Business Over Tapas

Editorial:

Easter went well, with good bookings reported from the hotels and busy days over at the bars and restaurants. The weather was good over Easter, although like the tourists, it has fallen slightly in the days following the holiday. One way or another, the forecast is for a hot summer...

Housing:

'A new report from a prestigious economic foundation argues that it’s only a matter of time before the real estate sector starts to contribute to the Spanish economic revival. The Savings Banks Foundation (Funcas in Spanish) believes that “the role of construction will sooner or later be significant” in Spain’s economic recovery. Two researchers from this organisation respected for its economic analysis, Santiago Carbó and Francisco Rodríguez, point out that the sector “will continue to have undoubted relevance” in maintaining economic growth in Spain...'. From Mark Stüklin's Spanish Property Insight.

Eye on Spain asks: How much money would a retired couple need to live in Spain now? The answers are in the 'comments'. *Any BoT readers have suggestions?

Tourism:

'The Spanish Government reported last Friday that, according to the latest Egatur tourist expenditure survey data, international tourists visiting Spain spent a total of 6,567 million euros in the first two months of the year, representing an increase of around 8%, year-on-year, and the best figure for this period in the comparable series...'. From Kyero.

How about a full month in Benidorm for 800€? All inclusive in a hotel. A British tour operator is offering cheap holidays in 'Spain's Las Vegas' (i.e. Benidorm) with remarkably cheap prices – 28 days in a three-star hotel 800m from the beach for £599. Flights, bed, food, booze... the lot. One has to wonder though... how useful is this kind of tourism to the local Benidorm economy? Story at Preferente here.

Ryanair has prohibited the sale of alcohol on its route from Glasgow to Palma de Mallorca following some bad experiences of holidaymakers starting their bacchanalias early.

Hosteltur wants a better class of tourist, notably 'German Cosmopolitans'. Such rare creatures to Spain's beaches are just 5% of German holidaymakers and they are distinguished by being wealthier than the average Josef (3,250€ a month income or better) or, as an industry spokesperson puts it: 'Cosmopolitans are open-minded consumers who possess personal values such as curiosity, individuality and an interest in learning'. Oh, and money too.

Finance:

'Tax declaration season has started … and annual returns for income earned in 2014 can now be filed. Rebates will come earlier than usual, as was the case last year, but those who are required to make a payment because of a shortfall last year have until the end of June to do so or to request the total be divided into quotas...'. From Think Spain.

Telefónica continues to increase its commitment to research and development, with 1,110 million euros invested in 2014, says Media-tics here.

'Despite resistance from green groups, Spain’s oil exploration is gaining momentum.
An estimated 250,000 jobs could be created in the oil sector over the next 50 years, according to Deloitte...'. Found at The Olive Press.

Headline from El País in English: 'Spanish economy creates 160,000 jobs in best March since 2001'. Actually, that's the number of new affiliates to the Social Security. The March jobless index was down by 60,200. But, cause for celebration nonetheless: 'The Minister of Employment and Social Security, Fátima Báñez, celebrated the fall of unemployment and the increase in the Social Security noting that "Spain is now producing more than 5,000 new jobs a day"...'. From Diario La Nube.

The Minister of the Economy Luis de Guindos says that the Government has been diligent in getting Spain out of the 'most painful and deep' recession of modern times and that we can now expect annual growth of between 2.5 and 3% over the next five years. Jobs are beginning to return, thanks to the growing confidence in the economy. ABC has the story.

The power companies, between them, cut service for non-payment to better than 500,000 homes last year, says El Mundo. In 2013, the number was twice that. While most households are able to pay their bill and get quick re-connection within 48 hours, some accounts (the electric companies won't say how many) may continue unpaid and unresolved for a far longer period.

The left-wing site Público reminds us that we are not out of the trees yet: 'Three out of every four Spaniards considers the current financial situation to be bad or very bad'.

