Andalucia Steve

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Spain's New Reform Program 

The Rajoy government announces its 'eased' austerity plan

Rajoy recently addressing congressThe Spanish government has announced a new National Reform Plan, which will be sent to Brussels with the goal of seeking a two year extension to the deficit target required by the EU. Here is a brief summary I've gleaned from the Spanish newpapers, El Pais and El Diario and La Verdad.

The changes were announced in a press conference this afternoon and will be described in more detail to congress next week.

The government conceded that it lost 1.3 million jobs since taking office and that it does not expect to see any new ones for the next two years. Job are expected to continue disappearing this year and will only start to recover in 2015.

Changes to pensions were announced included extended the retirement age, increasing the years in which contributions are paid and decoupling the pension rate from inflation.

Vice President, Soraya Sáenz de Santamaría described eight of the new measures of reform. Among them, the government will extended for an additional year the rise in income tax, announced further increases in excise tax, an additional rise of societies tax (via elimination of deductions) and a tax on bank deposits.

No new spending was mention, but emphasis was placed on the steps forward that would be taken in the liberalisation of professional services, a more appropriate taxation for entrepreneurs, improving public administration by removing administrative barriers through a thorough reform of all levels of government, funding for SMEs, more energy reforms and the development of markets.

Fortunately since I'm a blogger and not a newspaper reported I can say humbug. Even in Franco's day he provided jobs for people by an extensive programme of dam and road building. To me there seem few crumbs of comfort here for the poor people of Spain to be rejoicing about.

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Posted by Steve Gould Friday, April 26, 2013 3:36:00 PM
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Spanish unemployment over 6.2 million 

Spain is number one for unemployment in Europe

Spain - Number One in European Unemployment

I saw this on Facebook today and the owner said share to the world, so here it is. Six million, two hundred and two thousand, seven hundred people are officially unemployed in Spain right now. 240,000 - yes that's nearly a quarter of a million, lost their jobs in the first three months of 2013 (according to the national office of statistics).

Thing to note here is that the Spanish don't have much in the way of unemployment benefit. One has to pay in to the system for at least a year to get three months ub and you have to work five years to get the maximum duration which is still only a year. Then you don't automatically qualify for some other social security benefit. There are low benefits for families with children (cerca 400 euros monthly) or other odd benefits such as 'sobre 45' a benefit of twelve months duration that you can get on a year on year off basis if you are over 45 years of age and have previously paid into the system and qualify on various other criteria. The upshot is though there are a load of people in Spain who don't get any money at all for being out of work. They depend on family, friends, soup kitchens, bins and the back of restaurants and crime. They also work in the black economy.

Spain's black economy is huge. It's not as is often portrayed as an ingrained corrupt characteristic of the Spanish people. It's not as is often said of the Greeks, that people have a distaste for paying tax. In Spain, it seems to me that the main problem is that the system is skewed to deter people from working legally. There is not level at which VAT (IVA) is not applied to businesses in Spain, no allowance as in the UK. The equivalent of national insurance contributions in Spain is a flat rate of 240 euros per month, a horrendous burden for a single person starting out in business alone.

The tax rate is reasonable but filled with traps that catch the unwary. One way to pay depends upon you agreeing a level for a year. People I know have done that and been driven out of business when their income fell.

As such black money is very widespread and very popular. I've seen hundreds of itinerant agricultural laborers milling around at the bottom of town, waiting for farmers to load them into the back of a truck to pick fruit in the summer sun all day for a few euros and hour. I've seen offices, not of small businesses, but chains, which have two sets of books, one for black money, one for white, both of which go to the accountant. I've known employers to declare the minimum wage to get an employee on to the social security system and pay that employee half the declared amount in cash, and the employee says nothing because it's the norm - they say they need the work and everybody does it!

This situation gets worse all the time as more overly bureaucratic legislation comes down from northern Europe. The government implements something that the public servants dish out, the managers of firms either ignore or choose to deal with and if the do incur a cost, pass it down to the helpless employee. Just today I've learned that from the first of June, no property can be sold or rented without an energy certificate conveying it's carbon footprint. Will this sell more houses in a desperate property market? Or will it delay prevent sales, delay salaries and drive even more estate agents out of business? Watch for the unemployment figures in the last quarter of 2013 and I fear you'll see proof that it's the latter.

