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Guest Post: What Has Changed In Spain?

Tyler Durden's picture




 

Authored by Santiago Nino Becerra, via La Carta de la Bolsa,


These are the macro figures that the Spanish government submitted to Brussels on last April 26, when it asked for a two-year extension to meet Europe’s wondrous 3% target deficit. Look at the figures closely: see how the anemic growth magically accelerates once the  target is met, how the rampant public debt surprisingly declines upon compliance with such a target, and how the currently unbridled unemployment rate miraculously begins to recover at the very moment the target deficit figure is achieved.

These figures, you will recall, were accompanied by speeches made by various members of government whom at the time underlined that the Spanish economy was at a critical crossroads. Of key relevance to effectively send the message across were the speeches delivered by Prime Minister Rajoy and Minister of Economy De Guindos. Subsequently, Brussels gave its assent to the figures and granted Spain the two -year extension it had requested on the target deficit.

A few weeks ago, on October 17, the Spanish government submitted an updated version of last April’s macro figures to Brussels, only this time the projections end in 2016. Indeed, the revised chart scraps the magic that was to take place thereafter.

The differences between the two charts mainly lie in estimations of a little more growth and a substantial increase in debt. There are no unemployment figures in the new chart, or such did not make it to public opinion. Of course, scrupulous compliance with the target deficit was maintained from one document to the other. The numbers, as you can see, are sad and anemic, and continue to envelop the arabesque promise of target-deficit compliance; which I think is impossible to achieve unless it is all based on significantly higher doses of pain: a staggering deficit reduction from -4.2 % to -2.8 %.

Naturally, these figures were again accepted by Brussels. This is the point where we go into paroxysms of laughter.

Mysteriously, all talk regarding the above figures, as well as discussion of the 2014 Budget have ceased. Indeed, and relying on the meager 0.1% growth projections published by the Bank of Spain for Q3 of this year, as well as on the recent decline in the unemployment rate (which seasonally adjusted did not actually happen), the government and other semi institutional entities have rushed to announce the end of recession, that the Spanish economy now sees the light at the end of the tunnel, and that foreign investors’ such as Bill Gates’ have renewed their interest in Spain. What has happened?

Despite the country’s macro figures and a budget which assumes that 30% of the country’s spending next year will go to debt interest payments, how is it possible that we are suddenly being bombarded with wonderful news about Spain’s current situation – no longer at a cross roads – and colorful future? Several things have happened, I think.

First, the public wants to hear nice things because they are tired of hearing the bad; so if they want good stories, they’ll get them . No matter what happens tomorrow. Tomorrow, when reality hits and the scissors are again sharpened to trim that which growth will not produce, not even to even pay the interest on the debt, the public will be told other stories.

Second, time references have changed. The date now is the end of November 2014, when the European Central Bank (ECB) is due to publish the findings on its grand audit of the euro area’s largest 126 banks (16 of them Spanish ), as well as the results of the various tests that the European Banking Authority (EBA) will have administered on such banks. Until then, let there be peace everywhere, but specially in Spain. Surely, after next Summer, and in order to prepare the people’s mindset for what is to come, a few things may be filtered, but that will be then. For now, do not be surprised to hear things such as “Spain is doing well again.”

Finally, the divorce between the people and their representatives has consummated. The government tells its stories while the people perceive a different reality. Yet this matters little. What matters is making it through tomorrow. And if to make it through tomorrow the government has to go back on its words and say it meant differently from what it said not long ago, so be it.

 

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Sun, 11/03/2013 - 16:13 | 4117641 syntaxterror
syntaxterror's picture

30% toward debt interest payments? That's still much lower than the average Dumb-merican's. And Dumb-merica's S&P 500 at an all-time high. Bullish on Spain! And it's a world Cup year!

Sun, 11/03/2013 - 16:46 | 4117696 CH1
CH1's picture

What changed?

They thought the suckers were ready to imbibe more bullshit!

Sun, 11/03/2013 - 17:08 | 4117708 macholatte
macholatte's picture

 

 

What matters is making it through tomorrow. And if to make it through tomorrow the government has to go back on its words and say it meant differently from what it said not long ago, so be it.

