The first in a new cycle of Spain economy related podcasts I am doing with Matthew Bennett is now up.
Here's a sort of summary from Matthew of what goes on.
The short version: market reaction so far this year has, as always, been irrational, underlying indicators are not in a good place and Spain has no plan to replace the construction industry as the engine of its economic recovery.
* Spain, Greece and the EU bailout package;
* The madness of the markets and rational analysis of underlying factors;
* Is there any basis for the current apparent economic and financial calm?
* Important changes in the role of the ECB and its relationship with sovereign states;
* The impact of cuts announced by Zapatero in June;
* Spanish banks reliance on ECB funding and moral hazard;
* The civil service wage cut announced in June is not really a wage cut;
* Car sales in July were down 30% on June, after the Spanish version of cash-for-clunkers was withdrawn and VAT rose 2%. Is that indicative of what the rest of the economy might look like if we took away government stimulus?
* The effect of the VAT rise on consumer behaviour and the real-estate market;
* Inflation, deflation or stagflation?
* There’s no plan to replace the weight of the construction industry in the make-up of Spanish GDP. Could tourism replace the construction industry in Spain’s GDP?
* Europe and the IMF are not being harsh enough on Spain;
* The Spanish government’s hope of reaching 2.7% GDP growth and 3% deficit targets by 2013 is totally unrealistic;
* The north-south economic divide in the eurozone;
* What happens to Spain when the ECB starts raising interest rates and monthly mortgage payments start rising again?