Editorial:
Well, there it was – the Andalucian elections pleased, well, nobody. The winner with a simple majority was the ineffable and visibly pregnant Susana Díaz, but without enough support for a comfortable time, and now with less chance of spreading her wings and attempting to take over the national leadership of the PSOE in their primaries in July. Perhaps, as PSOE leader Pedro Sánchez told her just before the elections, 'you handle Andalucía, I'll stay with Spain'. The Partido Popular lost a number of seats in the Andalucían Parliament, followed in third place by the irrepressible Teresa Rodríguez from Podemos. But, has Podemos peaked? Fourth came Ciudadanos: not bad, but perhaps not good enough. Fifth the now largely redundant Izquierda Unida, who, like the disappeared Partido Andalucista, lost its support by being a previous minority partner in a PSOE dominated Andalucía. Talking of disappeared parties, the UPyD won no seats, as did the rest of the pack, including, well, PACMA, the 'animalist party' (it takes all sorts). Almería was the only province that called for the PP, with the other seven provinces preferring the PSOE, showing once again Almería's unease with rule from far-off Seville. The largest block were the 'abstentions' – those who stayed home (36%). In all, the seats are PSOE 47 (55 needed to win), PP with 33, Podemos took 15, Ciudadanos 9 and IUCA/Los Verdes (sigh!) has five. Susana Díaz in Seville says she will rule over a minority government, but only if the other parties agree to abstain, which the PP now says it won't be doing. Fresh elections anyone?
Housing:
Almería has more empty viviendas (apartments I think here) than Málaga, Granada and Jaén combined. Who wants to live in these new, or semi-new blocks erected in the cities? Well, workers and ordinary city-folk. They are never bought by retired foreigners, who prefer the countryside, small villages or the main resorts. The banks own most of them, numbered at 16,200 new builds in the province. Murcia is even worse, with over 20,000 apartments standing empty. (From Lenox' The Entertainer Online).
'Foreign demand has continued to boost the Málaga province property market. Last year, it recorded a 28 per cent increase in real estate sales to non-Spaniards, according to figures released yesterday by the Ministry of Public Works. Of the 23,929 properties that were sold in the province in 2014, 9,190 were bought by foreigners, representing 38 per cent...'. From Sur in English.
The Marbella International Property Show will promote property in the 'Triángulo de Oro' which is how the area between Marbella, Estepona and Benahavís is now being marketed. The exhibition will be held at the Palacio de Congresos de Marbella from April 28th to May 1st. More at 20 Minutos.
Age Concern says that it is worried about the growing number of elderly expatriates living in Spain on reduced income. The association has its office in Calvià, on the Island of Mallorca, and has about twenty volunteers, under the leadership of Jackie Codd. More here.
The State Prosecutor is back to his tricks, this time in Partaloa in Almería where he has asked for the demolition of 29 mainly British-owned homes. The story is also picked up by Spanish News Today here.
'Ex-pats in Spain who were conned into purchasing illegal homes in Spain are celebrating after a decade long campaign to change the law was successful. Before the crisis in 2008, hundreds of foreigners invested in properties in Spain, only to find that that their homes were illegally constructed. This meant that the houses could be demolished without any compensation being provided to the home-owners...'. This one from Emigrate.co.uk.
'Spanish lawyers assisting investors in the purchase of property have been regularly charging the fairly standardised fee of 1% plus IVA. For many, this is an unnecessary expense that can easily be avoided. Instead they opt for the help of a family friend, a local ‘gestor’ or even the real estate agency. Their arguments are varied: lawyers charge too much for what they do, they are bad in communicating with clients and if something goes wrong, they don’t want to know...'. Antonio Flores on the importance of a lawyer when purchasing property at The Olive Press.
'100% mortgages return to Spanish property market' (in some cases). Story at Invezz.
Tourism:
Following the recent terrorist attack at the museum in Tunis, bookings for holidays in Tunisia are down by 30%, according to Nexotour, quoting Spanish tourist agencies (no doubt to Spain's benefit). Tourism is a powerful earner for a country, as long as there's no trouble! To prove this, reservations in Spain are already up by 20% over expectations.
