Thread: The Right fails to make a clean sweep in Spain

Riding on the wave of their victory in the November general election, the right-wing Partido Popular went into the elections for the autonomous communities of Andalucía and Asturias expecting to cement their grip on power in all but the Basque and Catalan regions. The big prize was Andalucía, Spain's most populous region, where they've never held power during the democratic era. With the socialist PSOE apparently in melt-down the PP expected an easy win and an absolute majority in parliament. What happened yesterday was that although PSOE did lose their majority and half-a-million votes, many of those votes did not migrate to the right, but to the left. The PP won most seats but the coalition of communists, anarchists and greens, the Izquierda Unida (United Left) took 11% of the vote, doubling their representation and now hold the balance of power.

It's happy days for those who have been fearing a strengthening grip of right-wing, catholic authoritarianism across the country and proof that Andalucians at least do not all buy into the right-wing political hegemony.

In Asturias too, the PP juggernaut was halted and the socialists remain the largest party, although here the PP appears most likely to form an administration in coalition with the Asturian conservative splinter group FORO.

PP wave of triumph falls short.

Maybe that explains the turmoil on the financial markets yesterday.

Do you think Spain should remain within the 3% boundary?

Yep and the ironic thing is, that the markets quickly started to punish Spain and the rumour mill about Spain being a the next problem child exploded... all based on the fact that the PP did not get full control of everything. Why? Well there seems to be some sort of delusion in the market, that the regions with the highest deficit were in the lefts hands and needed to be taken over to save Spain. While the deficit is Andalusia is higher than expect (31% official unemployment does that), then it is in fact right wing run regions that are the worst offenders... go figure! And like it or not, the PP still controls the rest of the country pretty much (region wise) so how about getting those regions in check first before going in panic over Andalusia and Austrias? Fixing the cluster**** of the Madrid region might be a good start.

Originally Posted by Djoop

Maybe that explains the turmoil on the financial markets yesterday.

Do you think Spain should remain within the 3% boundary?

Spain needs to get jobs jobs jobs jobs... The deficit would poof if the unemployment rate was halved. The PP has not done much so far to impress me on that front, but there is still hope. There is a general strike on Thursday here.

Cutting the public sector again and again wont help the mood, which will impact spending, which will impact jobs. The ironic thing is that if it was not for the downbeat mood in Spain and lack of consumer spending, the Spanish economy with the public spending cuts would be in growth!

Hence cutting is brain dead as long as there is no comprehensive strategy to deal with unemployment. They need to open up closed professions, they need to make it much easier and cheaper to fire people on long term contracts, and make it easier to start businesses. They have done some of it but need to do much more. I for one, in my local area see weekly openings of new business and yes closing as well, but the openings so far out pace the closings. Very few shop fronts for rent/sale where I go... was many more just a year to two ago.

And like it or not, the markets are morons. Spain's debt ratio is the lowest in the major industrialised world so the burden is manageable as it is now. Spain needs more time to fix its structural problems (as do other countries) but the markets are run by greed and speculators that want a quick buck, and pushing Spain over the edge causing CDS payouts is faster way to money than waiting 5 to 10 years to get their investments back. The speculators lost out on Greece, and were forced to take haircuts, and now they are looking to make that up.. seems it is the oil price for now, but at some point they will turn back to countries like Italy, Spain, Portugal and even the UK.

I don't think it really matters that the PP couldn't secure Andalusia, that was just a joke. Constitutional autonomy in many of these regions makes party links crucial to determining the policies of the regional governments.

Failure to win in Andalusia, whose regional deficit was over double its 1.3% of Spanish GDP target for 2011 and which voted against the central government's 1.5% target for this year, represents a potentially serious setback in efforts to rein in the total national deficit to 5.3% this year from 8.5% last (and to 3% next year in accordance with the eurozone's proposed fiscal compact)."

A Tiny Regional Election Could Be A Big Problem For Spain, And Therefore All Of Europe - Business Insider

Originally Posted by PeteEU

Spain needs to get jobs jobs jobs jobs... The deficit would poof if the unemployment rate was halved. The PP has not done much so far to impress me on that front, but there is still hope. There is a general strike on Thursday here.

