naked capitalism

Diego says:

Edward,

it is an excellent idea to link articles in other important languages. I used to read Naked Capitalism's links for the Anglosphere, then read other non-English newspapers; so I would definitely benefit from non-English article selections. (However, I also think most of your readers may feel uncomfortable with this, so it may be better to put them last/apart).

On the other hand, I must sorrily say I still find some anti-Spanish bias in both this and previous selections (e.g. Edward Hugh's link, comparing Spain's situation to Latvia's!).

As you seem to read Spanish, may I recommend you this piece by the Spanish Minister for Industry, where he points to 7 Spanish economic strengths analysts usually forget? (pages 4-15 and page 18).

http://www.mityc.es/es-ES/GabinetePrensa/Discursos/Lists/Discursos/Attachments/86/2009-03-31%20IM%20Revista%20Economistas%20(final).pdf

Best regards,

Sivaram Velauthapillai says:

You guys know a lot more about Spain than me…but speaking as an outside observer, my concern with Spain isn't the real estate bubble. Although it was pretty bad, Spain's debt-to-GDP isn't that high (lower than France, Netherlands, Canada, Germany, etc) and the government can theoretically absorb the losses (not that they necessarily will or the population will agree to it–or that the capital markets will fund the government debt cheaply).

If I have a problem with Spain, it's the structure of their economy. They are inefficient, inflexible, and not diverse enough. For instance, the high unemployment sort of indicates the problem I have in mind. You can end up with all sorts of social problems with the labour situation doesn't improve…

Diego says:

Edward,

you are right that seeing Spain as a victim puts it on a different light. Anyway, if you want to succeed in your forecasts for them, ignore the "Spain is the next Argentina" crowd and add a pinch of Spanish optimism to them.

Remember Spain may have had a housing bubble, but it did not have a financial bubble (can you name a Spanish hedge fund/investment bank?), which puts it apart from the US and the UK.

Sivaram,

I can't see how Spain may be inflexible, inefficient or not diverse. What's your example for a diverse economy? It is easy to find developed countries far less flexible (France) and diverse (financial-heavy UK, manufacturing-heavy Germany and Japan). Low productivity has much to do with newly employed people, as they don't have enough experience yet. This may sound odd, but Spain has been creating half the EU employment for nearly a decade now, so there are lots of newly employed.

The Spanish unemployment rate is misleading. With nearly 20% unemployment, you'd think there are fewer employed people than in the boom years (as is true for the US). However, the reverse conclusion holds: there were 13m employed people in 1997, 15m employed people in boom year 2000, 17m in 2004 and we have around 17.5m employed now, in the middle of a deep recession.

The unemployment rate has shot up because of: 1) an extremely high immigration rate (the US would have received 40m immigrant in the last decade had it had the Spanish immigration rate); 2) young women wanting to work while old women were out of the labour market, so every new generation means more new unemployed; 3) people working in informal jobs while collecting subsidies; 4) the fact that those not working not only receive social benefits, but are also helped by their families (which tend to be more socially diverse than in the US).

That's why the US would explode with a 20% unemployment rate, while Spain has survived with a multi-year 20+% unemployment rate during the early 90s (with no significant social problems) and will do it again.