Spanish Economy Crumbles: Unemployment Nearly 25%

Tyler Durden's picture

In a week that Spain can't wait to end, the country was just hit with the bad news bears Trifecta, starting with the Real Madrid loss, following with the second S&P downgrade of Spain's credit rating for the year last night (or is that now SBBB+ain?), and concluding with economic data released this morning which showed that the economy is in a free fall that is approaching that of Greece, after retail sales fell for the 21st consecutive month, while Q1 unemployment soared to, drumroll please, one quarter of the working population or 24.44% to be specific, trouncing consensus estimates of 23.8%, and up nearly 2% from the 22.85% as of December 31. Which likely means that the real unemployment is far higher, and confirms not only that the economy is in free fall mode, but that Moody's, which delayed its downgrade of the country's banks to May, will proceed shortly.

The BBG chart below can only invoke laughter.

And the same from Reuters:

From Reuters:

Spain's unemployment rate shot up to 24 percent in the first quarter, the highest level since the early 1990s and one of the worst jobless figures in the world. Retail sales slumped for the twenty-first consecutive month.


"The figures are terrible for everyone and terrible for the government... Spain is in a crisis of huge proportions," Foreign Minister Jose Manuel Garcia-Margallo said in a radio interview.


Spain has slipped into its second recession in 3 years putting it back in the center of the Euro Zone debt crisis storm.


The government has already rescued a number of banks that were too exposed to a decade-long construction boom that crashed in 2008, and investors fear vulnerable lenders will be hit by another wave of loan defaults due to the slowing economy.

There is hope that things will change...

The government expects labor reforms passed in the first quarter that make it cheaper for firms to hire and fire to produce results next year. Many firms have taken advantage of new rules to lay off more staff.


"It's a very challenging situation. I don't think that the banks are cornered yet, but the government must come out soon to say how they will address them," said Gilles Moec, an economist with Deutsche Bank.


The downgrade put Spain's credit rating at the same level as Italy. S&P now has Spain on a BBB+ rating, which means "adequate payment capacity" and is only a few notches above a junk rating. Fitch and Moody's still rate Spain's sovereign with a "strong payment capacity".


S&P said it was likely the government would have to put more funds into banks and called on euro zone countries to better manage the sovereign debt crisis.


The government is considering whether to create a holding company for the banks' toxic real estate assets as investors have not been convinced by three rounds of clean-ups and consolidations in the financial sector.

But, as a reminder, there was hope that things in the US would also turn better nearly 4 years ago.

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Sudden Debt's picture

Pré Euro this was perfectly normal.

Same for Greece, same for Italy, same for the south of France.... and bonds where all in the stratosphere back than to.

It just means we're going back to the old ways.




you get the kids BITCH!

GetZeeGold's picture



No worries....the green jobs are just about to kick in.


Doesn't Solendra have a division over there?


Sudden Debt's picture

If the ECB or some other fucks are able to lower rates with crispy money all will be fixed again and unemployment can be ignored again for a few months.

Josephine29's picture

The trouble is that those in Spain cannot ignore it any more,take a look at this article discussing her Misery Index.

Misery Index


For those unaware of the Misery Index it is a relatively simple measure which adds the inflation rate (2%) to the unemployment rate (24.44%). So we get 26.44% as the Misery Index for Spain.


For her youth (16-24) the Misery Index is now 54%.

The situation for the youth of Spain must be absolutely dreadful right now..

LongSoupLine's picture

Something else, (not part of the "misery index" but just as important to stability), is both of Spain's soccer teams being eliminated from Champions League play. Don't's a huge deal with youth "distraction", and I'll bet the Spanish govt. is VERY nervous.

Sudden Debt's picture

And those kids who do have a job get paid peanuts...

So strange that people get all radical and right winged...

Muddy1's picture

Misery index for US:  Unemployment 22% +  Inflation rate 10% = 32%

NorthPole's picture

This chart is not laughter. It is revolution.

On the other hand, I've been to Barcelona a couple of months ago. On the surface, things do not look so bad. The architecture is great, the city is clean, the people seem happy, the weather is sunny, the cafes are full, the motorways jammed. In short, it looks nothing like the 25% unemployment would suggest. I remember crisis in my country (Poland) during the 80s and most of the 90s - unemployment 15-20%, the country bled white, cafes empty, motorways nonexistant, people gloomy, cities dirty. Strange; it seems to me they saw nuthin' yet until all the cafes are empty.