Cutting the public sector again and again wont help the mood, which will impact spending, which will impact jobs. The ironic thing is that if it was not for the downbeat mood in Spain and lack of consumer spending, the Spanish economy with the public spending cuts would be in growth!

Isn't this strike about the proposed reforms on employment?

Hence cutting is brain dead as long as there is no comprehensive strategy to deal with unemployment. They need to open up closed professions, they need to make it much easier and cheaper to fire people on long term contracts, and make it easier to start businesses. They have done some of it but need to do much more. I for one, in my local area see weekly openings of new business and yes closing as well, but the openings so far out pace the closings. Very few shop fronts for rent/sale where I go... was many more just a year to two ago.

I tend to agree with your line of reasoning here but Spain is not helped with higher interest rates at all. Europe isn't either.

And like it or not, the markets are morons.

I think that's a moronic statement tbh.

Spain's debt ratio is the lowest in the major industrialised world so the burden is manageable as it is now. Spain needs more time to fix its structural problems (as do other countries) but the markets are run by greed and speculators that want a quick buck, and pushing Spain over the edge causing CDS payouts is faster way to money than waiting 5 to 10 years to get their investments back. The speculators lost out on Greece, and were forced to take haircuts, and now they are looking to make that up.. seems it is the oil price for now, but at some point they will turn back to countries like Italy, Spain, Portugal and even the UK.

How much CDS is out Pete? That's nothing compared to the cumulated interests of inevstors in Spain and Europe for that matter. The problem is quite simple, there's hardly any growth in the eurozone. If that continues, even NL won't be able to pay its debts. So when markets receive signs we intend to keep our deficit at 4,5% you can expect rising rates.

The European socialist model works well enough in the northern wealth-producing state but the southern countries are quickly finding that socialist policies are unsustainable in the long term. Spain, and more so Italy are capable to generate capital to a degree, but the simple fact is that they too along with Portugal may find the restrictions of the Euro to much to overcome in the long run.

Economies based largely on the tourist and agrarian sectors cannot support the demands of bloated public sectors and powerful unions. Italy and Spain can avoid bankruptcy, default or Greece's fate by immediately overhauling stagnant socialist policies which have constricted markets and professions for decades. Whether or not the politicians and the electorate opt to do so remains to be seen. The election of less populist government with the will to do what needs to be done is the only feasible solution.

Originally Posted by Djoop

Isn't this strike about the proposed reforms on employment?

yes, and would have been held regardless of who was in power. Problem is, that some of the changes are actually okay according to the unions, where as others are nothing but removing basic rights from workers and making companies much stronger. Personally I think they should go Denmark's way and only make it illegal to fire someone based on race, religion, political stance, short term sickness, and pregnancy. Any compensation for dismissal should be negotiated either locally or between the company and whatever union.. and should be realistic and not the insane amount that is presently in the system. There should also be no closed industries.....sure there should be accreditation in most industries .. cant just call yourself a doctor without an education, but not much more than that, and it should be easy to get that accreditation.. unlike now.

I tend to agree with your line of reasoning here but Spain is not helped with higher interest rates at all. Europe isn't either.

Of course not, but the interest rates are not justified. If interest rates are to be based on risk and the over all economy, then there are certain economies (US and UK) that should have similar interests rates as the Spanish if not higher. But no..

I think that's a moronic statement tbh.

/shrug, I tell it as how I see it. The markets have since 2008 been acting like hysterical teenagers on a sugar rush. They are in denial of the impact of speculation... for **** sake when 65% of world oil trade per month is done by speculators then it HAS to have a huge impact on price... and they are in denial of the US and UK economic problems and in fact rewarding these countries. Just today the journalists on Bloomberg were parading one after another "expert" denying that speculation was having an impact on prices ... only one or two agreed that they were.

How much CDS is out Pete? That's nothing compared to the cumulated interests of inevstors in Spain and Europe for that matter.

