Spain slides into Full Depression
- Thread starter IanMacQuaide
- Start date
I'm spending some time in Spain right now. The part of the country (which is supposed to be one of the better off) is a complete disaster, I doubt it's much better in other areas. Unemployment ~20%. Unemployment is worst among the young. An entire generation losing their future.
The entire economy down here was built on construction and real estate and selling vacation homes to people from Northern Europe. Then you had all kind of luxury goods and services marketed to well-off Europeans/Russians. These markets have either disappeared or been cut in half. There is no other industry to pick up the slack in the economy.
Shops closing left and right. The prime shopping areas look deserted during the day.
The entire economy down here was built on construction and real estate and selling vacation homes to people from Northern Europe. Then you had all kind of luxury goods and services marketed to well-off Europeans/Russians. These markets have either disappeared or been cut in half. There is no other industry to pick up the slack in the economy.
Shops closing left and right. The prime shopping areas look deserted during the day.
He explicitly addresses the weak GBP as a catalyst for the UK to gain competitiveness. A means Spain is lacking by being tied to the EUR.Quote from Debaser82:
You Euro bear why not write a piece on Sterling collapsing again?
Spain's wages have to deflate 30% in order to become competitive with Germany's unit labor costs. It's a disaster.
I am well aware of the author's theory about a collapsing currency adding to a nation's competitivity I just don't subscribe to it at least not to the extend he does.
If his reasoning was correct the US would have gained in industrial competitivity these last 10 years and Germany or Switzerland would have become economic wasteland by now.
As if the UK is rebuilding it's manufacturing base as we speak thanks to the sliding sterling....
Most of the industry still left in the UK only exists at the mercy of government sponsorship anyways, the currency strength has little to do with that.
Last 10 years? The EUR was grossly undervalued as recently as until 2002. It took until 2007 before it was more "expensive" than in the early 90s on a purchasing power basis. You are assuming exchange rates have instant real-world effects on labor competitiveness, yet these things take a decade or so to play out as jobs and entire factories are being transferred.
Europe has benefited tremendously from the EUR weakness in the late 90s and early 2000s. Let's see how Germany is doing in 9 years from today if the EURUSD averages 1.50 and the EURGBP averages 0.90.
speaking of crime in eu... i'd pick france as my favorite. been robbed by rent a car agency in front of cameras and at the end they threatened 3 year prison + 30,000 eur if we dont pay IMMEDIATELY for "stolen" car that we left in their parking all captured by airport cameras. And this threat by police and their law system. What a zombie place !
Quote from makloda:
Last 10 years? The EUR was grossly undervalued as recently as until 2002. It took until 2007 before it was more "expensive" than in the early 90s on a purchasing power basis. You are assuming exchange rates have instant real-world effects on labor competitiveness, yet these things take a decade or so to play out as jobs and entire factories are being transferred.
Europe has benefited tremendously from the EUR weakness in the late 90s and early 2000s. Let's see how Germany is doing in 9 years from today if the EURUSD averages 1.50 and the EURGBP averages 0.90.
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Makloda...really like your viewpoints....
What price declines are happening to 2nd , 3rd homes in Spain's tourist areas....the tourist...2nd 3rd...home market for most any country would
seemly be in the top tier vulnerability
category....
It seems as if 2012 is the likely total wind down period...
Your opinion ....?
Say you are correct (I am not saying you are not)...
If everyone follows this route globally nothing will have changed in this race to the currency bottom....
The Chinese won't allow the CNY to appreciate, the USD and Sterling have to weaken to reachieve competitivity, Europe can't stay behind cause they need to save Club Med (I don't like the term PIGS
), ...No end in sight then so it seems to me.
More structural changes should be implemented then weakening the currency alone as it affects to many people ofsetting any positive outcomes from the currency devaluation itself.
+1
'Pickpocketeers' along the Mediterranean coast and touristic sites across Europe are the very best in the world. But they don't harm you, never feel a thing. lol