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Q4 Spanish Unemployment Soars By Most Since Lehman, Hits "Astronomical" 23.3%
For anyone convinced that yesterday's S&P two notch downgrade of Spain to A is the last one for a while, we have some bad news: in Q4 Spanish unemployment soared by the most since the Lehman collapse, hitting what new PM Mariano Rajoy called an "astronomical" 5.4 million. This compares to 4.978 million people unemployed at the end of Q3 2011. Since the official number is not yet public and will be released on January 27 we will take his word for it. In which case it becomes clear that in Q4 the Spanish economy experienced a Lehman-like collapse, losing more than 400K people, or the most since the bankruptcy of Lehman brothers. In percentage terms this means that Spanish unemployment rose by a ridiculous 2%, or from 21.5% to 23.3%, in one quarter! And since Spain is a country of the Keynesian persuasion, we can only assume the number includes a whole bunch of meaningless birth/death and seasonal adjustments, but we'll leave it at that. Incidentally, it means that by the time the mean reversion exercise, with cost-cutting and what not is complete, Spanish unemployment will be well north of 30%, and 2 out of 3 people aged between 16 and 25 will be out of a job, if ot more. It also begs the question just what the real unemployment picture in the US, which lately has put the Chinese Department of Truth to shame, would be if reported on a realistic, unadjusted, and not "workforce contracted" basis. The chart below shows you everything you need to know.
This is what quarterly Spanish unemployment looks like pre-BLS "intervention"
"This year (2011) is going to close with 5.4 million people... who want to work but cannot," Rajoy said, anticipating official unemployment data due to be published on January 27.
"It is an astronomical figure," he said in a speech to supporters of his conservative Popular Party in Malaga, southern Spain, in which he reaffirmed fighting unemployment as his top priority.
"This is our challenge and all our efforts and all our policies are going to be dedicated to this," he said, without giving a new percentage rate.
Economists have warned that Spain may be back in recession with the economy likely to contract in the first quarter of 2012. The Bank of Spain said the economy shrank in the last quarter of 2011.
As a reminder, S&P said there is a substantial chance it would lower Spain even further:
"We could lower the ratings again if additional labour market and other growth-enhancing reforms are delayed or we consider them to be insufficient to reduce the high unemployment rate."
Time to start pricing in the transition from spAin to sBain?
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Am I the only one that thinks the 09 Q/Q recovery looks like total bullshit?
No.
I don't know what else you would call it except "total bullshit"
Yes, Spain is fooked. So is Europe, just look at M3 and try hard not to visualize the ass-ream that has only started. Trichet didn't care, it was all about sauerkraut and stabeeleetee for that loser.
Off topic, but AT&T's customer service is the WORST I've experienced in my stack of years. These people suck and they admit it. And then tell you to go blow yourself.
I half-expect them to do a Blankfein and tell me they are doing God's work.
So basically... Spain is more honest about their unemployment than the rest of Europe or the US.
" Basically" , is subjective according to " technocrats"... That is, until the masses light their torches in the middle of the night.
can someone please disembark my SHIP? Baltic Dry . I thought everyone was on a 6 month cycle on this trade. Perhaps 6 months is up?
No, not this ship...
Time to go long unemployment. Check out KELYA.
My biggest concern with unemployment around the world has to do with demographics. There is a large percentage of 65+ year olds when taken as a total of world population. A significant portion of these people rely upon social programs for their support. Japan has a huge aged population and in fact has a generally upside down demographic pyramid. Consider that they are one of the most indebted nations. In the U.S. we have the boomers retiring and entering their golden years. China, as a result of the one child policy, is quickly entering a period of demographic distress. What happens when the young people are no longer willing to foot the bill? Many of the 16 - 25 year olds world-wide do not have jobs. If they do have work, they see the meager pay become leaner after taxes and deductions for programs they know they will never benefit from. I believe this is a building pressure point. There are limited solutions to this problem. Some talk about letting old people die by denying care are ignored as a sort of a joke. I don't believe it is a joke. We are already there. China has too few beds for the aged. Many don't have children to support them and they die from malnurishment or because they don't have warm clothes or sufficient shelter. How far away are we from this same predicament? I don't necessarily buy into American exceptionalism. We have a lot of resources (or at least access to resources), but I don't see this as a permanent condition. Finding a way to support the aged, in my view, is as simple as lowering barriers for employment of the young. Tax incentives (like no income tax, payroll tax caps for employing the young and inexperienced, etc) and providing true free market policies are crucial to our long term economic well being. Then again, maybe we are all better off if the youth revolt.