Politics:

'During an interview on the "Las Mañanas" programme broadcast by RNE, the President of the Government said he feels "very happy" with the unemployment and National Insurance data from the month of March, which were released Monday. In his opinion, "there has been a change in trend". As regards economic growth for 2015, Mariano Rajoy said it would be "wonderful" if the forecasts from the Bank of Spain were attained, which suggest a figure of 2.8%...'. From the official Government website La Moncloa. From the same interview, El Huff Post notes that President Rajoy was clear that 'there will be no changes on the Partido Popular. Things are working just fine'. By Tuesday, Rajoy was telling his senior colleagues 'not to be distracted by irrelevancies', and that the PP is 'not a forum for debate nor a group of old mates'. It seems almost disloyal to mention here the current open feud between senior party members Javier Arenas, Dolores de Cospedal and Vice-president Soraya Sáenz de Santamaría (Found at Espía en el Congreso).

The transcendental moment in Spanish politics... will one of the opposition parties allow Susana Díaz to become the President of Andalucía? Apparently not, with both Ciudadanos and Podemos insisting on ex-presidents Chaves and Griñán being thrown out of the PSOE before any talks could even begin. As for the Partido Popular, the word is: vote no. All this could end up with (slightly pointless) fresh elections for Andalucía after the summer. Per Svensson considers this situation at the end of this bulletin.

Corruption:

"I will say it very clearly: if we don't win the elections you will no longer work for the Junta de Andalucia". These were the -now famous- words of Irene Sabalete, a high ranking civil servant for the Junta while addressing a group of Territorial Units Directors. This shows the type of blackmail and extortion practiced habitually in political circles when election times come round. Apart from showing some areas of Spain as no more democratic than Venezuela or Cuba, these practices are INTORERABLE and must be eradicated. The woman in question had to resign when a recording of this address was made public but, how many others of these "pep talks" have gone unrecorded and never saw the light? How many more politicians and political parties will win elections on the strength of blackmail, extortion and bribery. (Facebook posting)

One of the heads of the Gürtel inquiry is Pablo Crespo. He says on La Sexta TV that both Mariano Rajoy and the leadership of the party knew of the irregular financing of the party and the distribution of bonuses. He admitted that made improper payments when working for the party in Galicia: "Everybody in the PP knew about it, I have no doubt that President Rajoy knew". Crespo also says he has receipts for the payments he disbursed.

The high number of cases of fiscal fraud and corruption must be faced, each year at tax-time, by the tax-gatherers over at Hacienda. This year, a substantial part of the entire force – some 1,409 officers, including 668 inspectors: a quarter of the entire number – have been diverted to this thankless task and are thus unable to concentrate on the more mundane activity of checking/advising the General Public. There are currently 1,700 major cases of corruption staggering slowly through the system and the Judiciary has the legal right to ask for help from inspectors. El Confidencial has the figures.

The ex-partner of disgraced Royal consort Iñaki Udangarin is one Diego Torres, who is currently concerned with 'spilling the beans' on his erstwhile friend to, ah, 'get off lightly'. To this end, we learn the Royal shoe-sizes of the entire Palace on an email sent by Undangarin on some occasion to a famous shoe manufacturer in the hope of some freebies.

Courts

The ex-Minister Juan Fernando López Aguilar (PSOE) has asked for a temporary release from his party to challenge a complaint of domestic abuse made against him by his ex-wife. El País has the story here. (In English, here).

Various:

Never, in a democratic country, has the State enjoyed such control over the 'traditional' media as has happened here in Spain, says El Diario, with a certain relish. After discussing falling copy-sales and advertising income in the main daily newspapers (-60% advertising revenue in just five years), the article continues: '...On the Titanic, the only life-jacket available to publishers is 'institutional advertising' – the absolutely opaque and discretionary distribution of funds at the hands of the Executive, which has increased in volume (in this election year), plus advertising from a few companies of the Ibex 35, at the orders of the shareholders who often act with a political conviction in coordination with the Government'. A small example: 'The Govt of Aragón receives favourable articles in the press in exchange for advertising'. Headline in El Ventano.

Following the (slightly hopeless) censorship of The Pirate Bay (see BoT 106), another site has now been blocked by the Ministry of the Interior. This is a free music site called Goear.

The Ministry of the Interior, inspired by too much late television and the American Freedom Act, is offering 1.6 million euros for a system to analyse all emails and social networking in Spain to catch wannabe terrorists and other evil-doers. Story at El Diario.

