Spain Real Time Data Charts

Edward Hugh is only able to update this blog from time to time, but he does run a lively Twitter account with plenty of Spain related comment. He also maintains a collection of constantly updated Spain charts with short updates on a Storify dedicated page Spain's Economic Recovery - Glass Half Full or Glass Half Empty?

Wednesday, May 27, 2009

Jo porto el Barça dins del meu cor

Barcelona Football Club 2 - Manchester United 0

Visca El Barça! Visca Catalunya!


Anonymous said...

Sorry Edward. Although I live here, my heart is still at home:

Manchester United,
A bunch of bouncing Busby babes,
They deserve to be knighted.

If ever they're playing in your town,
You must get to that football ground,
Take a look and you will see,
Football taught by Matt Busby.

Good luck


Edward Hugh said...


Good luck to you to. My son is a Man United supporter :)


Anonymous said...


Although the video was about Barca, it is contained in the blog titled the "Spain Economy Watch" so I am leaving a link to this interesting article from today's La Verdad newspaper about an economist's thoughts for Spain (a suburb of Catalunya):

If you have any thoughts I'd love to read them.


Edward Hugh said...

Hello Tim,

Sorry I have been so long replying, but I have had a really busy week.

I have to say, articles like the one you point me to don't impress me that much. The Spanish financial press is full of this sort of thing, but they don't really get to the heart of the problem, possibly simply becuase they are not technical enough.

As they say:

"Joel Kurtzman es hoy uno de los gurús de la innovación más respetados en Estados Unidos."

Personally I think we are suffering from an excess of "gurus", and insufficient attention being paid to the bread and butter technical reports of practical macroeconomists.

Krugman in fact took the trouble to go to Madrid, give a lecture attended by Zapatero, tell them more or less what they needed to do, and no on e took a blind bit of notice, on we go regardless.

Edward Hugh said...

Most of what Kurtzman says I find either empty or obvious.

"España se apoya en la industria de la construcción que es la más lenta en cambiar y la menos innovadora."

Does someone really need to give an interview to tell us this!

"No son las grandes compañías las que van a cambiar el modelo económico,"

Don't agree. Spain is not the UK or the US. The cultures are very different. Of coure we need more support for small companies and innovation (actually there is quite a bit of this in Barcelona), but more and more I am coming to the conclusion that what we need is "Here Comes The Spanish Armada II", only this time we need an emphasis on exports, not on domestic consumption, and the big question is how we make this transition in focus.

Few have really commented on what a disaster it is to give away the electricity company Endesa (with all those interests in Latin America) to the Italian ENI. In fact the Spanish are "monsters" when it comes to running this type of company, and I have a feeling that the Italians are going to be overwhelmed with the present that has just fallen in their lap.

"spaña, en primer lugar, tiene que conseguir que exista capital disponible para los emprendedores."

Again. This is obvious. But capital was coming. The only problem was most of it went into construction related activities.

Edward Hugh said...

Actually, Spain doesn't need capital from the outside - THE SPANISH NEED TO SAVE.

This is the big transition Spain has to make, it needs to move from being a current account deficit country to being a current account surplus one. This transition cannot be achieved by simply having a small group of highly innovative small companies - it is too massive for that. Spain, in my opinion needs to move back into activities it though it had abandoned forever. Those 5 million odd immigrants need to ne relocated into activities directed towards export. This means, among other things, factories and industry of a pretty conventional kind.

But to get this transition you need what is now being called "internal devaluation" - ie a substantial downward adjustment in wages AND prices to restopre competitiveness, make investing in Spanish export industries attractive and put people back to work.

What I find astounding is that in the whole article Kurtzman doesn't mention this problem once. When asked about where the money is going to come from to invest, he doesn't say Spanish people need to save and not speculate on property bets, he says simple venture capital.

He is globetrotting, and being paid for selling the same idea to every country.

But a simple grasp of macroeconomics (which he doesn't seem to have) would tell you that if we get large scale high risk investments in one country after another, we get overkill in this particular department - ie more investment than is really needed, and a deflation in proces due to excessive competition and oversupply.

Risky business is riskly business (like the internet boom) even if it is called "innovation".

So of course we need institutional reforms to make it easire to set up new dynamic businesses, but this ISN'T the biggest problem. The biggest problem is whether Spain can carry out the internal devaluation in the time available - ie before going bankrupt - and avoid being forced back to the pesseta.

The UK, you will note, doesn't have this problem, since they simply allowed the pound to devalue by 20%, and as long as they keep inflation contained I doubt they will have too many difficulties creating interesting investment projects once the recovery begins. The problem for Spain is that the recovery may start elsewhere while the Spanish train is still stuck in the workshop awaiting repairs.

