The problem is the speculators. They've got bored elsewhere& have turned their attention to Spain , once again !
The Spanish have done all that has been asked of them by Implementing swinging austerity cuts. It's extremely difficult to have growth when asked to implement austerity !
They have increased exports & reduced imports & now have a net income.Inflation is low, lower than the Uk. Yes there's the highest unemployment in the EU but that's what austerity brings. The ten year bond interest rate is being forced up, by the lenders & speculators, but as one economist pointed out at the weekend ; Why would you invest in German ten year bonds at 1,75% when any sane person can work out that over this period german wage rises & inflation will leave you with less than your original investment ? Another professor from the Madrid institute pointed out on Bloomberg yesterday that the Spanish have accepted the cuts , done everything asked of them & are still getting a kicking ! Why ? + their fierce pride will not allow them to seek help( even if it was necessary) or ask for a bailout!
This is something that is giving me extreme cause for concern at the moment which it shouldn't be.
If you allow speculators ( Gamblers in essence ) to run the markets I've always said that it's a recipe for disaster.
The EC Bank won't lend to eu countries at low rates but will lend to any eu bank at 1% ! So you've got banks borrowing at 1% & buying government bonds at 6% !!!!!!!!!!! It's just encouraging the speculators to put pressure on to up the bond rates.
When they talk of 'bailouts' it's worth bearing in mind that Cataluña alone has a gdp equivalent to that of Austria ! It's never going to happen.
Abyss_Rover wrote:
We are seeing very similar here in Mallorca. Many locals and expats alike, say that they meet with friends at their houses because of the no smoking laws. I guess, like the UK, this law will force many people to either do this or stand / sit outside, as many UK drinking establishments now have outside areas for smoking but you often find them full of smokers and NON smokers, while the inside is empty.
I guess this will improve when the weather does and I guess the tourists wont mind at all (unless the screen showing the football is inside).
What with the all inclusive strangling local bars, restaurants etc. With the smoking laws keeping locals and expats away, during the colder months. Surely many will be forced to close and the local tax income can only suffer for that.
Maybe if the Spanish government can claw back some of the black money, it will help in the short term but I feel that the real black money disappeared long ago and with local businesses failing, the prospects for the future are dim, in my personal opinion.
As I said, this is what I have seen and heard, in Mallorca. This is why we are looking to move somewhere that has more of a year long trade, not mainly the tourist season.
I hope that I am wrong but as it's been said before, world war 3 is a financial war and although I don't think anyone will win this one, many will suffer because of it.
Around here all the bars put in outside covered areas complete with electrics, lighting tv's, space heaters ,etc. Any that didn't won't get the trade.The awning makers, electricians, aerial installers ,etc; earnt a fortune.
The 'black economy' is thriving here ! My neighbour's son has more work than he ever had in the good times & there's plenty of his relatives & friends the same. There's still 51 billion in 500€ notes 'under the bed' in Spain & that's without the other denominations !
My neighbour managed to make 100k appear to build a 3 storey apartment on to the back of the house ,without ever going near a bank.
Todos somos Lorca.
