Why Crisis in Spain This Week Became More Important Than Greece
forbes.com
forbes.com
The problem is that nobody really knew ( maybe they didn't want to know) how big the hole really was: municipal debt (the bigest debtors to private companies in Spain, are city Halls), public banks (cajas) unrecoverable credits (huge lendigs to political friends for building proyects), crazy public spending ( huge airports,high speed railroad between small towns..). Mind you that all this has been caused by every political party, government agency, local government, private companies( mostly construction ones) and banks( friends of mine bank office directors were regularly yelled by their bosses to increase lending no mater who). Of course a gold rush of cheap credit infected the whole population. A perfect storm if ever have been one in the spanish economy.
Finally this government is taking the rudder of all this madness , and making real changes relatively fast: new transparency law for public agencies(there was none, all the accounting was almost secret!), plan for paying all the municipal debt to small companies (this finally has made public all hidden cities debt, and will avoid that lots of small companies go bankrupt), new banking and financial markets law (to increase the transparency and safety levels), public spending cuts (pretty heavy ones), another law to take control of regions that are not taking measures and making the needed cuts in spending.
I think that we are at the worst of it but only because all the truth (well maybe only the biggest part) is coming in to the light. I also think that we will go through this as real measures are being taken, in Greece they have the problem that there is no strong government taking this kind of measures.
Also a real deflation is taking place, in salaries and prices( as we can not devaluate due to the euro), this is quite traumatic for the people as you see how bussiness are cuting your pay slowly every year. But as prices were artificially inflated due to the euro ( germany used to be expensive in the nineties, now lots of things are cheaper there!), and the competitiveness of Spain sank, we only created wealth via credit. Maybe this deflation will increase our export rate slowly.
Somebody commented if it would be a good oportunity to start a bussiness or a shop here. Nothing that is related to sales is a good idea, as there is no cash around to buy anything. But it is a good time for hiring people with high qualification at a discount ( programers , biologist, architects, physicists, lawyers, ingeniers, doctors) for little more than 1000€/month, even with 1000€ you'll have peolple lining up for the Job.
Also it is a good time to buy spanish companies (we have some good ones too) with big discounts due to market undervaluation and their need for money (banks are not lending AT ALL!).
Edit: typos and general editing as I wrote it from the Iphone.
You can hire entry level programmers or engineers por 18-20k, but experienced ones will cost you 25keur or more, and probably you can get better price/quailty ratio in Eastern Europe.
Maybe 1000€ for doctors is a bit too low is true, but this year we are going to see stuff like that for people who doesn´t want to move away from their city.
Any way I´ll tell you in a couple of weeks, as I am planing to hire 2 or 3 programers along this month.
Please read again what I wrote as it has nothing to do with what that guy said . Somebody commented if there are opportunities here in Spain due to the crisis, and I still think there are, if you know what you are looking for.
Most of the debt issues are just coming to light, small town/village governments are still doing the same old thing, and the "people in power" are still getting away with it.
Nothing is going to make this go away, and this government, with their watered down transparency plans and regional examples (think Madrid and Comm. Venlenciana) isn't going to be capable to doing what it takes. There's just too much mud on their hands.
I will say when my wife and I spent some time on Ibiza and Mallorca that the attitude of the workers there seemed a little different, perhaps because these places are so heavily sold into servicing northern Europeans. On the mainland the amount of people I have seen collecting paro and working, or collecting power and rejecting work is horrible.
Paro = unemployment insurance in Spain.
Now all this has almost disappeared, not completely but is much better. People is realizing that the Belle Epoque where everybody had right to receive money for nothing is gone.
But it could also be that they are out of work and cannot play that game any more, instead are either 1. properly (or willfully) unemployed and on Paro or 2. they are working under the table and collecting Paro or 3. they are simply working under the table or 4. they are unemployed and have zero income...