Climate Change, if the current levels of emissions continue, could raise Spain's average temperature by up to 5ºC by 2050, says El Mundo here. Products like wine and olive oil could be at risk, adds The Local.

Love this one: The bankrupt toll routes around Madrid and elsewhere, short by 4,600 million euros, need some reason to attract more users. How about removing any and all speed-traps and radar, suggests the bankers. Motorists could go, uh, as fast as they like! If we could just get the Minister for Development, Ana Pastor, to see some sense... Story at Vozpópuli.

A map of Spain's provinces and the number (and percentage) of foreigners who live there. The winner is the Balearics with 258,626 foreigners, at 23.06% of the population. Alicante does well with 412,539 foreign residents at 22.27% of the population (plus those tourists in Bendorm).

A Telegraph puff for the money-transfer companies: 'It was only a few weeks ago that sterling peaked at a seven-year high against the euro at €1.42. Since then the single currency has regained around six cents. That might not sound much, but if you were planning on spending £100,000 you'd be €6,000 worse off and if you received £1,000 a month you'd have €60 less to spend. So what are the chances of the euro reaching €1.42 again any time soon? A straw poll among currency specialists showed opinion was divided...'. More here.

That amazing Caminito del Rey walk in Málaga is featured with great photographs in Business Insider here. 'The world's most dangerous pathway just reopened to the public after 15 years — and the views are dizzying'. Careful with your ticket though: this comes from Sur in English: 'The provincial government has blamed computer hackers for a website error which resulted in too many people turning up to walk the Caminito del Rey one day last week. Numbers are restricted to 600 a day and only 50 people can start at the same time, so it is essential to book a timed ticket in advance...'.

'The Lobo Park in Antequera is an unspoilt nature and wildlife park in the heart of Andalucía; where you may look at a wolf eye to eye for the first time in your life!...'. Story at Eye on Spain here.

Some More Consequences of the Decline in Population

by Andrew Brociner

In the last issue, we looked at emigration from Spain and saw that if continued, it would place growth on a new lower long term path. But the declining population has other consequences as well, which we will explore in this issue.

The emigration problem becomes all the more acute when considering that the fertility rate in Spain, as can be seen on the following chart, has been in almost constant decline for decades, except for the period of the recent boom (and that increase was also due to immigrants with a higher fertility rate who have now left).

The population in Spain has been steadily decreasing from its peak in 2012 when there were 46.818 million people, to the last count, in the 3^rd quarter of 2014, when there were 46.464 million. This reduction of 354,000 people is in net terms, as the number of people who have emigrated, as we have seen, is around 500,000 a year since 2011. According to the INE, the national statistics institute, in its 50-year estimates, the projection for Spain´s population is to decrease further to 45.485 million by 2029 and to 40.884 by 2064. That is a reduction of about 6 million people from 2012 and this, with a positive net migration rate. As the population is ageing, the over 65 year-olds are projected to increase from the current 18% of the population to more than 30%.

The working-age population is shrinking and, as we pointed out in the last issue, this puts the Spanish economy on a lower long term growth path. But there are other consequences as well. One of them is that while the population ages and the working-age population decreases, there will be less people to support pensioners. As can be seen in the graph below of the old-age dependency ratio, or the number of over 65 year-olds to the number of the working-age population (15-64), this is quickly increasing in Spain.

In particular, the 25-49 year-olds group, after increasing during the boom, has been decreasing since 2008 from 40.8% of the population to 38.2% at present. The trend in the old-age dependency ratio is set to continue, as can be seen in the following graph:

The old-age dependency ratio is set to more than double in the coming decades. As pensions are already posing a problem in Spain, with governments just postponing the problem, this scenario is increasingly becoming unsustainable. Spain is going from a situation in which there is one pensioner for every four people of working age, to one for three people, and then in the long run to one for less than two people. In addition to making parameters for pensions more restrictive, increasing amounts of the government income will have to be spent on pensions in future decades, making less funds available for other areas and the debt will keep on expanding.

