Odd Economics

AOG, Madrid

I was last in London over Christmas and I hadn’t gone back until now, late May. 

My how the place has changed!

First of all, there’s the Shard. 

A tall pyramidal structure made of glass and which some are referring to as Mordor.

Although impressive from a distance, close-up it suffers from that thing that so often occurs in the UK: location, location, location. Or rather, a lack thereof.

It is not in a good neighborhood and, for a building intent on promoting finance, it is not in the City.

I got pretty close to it from London Bridge’s station’s platform 6, which takes you straight to Charing Cross.

From there, you get a glimpse of the glass behemoth, and you can't help but be taken aback by the fact that the thing looks a) unfinished, and b) empty.

As is the case with many European cities today, there is an overabundance of empty office space, and London is not the exception.

According to FT,  “In a survey of the industry by CBRE, the world’s largest property fund by assets, three-quarters of banks with a presence in London said that they were planning to cut the amount of office space they used.”

And according to The Telegraph, in 2009: "Approximately 11.9% of City offices are vacant – equivalent to 10 large city towers – up by a tenth already in 2009 and more than double the 5.2pc prior to the onset of the credit crisis in 2007, as increasing numbers of businesses collapse or downsize.”

So it would appear that another glass tower is not really what London needs. 

And yet, there is something amazing about tall buildings. 

The way they defy our human perspective and make us dream of the views we would see from them. Yes, there certainly is a dreamy aspect to tall buildings.

Second of all, my trip to London also informed me of the fact that the city is living trough a construction boom. 

Around the Greenwich area, any empty lot has been turned over to a building company which will gladly erect one of those boring looking, yet ever so trendy, housing plots with pseudo-modern architecture (which, in case you are wondering, just means pricey properties with small rooms and hardly any storage space).

A friend of ours who lives in the area said he was appalled at all the construction and mentioned how these days, most of those properties are being snapped up by wealthy foreign nationals, who will be in the UK for, maybe, a week per year, and city types who commute into and out of Canary Wharf, but never set foot in the area.

And according to Londonist magazine, this boom is only helping to make property even more expensive: “Average asking prices in London have gone past the £500,000 mark for the first time, and Camden has joined Westminster and Kensington and Chelsea as a borough where average prices are over £1m. 

We’ve also noticed a little flurry of articles pointing out the extent of foreign interest in high-end property. 

The New Statesman points out today that only 45% of buyers in central London are UK nationals; Russians and Middle Eastern citizens are those who seem to find the posh bits of the capital most tempting. 

The New York Times recently looked at the effect on local businesses of increasing numbers of owners using their London homes as temporary stop-off points. 

This phenomenon is exemplified in One Hyde Park, where Vanity Fair found that just 17 of the 76 apartments sold are registered as primary residences, and seems to be practically empty.”

I wonder about how healthy this is for a country.

On the other hand…

During my stay, I also met with a couple of friends. They corroborated this idea about London’s average housing prices being too steep, especially for a country where average wages are around £26,000. 

Who in London can afford half a million for a place to live?

Some can, no doubt, but most people, most Londoners, cannot. 

On that subject, we talked about recent studies which mentioned how, it is now becoming very obvious, that all the wealth being created in the City of London is not filtering downwards. 

Yes, the City of London creates jobs, that is, it creates employment for the people who serve the people who work -mostly in finance- in the City.

However, all that wealth being amassed there is not percolating down to the rest of the country.

In fact, a large proportion of it is not even taxable, thanks to the UK’s myriad of legal and financial loopholes and tax havens (Gibraltar, Channel Islands, etc etc etc).

London might be one of the planet's financial capitals, but if you are living outside of London, in a council estate, how is that benefitting you and your family?

None of this is illegal, of course (because politicians pass the laws which benefit their friends), but is it ethical?

Desirable?

A really bad precedent...

In Spain, meanwhile, people often like to bring up the example of Mr. Álvarez Cascos, PM's Aznar's Development Minister who, a few years ago, when asked why property in Spain was so expensive, replied "if it is expensive it is because Spaniards can afford it".

What he was trying to say was that he was proud that property was expensive because it meant the Spanish were doing well.

This was before the Conservative party lost the 2004 elections and Spain was hit by an economic crisis from which the country has yet to emerge.

Unfortunately for Mr. Álvarez Cascos, as well as for Mr. Cameron in the UK, most citizens were not so rich that they could afford a property.

In Spain this meant that banks took advantage of people, prices were inflated, and the property boom turned into a bubble which burst.

