Has Zapatero lost the plot?
#31
Surely if Germany and France are exceptions, then the Euro can't be blamed ! Surely it's down to an unsustainable house price boom fed by loosening of credit - started in the US but also followed by the UK, Ireland, Spain etc. I'm sure you can make claims that the standard Euro currency makes it difficult to make an escape via currency devaluation or hyper-inflation, but I'm not sure at the moment that UK's escape plan that way is the best option (we shall see)! I think Germany (and to a lesser extent France) escaped the worst effects of the house price boom, which is possibly why they're in a good situation to come out of this mess, plus they still make things. End of the day we've all kidded ourselves in the West that we're getting richer because the value of our houses has shot up through the credit-induced boom. In reality most of the productive stuff has been heading out east. We can either decide to let house prices fall back to the long-term average value (as will happen in Spain) or devalue the currency so the net effect is the same (UK). At least we can still sell financial products, English classes and Real Madrid shirts to claw back some earnings, but it isn't going to be enough to keep our populations in 100% work.
The reason most of the Spanish paid the prices was because there was a lot (and there still is) of black money in the economy but many Spanish have 'always' been complaining of the rise in living costs here, people who work in hostaleria and many stores where still on a low wage, generally it was the fact that there are two wages coming in that kept their heads above water and gave them a bit more spending... so now we have a very expensive county 'compaired to a very few years ago' and a population on very low wages 'many in the south still on 600 and 700 Euros a month'.
Now you have a population where most people are feeling the pinch and prices are still going up and taxes of course with more to come, as I have also mentioned before here I think the Spanish have seen nothing yet 'or very little', the big problems will really start kicking in now this winter, this is when people like Zappatero who keep saying the recession in Spain has had it's worst will be eating their words as they seem to be doing a lot of late.
BTW, many companies in Spain pay a wage and then a 'back hander', this is basically to save the company money because they pay less tax. This was and is still a normal practice in Spain, not something that a government offical would *not* know because it is just that... 'Normal practice here' that everyone who is Spanish or who has integrated into Spanish society knows about. I doubt there is any Supermarket chain or department store group that have changed this practice and the government know it, these places are saving massive amounts of money from this practice but the government don't do anything, they pick on the small companies and on individuals... either because they are scared to go there or because they have a vested interest in leaving them alone, I personally think they are scared to go there.
Oh and no, Zapatero hasn't lost the plot, he actually never knew there was one in the first place...
Last edited by Econ; Sep 26th 2009 at 9:33 pm.