Spain set up a Social Security Reserve Fund, designed to fund future pension shortfalls. This was steadily increased to €66.8 billion in 2011. But, since September 2012, the government started to tap into this fund, to take pressure off its deficit in compliance with reducing this figure for the EU, drawing it down to €41.6 billion at present and is on course to withdraw another €10 this year. The Reserve Fund will then have less than half of what it did just a few years ago, at around €30 billion. And then the fund will only have a few more years at which it can be used to compensate pension shortfalls. At that point, the government will have to make changes to the system or see the debt increase or likely both.

The government debt has now almost reached 100% of GDP and has been steadily rising ever since the end of the boom when it stood at 35,5% in the first quarter of 2008. The situation with emigration and decreasing fertility is lowering the Spanish population and raising the old-age dependency ratio, causing the current Spanish pension system to be unsustainable.

Letters

(This could work here, too!)

It is a quiet day in a small Greek Village. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit.
On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.
The owner gives him some keys and, as soon as the visitor has gone upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.
The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer.
The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel.
The guy at the farmers' Co-op takes the €100 note and runs to pay his drinks bill at the taverna.
The bar owner slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit.
The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.
The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything.
At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.
No one produced anything.
No one earned anything.
However, the whole village is now out of debt and looking towards the future with a lot more optimism.
And that, Ladies and Gentlemen, is how the bailout package works. How clever is that?

Best regards, John.

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Finally:

A comparison between a British presidential interview (Cameron grilled by Jeremy Paxman) and Spain (Rajoy is asked about the weather on TVE's 'Las Mañanas') with Dani Mateo for La Sexta on YouTube (partly in English) here.

After elections = before elections

Per Svensson

The dust of comments and speculations in the wake of the Andalucian elections has now settled and one must look forward to the rest of this revolutionary year. The results in Andalucía are clear:

Susana Diaz, the young and ambitious leader of the socialist party, PSOE, gathered 35% of the vote. However, this is the worst result ever of the socialists, and they must look for a coalition partner to be able to govern. It will not be easy, after their previous partner, the leftist federation IU, lost 7 of their 12 parliamentary seats. She has 3 real options: Governing in minority; going for a great coalition with PP or offering some minor posts to the wishy-washy party Ciudadanos, that came down from Catalonia to fish in troubled water and caught over 9% of the vote. The corruption-tainted government Partido Popular lost half a million votes.

A coalition with Podemos, winning 15% of the vote, is not a tangible option. Podemos would say NO to any such invitation.

Tic-tac, tic-tac

The followers of Podemos are chanting “tic-tac, tic-tac” to prime minister Mariano Rajoy, to indicate that his time is running out. And how can it be otherwise, for a party mired in corruption on all levels. Where the national treasurer admitted from the prison that he for years passed brown envelopes with black money to all leaders of the party, including Mariano Rajoy; money paid in by promoters, builders, bankers and other shady entrepreneurs, soliciting favors from the government!

That is the same government that under the crisis slashed social benefits for the employees, pension rights for the elderly and support for millions of unemployed, especially young people without previous jobs. That is the government that has presided over a crisis (inherited from an incompetent PSOE prime minister) longer and deeper than any in the last seventy years. Today Rajoy trumpets that the crisis is over. Who believes him? Hardly the 26% of the registered work force still without a job, or the 6,4% on underpaid part time jobs and the 5,1% who have given up finding work, nor the more than 50% of the young still not finding work. Hardly the 11,7 million Spanish that according to the Catholic charity Caritas are living in poverty, 4,4 million more than before the crisis started in 2008!

At the same time as the lower more than 90% of the Spanish population has become poorer during the crisis, the less than 10% of the upper crust has increased their assets.

A year of elections

2015 will be a year of elections. On 24th of May, regional and local elections will take place in 13 of the 17 autonomous regions, among them the Balearics, the Canaries, Madrid, Murcia and Valencia. And in the end of December comes the final showdown: General elections to the national parliament, deciding who shall govern the country for the next four years.

The leaders of Podemos want to break the political monopoly of the PPSOE brotherhood, and they are especially after the scalp of Mariano Rajoy. In the year that has passed since the party was started, the young and inexperienced professors that head the organization have evidently made several mistakes. They will certainly learn from them, not repeat them. And in the meantime the number of affiliates is growing in leap and bounds. Wikipedia reported a membership of 100.000 in the middle of August; 200.000 at the end of October; 250.000 in the middle of November; 300.000 at the end of December. At the end of February, the membership count passed 350.000!

