Sunday, November 20, 2011

An eerie calm

It isn’t just the weather that has calmed down, the politicians who are taking part in the general election ceased canvassing yesterday in readiness for today’s voting.

It looks like a forgone conclusion with the conservatives set to win over the socialists. The only question now is, how much of a majority will Mariano Rajoy have by tomorrow.

A new government won’t provide an instant fix though because Spain's biggest problem remains the money owed to banks for property or land bought during a decade-long boom fuelled by cheap credit. Now the country is in crisis; growth is zero and unemployment has hit 23%.

During the boom years, children left school at 16 because they could easily walk into jobs on construction sites and earn €3,000 a month working a three-and-a-half-day week. Not any more, even those who stayed at school and gained qualifications up to and including university degrees are struggling to find employment.

To compound the problem for those who can no longer meet their mortgage payments, the value of repossessions has dropped drastically from the inflamed prices that people paid just a few years ago. And to make matters worse, they will still have to pay off their debt once their houses have been repossessed.

Rajoy and the conservatives have been very quiet about their plans for economic recovery, let’s hope they have some aces up the sleeve. 

1 comment:

Bill said...

I know it is not talked about it 'polite' circles (think of the man in the Bateman cartoons), but unless he really does have some magic aces up his sleeve, the solution for Spain is to disentangle itself from the Euro, to allow its resurrected Peseta to devalue and to regain the competitive advantage it has lost since the Euro was created. This is not of course a pain-free solution, indeed it would be extremely onerous, but it is the certain way to allow Spain to grow again in the medium-/long-term. Trying to maintain the same interest rate regime as Germany is never going to work for Spain (or Italy or Greece and a number of others).

Is there the political appetite for this, though?