Editorial:
One of the most complicated election processes ever must be the one that is occurring in Spain, which began on December 20th. Four parties won well enough that, separately or together, they could stop any government they didn’t like or that they didn’t dominate from being declared, yet no one party had enough support to form a stable government. Pedro Sánchez PSOE, with 90 out of a possible 350, has now been asked by Felipe VI to try and form a government. But with who?
And so they must disagree – as there is nothing in common with any of the four parties, and thus – any coalition would probably mean the disappearance in the short term of – at least – the smaller of those involved. In Spain, we have two parties renowned for their corruption, two old traditional parties and two brand new ones, two parties on the right, two parties on the left and at least one party in perhaps terminal internal revolution. The only mathematic solution, PP and PSOE, is a hard nut to crack.
A fresh election – the only apparent solution – would likely bring similar results: a similar problem.
It’s too late now to adopt the Two-Round System (Wiki) – used by the French and many other nations. The first time, you vote for who you like (tactical voting not necessary!). The second round is then held between the two leading parties.
So Spain must find another solution. Perhaps a ‘Royal’ compromise with an outside candidate for a short-term legislature? Maybe a coalition forged out of new/fresh party leaders? (El Mundo editorial here). Alternatively, how about a government of National Unity (Wiki)? But first, Sánchez must have his chance to either go ‘right’ with the PP and maybe Ciudadanos... or ‘left’ with Podemos and IU.
In short, it’s a mess.
Housing:
A useful article called ‘How to rent your Spanish property’ over at A Place in the Sun, begins with ‘Many people considering buying a second home in Spain do so with an eye to renting it out when it’s not being used by the family. This can be a good way to make sure the property pays for itself but, before you leap onto the rental market, you should look at what the law says...’.
According to 20 Minutos, Andalucía has now drafted new rules about short-term rentals, and all current city ‘tourist rental dwellings’ must be registered with the ‘Registro de Turismo de Andalucía’ to control ‘unfair competition’, quality and so on. Landlords are expected to keep up with a daily register of clients to ‘guarantee public security’.
Following on from a point in BoT’s editorial last week, Mark Stücklin’s Spanish Property Insight reports that – ‘Catalan architects warn that a rise in building activity is not what it seems ... On the face of it, a big increase in new home building looks like good news for the industry and economy. Housing starts are on the up, and the surface area being built increased by 26% last year, having increased the year before by 7.5%. But most of the increase comes from big projects of more than 10,000 sqm, which were planned in the boom years and put on ice during the crisis, explains Oscar Muñoz writing in the Catalonian La Vanguardia. And most of the new building activity last year was concentrated in the first six months of the year, and fell off sharply in the second half of the year...’.
‘How a dream of building an eco house turned into a 13-year nightmare of bureaucracy, bad weather and dead fish’. The amusing story of a home fraught with un-expected problems (well, paper-work obviously) in the heart of Andalucía – from the Financial Times.
News from Cantoria, Almería: Six British-owned houses have suddenly had their electricity cut by the power company since the houses, for the past four years, have been paying electricity for an illegal line, connected, apparently, by the disgraced mayor Pedro Llamas who claims that 'the homes were connected originally for humanitarian reasons'...
El Mundointroduces readers to La Zagaleta, ‘the most expensive refuge in Europe’. Read the hyperbole about this exclusive urbanisation located in Benhavís, near Marbella. Better yet, here is the ‘La Zagaleta Country Club’ prospectus, in English.
‘Q: I know you have mentioned some good countries for those interested in buying abroad; do you have some information about Spain as a possible location?
A: Spain is, by all accounts, a great real estate value right now. The country’s real estate markets were hit hard by the 2008 crash, and distressed British property owners in particular have been selling into a soft market. My reservation is that Spain has just enacted its own version of FATCA — much harsher that the U.S. law, in fact, in terms of reporting requirements and penalties. “Modelo 720” forces Spanish taxpayers to report foreign assets every year via a certified tax adviser or accountant. The imposition of this decree in late 2012 has resulted in many expats, Brits in particular, reducing their stays in Spain to less than six months so as to avoid fiscal residency, which triggers the reporting requirement.
Modelo 720 has also discouraged prospective buyers, contributing to Spain’s soft real estate market. The program is so harsh that the European Union Commission is investigating whether it violates EU legal norms. The EU Commission has given Spain two months to justify the process, or the country will be taken to the European Court of Justice, where it could face severe fines. The response is currently complicated by the fact that the country is in political turmoil following an indecisive election in December’. From an American newsletter called Sovereign Confidential.
Perpe has a graphic of house prices in Spain since 1970 here.
The Government is auctioning off the castle where Queen Isabel la Católica lived in the 15th century. The Castillo de Maqueda, in Toledo, starts at 9.5 million euros. Story here.