 

and then there is an election...... and then the old liars are replaced by new liars and the old liars are exonerated from blame.  Think Gerbal Wheel

 

 

I never blame myself when I'm not hitting. I just blame the bat and if it keeps up, I change bats. After all, if I know it isn't my fault that I'm not hitting, how can I get mad at myself?

Yogi Berra

 

Sun, 11/03/2013 - 20:43 | 4118113 Dareconomics
Dareconomics's picture

The first sighting of the Spanish Recovery Narrative is almost one year old.  In that time, the budget deficit has grown, unemployment has risen and bad loans have grown.  The MSM loves its narrative and will fight hard for it despite the facts. 

 

http://dareconomics.wordpress.com/2013/10/28/update-spanish-recovery-narrative/ 

Mon, 11/04/2013 - 17:43 | 4120380 Oracle 911
Oracle 911's picture

What matters is making it through tomorrow. And if to make it through tomorrow the government has to go back on its words and say it meant differently from what it said not long ago, so be it.

 

Well shit and bail ins happens, and when it happens the remnants of Spanish eCONomy will evaporate and after that guillotines will roll.

Sun, 11/03/2013 - 16:13 | 4117647 BrigstockBoy
BrigstockBoy's picture

But Fitch just revised Spain's outlook to Stable "saying the nation’s overhaul of banks has “advanced well” and financing conditions have improved" so it's all good. (/sarc)

Sun, 11/03/2013 - 16:27 | 4117669 Carl Popper
Carl Popper's picture

Maybe they can summon the animal spirits and extend this cyclical bull. People are tired of bad news.

Honestly we should all hope for an extension of the bull market and lower gold prices. Most of us are still dependent and need more time to purchase our freedom.

Sun, 11/03/2013 - 16:47 | 4117697 CH1
CH1's picture

need more time to purchase our freedom.

How? From whom? Where's the Freedom Store?

Sun, 11/03/2013 - 18:08 | 4117799 jonytk
jonytk's picture

Well it's the chicke or the egg problem, if no good outlook, there's no investment and if no investment no good outlook. Foreign investment is what will save Spain, the gov it's just laying the foundations, but the key problem of the unemployment benefits aka "paro" remains, it must be cut, then, yes, magically everything will be fix since the money they spend on unemployement benefits will became revenue in taxes when the unemployment drops.

Sun, 11/03/2013 - 19:12 | 4117934 HardlyZero
HardlyZero's picture

Blessed be the creative financiers.

Without massive credit there would be no stability.

Here we are.

(this is more or less the truth over the centuries, it all started in the House of Medici in Florence and Tuscany, Italy.  Cosimo b. 1389)

 

Sun, 11/03/2013 - 16:19 | 4117649 Peter Pan
Peter Pan's picture

NO

YES

Rajoy, Hollande, Obama....would anyone seriously hire any of these men to run his business, teach his kids or defend his nation?

Sun, 11/03/2013 - 16:38 | 4117678 Pure Evil
Pure Evil's picture

Obama couldn't run an EBT whorehouse even if it was staffed with NFL cheerleaders and "The Wookie" as head mistress.

Sun, 11/03/2013 - 16:24 | 4117666 Sudden Debt
Sudden Debt's picture

In EVERY political forecast from EVERY POLITICAL PARTY IN THE WORLD!!!

YES IN THE WORLD!!!

THEY ALL AGREE ONE THING!!!!

In the future you have to vote for somebody else and they'll make sure GDP and the budget issues will all be fixed.

AND IN A WAY THEY ARE ALL RIGHT!!

SOMEBODY ELSE NEED TO BE ELECTED TO FIX IT ALL!!!

Sun, 11/03/2013 - 16:49 | 4117699 CH1
CH1's picture

SOMEBODY ELSE NEED TO BE ELECTED TO FIX IT ALL!!!

No elected official is going to fix this - they're the ones who created it!!!

Sun, 11/03/2013 - 21:04 | 4118139 StychoKiller
StychoKiller's picture

The hole-digging machine can only perform one task, just a question of how fast it goes...

Sun, 11/03/2013 - 16:28 | 4117671 Iam Yue2
Iam Yue2's picture

PARIS - Fitch Ratings says it is upgrading the outlook on Spain's investment-grade "BBB" rating to "stable" thanks to progress in reforms and improved export performance.