At the higher point people was rejecting job offers because they had unemployment and didn´t want to lose it. It has been pretty standard(I have some friends and family who have been doing exactly this) to have a temporal contract in any job (6 months or 1 year) and when it finished you went to receive your unemployment pay till you finish it, 6 months or so without looking for a job, just enjoying. Then, and only then you looked for another job!. You can not repeat more than 3 periods of 6 months, because the company will have to transform your contract to a fixed one. So it does´t really matter how good you are, you are going to be fired no matter what after a year and a half.
Work contracts here are a bad joke (they have changed the law, but I don´t think it will really change that much as they only made firing cheaper, hiring is still very expensive). Companies are forced to hire people with this horrible contracts that don´t allow you to get a fixed job, because it is very difficult to be flexible with fixed employees (autopun no intended). Workers become more expensive as time passes, no matter how good or bad the worker is. Also firing somebody when he has been a lot of time in the company was very expensive (40 days for year worked, now reduced to 20)
Unions are defending the rights of the fixed employees but almost no one can get one of those contracts, so they are not defending the workers that really need to be defended, but the unions status quo. Also the companies have gamed the system and played with the contract conditions of hard working people, discouraging hard work (good workers are not payed more here, in general they prefer by far a cheap and unexperienced worker than a more experienced and productive one that happens to be more expensive).
We have a system in which from school hard working people were considered dumb, and made jokes of them. You pass from one course to the next even if you fail. Why are you going to study that hard if it is possible to earn more working in construction, and receiving the unemployment help?. The same happens in the companies (not all of them of course, but it is really common), why are you going to work hard if they are going to fire you anyway when the year and a half expires no matter how good you are.
That is why a lot of young people can´t afford to go living alone, of course is a cultural problem (not moving far from your town to get a job, requesting the best job conditions even if you are not the best worker nor have experience, etc..), but working and social conditions for young people have not been very encouraging to do much differently, in fact the opposite has been true.
The excess of cheap money around made people to see working as time lost. Much better go gambling (invest) in your flat, after all you were supposed to be able to sell it for double in 3 or 4 years.
You can also add the cultural loath to the EMPRESARIO (business owner). Here if your business is making money, you´ll be suspicious of stealing from your costumers or/and your employees (maybe is a catholic sin?, or simply good ol´ envy). People rather be a civil servant or be unemployed than be an employee and much less try your own business . Now it seems that people is changing the way they look at entrepreneurship, mostly due to the internet and Facebook, and of course necessity.
All this doesn´t mean that there is no really hard working people in Spain, there is, but in general it wasn´t seen as something to be proud of. More like kind of stupid (this depends heavily on your social extraction, lower levels where the ones that fell more deeply in this trap).
Maybe this deep crisis will have the effect of reseting all this broken system, and a change to a more rational one. (just maybe)
I have a few neighbors who have the entrepreneurial bug and have started small businesses during this downturn. One fellow said he would be happy to be making enough to employ his brother in-law and take home 1300 for himself.
Spanish modesty and enjoying the good life, while creating a proper small business and employing one or two people. Ole, here's to more people like that!
Everyone, everywhere has stood by and let this happen, because everyone assumed that everyone else knew what they were doing. Voices of concern were quickly silenced. Nobody wanted to be the party pooper, nobody has done anything to prevent this, nobody wants to bear the responsibility for what has happened, and nobody knows how to fix it.
And for the sake of being in the Euro the margin call has come, so to speak.
What I don't get, is why didn't they at least try to clean things up a little bit before all of this? I guess Aznar's idea was that the economy would pull thru all of the the corruption with the housing bubble. Kinda shortsighted.
Admin council of "Cajas" are formed by people selected by political party in power in that region, thus "Cajas" are highly politized. Many "Cajas" had a lot of toxic assets, and were forced to unite and create Banks to be able to refinance themselves.
Bankia is the fusion of many "Cajas" controlled by the PP (Partido Popular - Popular Party, right-wing party) in an effort to create a "Bank of Popular Party", that is Bankia. The "Cajas" involved, being the most important Caja Madrid, had huge losses due to toxic assets. The fusion of all of them won't get anythyng but a even greater hole.
