Spain in trouble?

Just got home via a 2 am cab ride, streets strangely empty. The cab driver said:

“It’s the news from the government, 4 million unemployed, over 17% of the working population, people are scared… wouldn’t surprise me if we reach 5 million…”

And I think Spain might well reach 5 million unemployed, I mean, it’s not as if the construction industry (which counts one way or another for over 30% of the GNP) is going to recover in the next 5 years… and what’s going to replace it?

Spain has troubled times ahead I fear…

19 thoughts on “Spain in trouble?

  1. RayTibbitts

    Okay, Spanish city streets empty at 2AM, especially Madrid’s certainly is odd, but I have a hard time believing that news about “el paro” would have that effect. I hope it wouldn’t, anyways.

  2. Hollis

    Ben, and you’re supposed to be an optimist too! Sleep on this and say it ain’t so! I’m optimistic myself that Spain can and will pick herself up. Things are abysmal in New York … airfare is at decade lows … the recession is worldwide right now.

  3. Chiqui

    Yes, we are going through a depression but it shouldn’t stop us from living. Living in fear is no way to live.

    Having been in business for 20 years, we’ve learned to tighten our belts during the lean times and to ride the wave during the good times. Mind you, this recession is the worse in our business’ history.

    It might take a little longer for the tide to turn but a strong world economy will become a reality again. In the meantime, I try to stay positive, be thankful for what I have and made the choice to be happy.

    By the way, good to have you back. I’ve really enjoyed reading the articles of your guest bloggers though.

  4. RayTibbitts

    Well, I’m not sure if it’s optimism, but perspective:

    4 million getting unemployment is barely 10% of Spain’s population. 90% is still an “A” grade (at least when I was in high school.)

    And for construction, it’s good that the industry has come back down to a realistic size. Literally millions of foreign workers were necessary to keep the artificial number and scope of projects running in the first place. Many, many of them will go back home, and will no longer be counted in the unemployment statistics. (of course, they will take their “paro” checks with them, and figure out a way to keep collecting as long as they possibly can.) Just think of it as a way for the Spanish government to indirectly invest in properties along the Black Sea.

    Investors from Russia, who have a simple flat-tax in their country, and a fairly stable currency, are sure to come build the Spanish real estate sector back up little by little, and things will start growing again. And, with how long it takes to get anything worthwhile built here, it won’t be just a short-term bounce, but a longer lasting return to stability. But, you have to remember that it wasn’t stability that was making so many jobs in the first place, it was unstable over-production that couldn’t last, no matter how well the banks are run or the rest of the world economy was doing. So, stability shouldn’t be expected to be a return to the insane over-building and over-pricing of before, at least not for many years.

    The ones who stay in Spain, and who don’t continue to find work in construction, will obviously have to do what I did and find a different sector to work in, such a service-sector or ‘hostelería’ job. With all the extra labor force available, the unions will have no choice but to concede to lower wages, but at least there will be jobs.

    Gotta think positive about these things, right?

  5. Ronzo

    I’ve already bought every language product Ben and Maria have for sale, and since that hasn’t worked yet, I’m coming to Spain for 3 weeks in September and plan to spend like a drunken sailor. I hope it helps!

    Most of the world is in the same boat as Spain, and I believe we will all rise together in the same symetry with which we sank.


  6. Moscow

    The recovery might take longer than it did in the past, because Spain is in the Euro zone. Zapatero doesn’t want to do necessary reforms, but once he or – more likely- somebody else gets those reforms done, things will start to mend.
    And it is not entirely true that things are worse than in the past. The recessions in the 70’s, 80’s and 90’s were very tough. Social protection levels were much lower, and despite what everybody tends to say, the education level of the population in general was also much lower.
    Spain’s economy was not as diversified and internationalized as it is today.

    There are bright spots everywhere. Nowadays, for the first time in history, Spain is the technological leader in one economic sector, that of renewables. Many of the wind turbines being installed today in the UK are made in Spain. Who would have thought that, 15 yrs ago?

  7. Ben Post author

    @Ray, sorry, have corrected it to read 17% of ‘working populaiton’

    The other big worry hear now is deflation…

  8. pippa

    My mother, who was alive during the Civil War (and remembers it with a lot of detail), says it cannot be worse than during or after the war, where a fried egg was a luxury and chicken was the Christmas meal. She says that if the Spaniards went through that, they can go through anything. Of course this is not a war, and I believe that Spain is going to be the country which is going to be the most difficult to recover from the recession, but that is only because of the previous “economic bubble” that was allowed in the first place. Despite the Spaniards are always moaning about almost everything, at the same time we are generally positive and we will get through this but it is going to take time. (Typical Spanish contradiction!)

