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Spain Is Losing Its People, Catalonia Fights For Independence, And The EU Gets Pushed Into The Conflict

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Wolf Richter   www.testosteronepit.com

“Do you want Catalonia to become a new state within the European Union?” That may be the question on the referendum that is causing a constitutional crisis in Spain even before the final wording has been decided. Efforts by Artur Mas, President of Catalonia, to pry his region loose from Spain are not only shaking up Spain but are pushing the European Union deeper into the conflict—just as Spain is experiencing a demographic nightmare.

A mass exodus. During the first nine months of this year, the number of Spaniards who were looking for the greener grass elsewhere jumped 21.6% from the same period last year to 54,912. And 365,238 immigrants bailed out too, for a total exodus of 420,150 people. After taking into account returning Spaniards and arriving immigrants, net migration added up to an outflow of 137,628 people—25,539 Spaniards and 112,089 foreigners. It was the first time that all 17 autonomous regions booked a net outflow of Spaniards. And Spain’s total population dropped by nearly 80,000 people! In nine months!

They left because things simply keep getting worse. September was a bad month—for the lucky ones who have jobs. They experienced the steepest plunge in purchasing power in 27 years. Prices jumped 3.4% year over year, while wages rose only 1.3%. Unions and employers had signed collective bargaining agreements earlier this year that would freeze wages in 2012 and 2013. Average wages under these new agreements rose only 0.7%—a harbinger of things to come.

This “internal devaluation”—long a factor in many Western countries, including the US—has now hit Spain. Over time, the workforce will become more competitive with cheap countries, like China. Despite its insidious impact on the population (the lucky ones who have jobs) and on consumption, internal devaluation is at the core of all “structural reforms.”

Spain exists in a surrealist new world: a debt crisis that is draining the central government and the autonomous regions, a banking crisis, unpopular “structural reforms,” unemployment of over 25%, youth unemployment of over 50%, a recession, and a population that makes its discontent known with often violent demonstrations. So, 84% of the people have “little” or “no” confidence in Prime Minister Mariano Rajoy. The fate of Alfredo Perez Rubalcaba, leader of the opposition, is even worse: 90% of all voters distrust him! Those are the two top political figures of the two major political parties, and the utterly frustrated and disillusioned Spaniards are defenestrating them both [Punishment Of The Spanish Political Class By The People].

This is the backdrop to Catalonia’s strife for independence. It all came to the forefront on September 11. Between 600,000 and 1.5 million Catalans—8% to 20% of the population!—angered by the stiff austerity measures that the central government had imposed on their bankrupt region, protested in the streets, demanding independence. Nobody could ignore that. And now, 74.1% of the Catalans support holding the referendum, 19.9% are against it, with 6% undecided. And over half of them would vote for independence.

Like the Scots, who were able to negotiate an independence referendum with the British government, Artur Mas wanted to negotiate the referendum with the Spanish government. Catalonia will hold early elections on November 25, and Mas, who is expected to renew his majority, was planning to hold the referendum during the next four years. But Rajoy and his government were in no mood to negotiate. Instead, they promised to lean on the Spanish Constitutional Court to get it to declare the referendum unconstitutional.

Then the shot before the bow. It would be a “crime,” declared Justice Minister Alberto Ruiz-Gallardón, if Mas refused to stop calling for a referendum after the Supreme Court declared it illegal—apparently, a crime of disobedience, as defined by the Penal Code, punishable by up to a year in prison and disqualification form public office by up to two years. María Dolores de Cospedal, Secretary-General of the governing People’s Party, emphasized that the government would use all “legal instruments at its disposal to prevent this situation,” adding that “there are already mechanisms in place to stop the referendum.”

The fear is enormous: Catalonia’s independence “would do away with Spain, because Spain makes no sense without Catalonia,” Gallardón lamented last week. The status of an independent Catalonia with regards to the European Union is uncertain as well. No rules exist to deal with the situation. As different officials say different things, the European Commission is being pushed ever deeper into the conflict. And it infuses the impending bailout of Spain with qualities of a Dali painting.

Neither banks nor public workers have ruined Spain—they’re just symptoms—but politicians, a separate class with special privileges born out of the “Transition” from the Franco dictatorship to democracy. And the old power structure is thriving under a new “democratic umbrella.” For a provocative analysis, by a Spaniard, of Spain’s deeply rooted institutional problems, read.....  Spain’s Unfinished Transition From Dictatorship To Democracy.

