history of doing otherwise...

Time will tell.

DO EXPLAIN...

southsiderosie

MOD NOTE:

As a reminder, please do not post videos without some kind of explanation of how they relate to the thread, i.e. assume that people reading the thread will not be able to watch the video. Video-only post deleted.

Doc Ruby

Farmer Pudsey wrote: »

Most of the above could be signed off as Irish with the figures slightly different except as we were a basket case we were not allowed to stimulate the economy.

Most of the above could be signed off as a wide variety of countries. What beats me is why these countries didn't learn not just from one another but from the past. Its not the first time there has been easy credit and property bubbles.

Rather than getting into a who had the worst politicians competition, we should recognise that weak and greedy politicians are to blame no matter where you are, whether that's Spain, Ireland, the US, Greece, anywhere.

Sand

@Doc Ruby

What beats me is why these countries didn't learn not just from one another but from the past. Its not the first time there has been easy credit and property bubbles.

Because this time is different?

Unless you implement strong and transparent policy making you end up with easily captured governments delivering awful policies. Nothing will change until these countries change the way they govern themselves. We've made zero progress in that regard in Ireland. We've still got the same awful Dail, the same awful civil service, and the same awful banks and business culture. The next crisis is probably due in 2020 but its not even likely we'll get out of this one by then.

I believe the Spanish are entirely right to avoid going into a bailout that is anything like the one Ireland is in. It would be self defeating and stupid. They need a bailout program that's actually designed to...bail them out. So did we, but the Green Jersey brigade long ago consigned us to the kindness of strangers.

Doc Ruby

Sand wrote: »

Because this time is different?

No, its not. I remember reading a report a few years back from some economist think tank, possibly in government employ, which could basically be summed up as "this was a straight down the line bog standard property bubble". Don't ask me for a link, I couldn't be arsed. This has been done and done and done.

Sand wrote: »

Unless you implement strong and transparent policy making you end up with easily captured governments delivering awful policies.

Oh I agree, but you've rolled right by the many many other issues with the Irish political scene, like the prevalence of public sector unions which should by rights be outlawed, or the way that we have one single executive branch with no reins on it except the toothless Seanad, or the blurred lines between local and national politics, or any one of a number of major issues. We're dragged down by the past, Dev and his shower of gangsters, through no choice of our own.

Sand wrote: »

I believe the Spanish are entirely right to avoid going into a bailout that is anything like the one Ireland is in. It would be self defeating and stupid. They need a bailout program that's actually designed to...bail them out. So did we, but the Green Jersey brigade long ago consigned us to the kindness of strangers.

The Spanish are doing the exact same thing we did in trying to avoid a loan to cover their losses. If they get better terms its because they need enough of a loan that it might threaten the very existence of the eurozone. I'm pretty fed up with the derp squad wagging their fingers at Ireland, given the massively worse conditions that exist for many of our European partners. 50% plus youth unemployment? That's Spain, right there. This is the kind of comparison commentary we should try to avoid in the interests of intelligent discussion.