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Spanish Tax Hike Sends Industrial Output Back To 1993 Levels

Tyler Durden's picture


In Europe there is hope, as demonstrated by every hope and optimism index over the past two months going vertical. In Europe there is faith, as demonstrated by yesterday's Draghi conference, in which the likelihood of further rate cuts was officially taken off the table (as expected: any further cuts would send rates negative, wreaking even more havoc with money markets). And in Europe, there is reality, as demonstrated by the following chart showing the index of Spanish Industrial Output, which disappointed broadly in November, down 2.3% sequentially and 7.2% Y/Y, sending it to levels not seen since 1993.

From SocGen:

In Spain, the seasonally adjusted numbers show industrial production falling by 2.3% mom in November and 7.2% yoy. While the consensus expected a rebound after the sharp drop recorded in September (-2.8% mom) and flat activity in October, this is another sign that the three point VAT increase in September as well as the ongoing budget tightening continue to weigh on domestic demand. The fall takes the level of production back to level not seen since 1993, wiping out the best part of two decades gains in production. On the details, all industrial sectors reported a fall in output. The main sector particularly hit was capital goods (-4.1% on a 3m/3m basis, -12.8% yoy) while consumer goods and intermediate goods output fell by 2.3% on 3m/3m basis.


Assuming an unchanged reading in December from November, industrial output would drop by 2.6% qoq. Although this negative contribution on GDP growth will be partially offset by a positive contribution from net trade, the Spanish economy is set to post a weak GDP print in Q4. Our Q4 GDP forecast remains at -0.5% qoq but risks are clearly tilted to the downside. In a nutshell, the recession remains severe in Spain and unemployment rate is set to carry on rising from already depressed level (26.2% in October).

Tax increase leading to widespread economic contraction and demand collapse? Someone should tell US economists all about this curious phenomenon.

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Fri, 01/11/2013 - 08:51 | 3143751 GetZeeGold
GetZeeGold's picture



It's about time those rich Spanish bastards started paying their fair share.

Fri, 01/11/2013 - 09:00 | 3143771 Azannoth
Azannoth's picture

Exterminate Zeeee Kulaks!

Fri, 01/11/2013 - 09:37 | 3143861 economics9698
economics9698's picture

"this is another sign that the three point VAT increase in September as well as the ongoing budget tightening continue to weigh on domestic demand."

Budget tightening is good, tax hikes bad.

Y = C + I - G + NX 

Fri, 01/11/2013 - 11:36 | 3144218 Panafrican Funk...
Panafrican Funktron Robot's picture

I see what you did there.  I completely agree.

Fri, 01/11/2013 - 11:44 | 3144240 tango
tango's picture

European austerity is nothing but new revenues via any means necessary.  Note that austerity has NOT reduced the size of the State nor has it diminished its role as the major player in the economy. But (we hear) if only we didn't have to worry about paying the piper all would be hunky dorey.

Fri, 01/11/2013 - 08:50 | 3143752 Vegetius
Vegetius's picture

Back to the future!

Fri, 01/11/2013 - 08:53 | 3143757 GetZeeGold
Fri, 01/11/2013 - 12:02 | 3144287 smacker
smacker's picture

I think Fuhrerin Merkel is having one of those installed across the entrance to the Bundestag, to match the ones she's already installed in Athens, Rome, Madrid and soon...Paris.

Fri, 01/11/2013 - 09:47 | 3143883 BullsNBeers
BullsNBeers's picture

1993 Called. It wants it's economy back.

Fri, 01/11/2013 - 11:25 | 3144176 Greater Fool
Greater Fool's picture

You mean: Forward to the Past!

Man, kicking this whole sovereign credit expansion thing is tough. We got the shakes.

Fri, 01/11/2013 - 08:54 | 3143758 LongSoupLine
LongSoupLine's picture

"Hope" is the best and most widely used fucking tool of the asshole power elite to keep the sheep asleep in the pasture as they fucking slaughter them by the masses.

Fri, 01/11/2013 - 08:55 | 3143761 Dick Darlington
Dick Darlington's picture

Yet somehow magically mystically GDP holds. Spanish accounting and 10% of GDP budget deficit keeping the utopia "alive"...

Fri, 01/11/2013 - 09:21 | 3143813 ItchyBeard
ItchyBeard's picture

I think we've met at Bruce's Bar & Grill

Fri, 01/11/2013 - 13:09 | 3144520 Dick Darlington
Dick Darlington's picture

Yes! Do You know Susan Walker? LOL

Fri, 01/11/2013 - 08:55 | 3143763 Racer
Racer's picture

That's what you get when the squid keeps sucking

Fri, 01/11/2013 - 08:56 | 3143764 jubber
jubber's picture

IBEX positive on this news obviously, 10y Spain bonds at new low 4.894%

Fri, 01/11/2013 - 09:12 | 3143797 AccreditedEYE
AccreditedEYE's picture

Seriously. I mean, what's the problem? It's up almost .50% Just BTD. It doesn't matter.