And here is the corollary in the US: year by year, government has become more present where economic decisions are being made. Through subsidies, tax breaks, regulation, and spending, government has claimed a virtual seat in the boardroom of most companies. And its involvement profoundly alters decision-making for investors. Read... Navigating the US's Politicized Economy.

 


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Wed, 10/17/2012 - 10:17 | Link to Comment steve from virginia
steve from virginia's picture

 

 

 

Neither banks nor public workers have ruined Spain, but politicians, a separate class born out of the “Transition” from the Franco dictatorship to democracy.

This is completely wrong and aimed to conceal the real culprit.

Spain like the rest of Europe (world) has been bankrupted by its automobiles- plus the trillion$ of euro-denominated debt taken on to put them on the roads and to keep them running. As long as Europeans were able to borrow cheaply from international finance, it could afford to send euros to Saudi Arabia and Iran for a capital good that was burned up for absolutely nothing in return.

 

Today, Spain doesn't have the euros, it doesn't have the petroleum either. It has smog and used cars.

Here is the problem: driving a car does not pay for the car, nor does it pay for the fuel needed the car and just about everything else that goes along with the car-program ... unless the driver operates a taxi, a farm tractor or a delivery truck. Driving a car does not pay for anything: the trillion$ squandered on 'infrastructure', on oil-wars, on finance ... along with bloated governments with their perpetual deficits needed to keep the entire enterprise afloat.

Analysts point their fingers at everything other than the real problem because doing so would lead to the inescapable conclusion that all the cars must be gotten rid of immediately.

Of course, the cars are going, anyway

If the force of events does the heavy lifting the consequences will be unimaginable hardship and suffering for everyone on Planet Earth. I personally guarantee you what is underway in Greece, Portugal and Spain -- conservation by other means -- is at the very start. The endgame is all of Europe to be as ruined as Somalia or Yemen or Haiti ... with dozens of nuclear reactors that cannot be tended! This is not something to occur into the far distant future, either. If everything remains perfect in this world there are two or three years' time within which to take appropriate action:

http://www.economic-undertow.com/wp-content/uploads/2012/10/CLB-100812.png

Nothing will remain perfect. Argue all you like but do so with Mr. Entropy. He never loses, hasn't for billions of years.

Adults make choices, they put away the toys, they decide what it is they must do to survive and let the rest go. The choice is between having cars or humans vs. no cars and no humans. Right now there are no other choices and time is running out fast.

 

Tue, 10/16/2012 - 12:32 | Link to Comment JOYFUL
JOYFUL's picture

I suspect one of Goya's paintings would be a better fit than Dali's(Pilgrimage-of-san-isidro?)...

Spain's situation is in no way 'surreal'...it's always been a country of regions, pasted together by marriage alliance or leaders with visions of their own grandeur -which visions usually outstrip the capacity of this smallish pennisula to supply the wealth to support.

Invitation into the wider world of the Eurozone merely played upon the fantasies of a new group of grandees, post-Franco, looking for a place in history, and perhaps their own portraits on the walls of del Prado; nothing about the work force or the patterns of industry required it -  Basque, Catalans, Asturians, etc, have traditionally excelled at marketing their products abroad, whilst staying parochial in their hearts.

Now that pleasantly successful mixture is dead...there is no going back to the homeland...regional autonomy or independence, neither have any hope of advancing the cause of the citizenry, who are firmly caught up in the nets of the criminals whose project of asset stripping the old cultures of Europe will proceed without interruption.

Only in the bitter highlands of Navarre, Cantabria, perhaps Leon and the rest of the Ebro basin might the gritty will to survive with dignity, and the means to do so still be alive...for the rest of a once proud people, those who once herded sheep have become the sheep themselves; the urban flocks will be fleeced by wolves in bespoke Armani wool suits.

Tue, 10/16/2012 - 12:50 | Link to Comment tip e. canoe
tip e. canoe's picture

how about Miro - Still Life with an Old Shoe?

http://modernart2011.blogspot.com/2011/04/joan-miro-still-life-with-old-shoe-1937.html

nice analysis J

Tue, 10/16/2012 - 13:02 | Link to Comment JOYFUL
JOYFUL's picture

Excellent choice...I suspect many Spaniards will be soon trying to find the means to 'cobble together' a meal or two...

whilst their social betters gobble together the finest in regional cuisine and  vintages!

