NO, SPAIN IS NOT 'DIFFERENT': IT TOO NEEDS A GRAND COALITION

With the rising of new parties, Spain’s two-party system has collapsed. But the surge of Catalan nationalism requires an agreement between all political forces to secure constitutional reform.

Podemos unleash generational thirst for change in Spain

Spanish elections will stay in history for many reasons. One of the most notable one is the fall of bipartisanship that prevailed all the way through the post-Franco era. The second one is the exquisite performance of left-wing Podemos, stepping in for the first time in national elections, reaching 20,6% and securing 69 seats.  ​

Gain or more pain in Spain?

In a new CER policy brief, 'Gain or more pain in Spain?' Simon Tilford demonstrates why Spain is no poster child for fiscal austerity and structural reforms. Tilford shows that Spain’s growth performance is less impressive than it appears at first sight. The level of economic activity remains highly depressed compared to pre-crisis levels (see Chart 1). He highlights that:

Greece and Spain helped postwar Germany recover. Spot the difference

Sixty years ago today, an agreement was reached in London to cancel half of postwar

Germany's debt. That cancellation, and the way it was done, was vital to the reconstruction of Europe from war. It stands in marked contrast to the suffering being inflicted on European people today in the name of debt.

 People exchanging food for tickets in 1923 Germany. 'Many, including Keynes, argued that [reparations imposed on Germany following the Versailles treaty] led to the rise of the Nazis and the second world war.' Photograph: Keystone/Corbis

Germany emerged from the second world war still owing debt that originated with the first world war: the reparations imposed on the country following the Versailles peace conference in 1919. Many, including John Maynard Keynes, argued that these unpayable debts and the economic policies they entailed led to the rise of the Nazis and the second world war.

No, we can't: Why Podemos is not Syriza

2015 will be a hectic year for the Spanish electorate. Over the next few months, Spain, a decentralised state with 17 different regional parliaments, will hold four different elections: to the Andalusian Parliament in March; regional and local elections in the rest of Spain in May; to the Catalonian Parliament in September; and a general election no later than December. All eyes are set on one party: Podemos (‘We can’), the rising star of the Spanish political landscape. Does Podemos stand a real chance of taking power? And what does Podemos really want?

Podemos’ origins are rooted in the 2011 indignado (indignant ones) movement which conveyed some citizens’ weariness with the Spanish political and economic situation and prompted many to vent their outrage on the streets. These protestors did not represent any particular political force. Critics accused them of not having a clear message, of lacking leadership and of staying out of formal politics. It gradually became clear that, without an organised structure and leadership, the movement would not succeed in addressing Spain’s most urgent problems. In January 2014, some of the most active people behind the movement (including university professors, economists and trade unionists) founded a new party to try to use indignation to achieve political change.

Are Germans Really Poorer Than Spaniards, Italians And Greeks?

 A recent ECB household-wealth survey was interpreted by the media as evidence that poor Germans shouldn’t have to pay for southern Europe. This column takes a look at the numbers. Whilst it’s true that median German households are poor compared to their southern European counterparts, Germany itself is wealthy. Importantly, this wealth is very unequally distributed, but the issue of unequal distribution doesn’t feature much in the press. The debate in Germany creates an inaccurate perception among less wealthy Germans that transfers are unfair.

 

WSJ: A European Nation Within Spain Catalonia

I recently attended the spring conference of the British Liberal Democrats. The party recommends a "no" vote in the upcoming referendum on Scottish independence. I was struck, however, by the language used by Lib-Dem leader Nick Clegg in his final speech: "We are a family of four different countries," he declared of the United Kingdom. "I want to see Scotland stay in our family of nations." 

Will Greece and Spain replace the UK as Europe’s fastest growers?

Countries on the eurozone periphery such as Greece and Spain have endured years of weakness but there have been recent signs of strength in these economies.

Ireland and Spain can stand on their own without bailout programs

GABRIELE STEINHAUSER

Ireland and Spain said Thursday they could stand on their own feet once their bailout programs end in the coming months, marking significant steps as the euro zone battles to exit a four-year debt crisis.

The currency union's finance ministers hailed the decisions as signs that their strategy of budget cuts, economic overhauls and long-term rescue loans was working.

Spanish finance chief, Luis de Guindos, left, with his Italian peer, Fabrizio Saccomanni, in Brussels on Thursday. Zuma Press

"This shows that our policy of stabilization of the European currency is successful and right," German Finance Minister Wolfgang Schäuble said as he arrived for a meeting with his euro-zone counterparts in Brussels.

But the moves by Dublin and Madrid not to seek extensions of their aid plans also carry risks, especially as new figures showed that the euro zone grew just 0.1% in the third quarter and the European Central Bank embarks on a thorough cleanup of banks' balance sheets.

"This is the right decision for Ireland, and now is the right time to take this decision," Irish Prime Minister Enda Kenny told lawmakers in Dublin after a meeting with his cabinet. "This is the latest in a series of steps to return Ireland to normal economic, budgetary and funding conditions."