It meant that property for lower middle class, and middle class families, suddenly went up in price, and many people, as is the case in the UK, were priced out of the property market.

It means that, given Spain's anachronistic mortgage and property laws, you may turn your property's keys to the bank, and it may sell it, but you will still own the bank whatever was left on your mortgage.

It means that many people are being made homeless even today in Spain, while the Government looks on.

It means that many immigrants left the country, the home they bought, and their debt, in Spain and went back to where they came from.

All of this points to Spain's failure, especially since Madrid, unlike London, is not so international a city that many Russian or Middle Eastern investors are willing to pay half a million Pounds (or the equivalent in Euros) on average for the privilege of having a property there (although they will pay this much for property on the Costa del Sol, but that's a different story).

In the UK, where this has happened in the past, what is happening is that people are slowly being forced to move elsewhere. In many instances outside of London.

It is not a crazy idea to suggest that in the not-too-distant-future, London will be a half empty city where a lot of rich people don't live, and a lot of crime takes place.

Is this really what the British Government would like?

And before anyone says 'but what can they do', let me just say, if you are the Government and you don't know what to do, then you shouldn't be the Government.

Left out and left behind

AOG, Madrid

Yesterday I was doing some shopping on the way home.  I had gone to the local supermarket with my headphones on and was looking to buy some dinner.
 

I noticed this woman fellow shopper as I went to the canned vegetables isle. I didn’t give her much thought since she looked very unfriendly and, quite frankly, these days I have zero time for unfriendly-looking people. 

I went about my business and stood in line to pay for a few minutes (it still amazes me how in Europe cash tills are usually kept at minimum with huge lines at any one time on any one register).
 

Suddenly, the angry woman in black rushed out of the supermarket with her huge over-the-shoulder bag.
 

The cashier was too busy and didn’t see her leave. The security guard was nowhere to be seen (maybe he was on a break). And the people in line in front of me where too preoccupied with having to wait for so long to pay.
 

So what is my gripe? Well, when I had last seen her, her hands were filled with items. When she saw me perhaps she got defensive that I had come to her isle when she was about to do some creative ‘discounting’ in her favor.
 

I did see her a couple more times in the store, and at all times she had her hands full.
 

So when she rushed out, I could only think the worse. Especially after, as I was leaving, the security guard came asking the cashier about her.
 

So why is this particular ‘potential’ shoplifter of any interest? Many reasons.
 

First of all, this woman was, in appearance anyway, middle class.  Almost trendy. She was well dressed and had an elegant manner to her.
 

Second of all, she was old. Maybe early to mid sixties. Although I know that people of all ages shoplift, it is true that she went against type. Middle class elderly women in Spain do not, as a general rule, shoplift. 

Especially not food.
 

But here it was, the real and ugly face of Spain’s current economic crisis.
 

The media in Spain, and I find this surprising, continuously go on and on about youth unemployment. With good reason, it is true. However, Spain suffers from a much more modern (yet antiquated in its inception) malaise. 

Unlike the US, or other more forward-thinking countries, in Spain, once you are past the age of 40, you may as well forget about working. 

In the labor market you are pretty much invisible and unemployable. 

And no, I am not exaggerating. 

Last year, about 40% of people unemployed in Spain were over the age of 40. The number is higher for those over 50. 

It is true that, generally, in Spain most employers prefer to hire younger and cheaper workers than those with greater experience. 

The first time I saw an advert which stated very explicitly “People over the age of 40 need not apply” I was shocked. That was 5 years ago, but those adverts have not stopped popping up. 

And yes, in theory, Spanish law forbids age discrimination. But this is one of those instances where the law is much more advanced than the society it is meant to serve.

Whereas in the UK such adverts would create an outrage, here they merely reflect the current state of affairs.

And I have another example. Years ago a friend of mine from Barcelona had just gotten back from the US. 

He is not exactly anti-American, but he does have that strange superiority complex which most Europeans seem to don whenever it comes to American culture and American practices and things they don’t know anything about.

He was telling us at a bar about his trip. About how wonderful it all was, how cheap things are in the US, and about how, in America, old people are exploited.

“I went to Wal-Mart, and the guy bagging my shopping was an old guy! Why do Americans exploit the elderly like that?”

Most people kept quiet and some laughed. Where he saw exploitation I saw respite from life and poverty.

And then I said that unlike in Spain, where old people are not even hired, at least in the US the elderly are not discarded and they are allowed to remain productive if they wish to be.