Ghordius's picture

Remember that Barcelona is the humming and working capital of the most affluent region of Spain, Catalunia - the Spanish problems are elsewhere

greenspanator's picture

You have no clue about what you are saying.

Young catalans have been going to Madrid for years, even before the crisis. Catalan affluency is a myth from the '80s.

If you go to Madrid you will find the same as our Polish co-poster, even if you go to any major city.

Public debt is what keeps the blood pumping through public servants' payments, and from there to the rest of the economy (what is left of it). But maybe Europe's plan is to shield them and leave them pretty much on their own:

Ghordius's picture

Young Spaniards from all regions have been going to Madrid for years (in fact since Philip II), I don't see it as an argument, Madrid grows like mad.

You say Catalan affluency is a myth from the '80s? I would like to know compared to what other Spanish region, if you exclude the Madrid special case - which is part of what you are describing. Please add some details, the "If you go to Madrid..." does not work for me, I spent all in all over 60 days last year in Madrid and Barcelona and several other cities including Sevilla, Toledo, Cadiz and a short trip to Jerez de la frontera for my stocks of Sherry...

Happy to have a long fight about this, but please read first my other comment in this thread. Are you Spanish?

greenspanator's picture

My logic is that there is no such welfare in Catalonia because their youth are forced to emigrate; my logic is in regard to the SP ratings of Catalan bonds; my logic is a possible bailout of Catalan finances by the central government. Only if we forget about past glories that are no more can we build future prosperity.

Yes I am Spanish and I tell you that you can see bars as if nothing happens, almost everywhere. Are you Catalan? Of course, some Spanish regions are very depressed because of the historical lack of industry, but you will find that right in the heart of Catalonia: the industrial belt, long forgotten and dismantled, is plaged by poverty and racial fights. I fear that once the corralito is declared, the traffic jams that our co-poster from Poland reports will disappear because of a higher-priced oil, that is now capped by a German euro.

I don't want Catalans to fall, I don't want any country to fall. But I don't want to hear nonsense because it is not helpful.

I am sorry that I won't be able to have a longer discussion, I'm afraid I have no time :-(


Ghordius's picture

then I'll concede the point in favour of something much more important: the "corralito" (interesting link, btw). While it makes sense to be prepared/hedged for a similar eventuality like this - hint, it's shiny - IMHO won't happen. Those who could leave the EUR won't, and those who would can't. My two €-cents, of course.

GCT's picture

Hats off to both of you for having a sane conversation for a change.  Lately it is like coming to a dog fight or all out attack on people in the ZH comment section.

I hope we can all get through this and start producing jobs for our youth.  I am an old fart.  It pains me to see what is going on all over the world.  What boggles my mind honestly is how did the real estate markets all over the world go over the cluiff almost in unison.  It sounds like a huge planned conspiracy worldwide to steal everyone's property and wealth. 

Arvo Particleboard's picture

Barcelona lost their bid for the Champions League final as well this week. To Chelsea, no less!

Will the humiliations never cease?

tabasco71's picture

Nope, they won't... because it was actually Torres (ex-Madrid) who after having been with Liverpool for years and done nothing, suddenly woke up and saved the game for Chelsea.

The rivalry between Madrid and Barceona is an enduring one

Global Hunter's picture

Torres was a player and product of the Atletico Madrid club

HD's picture

And US futures are currently green. It would almost be funny if it wasn't so sad...

Sudden Debt's picture

If somebody gets the door slammed into it's face, the others profit from it.

I don't really understand how it works, but I don't have a PHD so you can't blame me for it.


HD's picture

You just helped me understand why my nose hurts and my retirement is missing...

Bobbyrib's picture

US investors are just severely delusional.

FinalCollapse's picture

ECB is pumping the markets up again. Bullish!!!! Free money by truckloads!

The Swedish Chef's picture



Stop feeding the nazionalist trolls and acknowledge Cataluña as a part of Spain.

Dull Which's picture

Guardiola joining the 25% too.

Ghordius's picture

1. what happened to your avatar? I preferred the old one. 2. WTF are you talking about? Calalunia is in a similar position as Scotland, it could be independent or more autonomous but it does not make much sense in the current environment...

