Rajoy did not live in Spain – Fourth

Rajoy did not live in Spain – Fourth

Rajoy does not live in Spain <-

class=”fecha_eco”> August 2, 2014

class=’clearfix’>

->

| Published: 02/08/2014 13:04 <- Social Sharing Toolkit v2.1.4 - > class=”mr_social_sharing_top”>

Alejandro Inurrieta *

The press conference prior to the summer holidays deigned to give the President Rajoy recorded and should be subject of study in schools Political Science and Communication , as the best example of propaganda and detachment from reality.

Much has been made of what the power provokes in the minds of the occupants of the Moncloa, but the message of the President Rajoy can only be understood in key social and media isolation, only disturbed by voices whispering her that all goes well , especially for economic and media groups holding the executive.

In this press conference, the only questions in a while, and was clearly electoral monothematic, from long by such important issues as the growing corruption in his party and other left and right, the Catalan problem, the international crisis or war crimes committed by Israel against Palestine . Therefore focused Rajoy to announce solemnly that the crisis is over, the recovery is firm and is here to stay, as if the Spanish economy was autarkic and not depended on the European cycle, or Russian, for instance . These statements, as dangerous as irresponsible and tacky, just hide a burning desire to win converts and despise those who would never vote.

To shell the actual data, and can perform a diagnosis appropriate, must take into account the importance of having quality statistics and true, something questioned in recent times in Spain by multiple classes. Therefore, we must start from the fact that GDP in 2013 should be revised down sharply. Data from the Household Budget Survey of 2013 confirms recently published the second biggest drop in household spending since the beginning of the crisis, so the private consumption should be revised downward.

In addition the external sector data are inconsistent with those provided by the Ministry of Economy, so that in the second half of 2013 the external contribution was actually negative. Regarding the data for public consumption, which figures in the national accounts of the last two quarters will go to the newspaper archives as clear examples of accounting engineering are absolutely inconsistent with data from the National Audit Office . The Government would have shifted the public expenditure in the last quarter of 2013 to the first of 2014 in order to approach the fulfillment of the public deficit set by Brussels. In the reviews of August this year and in the final August 2015, the GDP of 2013 would finally fall between 2.0% and 2.5%, except in the case of artificially keeping real GDP reviewing strongly downward the GDP deflator, as was done in 2008.

After more than six years of severe recession, none of the causes of the current systemic crisis, debt volume brutal and an insolvent banking, have been fixed . It has become a dynamic feedback process of reactivation of debt with new financial bubbles as the only way of overcoming the crisis. However there is a noticeable difference compared to 2008. Whereas in 2008 most of the debt was private, the process of resolution of the banking crisis and other socialization of private losses triggered the volume of public debt to unaffordable levels. Total debt of our economy, private and public approaches 4.4 trillion euros , about 430% of our GDP.

Banking institutions are not transparent in referred to as toxic assets. It is known that the total amount transferred exceeds the SAREB, including loans and SME loans to investee companies, mortgage refinancing undergoing constant. bank arrears at record highs, 13.4% versus 2% levels before the crisis . However if we add the amount of the SAREB, and all assets that have contaminated, actual arrears exceeds 20%. In this context the credit to companies and households is paralyzed. As a result of this situation solvency and capitalization questioned, corporate lending continues to fall, also by demand factors, as the creditworthiness of applicants is minimum. This is causing a rise in the cost of unaffordable money for a good part of households and SMEs.

Under these assumptions, the ECB will be only happens launching new issues of lters to force credit flowing between banks and to the consumer, not realizing that the conversion of entities has not been completed, which is felt in the volume of employment that is destroying the sector. privileges of the financial system continue has been no regulatory measure to improve transparency, or to reduce the balance sheet at the aggregate level. Banks continue to buy government bonds and that gives countries like Spain a way to continue growing timidly and increase the public debt bubble, fueled by low interest rates.