Tourism:
68.1 million foreign tourists visited Spain in 2015, says Agent Travel here. At 4.9% up over 2014, this is a Spanish record. The UK provided 15.6 million; France 11.5m; Germany 10.2m. The sharpest rise was made by visitors from the USA at 1.5m, a rise of 23.6%. The largest fall comes from Russia, with under a million visitors, a drop of 32.7% over 2014.
There were more than eleven million hotel overnight stays in Benidorm in 2015, according to El País in English. However, it adds, Benidorm is only in fourth place nationally, with ‘...Barcelona (18.4 million) at the top of the list, followed by Madrid (17.8 million) and San Bartolomé de Tirajana in Gran Canaria...’ in third.
‘The largest city in the Balearic Islands will go back to its old name following a decision in the most recent local council meeting. Officially, the regional capital is known as Palma de Mallorca, but the coalition council – made up of the socialists, Podemos and left-wing independents MÉS Mallorca – pledged before the elections that they would change it back to simply 'Palma', as it was previously known. The name was changed to 'Palma de Mallorca' by the former PP-led regional government of the Balearics, sparking heavy criticism by the city council...’. From Think Spain.
Finance:
El País reports that unemployment fell in late 2015 by the creation of a massive 678,200 jobs over 2014. This leaves Spain with 20.9% unemployment. However, says El Mundo, some of these were seasonal Christmas jobs, as unemployment rose in January by 57,247 persons.
Ideal reports that Almería unemployment also fell 43,300 people in 2015, leaving the province with a still far-from-satisfactory 25.13% unemployed. Cádiz remains the worst across Andalucía with an appalling 36.73% unemployed.
An analysis over at Público shows that, despite the triumphalism of the Rajoy Government, the situation of the labour market has gone from bad to worse between 2011 and 2015.
Then, we have the self-employed, los autónomos. Their parlous situation is analysed by Los Replicantes here.
‘Plunging shares, shrinking profits, and a spate of new regulations and court cases that could end up setting it back billions of euros – that’s what the Spanish banking sector is facing. But now, banks are also grappling with the complete absence of a friendly central government to insulate them from the cruel vagaries of the global economic downturn.
And the strain is beginning to show...’. Wolf Street reports (and goes after the vulture funds).
Politics:
On Tuesday, Pedro Sánchez was offered the chance to form a government by the King. Sánchez says it will take him a month or so to put a coalition (or some lesser agreement) together before he calls for a plenary session. He began his meetings with the other groups on Wednesday. Here’s the ABC’s report. Here The Guardian says ‘King Felipe calls on Pedro Sánchez, who says he wants to form a progressive government for change’. The news-site El Diario says ‘Pedro Sánchez finds with IU and Compromís (two small parties) an understanding not so far found with Podemos’.
Felipe Gonzalez has advised the PSOE not to have anything to do with Podemos. The leader of Podemos, Pablo Iglesias, laments that Gonzalez should ‘ally himself with the PP’. And so it goes on... It is no secret that Susana Díaz doesn’t agree with her captain, Pedro Sánchez, but now a recording of a private session between Susana and some of the other PSOE ‘Barons’ shows how deep the divide is. Indeed, she is considering pulling her PSOE deputies (she has 22) out of any concord with Podemos. Sánchez clearly prefers an alliance with Podemos, and suggests that any agreement should pass by all the militants in the PSOE before he signs anything... Meanwhile, the leader of Ciudadanos, Albert Rivera, who said ‘he who can’t clean his own house certainly can’t clean Spain’ – a dig at Mariano Rajoy – is now attempting new approaches to both the PP and the PSOE. The PP insists that it won’t support any other candidate other than its own and is now preparing for fresh elections – which, according to El Huff Post, would be held perhaps as late as the end of June, and if you want the opinion of Pedro J Ramírez from El Español: ‘vamos a nuevas elecciones’.
Carles Mulet, a senator for Compromis, says that the State Prosecutor should declare the Partido Popular to be a ‘criminal organisation’ and should proceed with its dissolution.
Andrés Hertzog, the presidential candidate for the UPyD in the December elections, has announced that he is without work, and has registered for unemployment benefits.
According to Pablo Iglesias, El País is making every effort to steer Spanish opinion towards a coalition with the Right while evidently anti-Podemos in its editorials. Vozpópuli reports.
A number of laws passed in the last Parliament are now being studied by the current House to see which and what recent laws can be repealed. These would include the unpopular education law the LOMCE, the Citizens Security Law (‘Ley Mordaza’) and the Labour Reform law. The President of the Congress of Deputies, Patxi López, has agreed that ordinary activities and plenary sessions will be held in the Cortes Generales (Lower House).