The Swedish Chef's picture

1. My old avatar was too much to stomach for ZH apparently. I think it has to do with advertisers...


2. It could be but not before a couple of hundred thousand Spaniards die in the civil war it would provoke.

LawsofPhysics's picture

I liked the old avatar as well.  Tell our friend above to wake up.  The only regions of the world that can be truly independent moving forward will be regions that either have or control cheap energy sources.  That is what all the fighting has always been about, since the dawn of "civilization".  Americans are dilusional because they constantly wonder what their oil is doing under everyone else's sand.

Ghordius's picture

this is part of what I mean with "does not make much sense" and goes in my general point that "small is not beautiful" at the moment, neither in monetary nor in political matters.

jomama's picture

could it be that it might be finally happening?

EmileLargo's picture

Why the hell is the British Pound and the Euro going up against the Dollar? It doesn't make any fucking sense.

GeneMarchbanks's picture

Take a look at the EURUSD since late February and you'll see that since then the range has been a steady 1.30-35 perhaps co-incidentally around that time the monetary discussion of CBs has turned opaque.

Euro hasn't been this calm in ages.

LawsofPhysics's picture

range bound for quite some time, trade it bitchez!

PhattyBuoy's picture

Where is Spain on a map again?

Colts get Luck-Y ...

debtor of last resort's picture

Maybe they all can get jobs at the ESM.

Peter K's picture

More Euro.... i mean cowbell ;)

But hey, at least Euroland is fixed :)

Chain Gun Smoke's picture

With 25% unemployment I'm surprised there aren't more riots. A minimum of 1 in 4 can't pay their bills. That's a whole lot of stressed out, pissed off, and desperate people.

NorthPole's picture

That's right, it's strange given their supposedly hot Latin tempers. Moreover, if the government says the unemployment is 24.44%, it's probably more like 30%.

Ghordius's picture

yes, there are more stressed out, pissed off people, but it isn't the US, it's Spain. A big chunck of those "official" 25% (for several reasons the Spanish statistician work differently, they tended to overreport the unemployed for some 20 years - a "serious" statistics started only around 1996 or so for EU stats reasons) is that 50% of youth-unemployment, those are youngs that really did not plan to leave their parent's homes anyway until they marry - and even that is some 5-10 years later than the US youth. Families function in the "extended" mode that is unfamiliar to people accustomed to the "full nuclear" Anglosphere model.

Then many of them work in the "black" economy - much more than for example Scotland where the number was estimated to be some 10%-15% not that long ago. Additionally, Spain is one of those countries where the gov spent lots and lots of tax money on cheap, affordable housing for rent, this also takes a lot of pain away not having to worry about losing your roof above your head - if you can't pay, often the gov will.

Bills? Healthcare is different, housing is less a prob as described, food is on the extended family's table, a car is often no necessity, and Spaniards are thrifty people anyway...

And, similarly to some regions in the US, the hard work is there, in agriculture, only that many well-educated Spaniards prefer not to work side by side with the illegal fruit pickers from Marocco. Hell, some could have factory work but they say "I have a degree". The very best are leaving for other EU countries or South America, this is the real long term problem, IMHO.

Pain in Spain, yes, but not comparable by numbers alone.

max2205's picture

Euro mentality. Don't worry be happy, it is what it is and the Govt will take care of me till things get better.

Frastric's picture

A worrisome BBC article about a collapse in retail sales in France, Germany and Italy; PMI went from 49.1 to 41.3. This will definitely cause the USA to recouple with the rest of the world.

navy62802's picture

Oh don't worry, it's just a mild recession. GDP will be growing in no time. /endsarcasm

Debugas's picture

i have to agree with NorthPole.

Those spanish jobless people have not seen what the real depression actually is - if you looking for a job then come here to eastern europe and try working full time for 200 euros per month!!!

Ted Baker's picture


Bobbyrib's picture

QE will prevent a recession/depression?

Vince Clortho's picture

for a good 10-20 minutes.  The important thing is it will boost equity share prices higher into the stratosphere.

We are fortunate to have Bernanke and his many tools.

TheMerryPrankster's picture

I think I spotted a typo, don't you mean: "We are fortunate to have Bernanke and his many fools." ?

America and the world economy living the dream, everyday. What happens when they wake up and realize they ate their pillow and mattress and can't get back to sleep and have poisioned themselves?

Another day in the dream machine.

trilliontroll's picture