The Spanish labor market, the news is not better, despite the euphoria following the EPA’s second quarter. The labor force began to fall in 2011, the result of population decline and own workforce reflects the absence of decent work expectations, beyond contracts for hourly or daily. EPA data for the second quarter implies that economic growth continues to be negative , calculated by adding the hours worked and the population variation, reflecting the greater reality of labor precariousness of our democratic history. When you are changing the type of normal working hours, you must be very careful with the numbers, and not confuse job creation precarious existence. For example, if a thousand jobs are destroyed to create full-time and 1,500 part-time, there is really no more work that day destroyed the equivalent of 250 jobs. According to the EPA have lost nearly four million hours of work and there are 128,800 employed more . Therefore, we can say outright that Spain does not guarantee work out of poverty.

In a year have lost 0.7% of the hours worked while the number of employed increase 0.8% . This increase is exclusively engaged in the service sector. In the hours that sector increased by 0.2% and the number of jobs by 1.7%. The industry has lost 1.8% of the hours worked. The manufacturing industry accounts for 90% of employment, lost a million and a half hours and ten thousand employed. Once again a great weakness is manifested by lack of competitive high value-added sectors that could pull a recovery, which exists only in the imagination of electoral gurus.

Labour reform has eliminated and half a million full-time jobs and emerge two hundred fifty thousand part-time or batch. Were destroyed seven hundred fifty thousand fixed positions and half a million temporary. In the last year the rate of insecurity has increased 1.1 points . This increased casualization and the expulsion of workers from companies with a vested rights and won throughout the years, its entry into force other companies in extreme weakness that results in a much lower salary.

President Rajoy

tiptoed on the reality of growth Spanish course. The quality and origin. No longer boasts of selling the foreign sector is the engine of the Spanish economy, but its deterioration is noticeable until May with a current account deficit of over 10,700 mill. € . mean, the government is at it again, debt-financed growth and an attempt to revive private consumption via credit , which is criticized both Zapatero and that was hard to remove. This is explained by the great intellectual ignorance of the conditions of foreign trade and the variables that explain our meager foreign sector. The consequence of this new outdoor twist is the strong increase in net foreign debt Spain to reach a new record 1.021 billion euros, 99.8% of GDP . We have not yet emerged from the crisis and a new balance of payments crisis is over, ie back to the beginning of the crisis.

Finally, a word on Rajoy said income trends and wage inequality, true barometer of economic health and recovery expectations. In late 2013, the service said BBVA studies had found that new mana, empirical evidence that in Spain the real wage declines were accompanied by reductions in the unemployment rate. This is a purely spurious correlation, as there was a third variable, they did not consider the debt. Wage cuts are not effective in the fight against unemployment, while demand yes it is. Economists as Stockhammer and Onaran already showed that for such disparate economies like U.S., UK or France, contrary to neoclassical expectations, there was no evidence that changes in real wages, and thus the distribution of income affect unemployment. Not only that, the substitution of capital for labor in response to a greater share of wages was not verified empirically. The most important policy conclusion is very simple:. wage cuts are not effective in the fight against unemployment , while demand is clearly what

If the engine growth of our economy off the external sector, the growing surplus in the trade balance would be backed by a massive investment process that improved our production . But this is not happening. Neither of foreign direct investment in our country are improving; nor the Spanish companies implement investment processes in equipment in accordance with high ROE. Prefer debt reduction processes that invest abroad at very low rates. So the question that arises is, where has foreign capital entered in the last two years ? Have you been to improve our production? Or just have taken advantage of falling prices in various real and financial assets to get quick capital gains ? The most plausible theory is the last.

To support this argument, we look at the income component BOP . In recent months it is experiencing a growing deficit. On the one hand foreign investment gain significant returns, which results in significant departures income. The main explanation is that bought cheap, bargain prices . On the other hand, the massive Spanish direct investment abroad, in the process of internationalization of large Spanish company, producing a very low efficiency, which translates into income inflows ridiculous. The main explanation is that dearly bought.

In short, there is much to do before considering overcome this acute phase of economic and social recession. We must recover all the cuts in education, dependency, health and human rights have resulted in poverty and inequality that began with great dynamism Zapatero. The situation is dramatic for many households with no income, for young and old who do not find employment ever and for many undercapitalized citizens. But the worst is that it is still committed to a model of debt accumulation, and cheap consumer credit via employment without changing horizon growth pattern. But of course, the main thing is to win elections.

(*) Alejandro Inurrieta is an economist and director of Integral Consulting Inurrieta.