That hole of toxic assets is being nationalized and assumed by the state. Remember that Spain is now ruled by the PP. That allows effectively saving Bankia as a Bank of PP. But Bankia is NOT owned by the state, only 100% of BFA (the bad part of Bankia) is owned by the state, which in turn controls 45% of Bankia. That leaves 55% of Bankia, free of toxic assets and owned by private hands, but effectively controlled by the PP.
I see all this as a multi-billion euros scam
Perhaps a good side effect of how unemployment benefits work there is that people become willing to gear down their salary expectations. You have a long period of living off the dole where you reduce your spending, and by the time that runs out you are probably more willing to work for less. I thought I would never say this, but this might be what saves Spain and the Eurozone by allowing Spain to become more competitive without inflation.
Looking at spanish stocks, I wonder why Telefonica is falling so precipitously. That seems way overdone to me.
Sometimes I wonder if a return to the Peseta and devaluation would bring back the foreign money in the RE market... It would at least move towards filling up the housing bubble with real money.
A very closed friend of mine started his company (internet startup) in Spain just over 12 months ago. He wanted to hire Spanish developers, with c. 5 years experience. And he did. Even if this was a startup, the working conditions were pretty good for Spain: €32,000 (well above many corporate jobs), private health insurance, equity, job responsibility and decision making. My friend was paying salaries out from his own savings, no seed money raised, and he was paying himself zero.
Since founding the company, he has fired two developers because of a "legacy" cultural clash. What my friend (late 20's guy) found out was that many developers (and probably this extends to many other industries) were looking for a 9-to-5 job, no frills jobs. They did not show any motivation/passion at all. They took no ownership of projects, did not step-in when issues came up and showed no motivation for "getting things done". He was frustrated because the company was a startup, not a large corporate, and his bank account wasn't cash rich, but Spanish developers showed no respect and did not go that extra mile to ship product in a responsible timeframe.
These two developers, in their mid-30's, are probably not representative of the entire dev community in Spain, but my friend burnt out, and hired developers in Poland. The Spaniards were let go, in time to pay them no equity.
From what he has told me, a part from some minor communication issues, Polish developers showed the right work attitude and passion, with a mentality very much like the Valley. Since the initial work crunch, from working 80 hour weeks, he is now doing a 9-6, and the company is cash flow positive. Just shows that hard work does pay off, and how a 9-5 mentality (specially when starting a company form scratch) is cancer to the company.
Anyway, happy it worked out for your friend. Yay for outsourcing!
It's more like: devs tell him, "yes, super excited to work in a startup, salary is terrific, challenge accepted."
truth: "oh, it's 5pm, lets go home. we haven't had the time to push production code to fix that bug, but we can do it tomorrow."
it is easy to say that someone is a bad leader/bad recruiter, but the fact of the matter is that it is a common cultural issue (as per other comments in this thread). Hence, why did it work in Poland and not Spain? Many good engineers at large corporates in Spain don't make that money, and yet for less one can get an equal service in Poland.
Clearly "at least you have a job" was not an approach to motivate hires, they were let go.
Poland has almost 1/3 the GDP of Spain; of course his money was more effective there. Did he bring them to Spain? Last time I interviewed a Polish developer, salary expectations including relocation to Spain were roughly 2/3 from a pool of candidates decidedly more expert than their Spanish counterparts.
That's one of the big challenges Spain faces in the next few years: reducing the cost of living without destroying the standards of life, so it can become competitive again while keeping a reasonable amount of experts and highly skilled workers (who are now fleeing the country in droves).