You see that is the problem. It is not investors that hold the CDS, but companies like Morgan Stanley and JP Morgan.. speculation based financial institutions. The Markets have changed hugely the last decade.. in the old days it was pension funds and real investors that held and bought most things.. now days it is financial speculation companies that are the power houses with their milli-second trading and they have no problems in crushing companies, people and countries for a profit.

Real investors would do everything in their power to prevent a Greek default or hurt the economy of any country.. simply because it would prove catastrophic for their portfolio in said country and else where. That is why Greece was not thrown to the dogs so to say.. the real investors would have lost everything, and the speculators would have earned billions.

The problem is quite simple, there's hardly any growth in the eurozone. If that continues, even NL won't be able to pay its debts. So when markets receive signs we intend to keep our deficit at 4,5% you can expect rising rates.

There is no growth because of the doom and gloom talk. When people are afraid of the future, then they stop buying which means no growth. This means less workers needed and you get into a very bad rut... On top of that you have government cutting and cutting creating a panic mode... cutting originally demanded by the right (inspired by the US right) and the markets who now say it is not a good idea... funny when they have gained power in previous left wing countries...

Like it or not, growth would return pretty fast if people had just a little hope for the future... and growth would mean more people in work and so on.

But as long as we are served for almost daily doom and gloom talking heads on tv news, most often from the same financial institutions who are raking in billions in profits and bonus during this recession (conflict of interest there anyone...), then we will be in this situation. Just today, on Bloomberg and CNBC, it has been on financial banker after another from the usual suspects claiming doom and gloom in Europe. Very little positive has been said, and the journalists are eating it up (more on CNBC with their anti-European attitudes, than on Bloomberg). This kind of negativity spreads to the news that average Joe watches during the evening, and that in turn makes him think twice about buying that holiday or getting a new car and so on.

Now I am not saying we should be in total denial about the situation and ignore things just to get a positive spin... what I am saying is we need an objective view on economic issues, one that is not driven by short term profit and nationalistic pride. Each time I hear "Spain's debt problem" I want to kill the guy saying it.. because compared to most other major economies, Spain's "debt problem" is very minor and yet it is Spain that is under attack for having a debt problem.. wtf?

Originally Posted by Meathead

The European socialist model works well enough in the northern wealth-producing state but the southern countries are quickly finding that socialist policies are unsustainable in the long term. Spain, and more so Italy are capable to generate capital to a degree, but the simple fact is that they too along with Portugal may find the restrictions of the Euro to much to overcome in the long run.

Economies based largely on the tourist and agrarian sectors cannot support the demands of bloated public sectors and powerful unions. Italy and Spain can avoid bankruptcy, default or Greece's fate by immediately overhauling stagnant socialist policies which have constricted markets and professions for decades. Whether or not the politicians and the electorate opt to do so remains to be seen. The election of less populist government with the will to do what needs to be done is the only feasible solution.

Spain is FAR less "socialist" than say Denmark and Sweden.. just saying.

Also, Denmark is also an agricultural country... well pigs, more pigs and even more pigs.

And Spain has always had a "bloated" public sector, and yet it is still smaller than most in Europe.. the bloated part came in large part under the conservative dictatorship back in the day. People have to remember, Spain is only 30ish years out of a 40 year dictatorship and civil war..When it entered the democratic sphere in the late 1970s, the country was a 3rd world country on almost every front and in those 30ish years the changes have been dramatic and some parts (read the public sector) has struggled to keep pace and adapt.

But yes, over regulation, non-flexiable labour laws and rules and protected industries are the biggest problem in Spain.. and the last 5+ years the governments have been changing things rather (relatively) dramatically but there is more to be done.

Originally Posted by PeteEU

-- what I am saying is we need an objective view on economic issues, one that is not driven by short term profit and nationalistic pride. Each time I hear "Spain's debt problem" I want to kill the guy saying it.. because compared to most other major economies, Spain's "debt problem" is very minor and yet it is Spain that is under attack for having a debt problem.. wtf?

Recently (this week) it seems to have been Olli Rehn and Mario Monti talking up Spain's debt into "crisis" - Mario Monti in particular is apparently "decoupling" the Italian economy from that of Spain and in some EU circles, this has been seen as a positive.