Fri, 01/11/2013 - 09:14 | 3143801 GetZeeGold
GetZeeGold's picture



OK....so I buy it....what then?

Fri, 01/11/2013 - 09:19 | 3143805 ItchyBeard
ItchyBeard's picture

You get shafted . . .

Fri, 01/11/2013 - 09:17 | 3143803 Stuntgirl
Stuntgirl's picture

IBEX positive on all catastrophic news. Every time. I mean, the news that actually gets out, because the SS plunder got out 2 days ago and was never actually reported. Just like this bit is not reported in MSM.

Cue my relatives, friends, anyone I advised to please for the love of god REFRAIN from going back to stocks, looking at me askew and pointing out in varying degrees of condescension that I am a retard and have no idea what i'm saying.

It's going to be a slaughter, but i'm just not bothering warning people anymore.

Consensus is that Spain will begin growing and healing in the summer. If you offer any sound reasonable argument against that idea, you are an unpatriotic bastard, and it is somehow YOUR fault that things are shit.


Fri, 01/11/2013 - 15:26 | 3145072 MillionDollarBoner_
MillionDollarBoner_'s picture

It is YOUR fault that things are shit!

Stop repressing those animal spirits, you...you...terrist!

Fri, 01/11/2013 - 08:58 | 3143767 ricky2
ricky2's picture


Fri, 01/11/2013 - 09:10 | 3143787 Monedas
Monedas's picture

The Spanish are a proud people .... also insecure, delusional and clueless in their fanaticism for the Socialism of two centuries past !  Imagine a whole country .... where Piers Morgan personality disorder is the norm ! Good luck with that !   Monedas' New Years resolution:  I must gloat less over Socialism's failure !

Fri, 01/11/2013 - 09:20 | 3143809 d edwards
d edwards's picture

What? Raising taxes doesn't stimulate growth? Don't tell the 0webama regime! Watch for this to happen in the US too, now that we have the new 0webama tax rates and 0webamacare to pay for.

Fri, 01/11/2013 - 09:25 | 3143829 Super Broccoli
Super Broccoli's picture

ahah what a joke this country is !

Fri, 01/11/2013 - 09:27 | 3143835 ItchyBeard
ItchyBeard's picture

Can the let loose some bulls in the parliament? I bet it will get more views on boobtube than pamplona's running of the bulls

Fri, 01/11/2013 - 09:29 | 3143840 Jason T
Jason T's picture

Martin Armstrong: Look at Spain – it is unbelievably cheap now!!! (DEFLATION). Not necessarily property prices, but everything else – supermarket prices are about half of those in Austria/Slovakia and about one third of those in Canada, rents are ridiculously low (e.g. 400-600 euros for central, decent looking apartments of 2 bedrooms), etc. In Singapore that is $10,000 a month. In Zaragoza, which is unbelievably cheap, clean and orderly, there are no beggars or homeless to be seen anywhere on the streets, and there are still plenty of people out in the evenings. It’s shocking that big Spanish cities are so much cheaper now than those in Latin American cities and still have a huge quality of life advantage (i.e. nice enough, civilized in Spain vs. unsafe and often total hellholes in parts of Latin America).

Spain is in meltdown mode. Yet because it cannot unilaterally control the Euro, we seeDEFLATION instead of INFLATION. As money rises in value, prices fall. Spain is providing residency status if you buy real estate. This is an effort to support the local real estate market since banks are unable to lend long-term.

Fri, 01/11/2013 - 10:32 | 3144012 Stuntgirl
Stuntgirl's picture

Jason, I don't agree with what you copy.

400-600 Euros will get you a ROOM in a central part of a large city like Madrid. A two bedroom apartment is minimum twice that.

Zaragoza is NOT a large city, it's a town and there's nothing there. Compare Singapore? That's like comparing New York to any Springfield.

Comparing Spain to Latin America makes no sense. Comparing it to Europe does. Minimum salary is in the 600's and a damn nice salary for a uni graduate is 2000 monthly, fast declining.

In Latin America you can get a job, in Spain, just try.

It is only a (very)nice place to live if your income comes from elsewhere. I would seriously caution anyone that real estate taxes are being massively hiked by obscure methods (not hiking the rate, but raising your house's valuation), purchase tax has hiked as well, deductions eliminated, and going the greek way. And beware of the fiercely denied but soon a reality WEALTH TAX.

Catalonia proposes to bring wealth tax back starting at 500K individual worth. What a joke.