Tue, 10/16/2012 - 10:57 | Link to Comment dadichris
dadichris's picture

I'm rootin for Catalonia!

Tue, 10/16/2012 - 10:54 | Link to Comment ItsDanger
ItsDanger's picture

Somewhat similar to Quebec in Canada.  An excellent excuse to blackmail the federal gov't for more handouts and special treatment.  All this nationalist talk is complete BS.

Tue, 10/16/2012 - 11:21 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Spain needs a Fiat King.
Otherwise its investments ,some of which were quite good will disappear into a entropy pit.

This example speaks volumes……I think it needs 2.2 million or so to get going but they don’t have the money , this means more diesel is burned for no return subtracting from domestic demand.

This tram ran for 2 weeks in 2011 and then stopped for lack of symbolic tokens because of the debt build up.

es.wikipedia.org/wiki/Tranvía_de_Jaén

http://www.vialibre-ffe.com/noticias.asp?not=9164

A new existing but short line take out of commission so that the guys up North can have the capital to build more of the same in France !!!

Its both crazy and wildly corrupt.

It looked very busy in this video from spring 2011.
http://www.youtube.com/watch?v=gZmPh3b6yfM

The problem with Europe me thinks is that it ain’t using its existing capital stock too well
The Euro can only grow outwards through waste production as it is not really a currency , its a yield vehicle.

The central question of our times is why or to be more precise – who benefits ?

PS
I have never been to Jaen but looking at at it from Google earth it is a compact city with the tram line reaching north to a light industrial area with a large car park for people who wish to enter the city without the need to idle your engines in city centre traffic all day.

Spain has more real physical capital then the UK which has the third lowest fixed capital investment in Europe (2011) after Ireland and Greece but the UK wants it back.

http://www.panoramio.com/photo/56446505

Jaen tram with the light Industial area to the west and the car park to the north.
Not operational …………….

http://www.panoramio.com/photo/10168319

University along the line……..must be full of American students who drive to work & study.

Tue, 10/16/2012 - 10:51 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Somebody or something is hacking away at what remains of the Spanish nation state and me thinks its London.

Imagine a simple but extreme slave state / trade model.

England is the primary consumer of goods for its Villas such as marble products , fine wines , refined metal work etc etc.
The Rhine / Rhur region is the producer of these goods.
But the crops (bread) which supply the energy for its slaves is reducing by 2% a year.
To continue to do what it does the Rhine Rhur Jurisdiction decides to increase efficiency rather then productivity. ( productivity = investing more in agriculture which is really energy in a slave state)
However it gets the same or more goods for less by reducing the calories of its workforce……this appears to work until you finally hit a entropy wall.

The modern German production machine which orbits the Rhine / Rhur is the most efficient in the world , however it has become efficient by destroying its long term productivity.

http://www.youtube.com/watch?v=aRghETHFvYs

(its energy density declines year after year because for example it has given up the Nuclear energy thingy which is very capital intensive , it therefore prefers to run down its capital and express a short term profit.)

Eventually deficit England will not receive the goods.

These weird trade systems have very little redundency……they were built that way to increase their short term labour arbitrage profits as global finance houses control the money supply of these former nations.
However a vast amount of capital (oil and stuff) is lost in this from a global perspective pointless trade.
The UK is perhaps the most extreme deficit large country whose credit based demand can shift capital allocation worldwide.

PS
The UKs primary trade “partner” is Germany but it has a larger trade deficit with China which is a extreme colony.
The UKs trade deficit with China was -£22,203 in Y2011 although it has come down a bit since Y2010 and is showing continual signs of weakness.
China will come out worst from this crash but there is really nothing there withen the UK….its a empty box.

It all starts with the credit note and not the production process.

Need I say this is game theory played at the highest level possible.

On cue from ACEA

“In September, the EU* recorded a total of 1,099,264 new cars, or 10.8% less than in the same month a year ago. Looking at the major markets, the British was the only one to expand, while Germany (-10.9%), France (-17.9%), Italy (-25.7%) and Spain (-36.8%) all faced a double-digit downturn.