Don't get me wrong on the hiring issue, I think they are both parts at fault. The irony in this whole situation is that you hear from Spaniards (primarily those called "indignados") complaining about €1k/month salaries, shitty jobs, etc. and my friends stumbles into a situation where his employees have above avg working conditions (€2,700/month, with private health insurance and equity"!") and there is no reciprocity in specific working situations (he was definitely not asking 80hr/week in perpetuity, he was just asking to ship on time to meet deadlines, if that means working leaner, or working more hours that is up to each individual, just get it done).
I know where you are coming from but unlike people here on HN seem to think; the whole world is not Silicon Valley (and I know at least one person in Silicon Valley crunching 11+ hours/day for equity in a startup actually); the amounts paid to programmers there are not really examples for the rest of the world. If you want that just move there and pray the stories are true; there is no bubble.
One of my best friends in the Netherlands has been working for around E40k gross as a top dev for 15 years; he doesn't care about money, doesn't ask for raises. The company still looks like a startup, but is making enough to pay salaries every month for 15 years. He doesn't mind crunching outside work time and often does.
Besides the question if it is 'smart' or not to do so, I don't know a lot of people who worry about these kind of things much. They just work and have fun doing it and the moment they don't like it anymore, they switch.
If your friend expected his early employees to work 80 hour weeks, the pay he was offering was not "well above many corporate jobs".
Presenting Catalonia as some kind of an exemplary case for a larger problem may be misguided for another reason. Spanish regions are famously independent minded. Normally, no one outside Spain listens to the the Catalonian government's tactical maneuvering to extract concessions from the central government. But these days, any mention of debt in Europe causes panic attacks.
The Levenshtein distance between Catalonia and California is just 4 whereas the distance from Catalonia to Greece is 9. That can't be a coincidence ;-)
Local debt is the big untold story of the Euro crisis and, if that was not apparent before, it became glaringly so when Catalonia’s President this week told the world his autonomous Catalan Government would struggle to meet its bills at the end of this month.
What I take issue with is that he didn't actually fact check whether or not Catalonia is an example of a dangerously indebted region. He makes it sound as if Catalonia is on the brink of default by the end of the month, which isn't the case at all. He just takes the words of a politician at face value, apparently unaware of the internal dynamics of Spanish politics.
What the Catalonian president did was to pressure the Spanish government to let the regions refinance in federal Spanish bonds because interest rates are lower than for debt issued by the regions.
http://krugman.blogs.nytimes.com/2011/12/09/slow-learners/
From reading his blog you'll also know that: - Spain had surpluses and was lowering public debt before the crisis - The catastrophe that austerity caused and how the idea was very bad in the first place - How the crisis was made worse by the 'euro straightjacket' (ECB tight money policy). - How the euro caused trade deficits in the southern countries that were compensated with German and French capital.
The weird thing is - its not even unorthodox, unconventional economics. Its the basics that everyone studies, but no one remembers.
How does an inflating euro cause inflation in the dollar?
What we saw in the US housing crisis is now playing out on a scale of nations.
Seriously, all the commodities guys are. If you look at gold/silver demand guess what the major determinant is - OH YEAH - JEWELLERY! You know the stuff people buy when veblen goods are popular (i.e. a strong world economy).
Your baubles are worth nothing if the 2 largest economies go down.
Everyone dumped emerging markets, the euro and stocks to buy dollars and treasuries (flight to quality during high vol.).
Not because anything drastically changed, but because of the beauty contest dynamic in markets. You predict what others may predict to happen in the short term and act accordingly.
Go buy yourself a gun, food, and some survival training if that is your position. You can't eat gold. You can't live in silver. And you most certainly can't sell it when everything goes down.
Here's a hedge fund analyst's take on it: http://www.quora.com/Why-is-the-price-of-gold-rising.
Notice the graph and its constituents. Gold/Silver guys mock us fiat currency types (i.e. everyone) when they themselves are trading the same trust based tulips as the rest of us.
Everything you trade is based on trust, and trust is, and always will be, a bet on the future being better.
Gold/Silver is a bet for the world getting better, not worse.
You can't invest in the end of the world. You can merely prepare for it.