Spain's Finance Minister Luis de Guindos said in Brussels that "the closure of Spain's banking bailout is good news for both the Spanish and the European economy." "This is a clean break, and now we have a banking system that is more solid and more solvent, with every indicator pointing in the right direction," he added.

But both countries leave their bailouts with high debts—Ireland's is projected to hit 124% of gross domestic product by the end of year, while Spain's is expected to reach 94% of GDP—high unemployment and big deficits.

No, the Spanish Can’t Be More German

Everyone knows the stereotypes. Germans save for the future, while Spaniards spend everything they earn. So it's not surprising that Germany has survived the recent crisis in decent shape, while Spain is a mess, with unemployment at roughly 27 percent. If only the Spaniards had been as thrifty as the Germans, this never would have happened, right?

‘Rajoy to seek Brussels’ flexibility to increase deficit to 6%’

El País, 29 March 2013

Spanish Economy Minister Luis de Guindos will meet with the European Commissioner for Economic and Monetary Affairs, Olli Rehn, next week to agree the deficit margins Spain must achieve to fulfill EU requirements.

De Guindos will request to meet the 3 per cent deficit goal by 2015 instead of 2014, with a 6 per cent deficit in 2013 and 4.5 per cent in 2014.

Is Spain Preparing For Its Own Deposit "Levy"?

While Spain's economy minister Luis De Guindos proclaimed in the Senate today that bank deposits under EUR100,000 are "sacred"and that "Spanish savers should stay calm," Spain, it would appear, has changed constitutional rules to enable a so-called 'moderate' levy on deposits - as under previous Spanish law this was prohibited. 

A Tale of Two Adjustments (Germany-Spain)

A commenter on my last euro post asks a good question: didn’t Germany once have a problem of excessive unit labor costs, which it cured with a protracted squeeze? And in that case, why is it so terrible if Spain is asked to do the same thing?

The answer is basically quantitative. I’d make three points:

Bankia turns in record loss of 19.2bn euros for 2012

Spain's troubled Bankia - formed of the merger of seven floundering savings banks - has reported a record loss.

The bank, which received aid of 18bn euros, made a loss of 19.2bn euros (£17bn, $25.2bn) for 2012 and put aside provisions of 26.8bn euros.

Spain reacts: "What is good for Italy is good for Spain,"

Spanish Economy Minister Luis de Guindos said Tuesday the risk of political stalemate in Italy after an inconclusive vote had shaken markets, but that this effect would only be "short term".

"What is good for Italy is good for Spain," the minister told a news conference, while adding that he was "convinced" that the "political will" to lead Europe out of the crisis "will prevail".

Spanish borrowing costs rise at bond auction

Spain's borrowing costs rose as it tapped the debt market on Wednesday for the first time since the eruption of a corruption scandal that has implicated top members of the ruling Popular Party including Prime Minister Mariano Rajoy.

The Treasury raised 4.61 billion euros ($6.25 billion) in medium- and long-term sovereign bonds, with demand outstripping supply by two to one, the central bank said in a statement.

SPAIN Bad bank becomes Europe’s leading property agency

The bad bank created by the regrouping of toxic assets owned by nationalised Spanish banks has become "Europe’s biggest property agency," notes daily ABC. The assets represent €36.7bn, which is —

considerably more than Europe’s leading property group, France’s Unibail-Rodamco, which has assets worth €27.5bn. It is also more than the €30bn absorbed by the Irish bad bank, the National Asset Management Agency (NAMA)

Madrid threatens to block Barcelona’s ‘illegal’ independence bid

Madrid has warned Catalonia that it has the sufficient means to block the fugitive region’s “illegal” plans for a self-determination referendum, as two Catalan political giants unite to pursue their battle for independence.

Deputy Prime Minister Soraya Saenz de Santamaria announced Wednesday that the country's central government believes the vote would be unconstitutional, saying, “our legislation has many mechanisms to stop any illegality."

El Economista: SPAIN : EU opposes publishing tax evaders list

The announcement by Spanish Treasury Minister Cristóbal Montoro on December 13, that he intends to publish a list of tax evaders was not well received in Brussels, notes Spanish financial daily El Economista. According to a high-level EU civil servant interviewed by the paper, such a move would be "illegal and contrary to community law and to the European Directive on the protection of personal data”.

Catalonia's raging independence debate hits cold reality of likely EU expulsion

As in towns across this wealthy northeastern region, the maze-like cobblestone streets of Girona’s medieval quarter are fluttering with flags in favor of Catalonia’s independence. Here, however, there is also a smattering of flags bearing the slogan: “Catalonia, A New European State.”

It goes to the heart of a Catalan conundrum.

While the separatist dream of millions has never felt so close to becoming a reality, independence fervor is now coming up against the cold, hard facts of what breaking free would really mean. Few realize that this Spanish region famed for its trading prowess would be shut out of the European Union for years, a huge hurdle to doing business with its most important trading partners. EU officials say an independent Catalonia would face the same membership conditions of any other candidate nation.