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Posted by Steve Gould Thursday, April 25, 2013 10:11:00 PM Categories: activism Europe Spain
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Spain Announces Easing Of Austerity 

Marino Rajoy To Announce Changes on Friday.

Pic http://www.lamoncloa.gob.es/IDIOMAS/9/Presidente/Fotos/2013/20130409_PdGGCS_UHP.htm 23/04/2013The austerity news is coming thick and fast. Barely two week after the Reinhart/Rogoff paper was discredited, politicians have been making noises that the end of austerity is near. Now the FT has reported that Spain will be the first government to announce an easing of the measures currently in place. 

In an article that follows the pattern of many other announcements by Rajoy, the idea is 'mooted' by government sources before the official announcement to test the water.

The article says plans will be unveiled to reform to the pensions system, labour market, service sector and fiscal management.

Of particular interest are measures the liberalise the protected professions of which Spain has 174 that have barriers to entry due to specialist entry qualifications. These professions are backed by powerful lobby groups and it will be a battle to get such measures through.

I'll blog more on Friday when the official anouncement comes out but this sounds like the first good news for Spain in a very long time.

http://www.ft.com/intl/cms/s/0/f539b874-ac31-11e2-a063-00144feabdc0.html#axzz2REgA3Zr7

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Posted by Steve Gould Tuesday, April 23, 2013 10:19:00 PM Categories: activism economics Europe Spain
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More fuel on the austerity fire 

European Commission Boss Barroso Signals the End of Austerity

© European Union, 1995-2012 Used under licenseFurther to my earlier post that Bill Gross of Bond Fund Pimco has come out against austerity, (http://www.ihatestevegould.com/IHSG/the-game-is-up-for-austerity.aspx) another important anti-austerity statement has come from Brussels.

José Manuel Barroso who heads the European Commission, in a story again from the Financial Times said at a press conference that while he defends austerity as being broadly right, he says it has "reached it's limits"!

Reading further down in the statement of 'what he actually said' on the commission web site (http://europa.eu/rapid/press-release_MEMO-13-368_en.htm), he appears quite critical of the economists behind austerity, saying "I know that there are some technocratic advisors who tell us what is the perfect model to respond to a situation, but when we ask how we implement it, they say that is not my business."

My take on that statement is that he's saying the guys (and gals) who came up with this crazy plan did not tell me what to do and I ended up looking like a right plum.

He goes on to lay blame at the gate of "management, technology, policy, wrong or good decisions, policy and politics". Erm, being the head of the commission, isn't that kind of like his responsibilty? Isn't it the job of Barosso and his elk on the fat cat salaries to figure out what the right policies are and implement them?

 

 

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Posted by Steve Gould Tuesday, April 23, 2013 7:54:00 PM Categories: Europe
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The game is up for austerity 

Worlds largest Bond fund manager attacks austerity

18 hours ago another revealing story appeared in the Finacial Times. Bill Gross, the manager of PIMCO, the worlds largest bond fund has rounded on the austerity measures being pursued by the US and Europe. 

In a quote that I think will become famous, Mr Gross said:

The UK and almost all of Europe have erred in terms of believing that austerity, fiscal austerity in the short term, is the way to produce real growth. It is not.

Now the thing is you have to consider who this guy is. He's not a left wing trade-union activist. He is a mega-capitalist who makes money trading bonds - big bonds issued by governments. Also consider that this is a complete u-turn as in 2010 he was criticising the UK for carrying too much debt. At a guess he has changed his view after the Reinhart Rogoff fiasco came to light earlier in the week.

This story sheds light on how quickly the support for austerity is waning, and probably hints at a forthcoming about turn in government policy in Europe and the US, so lets get ready for the boom we've been waiting for for so long.

http://www.ft.com/intl/cms/s/0/6c023bdc-a93c-11e2-a096-00144feabdc0.html#axzz2RHZBeAMZ

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Posted by Steve Gould Tuesday, April 23, 2013 12:54:00 PM Categories: activism economics politics
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Anti-Thatch Music Show 

RNE3 plays an hour of protest songs from the 1980's

One of the many joys of living in Spain is the radio station RNE3, which was most aptly described by my partner as a station run by a load of John Peels. It's difficult to define the policy behind what they play but to give you an idea I've heard them play The Sex Pistols at 8am! They play Murcian folk music, Fada, Balinese gamalan ceremonial music and Fela Kuti, one after the other. They have won awards as best radio station in Europe over and over because there is no other station to touch them.