In a few years time, I'll buy my villa here for pennies, but in the meantime don't touch this crap.


Fri, 01/11/2013 - 11:49 | 3144251 tango
tango's picture

Where one can really make a killing is the luxury side.  Since high end products were incredibly inflated they also have fallen the most. Summer homes near the coast that sold for 1.5 M are now going for 300K "or best offer".   Art is going cheap as is sculpture. 

Fri, 01/11/2013 - 09:30 | 3143845 NidStyles
NidStyles's picture

Wait, Spain has Industry?

Fri, 01/11/2013 - 09:33 | 3143852 GetZeeGold
GetZeeGold's picture



They took a ball bearing and painted it green.....there you go.

Fri, 01/11/2013 - 10:10 | 3143943 From Germany Wi...
From Germany With Love's picture

Ende aller Blütenträume

Fri, 01/11/2013 - 10:24 | 3143987 Dareconomics
Dareconomics's picture

The collapse in industrial production will be greater than the gain from exports. Spain is in store for a rough 4th quarter and 2013. OMT, anyone?



Fri, 01/11/2013 - 11:14 | 3144141 americanspirit
americanspirit's picture

As long as they keep exporting Jamon Iberico, the world's best olive oils, and some really good red wines I'm not complaining. Unfortunately most of my Spanish friends are living in an emotional state best depicted in Picasso's Guernica.

In all seriousness, I believe that we are about to see a revolution in which the Spanish military will, unlike most revolutions, take the people's side. And then of course, take over the country along with "workers revolutionary councils". Anyone living a wealthy lifestyle in Spain today better get fitted for a rope collar because its coming.

Fri, 01/11/2013 - 11:51 | 3144259 tango
tango's picture

Yes, the country will lose decades of gains as the "people" squander what little wealth is left.  Oh well, at least everyone will be as equal as they were under Franco, i.e. dirt poor.

Fri, 01/11/2013 - 12:14 | 3144336 Stuntgirl
Stuntgirl's picture

Greenie for you, BUT:

Thinking that the spanish military will take the people's side is naive. It will split in two sides, that's what we do best.

The military is yearning for the protagonism lost during Franco's regime, and that protagonism was heavily linked to the "right" (do not confuse with USA concept of right").

Only this week, MSM showed the king and prince in military uniform, with Rajoy, at a military show, with a heading along the lines of "The army is kindly not responding as it could and should to provoking Catalan airs".

Noone expected middle and low class police (with frozen and cut salaries) to mow down the people the way they are doing. The police is itself splitting in two sides currently.

Wars in spain start as class warfare and end as ideological warfare regardless of class.

Wealthy people are already gone a la depardieu, living here temporarily with bags packed.

God knows my bag is packed and my cash is gone.

Fri, 01/11/2013 - 15:19 | 3145035 Totentänzerlied
Totentänzerlied's picture

"the Spanish military will, unlike most revolutions, take the people's side."

Adelante Soviético!

"Anyone living a wealthy lifestyle in Spain today better get fitted for a rope collar because its coming."

You mean like ... nearly every fucking person in Spain - up until a few months ago when the free shit gravy train finally ran off the tracks after how many decades? Oops, guess they'll have to exterminate themselves.

"workers revolutionary councils" and then we'll see industrial output and economic activity fall to levles not seen since 1883. Viva la revolucion!

Fri, 01/11/2013 - 12:24 | 3144381 waterdude
waterdude's picture

VAT increase did that.  Have a look at exports (up 4.3% for 3q) and primary acct, which is likely already in positive in 4q 12 or 1 q 13.  Plus the banking system recapitalized to the tune of 25% of GDP.  

Fri, 01/11/2013 - 13:42 | 3144674 littleguy
littleguy's picture

When is the Titanic going to sink? I've been waiting for 2 years now... and somehow it's still afloat. Can somebody explain how this is happening? Present theory goes there's enough eurocrats to put fingers in all the leaky holes.

Fri, 01/11/2013 - 15:46 | 3145169 Bobportlandor
Bobportlandor's picture

As long as people believe their toil and sweat is worth trading for digital dollars the system will hang on until the tipping point comes. For some the tipping point started in 2007, others Oct 2008....2013: American express, N.Y Times, Spain's Banks, it's eating through the system.

You don't die immediately from cancer it takes time.



N.Y Times


Spanish banks layoff 55,000


Fri, 01/11/2013 - 15:22 | 3145050 MillionDollarBoner_
MillionDollarBoner_'s picture

"back to level not seen since 1993, wiping out the best part of two decades of malinvestment."

There - fixed it fer y'all... ;o)

Fri, 01/11/2013 - 16:51 | 3145416 jubber
jubber's picture

So the IBEX just hits a new high 4 1/2 hours fater it closed, what a fucking joke this market is!

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