Excellent post. I use demographics in my work to estimate future housing demand. I knew about when housing would crash, and I knew it back in late 1992. My initial estimate of the start of the crash was off by about 16 months. That was close enough to save my ass. I finished an affordable housing project in 2007 and did not start another. When Obama was elected I went 75% Galt and moved to a tiny isolated town. I don't miss the rat race and urban insanity one little bit.
BTW, I estimate Japan will come out of its' demographic winter before the other large economies.
The solution is clear - increase private savings for retirement and have a complete seperation of social benefits from government accounts.
Also, a gradual increase in retirement age is a must. I don't think the US is on its way to having the old die from manurishment, but we're definitely going to have to control health costs and reduce benefits.
The 18 to 25 year old will be sent to kill each other. They will do it for misguided idealism or nationalism or any of the other isms out there.
There are no need for tax incentives. Just eliminate minimum wage. Some will have to work for little. There might be other arrangements like partial bartering (food, housing, etc). But the BEST part is some will work for FREE. Yeah, you heard right. The system of apprenticeship work really well for centuries. Many apprenticeship opportunities in agriculture, craftsmanship, even high tech like computer programming can benefit. Alas, education in this country is a racket, so that will never happen. Not to mentioned all the liabilities that come from having employees now a days. A term I been hearing lately is a 1099 employee as a way to work around all these bs regulations. I am sure the IRS will put a stop to that one soon.
I had been working as a contractor under an S-corp for 5 years. The IRS has been bullying many of the consulting companies that hire people like me. They bully these companies regardless of requirements or the tax code. The last companies that I worked for required my company to send all the payroll filings to make sure I was in compliance. The worst was private insurance for worksmans-comp. That is insurance for insurance. The regulations and the bullying by the IRS just makes it so that companies don't want to deal with me regardless of experience or past work with them. I am software developer, so it is not a high risk area. I went Joh Galt about a year ago.
This is insane. Spain and Germany are going towards a 4% DGP contraction in 2012. If you look at PMI numbers its more than obvious. There is no way to stop it at this point and no "reforms" can change it.
Defcits will baloon to 10%+ for both countries. This pretend game is idiotic.
After talking to some French guys this week, I get the feeling that much of the EU Core still sees this as necessary lesson for southern Europe and relatively painless for them.
Idiots.
Then they are complete morons - don't they realize that their governments gave Greece and Portugal billions of dollard that they will never see back. They are still giving Spain and Italy even more Billions through the ECB and they will never see that moeny back either. Their banks are on the verge of collapse if they haven't noticed.
2011 was still a good year for the European economy. 2012 will bring a deep recession. We'll see how they feel about it then.
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Sweet sarcasism! I love it!
Every moring since I started following ZH, I turn on the T.V. to see if Europe has blown up and is going down in flames...Could Monday be the day...? Can we finally hit the reset button, watch the end of the train wreck, and eat our popcorn before it goes stale? Or, is this bad movie going to continue...
It's nowhere near collapse. The ECB has been able to stabilize bonds for now, and the downgrade won't change it. The endgame will come when 2012 brings a Greek-style recession to Italy and Spain. When both of these countries experience a 4% contraction in GDP, Europe will be face to drop the charade and do what they should have done in 2010 – restructure the debt back to manageable levels and move on with balanced budgets.
Simple solution to Spain's problem: The unemployed should move to Portugal.
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U.S. Shadow unemployment is not much different.
It is at least 15% using more realistic statistics dumped in the early 90's to help the politicians make employment look better than it really is.
The ECB can't possibly plug all the holes in Italy and Spain.
Eurozone depression, and U.S. on it's heels, are imminent.
The Zapatero led socialists of Spain took over in 2004. Obama's economic plan is just a carbon copy of Spain's last 7 years, and is having the same results. Did any of the neo-socialists get the memo from the 20th century that socialism doesn't work? Seems not.
Everytime socialism fails the ideologues rant that it still works and is sustainable. They'll scapegoat humans as the unsustainable problem, not flawed social engineering. Good for Spain for finally throwing them out last month.