LONDON - EBay has apologised and removed about 30 items of Holocaust memorabilia from its listings after a British newspaper reported that items including a striped concentration camp uniform were on sale.

Sun, 11/03/2013 - 16:31 | 4117676 Clever Name
Clever Name's picture

Wait, wait, I got this one!

The rain no longer falls on the plain?

Sun, 11/03/2013 - 18:29 | 4117844 Hail Spode
Hail Spode's picture

You beat me.  I was going to say "The rain falls mainly on the mountains now." just to see who would get it.

 

Sun, 11/03/2013 - 16:32 | 4117680 Quinvarius
Quinvarius's picture

Chinese plans to nuke the US:

http://www.yalibnan.com/2013/11/02/chinese-state-media-show-plans-for-nuke-strikes-on-us-cities/

Just thought I'd throw that in.

Sun, 11/03/2013 - 16:40 | 4117693 Pure Evil
Pure Evil's picture

If Obummer doesn't leave by January 2017 then I'll be more than happy to cheer them on.

But, I noticed they don't have the District of Criminals targeted so what's the point.

Sun, 11/03/2013 - 16:51 | 4117702 Terminus C
Terminus C's picture

Why would they target their friends?

Sun, 11/03/2013 - 17:27 | 4117726 shovelhead
shovelhead's picture

That will cause some taper somewhere.

Sun, 11/03/2013 - 23:05 | 4118407 americanspirit
americanspirit's picture

Thanks Quinvarius - I have to wonder why there isn't a black dot on DC? And why isn't Dallas invited to the party? The dots on this map don't even correspond to major US missile bases. Cheyenne Mountain is ignored. Hoax? Or just dumb Chinese.

Sun, 11/03/2013 - 16:34 | 4117682 Vegetius
Vegetius's picture

At this point who cares about the pretty charts draw up by Economists paid for by Governments to look good. 

The reality will not change, and the reality is this system is going to crash and it will all burn.

Sun, 11/03/2013 - 16:35 | 4117684 Atomizer
Atomizer's picture

Just like clockwork, the IMF posts favorable recovery stats. Four weeks later, a crisis mode ensues.

http://www.imf.org/external/country/esp/

TAXING OURSELVES OUT OF—OR INTO?—TROUBLE

http://www.imf.org/external/mmedia/view.aspx?vid=2758954215001

 

Pay close attending to Forward Bullshit & Redistribution of Wealth in an insolvent banking industry.

Sun, 11/03/2013 - 17:09 | 4117713 Make_Mine_A_Double
Make_Mine_A_Double's picture

The unlying house crisis is still there gutting the internal economy of Spain.

Only that has changed is that the banks are now essentially nationalized. State = banks / banks = State. They are stuffed with Spainish bonds and that is their 'collateral' and vis versa.

Unemployment is still at Depression levels and it would be interesting to see a forward study of how losing an entire generation of entry level young adults into the work force will impact their economy over time. No first car, no first house, no marriage, no children, no furniture, etc. etc.

I would wager we will look back in 10 years and see this as the calm before the Great Storm.

Sun, 11/03/2013 - 17:33 | 4117744 shovelhead
shovelhead's picture

Bullish on Spanish bug-out bags.

Is sodomy by the Govt. grounds to obtain political asylum?

Does Basil Fawlty still need help?

Sun, 11/03/2013 - 18:05 | 4117793 Reaper
Reaper's picture

All governments lie. The final cost of the lies differs.

Sun, 11/03/2013 - 19:06 | 4117909 exartizo
exartizo's picture

Simple.

They were finally able to purchase some good ol' fashioned American Spin Optimist Media Consultants aka US Government Damage Control Specialists.

There first consultation?:

"Lie as long as you need to, especially when it gets 'serious', until the numbers don't matter, people stop paying attention, and realize that 'that is what governments do".

Just like in the good ol' US of A.

Sun, 11/03/2013 - 20:58 | 4118134 Stuck on Zero
Stuck on Zero's picture

Debt to GDP is a fictitious number because GDP is fictitious.  The GDP does not owe the debt, the government owes the debt.  A better gauge of debt levels is debt/income.  Current income is about $2.5 trillion.  The debt is clearly unpayable.

 

Mon, 11/04/2013 - 06:29 | 4118752 CHX
CHX's picture

Summary: Q: What has changed? A: Nothing.

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