Friendship Economics

AOG, Madrid

It is not news that the Spanish economy is not doing extremely well. It is affecting the whole country and yesterday the unemployment rate went back up again.

Of course, to the uninformed observer, Spain's unemployment comes with a caveat: One, most of the people unemployed are immigrants who used to work in the construction sector (until recently one of Spain's economic pillars and main engine of economic growth). 

And two, most of them survive in what is known as the 'Black Economy'. That is, people are working and not paying taxes on their earnings. Many claim unemployment benefit and work. 

Nobody talks much about it and the Government acts as though they know nothing of it. And just as well they do, otherwise they would have a revolution in their hands.

However, there is a knock-on effect going on. Although people are working, even in the 'Black Economy', their spending power has diminished. 

And whereas a few months ago every analyst in the country was saying that imports (to Germany, France and the UK) would pull the economy out of the slump, the tune has changed of late. 

Now, it is, as we always knew, that what will get the economy moving is consumer spending.

However, given the performance of US banks in the last couple of years, Spain's banks are not too keen on lending. 

And in Spain, like the US and almost everywhere else, the biggest purchase people make is property. 

Certainly the big property promoters are pushing for the banks to start lending again, and Spain's President has met with several banking CEOs to ensure that lending continues. 

But thus far, nothing. So, in the meantime, the Government has decided to extend people's pensions, to push for reduced salaries and less worker compensation when fired. 

This in a country famous for paying employees about 80% of what their European colleagues make. And needless to say, people in Spain work longer hours than the European average.

Many have criticized the PSOE, Spain's governing party, because they are a Socialist party taking very right-wing measures. 

In roughly one year's time, Spain will have a general election (if not sooner, elections are the privilege of the Prime Minister). 

To most analysts, it is a foregone conclusion that the opposition will win the election.  And most think they will do so without having to lift a finger.

However, not all is lost.

A couple of days ago Mr. Zapatero said that in 2012, the whole country would feel the benefit of an upsurge in the economy. 

Just in time for the elections? Too little too late? Only time will tell.

In the mean time, a friend of mine called me yesterday with a question.

"Do you know how they hunt kangaroos in Australia?"

"No."

"They kill them at night. The lights from the 4x4s blind them, and they remain perfectly still. Then they get shot."

"Ok."

"That is how I feel these days. Like a kangaroo caught in the lights. I am completely frozen".

He owns a computer repair business, and he hasn't been doing well since last November.

"If I don't have money coming in, I freeze. I just freeze."

Unfortunately, he is not alone. Most of the country is, at present, frozen.

The secret of their salary

AOG, Madrid

April has been a funny month in Madrid. One day it is hot enough to inaugurate the “shorts” season, and the next it rains. Is this global warming?

Since January, I have been doing an internship at SER radio. Normally I started at three and left at ten PM. I have been re-allocated to the morning shift: eight to three PM. I find myself with a lot of free time in the afternoons. It has only been three days, but already I’m finding it a bit hard to adjust. It is difficult going to bed before midnight, though, surprisingly, it is relatively easy to wake up early. Go figure.

Last week, I watched a program called “Tengo una pregunta para usted” (I have a question for you), in which 100 regular people (referred to as citizens in the news), ask a politician a question.

The first guest was Spain’s Prime Minister, Señor Zapatero. His program did not go all that well. Some complained he had not had the opportunity to watch the show beforehand, unlike the leader of the opposition, Señor Rajoy. Out of the whole show, the only question which stuck out in people’s minds was the one where Señor Zapatero is asked the price of a cup of coffee. “It depends where you go but I would say normally about 80 cents” he replied. The media had a field day. It is true that in Spain’s parliament, subsidised coffee is 80 cents. But not in the real world.

However, Señor Rajoy also hade his Waterloo on television when he was asked his salary by a woman who lives on a monthly 300 Euros pension. His first reply was “Huh??” and then he declined to answer, though he assured her two things:

1- (humbly) he earned considerably more than her.

2- He was working hard to ensure that everyone’s pensions were improved.

Hard to believe from a man who has spent his entire time in the opposition fighting the Government at every opportunity, and then some.

Anyway, next day at work most people were siding with his actions. “The poor woman would have felt very uncomfortable if he had told her how much he made” was the reply I heard from most (though not all) people. Funny how it is quite customary in Spain to think of other people as being of less than average intelligence. I asked myself a few questions during that day- a day in which the press had another field day revealing the salaries of Spain’s top politicians, one after the other (even Señor Rajoy’s, who to this day continues to avoid saying how much he makes a month!).

I asked myself if most people think this woman would indeed be amazed to hear that Señor Rajoy makes over 9,000 Euros per month (he receives 2 salaries, one as a member of Spain’s Parliament and the other as leader of his party). I wondered why so many people were reluctant to talk about salaries ( I have since learned that in Spain- like in the UK-, salaries are private), and especially Señor Rajoy. After all, did he really believe for a second that the press would not reveal how much he made? After all, as a politician, his salary is public information.

I fully understand that many would not like to reveal their income, but a politician whose salary is voted publicly in Parliament? Odd to say the least.

Many have said that he was trying to, not so much save face, but rather please everyone. His intervention in the show had a higher audience than Señor Zapatero’s.

I read that, after 2 politicians, the show’s producers are looking for their next guest. Could be a painter, an actor, a musician….I think the public will vote. I think I should like to see who goes up for scrutiny next.