Marca España explains tourism: 'Spain's leading industry', in an interesting presentation here.
The ten highest scoring Spanish destinations according to Travellers' Choice 2015 and TripAdvisor are Barcelona, La Oliva (Canaries), Seville, Madrid, Llanes (Asturias), Granada, Córdoba, Valencia, Marbella and Benidorm.
Spain's official tourism portal is Holiday in Spain here.
Finance:
The Banco Madrid has now been closed down on judge's orders. Depositors may redeem a maximum of 100,000 euros each from the Fondo de Garantía de Depósitos. ABC has more. The background to this at Wolf Street: 'Rich Man’s Bank Hit by Bank Run, Collapse'.
Politics:
The investiture for the new Andalucian Parliament will be held on April 16th. The PP says it will 'vote against' Susana Díaz for President, but that it will observe Mariano Rajoy's plan to 'support the most voted formation' and won't seek alliances of its own. This is causing both Podemos and Ciudadanos to think again, as, if a simple majority is not reached by mid-June (all parties voting 'no' rather than abstaining), we could see fresh elections in September! More here.
The Wall Street Journal (Pay Site) noted the Andalucian elections and that: '...The first election in Spain’s crowded 2015 electoral calendar was highlighted by a strong performance by the Socialists in a poor and populous region where their long dominance appeared to be under threat. The Socialists retained all 47 of their seats in the 109-seat parliament. Analysts said the Socialists’ entrenched political machine helped them overcome discontent over high unemployment and an embezzlement scandal involving many Andalucian Socialist officials...'. Indeed, so many people in Andalucía are obligated in some way to the current régime for so many reasons, that voters across the region felt that they must vote neither with their heads nor with their hearts. But with their wallets.
Mariano Rajoy says that the results in Andalucía can not be extrapolated to the rest of Spain, although the results for the Partido Popular 'were infinitely worse than expected'. Euro Mundo Global reports. In El Mundo, Rajoy is reported as admitting to his national executive that many PP voters had switched to the centre-right Ciudadanos.
Apparently, and despite the 64% turnout for the Andalucían elections (up by three points from 2012), only a dismal 3.8% of the 202,300 Andalucians who live abroad voted.
The worst hit party at the Andalucían election was the UPyD, whose candidate failed to receive enough votes for even one seat in San Telmo. Following this, and much criticism of the Party Leader Rosa Díez, five of the twenty members of the party council have resigned including two deputies in the national Parliament. Indeed, Díez may herself be replaced.
Susana Díaz as noted says she will run Andalucía with a minority government. A possible ally for her might nevertheless be Ciudadanos. However, their leader Albert Rivera says that, 'if she hasn't thrown out Chaves and Griñán (the two previous presidents of the region, both under investigation for corrupt practices) then I won't even pick up the phone'.
Newsweekasks: 'Is Pablo Iglesias Spain’s Barack Obama or Its Vladimir Lenin?' It's an interesting article. Here are the bones: '...Podemos is positioned to spark the continent’s next mini-revolution, and its leaders have some bold economic proposals. Among them: raising the minimum wage, creating a maximum wage, lowering the retirement age, implementing a 35-hour work-week, ending tax havens and E.U. border controls, nationalizing utilities and banks bailed out by public funds after the crisis and even a proposal to ban lay-offs for companies turning a profit...'.
'Thousands of people took part in a “march for dignity” in Madrid on Saturday to protest against austerity measures on the eve of a closely-watched regional election in southern Spain. … “Bread, work, a roof and dignity” read a large banner as a group of demonstrators made their way through one of the richer areas of the capital before joining up with other protesters at the Plaza de Colón square...'. From The Guardian.
The most extreme (and often amusing) criticism of all things political is Spain's answer to Guido Fawkes, the Espía en el Congreso. The site has been 'down' for the past few weeks, following a massive attack by parties unknown (sic). Now returned.
Corruption:
A number of senior civil servants have been arrested across Andalucía as part of the Judge Alaya's investigation into the multi-million workers training courses scandal. The arrests include the Nº 9 on the PSOE list for Jaén. Indeed, as El Mundo stated just the day before the elections there, Andalucía has 1,000 imputados, people under investigation, and 6,000 million euros defrauded in some way. It didn't appear to make much difference!