Question heard posed to Socialist Bureaucrat: "So where are all the green jobs and Green Energy you promised, after 7 years?"
Socialist Answer: "Oh, there are plenty of green jobs and green energy! The programs are a huge success! The problem is there are still too many "greedy" people who want lights to see in the dark. But not for long, we've created many green jobs to find out who they are and where they live."
look the ministry of truth and vacations has released the newest data from the republik of oceania. unemployment which creates jobs, has fallen thus destroying jobs. our dear leader when done with his new and earned vacation will promptly fire a million or so of the ruffian class to once again create jobs.
besides we just blame that bush and arrest some of these traitors who call for freedom and all will be well.
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Christopher Columbus sailed the ocean blue
Nah, the Vikings and Templars beat him there. They just ate each other! Truth!
Can kicking in Europe is starting to break toes...Doubt it stops there...
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It was lack of tan lines that I was admiring...
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There is one thing that fascinates me. With close to 25 per cent unemployment, how does a nation post either small growth in Gdp or just a small fall in GDP?
Does it mean that 25 per cent of the people are excess capacity?
Either there is something wrong with GDP figures or the functionality of Spain's economy is seriously flawed.
Both...25% unemployment is certainly 'depression' territory...As far as people being 'excess capacity'...Do you really want me to comment on that...
GDP numbers have to be bunk. No other case for right at depression level unemployment.
25 per cent of the general working age population and almost all of the youth that can still be counted. All others no longer be counted or no longer be accounted for.
Was for sure revolutionary territory in the last millenia , but the new world is a crowded place for any uprisings, they won`t happen anytime soon in no part of this globalized world.
Never ever. Or maybe all at once... :-)
That's the magic of deficit spending. You create growth by bringing new money into the country with the guise that you might pay it back someday instead of just rolling it over with new debt. Presto! GDP is supported as the new money is spent and trickles through the economy.
What happens when you take away that new money? Or dare even try and pay it back? The opposite, of course. DOOM.
I'm Swedish and I've bumped into many well educated Spaniards at parties looking for employment. It must be a sure sign of hardtimes in Spain.
Don't ask Q/A you're aaa+
The average Spaniard is an indolent greasy dwarf who would recoil in complete horror at the thought of a days work.
One notch above the Greek grab ass rating! I like the Portugese though. Very kind people / Thankfully with access to the Mediterranean Sea!
Portugal is on the Atlantic, still has great beaches though but none are on the med.
Now now.
I've know numerous Spaniards who were erudite, clean and well dressed, polite, and hard working.
He who casts the first stone, as the saying goes.
Besides, Don Quixote is an excellent read.
Do you really need an "economist" to "warn" you that with %23 UE economy "may" go "back" to "recession"??!
According to a guest on Tarpley today...Ron Paul finished 2nd with some 2500 votes in the New Hampshire Democratic Primary!!! Ahead of some 10 other candidates running against Obama...Oh, and they were all write-in ballots...Wow...Even Democrats are starting to get it....
Sames as the US but we dont give the real numbers ours are manufactured lies.
I didn't realize working was a requirement in the EU. If 23.3% actually claim to want a job but cannot find one, then how many are they claiming actually want a job?
In other words, the labor participation rate in Spain must really suck.
and the ECB is printing directly into Spanish banks that then re-lend to development. More insane Keynesian madness. The ECB and Spanish goverment will turn Spain into an urban wasteland. One plus, is that at least the squatters have tons of places to choose from.
The 23% unemplyment is actually realistic, while the statistics exclude several hundred of thousands of people looking for work, on the other hand, they include unemployed working off the books.
It will increase, once they start firing hundred of thousands of politicians' friends and family emplyed in useless public companies.
The Spanish labor market is quite disfunctional: huge salaries for a few chosen: air controllers (up to 700.000 euros/year), notaries public..., and 1000 euros per month for new engineers.
While I agree that high unemployment in Spain is a big problem, real unemployment is much lower. Many Spanish work off the books while collecting unemployment. Spain, Italy, Portugal, and Greece, all being second world countries, have large black economies.
The problem is two-fold. First, real unemployment is still too high, though much lower than 23-24%. Second, black market jobs do not pay taxes or social security.
not sure there's a connection.
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