My friend was not convinced. Neither were the others, although some did say that, as usual, the US was more advanced than Spain in these matters and that Spain had “a long way to go still”.

But you see, in Spain, most old people don’t work not because they don’t want to, they don’t work because they are either retired, or they can't find a job. 

Of course, Spain being Spain, the family plays a very large part in this scenario. 

Most retired people in Spain have a state pension, and many financial benefits, however most does not mean all. 

When that happens, the family tends to fill in the gaps which the State leaves open (and there’s many of those). 

Although access to free health is guaranteed, many other things are not, and that is where most people rely on their families. 

For example, it is not at all uncommon for married couples to take in their elderly parents to live with them. Less so these days, especially in large cities like Madrid or Barcelona. 

But it is not uncommon, nor unheard of, nor strange. Nor is it strange to go on vacation with the entire family, grandparents included. 

Personally I find this one of the more endearing traits of Spanish society. 

There was a story in the papers a couple of years ago which talked about an elderly couple, one of whom (the wife) had been made homeless when the building they lived in was about to be refurbished. They had been living there for over 40 years. 

“There” was a one room studio apartment the walls of which could be touched at the same time if you stretched out both your arms. 

In Spain this is known as “infra-vivienda”, or substandard housing. Unfortunately they are not the only couple living in such conditions. 

On the one hand you could blame social services, but on the other you can also blame these people’s culture.
It is unsightly to ask for help, or complain publicly. Or at least it is for their generation. Younger people do complain more, though there is not much of a culture of asking for help. Ironically, there is a culture of demanding a particular right.

This I usually put down to their rights being trampled during the Franco dictatorship. 

So when that elderly woman left with, probably, some shopping in her bag, it dawned on me just how bad things are beginning to get. And although Spain’s economy is much larger than Greece’s (and Portugal, Ireland and Iceland put together), if things get worse, then people’s lives will suffer because of it. 

Although there is a large underground economy in the country, it is obvious that not everyone participates in it. 

That lady last night did not seem to be participating in it.

Fear of poverty

AOG, Madrid

I just got back from London. I have to say that, for the first time in a long time, I got the feeling that the whole country is bracing itself for what is coming finance-wise.

Yes, I am talking about the fear some people have concerning the recent budget proposals by the Torie/Lib-Dem coalition Government.

I spoke to a couple of friends about it and the general consensus was that the Government , in their opinion, is trying to outdo Thatcher. 

From what they said, many people fear that a lot of social rights will be taken away and, once gone, will never be returned.

One guy I spoke to mentioned that it was unfair how David Cameron, who has led a semi-sheltered well-to-do life has embarked in a quasi-crusade against poor people, not poverty. And the lady who told me this did so almost in tears.

I think she felt helpless as to what was happening. She was afraid.  

Should citizens be afraid of their own Government?

Another friend whom I spoke to mentioned how Britain had always been a Nanny State. It all started with a comment made to him by a good friend from Italy who said he felt like the UK was a bit of a police state. 

His partner then mentioned how a friend from Austria who'd lived in the UK had always felt it was a bit oppressive which is why she moved back home to have children.

I found it ironic since Austria has always seemed slightly oppressive to me.

From reading the British press, it would appear like my friends are not the only people worried about the coming months. 

Here The Guardian's take on it regarding Housing, which, according to many, will create an exodus of poor families from central London into the suburbs and will see an influx of well-to-do families into central London. 

Here The Independent talks about Boris Johnson's (Mayor of London and a Torie MP) take on the situation.

And here, the Daily Mail talks about child benefit cuts.  

Of course, nobody doubts that the UK needs to curb its spending, but many wonder if this is just a case of using the economic climate to enforce a right-wing social change. 

I think we will just have to wait and see.

Vacations in Brazil pt. 4

AOG, Praia do Forte

Today we got up really early to go and see the city of Salvador de Bahia, or simply Bahia. Out of all of Brazil's cities, this one has always been my favorite- eventhough I'd never been here before. Blame Disney and The Three Caballeros.

I still remember the song the Brazilian girl, Aurora Miranda, sister of Carmen, sung during the movie: Quindins de Yaya....memories!

(Coconut Cupcakes in case you are wondering). Even today I hum the tune now and then. Childhood is such a powerful thing.

God, how I loved that song!

And this one, the opening tune. There is something so romantic and sophisticated about it.

And today, I was going to that very same city, finally! I couldn't wait to see the old homes, the streets, the sound of the place.

We left the hotel lobby inside a large, and thank God, air conditioned bus, with the rest of the day's fellow travelers.