Spanish construction companies paid a massive bribe – said to be 90 million dollars – to a Venezuelan politician to ensure a contract to build a metro system in Caracas, says El Mundo, naming names.
The judge who investigated the 'B accounts' of the Partido Popular has finished his inquiry and intends to bring the affair to trial, says El País in English here. More at El Diario here.
Local elections May 24th:
Dozens of accused politicians are standing in the local elections, says El País brightly.
Our quality of life in our pueblo is based, in part, on the way the town is run. Is money well spent? Does the Town Hall favour tourism over foreign residents? Can we participate in local affairs? Is culture supported by our taxes? These and other issues make both our lives here more (or less) enjoyable and also add (or subtract) value and demand to our properties. Politics may be distasteful and full of ugly criticism and insult, but its results will affect our lives and our wallets. So if you live here, find out what's going on, and vote your preference!
Various:
That pádel championship (see BoT 104), due to be held in the Roman amphitheatre in Mérida, has been overturned in favour of a less provocative locale.
'Venezuela alleged on Tuesday that Spain's former socialist prime minister Felipe Gonzalez had joined a plot of ultraconservatives to overthrow President Nicolas Maduro's embattled government...'. From The Local.
'A new bank is giving a warm welcome to ex-pats who own or rent a property in Spain.
Hola Bank is being launched with an initial 100 branches across Spain, initially in Málaga, Murcia, Alicante and the Canary and Balearic Islands. Owned by Caíxa Bank, which has 375,000 international customers, it will concentrate on serving its customers in English and other international language...'. More at The Olive Press. The bank's website here.
'Some 124,995 Spanish citizens left the country in 2014 to establish their residence abroad. This figure represents an increase of 6.1% compared to a year earlier, and brings the total number of Spanish now living abroad to 2.18 million...'. So says Kyero.
According to the ABC, we find that the Government, anxious to please the population, is to reduce IVA in three vital fields; 'Bullfights, hair-dressers and para-pharmaceuticals'. The first on the list, admits the article eventually, refers in more general terms to 'culture'; to be reduced from 21% to 10%. As to 'when', the President says 'when the time is right'.
El País in Englishsays (in a welcome but evidently paid-for news-item) 'Telefónica to triple customers broadband speeds before summer. Unprecedented upgrade will come at no extra charge and beat the competition’s best offer'.
Bad food and fat children: that appears to be the fate overtaking Spain, as this country is now only second behind the USA in child obesity. And there's a lobby to keep things that way ('flab doesn't come from consuming our products, but from not observing a healthy lifestyle'). In an important article of opinion from La Marea, we meet the sugar lobby, known in Spain as 'El Instituto de Estudios del Azúcar y la Remolacha' (IEDAR) which is the 'academic branch of the sugar manufacturers'. Then there's the 'Federación Española de Sociedades de Nutrición, Alimentación y Dietética' (FESNAD), which (we learn) 'works closely with companies like Danone, Nestlé, the Coca-Cola Company and Puleva'. Best of all, there's the 'Fundación Alimentum', run by food executives from '...Presidencia de PepsiCo, Vicepresidencia de Danone S.A, tesorería de Grupo Leche Pascual y vocalías de Bimbo Iberia, Grupo Calvo, Campofrío Food Group, Coca-Cola Iberia, Corporación Alimentaria Peñasanta S.A. (CAPSA), Deoleo S.A, El Pozo, Ferrero Ibérica S.A., Federación de Industrias de Alimentación y Bebidas (FIAB), Gallina Blanca Star, Grefusa, Lactalis Iberia S.A., Hero España S.A., Kellogg España S.L., Mondelez España, Nestlé España S.A., Nutrexpa, Orangina Schweppes Iberia, Panrico S.A.U., Pescanova, Unilever España S.A., Wrigley España...'. Fine people all. As for the Mediterranean Diet, which keeps those of us who avoid sugar, fats and other junk reasonably fit and healthy, here's the entry at Wikipedia.