But you have no idea what you're doing.
I merely wish to point out that you can't bet for the end of the world. You can merely prepare for it.
For this argument, I define value as providing ME something, not value that can be traded.
Not the end of the world.
It's no different from buying the stock of companies that sell the goods the commodities are composed of (since they demand those commodities and in turn set their prices in the market via demand).
It's all supply and demand.
Money moves to safety during times of high vol. People think money moves to gold, when in fact it moves to the highest quality bonds and currency.
Gold market is tiny compared to the pools I deal with. But those morons fly around claiming stupid things, and I just wanted to set things straight.
So why the "flight to gold" that is spoken of in the media?
It sells papers and ads - it's link baiting in real life.
You need to look at the incentives of parties before you take their word. My incentive is obviously for people to buy dollars and treasuries, but guess what, everyone does that every day of the week (business/buying/stocks/retirement accounts). So I don't really care what gold huggers think.
But gold huggers work on a small market, and it is their incentive for others to buy into this farce. Take from that what you will (reminds me of pump and dump and the tulip mania).
Don't believe what I say, go figure stuff out for yourself. Everyone is biased.
Don't buy t-bonds, don't buy gold. Look at incentives. Look for production of useful goods. Make your own decisions.
Paper money can be made out of thin air. Gold can't. Big difference.
Reports of paper money's death have been greatly exaggerated.
Floating paper is here to stay people. If the world falls apart, all that matters is guns, food, water and shelter.
Your baubles are worthless without the society to back it up. And since we move trillions across nations everyday, I'm going to go ahead and say the world trade markets are synced up and highly correlated/dependent. If one super centre goes down, so does everyone else.
We live in one world now, people just don't know it yet.
Hyperinflation is a pretty well documented historical phenomenon.
Paper is created by a central authority. A central authority can inflate the currency or impose control mechanisms.
Control mechanism avoidance example: China using gold to buy oil from Iran.
http://buying-gold.goldprice.org/2012/04/india-and-china-to-...
>You assume rule of law, efficient markets, a government that will protect your assets, a place where you can spend your gains. etc. etc.
It sounds like you equate a hyperinflation scenario with a complete societal breakdown. That isn't necessarily the case.
>Reports of paper money's death have been greatly exaggerated.
Paper money as a tool will never die because it's convenient. Individual currencies, however, have and will. This is historical fact.
>Your baubles are worthless without the society to back it up.
Of course, but currencies collapse more commonly than societies. Value stored in commodities can be recovered. Currency value killed by hyperinflation can't.
Those countries you speak of were when the markets weren't tied to each other and weren't highly correlated/dependent (1700-1960s). This was due to flux in global geopol structure where the countries didn't have much to do with each other.
Tell me the last time a developed nation got hyperinflation.
Stick your money in uncorrelated risky countries, and you take the yield, but you take the risk of hyperinflation.
What's a "super centre"?
>Those countries you speak of were when the markets weren't tied to each other and weren't highly correlated/dependent (1700-1960s). Tell me the last time a developed nation got hyperinflation.
Argentina (ended 1991) and Yogoslavia (ended 1994).
http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hype...
And I quote from the legendary Wikipedia (http://en.wikipedia.org/wiki/Hyperinflation):
Hyperinflation is often associated with wars or their aftermath, political or social upheavals, or other crises that make it difficult for the government to tax the population.
Obviously the next comparison will be with the largest and most stable economies the world has ever seen, moving the largest quantities of wealth it has ever seen. Not.
Super centres are where the majority of cash moves through, either for trade or as an intermediary. Eurozone, Japan, China, America, India. Those are the places that matter.
Some small POS country in South America and another in Eastern Europe are rounding errors. Hyperinflation is only a concern for relatively risky, isolationist countries that are still undergoing societal flux.
Once again, the reports of paper money's death have been greatly exaggerated - ESPECIALLY by those who stand to benefit from it - long gold/silver etc.