The tour guide, named Felix, was a local who came across as a very friendly person. He told us all about the day's events, where we would be taken, what we'd be doing, etc. After about 30 minutes of speaking, he allowed us to travel and admire the views.

I would like to say that he allowed us to do this in silence.

Unfortunately, somebody thinks that tourists must love the singer Carlinhos Brown so much that they would enjoy traveling in a bus for about an hour and a half with him and his racket playing non-stop until we got to Bahia. Wrong.

Thank God for iPods, I say.

Road to Bahia...

The road into Salvador de Bahia goes from being two lanes outside Praia do Forte, to a proper 4 line highway as we approach the city. It is called the Linhea Verde, or Green Line, and it goes all the way up to the Brazilian state of Aracaju.



Along the way the Brazilian countryside is a mixture of virgin jungle (known as the Mata Atlantica or Atlantic Rain Forest), palm trees, stray dogs, rich private comunities, and poverty.

Poor homes, half built, half painted, half lived in, dot the road all the way into Bahia.

There is a well known Spanish photographer named Dionisio Gonzalez who was inspired by this type of housing.

I think this because his work so closely resembles what I could see from the window on the bus.

I really like his work. The photograph here is one of his. It is called "Heliopolis". I find it extremly beautiful. It closely mimics the roadside homes I saw on the way to Salvador.

As the bus passes by these small towns (do three homes and a store make up a town? Two homes and a dog?) by the side of the road, which have no apparent name, I wonder what their lives must be like.

Often you can see inside their homes. Most of them have the television on. You can see the walls, decrepit as they are. Sometimes dirty.

You can see the clothes hanging out to dry. So much color, always the realm of tropical poverty, color. European wealth being so monochrome. I wonder why this is?

In some of the houses, small children are outside, playing. Some have a woman or two, sitting on a chair, guarding their home.

Perhaps they wait for their sons or husbands to return. Or their daughters. Sometimes you can make out a chicken, or a rooster.

I also saw towns peep out from the jungle. Some homes have two or three stories. Usually the third story is unfinished. It reminds me of the images one sees of Beirut, a city of once-legendary beauty, now destroyed and falling apart because of war.

So these villages, with their own conflicts with the modern world, their own wars, even if they are only social, peer out unto a road which leads to Bahia, a city, I would later find out, caught between modernity and its past. Wealth and poverty.

As you approach the great equatorial metropolis, the small towns cluster together, resembling larger towns.

Wealth also begins to seep through. It is very easy to spot.

Modern life is so innanely similar these days, we see the same things, we buy the same products. So global and boring at the same time.


The number of gas stations increases; so do a few restaurants; furniture shops.

And many pool stores with their upstanding blue monoliths as an expression of wealth and first-worldism.

Traffic also gets heavier. Modern cars are still not seen in great numbers. In fact, I have to say, most of the cars I see in Bahia are a bit old. Tattered. And pedestrian models.

No jazzy Lincolns or Mercedes are seen in great numbers (though in some neighborhoods, like Barra, Mercedes and Audis did seem to congregate along street parking lots).

Mostly VW and Ford and many many Japanese cars. Some Chevrolets; some Fiats. Our consummerist world also begins to grow as you approach Bahia.

Here and there, the stores get larger; shopping centers, though humble, pop up unannounced, with their customers as suburban furniture on a tired road.

Of course, life in this country is relative to life in Europe and the developed world. Although it may sound crazy, I do envy the space some poor people have.

Although humble, their half built homes, many with a satellite dish, are larger than my flat in Madrid. If they hear their neighbors, it is because they are on the street making some noise, not because their televisions are on too loud next door. Or the upstairs washing machine is on spin cycle.

All is relative.

The Destruction of the Black Middle Class

AOG, Madrid

I am not black. Reading this article in The Huffington Post scares the hell out of me. I will always be amazed at the fact that the whole country chose to look away from the plight of its citizens in Louisiana when hurricane Katrina stuck only 4 years ago. And that it voted Bush back into the White House for another 4 years only provided for the icing on the cake. I was surprised and saddened that day.

A friend of mine from Chile once said that the US is a third world country, only dressed well. Up until 2005 I had disagreed with her.

It is not enough that only some people live well, and have unthinkable opportunities that they would not have in other countries. It is to America's pride that its economy is what it is. But it is to our shame that participation in that economy, and that the redistrinbution of the huge wealth it creates, is tantamount to that of a banana republic.

I hope this changes one day.

Read the Article at HuffingtonPost