Corruption (wouldn’t it be nice to end this section?):
‘The corrupt one seduces provincial society by feeding a nephew, by placing a child with problems in a nice job, through fixing the boiler in this man’s house, and by subsidizing the local football team and singing, the while, at the karaoke’. In short, they bring light and cheer to their surroundings, says an article by David Trueba in El Ventano called ‘The Seductive Sparkle of Corruption’.
The Local introduces ‘Ten Spain corruption scandals that will take your breath away’ here.
The judge accuses all of the Counsellors of the PP in the Valencia Town Hall for sanitising the accounts of ex-mayoress and current senator Rita Barberá.
Rita Barberá’s sister Asunción appears to have had a hand in the goings-on and money-laundering in the PP offices in Valencia. She is reported in El Mundo as saying to some confidants ‘We overdid things, many of us, we overdid it’. Now the Valencian branch of the PP is under investigation in the Operación Taula (A number of articles from El Mundo here). Rita herself could only be tried by the Supreme Court as she has immunity.
El Español reveals that the PP in Madrid was financed in a similar way to the organisation in Valencia – with a number of employees from the party headquarters going to a nearby bank on a regular basis and paying small cash ‘donations’ to the party account, thus helping ‘wash’ large sums held by the party, received from important donors.
A helpful list of the PP accused to date in 2016 here.
From The Local: ‘Rodrigo Rato, a former chief of the International Monetary Fund (IMF), is to stand trial for misusing funds when he was head of a bailed-out Spanish bank, a court in Madrid said on Monday. Rato is one of 66 accused in a scandal that allegedly saw executives and board members at Caja Madrid and Bankia - the group whose near-collapse sparked an EU bailout of Spain's financial sector - spend around €12 million on themselves between 2003 and 2012...’. El Mundo notes that the bankster who was twice imprisoned (briefly) last year for bank fraud, Miguel Blesa, ex-director of the Caja Madrid, is also part of the accused (Readers may recall that the judge was fired for his impertinence).
‘The trial of Spain's Princess Cristina on charges of tax fraud must go ahead, a court ruled on Friday, throwing out an appeal by her lawyers in a case that has badly damaged the image of the royal family. The 50-year-old sister of King Felipe is one of 18 people on trial following a six-year investigation into the Noos Foundation, a charity run by her husband Iñaki Urdangarin...’. From Reuters.
Well, anyone can make a misstatement on air but Minister of Development Ana Pastor just pulled a doozy (here on the RNE national radio as reported in El Español): ‘It’s impossible being in politics and to remain honest’. She later corrected herself in a Twitter message: ‘I meant to say, it’s impossible being in politics and to not remain honest’.
But, let’s hear it for the PSOE. The Anticorruption Prosecution has asked judge Álvaro Martín to question the two ex-presidents Manuel Chaves and José Antonio Griñán, together with the ex-councillors José Antonio Viera, Carmen Martínez Aguayo, Antonio Ávila and Gaspar Zarrías (all of whom have now lost their parliamentary immunity) as part of the ERE scandal in Andalucía. Ideal has the report.
Well, anyone can make a misstatement on air but Minister of Development Ana Pastor just pulled a doozy (here on the RNE national radio as reported in El Español): ‘It’s impossible being in politics and to remain honest’. She later corrected herself in a Twitter message: ‘I meant to say, it’s impossible being in politics and to not remain honest’.
The Acuamed scandal: ‘The “implacable” fight against corruption’ discussed in detail here.
Catalonia:
The Danish multinational Nilfisk is moving its Spanish head-office from Mataró in Barcelona to Madrid for what the company describes as ‘minimising the effects that any political eventuality might have on our employees and business’. ABC had the story here.
Courts
In the final two weeks of December, a massive 499 fires were declared in Cantabria. To date, there have been four judicial sentences. Story at El Diario.
The ex-mayoress of Jeréz de la Frontera, Pilar Sánchez (PSOE), began her four and a half year sentence on Sunday in an all-women’s prison in Seville. She was convicted for her part in the ‘Caso PTA’.
Essay:
Warning – beware of boiler room financial magicians. The CNMV warns of forty unregistered financial houses which offer investment services without proper authorization. It seems if one cannot get a return from the bank, then the prospect of juicy interest from investment can be appealing. An article in El Diario offers this advice: ‘...A few tips to avoid falling prey to the boiler rooms. The first one, go to the CNMV records to see if the company in question is authorized to operate. In addition, an investor should suspect of being in the presence of a boiler room if these assumptions are true:
1. They offer much higher returns than those offered on the market. It is what is called "playing with customer avarice."
2. Contrary to the dictates of the law, this is a service that is offered, but not required. They are usually phone-calls made from "call centres".
3. These calls always offer small capital investment and very high profits but neglect to say that those supposed returns come with high risk, with very leveraged products, where the customer can lose all his money.
4. They charge very high commissions, which can be as much as 20%.
5. They use very aggressive sales tactics, pressurising the client to make a quick decision.
6. They always deny any type of information required by the potential customer related to their address, contract info and so on.