I said I have been busy this week. I was, among other things, occupied with the Baltics, where, of course, they are trying to carry out "internal devaluations" since they have currencies pegged to the euro. This whole experience is instructive, yet few people in Spain seem either interested, or aware of the significance.

This is a measure of how far we are from getting to grips with reality.

As I say, its not that I disagree with Kurzman. I just think he is only talkinga about a small part of the current problem, and is saying things which have been being said for at least a decade now. But it is the kind of thing they love in the Spanish press.

Maybe becuase it make what is bound to be a very difficult and painful process all sound so incredibly straightforward. We just need to innovate. OK. Fine. I was thinking of doing some of that only this morning.

marin belge™ said...

Hi Edwards,

I certainly disagree with on your take on Keynes, Krugman and al:) ...But I do appreciate your brilliant contributions on this blog and elsewhere. I follow on your entries on Roubini, fistfulofEuros and here as well, per descomptat.

IMHO I feel that the latest message above should not be hidden in the comment zone of a "Jo porto el Barça dins del meu cor" entry but should be offered a full entry on your blog.

I'd be glad to hear what you mean in terms of "internal devaluations" by the way and on your take on the way Spaniards do tackle the current situation.

I am still confident that the Spanish people may be able to effectively to "revert to a sustainable consumer pattern" in a more humanly and financially effective way than most other people, OCDE I mean? Some sort of Spanish way? That's what a friend with a Catalan (Barcelona) extraction tell me? Is that your take or is that cheap romance?

Edward Hugh said...

Hello Marin Belge,

"I certainly disagree with on your take on Keynes, Krugman and al:) ..."

Well look. Lets go the other way, and simply let the economies contract till they hit bottom? What sort of a contraction do you think Spain has in front of it if the global economy need 5 years or more to recover from this? Say 20% drop over the next five years, with unemployment constantly over 20%. This may sound nighmare-ish, but this is what I think we will be faced with if the quantitative easing doesn't work - which it may well not do.

On top of that we have the "internal devaluation" issue you raise. Spain maybe needs a 20% drop in the wage and price level (internally). This hasn't started yet, and remember this is vis a vis Germany, where prices are already falling at this point. I really do think Germany is the biggest case of possible Japan type deflation we have in Europe. So what if German prices fall 10% over the next five years due to the high euro impact of the growing reserve currency status. This would mean Spanish wages and prices need to fall around 30%.

On top of this house prices may well correct by 50% (peak to trough) from their 2008 level (relative to other prices, NB) - I mean Japan property is back at 1984 levels at the present time.

Now you do the sums on the debts people will be left with (which don't fall, this is the point about why deflation is so toxic). This is impossible to sustain. I leave the rest of the deductions to you.

Maybe my numbers seem strong, but run various scenarios, this is what is called "stress testing". What the Spanish government is doing in this regard is simply laughable.

This is why none of this is simply an ideological crusade (I disagree with the way Krugman handles it on this level), but a very real and pressing practical issue.

"I'd be glad to hear what you mean in terms of "internal devaluations" by the way and on your take on the way Spaniards do tackle the current situation."

Well look, the second anniversary of the start of this crisis in Spain is coming in August, and virtually no real progress has been made on the relative correction to date. Which means that things are moving horrendously slowly. Which means that time is running out. Which means that I am not optimistic.

Spanish sovereign debt will start to come under pressure from next year. If we don't move more quickly we could easily end up in 2011 where Latvia is now.

"but should be offered a full entry on your blog."

I know, but the issue is time. Another post coming soon. I am busy today with the China trade data. Take a look on Afoe. This is important. This will have consequences for Spain, even if people here can't see it at this point.

marin belge™ said...

Say 20% drop over the next five years, with unemployment constantly over 20%. This may sound nighmare-ish, but this is what I think we will be faced with if the quantitative easing doesn't work - which it may well not do.

How can anyone you can really re-balance economies of this size and with such levels of imbalances with low unemployment.

Especially if you want globalization to stay intact.

The only way you can possibly is trying to crank back the current framework UNCHANGED and pray it works. That's what QE is all about.

Governments are abandoning their skills - which include active protection of their internal markets against over-aggressive mercantilists, nationalizations à la Swede and setting welfare à l'allemande - to meddle with central banking.

I haven't seen any of these items on the agenda of the authorities of those countries in the middle of the storm. I do not mean Japan, Germany or the Netherlands...

Good luck.

Anonymous said...

Another fucking futbolero