Well last week they surpassed themselves again. Just after Thatcher's death when the BBC were considering banning Ding dong (which made it to number two) RNE3 played an hour of music that captured the spirit of her time in office, which included many anti-Thatcher protest songs.

This Sunday, in 'Sonideros' we remember Margaret Thatcher related songs, perhaps the most controversial political figure of her time, and who aroused the most arguments and hatred. We hear pieces of resistance Britpop written during her years in office, rabid diatribes against her politics and harsh portraits of British society under her mandate by The Specials, The Beat, The Jam, Billy Bragg, The Blow Monkeys and yes, Ella Fitzgerald.

http://www.rtve.es/alacarta/audios/sonideros/sonideros-doctor-soul-rock-margaret-thatcher-14-04-13/1765287/

RNE3 Play songs from the Thatcher Era

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Posted by Steve Gould Saturday, April 20, 2013 5:25:00 PM Categories: activism music politics
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Austerity Rubbished  

Economists behind it got sums wrong

I love this story that appeared in the Financial Times today. It's motto is something I've always suspected, that far from being run by evil geniuses, the control of the planet is in the hands of people who are just as stupid the rest of us. Laughing

Harvard professors Kenneth Rogoff and Carmen Reinhart wrote an influential paper in 2010 called "Growth in a Time of Debt," which found that economies with ratios of public debt to gross domestic product above 90% tend to contract about 0.1% annually.

This paper scared the pants off many governments which at the time were struggling to get back on track after the financial crisis, often by taking on more debt. The paper was used to justify the austerity policies which are now in place in most Western economies, and was citied by many famous politicians including congressman Paul Ryan and Britain's George Osbourne.

Well to cut a long story short, these Harvard guys got their sums wrong. The paper was 'riddlled with errors'. For example, the spreadsheet used to prepare the stats in the paper had an incorrect formula so the magic figures on which they based their conclusions were just plain wrong.

The errors were identified in a new paper, by University of Massachusetts Amherst economics doctoral student Thomas Herndon and professors Michael Ash and Robert Pollin. They claim Reinhart and Rogoff were wrong in concluding that a high level of public debt dooms an economy to a long period of slow growth.

So that's just great. We're all under the economic cosh, government spending slashed, everyone's out of work and all because a couple of college boys are crap at Excel!

Link to the full FT article

 

 

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Posted by Steve Gould Wednesday, April 17, 2013 9:39:00 PM Categories: economics
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London Thing 

Poem written and read by John Elbrow, my nephew.

This is a poem written and read by John Elbrow about London, the city where we both lived and worked. John chooses to live their still and volunteers each year to help the homeless at Crisis at Christmas. I chose not to live there and moved to Spain. Who was right - you decide!

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Posted by Steve Gould Monday, April 15, 2013 10:40:00 PM Categories: activism politics
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Insightful as Always 

Richard Wolff - nice description of the Cyprus bailout fiasco.

Richard Wolff explains ecomonics in words of one syllable that even dumb folk (like me) can understand!

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Posted by Steve Gould Sunday, April 14, 2013 3:10:00 AM Categories: activism politics
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A cracking day in Olvera 

Feels like spring

Olvera is located in Andalucia about an hour and a half in the car from the Atlantic ocean. As such we do seem to get four proper seasons. This winter we had a ton of rain and for the last month or so there has still been the threat of changeability. Today however was different. Today we had 27 degrees. Today there was a wedding, a funeral and a communion. Today the water was cut off for the whole town for the whole of today. Today was different. Today was special.

View from the terrace I did try to take a photo to express what a nice day it is - this is the best I could come up with!

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Posted by Steve Gould Saturday, April 13, 2013 10:13:00 PM Categories: Olvera
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