How best to create jobs – well, by creating them. The Government is to increase the number of new jobs in the public sector fourfold, says Público, in this election year.
According to Tráfico, mortal accidents are up recently on Spain's roads because of 'the economic improvement'. Others feel it is because of a drop in State road maintenance. Elsewhere, we read that 'Spain was among the top countries for road safety with 36 fatalities for every million inhabitants, according to a European Commission report on Tuesday...' (From The Local).
Palma de Mallorca has been chosen by The Times as the best city in the world to live says 20 Minutos with evident satisfaction.
Galicia – the top ten places to visit, according to Eye on Spain.
A resident of Seville posts an amusing blog at Trans-Iberian about drinking in that beautiful city, where there is a bar for every 180 citizens...
Hiking in Spain: 'Spain has over 60,000 kilometres of certified footpaths, so this sport is an excellent way to explore all the country's different landscapes from north to south.
On your way you'll be able to see great lakes with glacial origins, volcanoes, marshes teeming with birds, cliffs with centuries of history, forests where you can hear the bellowing of stags… You can book your hiking activities and experiences on this page. Here you'll find information on prices, the dates when you can do the activity, how long it takes, what language options are available and its target public...'. From Spain Info.
The Málaga car museum here.
More on Deflation
by Andrew Brociner
In the last issue, we saw that prices are continuing to decrease in Spain and that the ECB is trying to stem this trend, before it feeds onto expectations, creating a vicious circle.
We saw how consumption is still very low in Spain and deflation can only contribute to this. We discussed how people tend to put off purchases when there is deflation, and we can also consider what happens to credit in this environment. Just as inflation makes the cost of borrowing cheaper with people advancing purchases, deflation raises the cost of credit by raising the real interest rate. A low nominal interest rate, as we are seeing recently – close to zero – less the negative inflation rate produces a positive real interest rate. This decreases the demand for credit and therefore consumption. In Spain, it is the case that household borrowing continues to decline, even though we are a long time away from the end of the boom and there are signs of growth.
Another factor dampening consumption is that household debt needs to be paid off and thus consumption is put off until this takes place. What makes things worse is that an indebted nation like Spain suffers from deflation as it makes the real value of the debt higher. The debt in Spain is high and rising. As well, households still have a lot of debt and negative prices makes the burden harder. Therefore, the debt situation in Spain with high and rising debt can get worse in a situation of deflation. This debt sustainability is a reason why Draghi wishes to avoid deflation.
As is the case in Japan, with its long period of deflation and a debt which has climbed to 245% of GDP, the ECB is addressing the issue of debt unsustainability in European countries as well with its recent introduction of sovereign bond purchases. Greece's debt is at 175% of GDP and other southern European countries such as Italy and Portugal, with debts at around 130% of GDP and then Spain, are causes for concern, given the current deflationary situation.
In the backdrop of the disinflation we have been seeing is the changing pattern of demographics. Just as in the case of Japan, with its ageing population, Spain too faces the same type of scenario in the years to come. Spain's population is ageing as well, fertility is low, the workforce is diminishing and the rise in immigration during the boom years has not only stopped, but there has been emigration for the last few years, with Spaniards leaving the county, with the result that the population in Spain is falling. These demographic considerations only add to the economic ones, such as high unemployment, to contribute to the deflationary pressures we are witnessing. The main concern is that these demographic issues represent a secular change which implies that these downward pressure on prices could be here to stay. It is also in response to this, that the current monetary stance of the ECB will be accommodating and that interest rates will remain low for the foreseeable future.
Letters
Hello Lenox – the ‘eighth’ Canarian island is Isla de Graciosa, previously under the autonomy of the Ayuntamiento de Teguise, Lanzarote, and for reasons seemingly known only by the Politicians involved, was granted Independence in the Autumn of 2014.
Best regards,
John
Dear Lenox, Personally I care little for politicians, but given the choice I'd kick out all the corrupt ones, and the loony idealists.
But who would be left to govern? Not many.
Thank you for BoT. An eye-opener.
best wishes,
Bob
Finally:
The casta (the ruling class) doesn't ride in the metro. With Solfónica. On YouTube here.
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