The Housing Sector
by Andrew Brociner
Last year, we spent several issues looking at the housing market and found that there was no price increase taking place. We examined several factors which explain the lack of price movement. For instance, we saw that while there is a lack of demand compared to the boom period, for different reasons, such as the decrease in population and the lack of new households set up, there is also too great a supply, as there still remains a huge stock of unsold houses built. It is worthwhile to see where we stand so far this year.
If we look at the house price index from the Instituto Nacional de Estadistíca (INE), we find that it is still very low, but turning upwards, albeit slightly.
It is clear that given where this index was during the boom, it has lost a tremendous amount of ground, but at least appears to have bottomed out during 2014 and the beginning of 2015 and has, since the 2
nd quarter of 2015, started to increase a little.
We could take a look at the annual rate of change of each quarter to assess how this increase is proceeding.
It is remarkable that from the beginning of 2008 until the beginning of 2014, the annual change in this price index was consistently negative: that is many years of constantly falling prices. After that, it has spent over a year consolidating.
The data we have so far for the 2nd and 3rd quarters of 2015 suggest a small incremental increase, of 4% for the 2nd quarter and 4,5% for the 3rd quarter of 2015. But we do need to wait for more data to see if this increase is being sustained at all. Next week we will continue examining this finding.
Brexit:
So, what’s the plan? ‘EU eurosceptics, europhiles & europhobes and what do the Leavers have as an alternative that is better than the EU??’. An essay at Say Yes to Europe.
Various:
From the northern Costa Blanca – La Marina Alta – we read that there has been a sharp drop in the number of foreigners living there, or at least, being registered on the padrón. In the last five years, says La Marina Plaza, one third of all foreigners have left. Calpe for example falls from 18,873 foreigners in 2010 to a current 10,231. Jávea from 17,414 to just 12,242. A report from (anon.) highlights one possible reason for the departure (or de-registration at least) of foreigners, saying in part: ‘It’s hard to assess the effect of the Modelo 720 asset declaration exercise, but there is no doubt it is a consideration, maybe not so much for people never coming to Spain, even when they have properties, but for restricting their time here to less than 182 days, at least on an any recorded basis. Either way, packing up or leaving, or shortening stays here has to have a serious economic impact, which sillies like (the tax minister) Cristóbal Montoro refuse to recognize’.
A comical Twitter based on a true incident. ‘The Minister of Justice has recently been in Guatemala to give a talk on how to avoid corruption. They are still falling about laughing’. The comment comes from Magistrate Joaquín Bosch.
‘Sad news in Spain – the first arrest in Ávila for using photovoltaic plates for home-use’. The story is dated 10 October 2015 and appears in Energias Libres.
From the alarming sounding CGT-LKN Bizkaia comes this intriguing headline: ‘Information no longer exists. It has been substituted by propaganda. Journalism has made way for script-writing’. Plenty of examples follow... (which is why you need BoT!)
It appears that those wanting a ticket for the Caminito del Rey, the exciting cliff-hanging walk near Antequera in Málaga, can now no longer obtain one from the Diputación, which claims to have ‘sold out’. Now, you go to an appropriate restaurant, have a jolly lunch, and take your ticket, all for an appropriate charge. Malagaldía is incensed, here. (For example).
Following after a couple of earthquakes in the Mediterranean off the coast of Granada, geologists warn that, statistically, a ‘big one’ is coming. The last major earthquake in Spain was on Christmas Day 1884 in Arenas del Rey (Granada), with some 900 people perishing.
Lijar is a tiny and evidently somewhat truculent pueblo in the interior of Almería. It is best known for having declared war on France, the whole of France, in 1883 and reluctantly signing a peace treaty with the Gallic Nation a century later in 1983. Wiki has the story.
Letters:
Dear Lenox, This is late but refers to Rita Barbera's lack of immunity! (BoT 145). My wife is Spanish & her father, now dead, was an MP in Madrid & a senior member of the Socialist Party. The aforados are not immune from the laws of Spain, we believe. Rita (a Senator in the Madrid Parliament & thus an aforada) & the thousands of aforados have the right to ask to be tried by a higher court--the Supreme Court--if a judge in a lower court accumulates evidence which implicates the aforado. Thus there will be no move on Rita until the judge in the Rus & others case has accumulated all the evidence & it is then shown to a judge from the Supreme Court.
The wheels of justice turn very slowly in Spain & perhaps more slowly still for indicted aforados because of the Supreme Court. Thus some aforados may avoid a trial because of statute-barred--time considerations. But that is luck not, we suggest, from immunity.
Un saludo, Iain
Finally:
2016 Spain’s Eurovision contender is Barei with ‘Say Yay!’ Barei writes and sings in English (which has upset purists). Listen on YouTube here.
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