The Podemos leaders are not very keen on risking their good name in local elections, where smart operators (unknown to the national board) may shanghai municipal election lists, starting at once to peddle jobs and building licenses. So we shall not see many local Podemos lists, but mostly alternatives with Podemos taking a leading part. The real battle will start in the autumn, when the battle for the national parliament heats up.

The most recent national polls (from February) show Podemos has overtaken PSOE and to be on level with the PP. Of course, polls are not elections, and much can happen before the end of the year. But the pollsters are good, they predicted precisely the results in Andalucia, including the 15% for Podemos.

A program for European citizens

For the European citizens in Spain, the ones left after PP has culled tens of thousands from the “padrón municipal”, the most interesting election will be the municipal one, where at least some of us will have a right of vote and of standing as candidates. It is a good opportunity to show disinterested parties that European citizens will want to take part, and to disillusioned compatriots that something can still be done in Spain.

I know that quite a number of foreign residents have been contacted by various parties or groups. I repeat my advice to you all to stay shy of the “old” parties, that in most places will be taking a good beating, and also such groups that only are after power, influence and money.

The best test of any party/group is to ask for their programs, or yourself presenting some program points in the interest of all European citizens. Here are some program points to be used. I have already presented them to the national leadership of Podemos, without getting any reaction:

Podemos and the European Citizens in Spain

Based on the principle in the Maastricht declarations on free movement of people, Podemos welcomes the many citizens of other EU countries who have settled in Spain or are considering doing so. Due to its varied landscapes and beautiful nature, beneficial climate, a great culture and the inherent friendliness of its people, our country possesses great attractions, especially for retired persons from Northern Europe.

Hundreds of thousands of families from Northern Europe have already acquired a home along the coasts and on the islands of Spain. After several visits as tourists, many more are considering becoming permanent home-owners.

However, over recent decades, the process of planning, construction and sales of homes for citizens of Spain as well as those from Northern Europe and other parts of the world, has become a profit vehicle for corrupt politicians, unscrupulous promoters, greedy bankers and scheming property sales organisations. Their senseless and uncontrolled building frenzy brought the country into a terrible financial crisis, with millions of unemployed, a generation of young people in misery and hundreds of thousands of small and medium companies in bankruptcy.

Also many European citizens were hurt in this process. Many others are hesitating to invest in a home in Spain.

Podemos will brush out the greed and corruption in politics, cut the wings of the predatory promoters, take irresponsible bankers to task and stop the schemes of fraudulent sales organisations. We shall rebuild a sound property market, based on real demand and not illusionary marketing dreams, giving jobs to the unemployed, activity to small and medium building companies and a future for the younger generation. We shall inform, encourage and protect the Spanish and foreign home buyers and owners.

Illegal dwellings

Tens of thousands of dwellings were built contrary to the law during the speculation bubble, with the passive and sometimes active collaboration of local authorities. Many of these houses are refused running water, electricity supply and other infrastructure needed for decent occupation. Owners are in several places threatened to have their dwellings bulldozed and indeed some have already had their houses knocked down.

Podemos demands stricter control over illegal 'parcellation' and construction, heavier punishments for promoters, sales organisations and politicians involved in such activity and an amnesty for inhabited illegal dwellings.

Urban abuse

Many home-owners have become victims of 're-parcellation' schemes from unscrupulous promoters, under unjust regional urban legislation. They have had their properties destroyed, often at their own expense.

Podemos demands that such legislation be changed and the figure of the 'agente urbanizador' be eradicated.

Fair taxes

The government is trying to impose higher taxes on European home-owners than those payable by Spanish citizens, being stopped in this illegality by the European Court of Justice.

Podemos demands a fair taxation for foreign home-owners, equal to the one for Spanish citizens.

Information

To regain the confidence of foreign home buyers and owners in Spain, the Spanish authorities must accept their obligation to give a complete and authoritative information on the laws concerning property purchase, construction, ownership as well as the pertinent legal/fiscal obligations.