  9. JUanjo

    Pippa (and her mother) make a good point. It is all relative! Sure it is going to be tough going wherever you are in the Western world for the nnext couple of years, but “tough” only relative to the good times we have enjoyed over the last 10 years plus.

    As somebody who lived through two, if not three, major downturns in the UK and world economy (and being made redundant twice in the same year!), I can tell you that you just reduce your expectations a little, concentrate on your family and friends who are in the same boat and life goes on!

    Some years ago, I forfeited a highly paid job to go back to university for a few years to do some
    research I had been wanting to do for some time. Having a large and young family at that time, going from a comfortable salary to living on a research student’s grant was definitely a challenge! As a family, we chose to follow that path and even now some 30 years later we all agree that time was one of the best periods in our lives despite being rellatively penniless for much of the time. You adjust your sights and expectations and life goes on as before, just at a lower expense level!.

    So- as that annoying Spanish ditty of a few years ago used to say- “Don’t worry- be happy!”

  10. Lenox

    Malaga unemployed at 27.2% and Almería at 24.7% – probably to do with the building downturn (or the fact that we are the only two PP provinces in Andalucía – whose current unemployment, after 19 years of Chaves, is a mere 24%).
    Including me…

  11. ElGuiri

    Spain won’t fall into the sea. It had its charm when farmers were herding their sheep through the plaza mayors, and will have its charm no matter what happens economically.

    All the same, Spain has some fundamental reforms to tackle. The reason the economy is overly dependent on tourism and construction is that Spain fails to win in the competitive sectors of the economy. There are reasons for that. The educational system at the collegio level and down is outmoded, relying too much on memorization. It teaches kids how to cheat, but it doesn’t teach them the skills you really need to compete in the world economcy, The government, on a good day, is an obstacle. On a bad day, it’s corrupt. There’s a lot of crony capitalism left over from Franco’s day, with banks, phone companies and utilities delivering overpriced, poor quality services because there is no competition. And on and on.

    It’s a good time for Spain to take a hard look at what they need to do to compete globally, and make a start.

  12. Katie L

    Funny how I thought Spain would be a good alternative to Detroit. Ha! But the government is still sponsoring lots and lots of Auxiliares de Conversacion, so it looks like my “employment” (grant) will be ok.

  13. RayTibbitts

    I actually didn’t mean for it as a correction. The complicated specifics of calculating unemployment rates are beyond me. I was just trying to find a more happy perspective to news with a very narrow “bright side”

  14. Valencia

    I lived through over 20% unemployment in Asturias for years and you wouldn’t have noticed at the time. The main problem at the moment is that people are bricking it. Therefore the fear transfers itself into everything.
    When your economy relies on two things that are suffering like construction and tourism and has no back up then you are in trouble when those two things crash and burn. However as mentioned above, renewables is a big industry to come and Spain is a World leader.

    Spain is split into two parts at the moment, the South with well over 20% unemployment already and the north with unemployment around 11%. The north wasn’t overeliant on construction and tourism of course and the economy is more diversified.

    Spain will recover but it will take time and yes I see unemployment at 5 million and I am an optimist but lots of people will go back to their countries of origin, I include Europeans in that, which will bring down rates a bit and the recovery will eventually come.

    Whatever happens Spain is and will still be a great place to live.

  15. Richardksa

    On Friday night a group of us sat until 4am at a terrace at the top end of Fuencarral. The streets did not seem empty – and neither were the first several cabs I tried to take to get home when the bar owner finally decided that we should have homes to go to.
    Maybe, now you are a responsible parent, you have stopped going to where the fun is!!!!!

  16. Maria S.

    Spain – like the U.K. and Ireland – will have to ride it out and possibly throw some bad things overboard. A crisis is usually a good time for an overhaul.
    Many of the people I know in Germany know of somebody who has been laid off or works reduced hours. The economy seems slow, but yet nobody seems to be really suffering – at least in our surrounding.
    An article from the International Herald Tribune about the situation in Spain:

  17. Andrew

    We need to borrow money from the lovely banks! Buy things we can’t afford, live the luxury lifestyle, then go bankrupt again and end up in the mess we currently in. All aboard the merry-go-round…

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