From January to September, the EU* market shrank by 7.6%, compared to the first nine months of 2011. Results were diverse across markets, as the UK posted growth (+4.3%), while Germany saw its demand fall by 1.8% and Spain (-11.0%), France (-13.8%) and Italy (-20.5%) contracted more severely. ”

The British are the last men standing with a credit note…………they are simply wasting Europe to a point they are getting negative income from the rest of the world (which is almost unheard of in the UK as they have always earned a income from the planet)

The Brits want real goods from the Rhine /Rhur region over and above income.

This is very very big news people

Again the UK engages in almost no rational energy /transport investment.
Its fixed capital investment is almost third world.
But its sov nature withen the Euro soup enables it to buy real goods from non sov states who must export to earn a income.

The Euro region is a colony of the UK.
Case closed.

Tue, 10/16/2012 - 10:56 | Link to Comment tip e. canoe
tip e. canoe's picture

Somebody or something is hacking away at what remains of the Spanish nation state and me thinks its London

methinksotoo...Catalonia wanting to join the EU is the tell.

Tue, 10/16/2012 - 10:29 | Link to Comment Frastric
Frastric's picture

Spain is taking the red pill and finding out just how deep the rabbit hole goes...

 

Tue, 10/16/2012 - 10:27 | Link to Comment Chuck Walla
Chuck Walla's picture

The UN isn't going to like this migration to the country. Agenda 21 wants as many people as posible in the cities where its easier to control them. We need Obama as President of the World.

FORWARD SOVIET!

Tue, 10/16/2012 - 10:07 | Link to Comment Dareconomics
Dareconomics's picture

Rajoy should allow the referendum. By suppressing these nationalist feelings, he is making the situation worse. A better deal on tax revenue and action to strengthen Catalan culture in the region should keep them within Spain.

http://dareconomics.wordpress.com/2012/09/26/black-swan-of-barcelona/

Tue, 10/16/2012 - 07:57 | Link to Comment Canucklehead
Canucklehead's picture

Let's see...

Spain's total population - 47,190,493

# of people leaving - 137,628

Percentage of total population - 0.29%

It must be a slow news day.  I wonder what Tim Tebow thinks of this?

Tue, 10/16/2012 - 10:46 | Link to Comment Helvetico
Helvetico's picture

What you fail to appreciate is that many of those leaving are young, highly educated people upon whom the future of the country is predicated. Your simple math only tells part of the story. Think "brain drain."

Tue, 10/16/2012 - 07:54 | Link to Comment e-recep
e-recep's picture

here in turkey pensioners/retirees are leaving the big cities and moving to rural areas where food and rent is cheap. life has become too expensive for them to remain in the city.

Tue, 10/16/2012 - 12:53 | Link to Comment JOYFUL
JOYFUL's picture

Yes, but at the same time, anyone who can is leaving the 'rural areas' for any urban center they can get a toehold in...Turkey is living a fantasy of modernity, it's elites hynotized with the notion of abandoning everything rural and supposedly 'backward' for an illusory place in the very same consumerist civilization that is crashing down in ruins in countries all around them.

It's absurb, and saddening. Yesterday I threw my hands up in the air when the state veterinarian, from who I sought eartags for some of my sheep, sat in his office and announced that our stable(on the edge of a modest size town' was now 'illegal'....when he saw my expression, he mumbled some inanities about flies, sanitation, and smells, things which never seemed in the past to have prevented ourselves and our neighbours from getting fed in a healthy manner...it's going to be rough going here all too soon, city or country...too many people have now grown up thinking that their food gets produced in factories, and this in a country which is hardly two generations away from semi-medieval times.

Your urban refugees will soon enough find themselves in another, blacker fantasy, where visions of a pastoral existence now fading quickly will feed only their disillusionment, not their bellies. Turkey is travelling at high speed in the exactly opposite direction from safety and sustainability, it's people betrayed by it's leadership in the same manner as all the rest of the (soon to be formerly) "developed world."

Tue, 10/16/2012 - 10:02 | Link to Comment mjk0259
mjk0259's picture

Isn't that good? It makes more sense for working people to be in the city than in a rural area where they probably have more difficulty using/developing skills to create wealth.

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