The western world may be headed for upheaval. Globalization and technological progress are making western labor redundant and the economic center of gravity may eventually move to the East.
Transformation brings uncertainty. Paper money will always remain as a tool, but when global orders change, as they have throughout history, individual currencies may be casualties.
> You can't eat gold. You can't live in silver. And you most certainly can't sell it when everything goes down.
Hyperinflation in Zimbabwe ring a bell? They sure didn't seem to mind that you can't eat gold, and just went ahead and exchanged it for food instead: https://www.youtube.com/watch?v=8HD0NWRSEjU
Your dismissal of gold as "baubles" doesn't change the fact that it does seem to work as a medium of exchange, even in a situation where a fiat currency no longer doesn't.
Sure, that's based on trust, just like you said. But mcantelon's point that gold can't be created out of thin air is relevant to that trust.
> Well seeing as my tbills represent the future output of the world's largest economies
Your T-Bills are IOU's from one of the world's largest economies, and guess what? -Those are based on trust too.
> Money moves to safety during times of high vol. People think money moves to gold, when in fact it moves to the highest quality bonds and currency.
Yes, money moves towards perceived safety. The mainstream perception of the ultimate safe investment has been US bonds.
But you know, it's possible that something else might end up being perceived as safer than US bonds. Perhaps something that's not controlled by any government, and can't be created out of thin air. Perhaps something that is still trusted as a medium of exchange.
Government bonds in general have been thought of as a safe investment, but Greece's bonds are government bonds too. Care to buy some?
I trade large currency/bond markets, not the relatively small markets like gold. I was making a point. I can't make people do things, the market is way too big (just ask the Bank of England!). Gold huggers can. Hence why I stated:
> Don't buy t-bonds, don't buy gold. Look at incentives. Look for production of useful goods. Make your own decisions.
Yeah you're picking and choosing your examples there. I only talked about super clusters (euro/dollar/yen/yuan/rupee), not POS countries in Africa that have 0 impact on global markets, as they aren't connected, or correlated. Care to read my other comments, they indicate when hyperinflation occurs:
> Hyperinflation is often associated with wars or their aftermath, political or social upheavals, or other crises that make it difficult for the government to tax the population.
Sounds like Zimbabwe now then doesn't it?
Barter > Gold. Barter is the normal medium of exchange. It scales nicely in the developing world, where things are slow, and people are poor. Gold is a POS medium of exchange for the exact reasons gold huggers love it. There isn't enough of it to do anything with. It's nothing but shiny baubles for the uncritically thinking. Why not diamonds? They're just as rare, just as hard to handle? Why not cacoa beans? Or platinum? Or terbium? HUH!
> Sure, that's based on trust, just like you said. But mcantelon's point that gold can't be created out of thin air is relevant to that trust.
Yeah that's the point. Your gold has no use in a developing country, despite what you think. People trade in dollars for a reason.
> Yes, money moves towards perceived safety. The mainstream perception of the ultimate safe investment has been US bonds.
The US has the fastest nukes, the best standing military and one of the greatest economies.
> But you know, it's possible that something else might end up being perceived as safer than US bonds. Perhaps something that's not controlled by any government, and can't be created out of thin air. Perhaps something that is still trusted as a medium of exchange.
Nothing is safer than the US government.
And do you know why?
Because if the US government isn't safe, well then, none of this matters. The US is a conduit for massive capital. It exports huge amounts of goods and services, and consumes far more. You want to bet on the end of the US? You can't, because that bet is the exact same as the one for the end of the world. You cannot invest for catastrophe. Merely depression!
Buy gold all you want. Your bet, if you look at it closely, is exactly the same as mine.
It's just that you don't know what you're doing.
> Yeah you're picking and choosing your examples there.
Ah yes, the classic "cherry-picking" -accusation. Always a good distraction.
You said:
>> Your baubles are worth nothing if the 2 largest economies go down. >> You can't eat gold.
I pointed out that gold was actually "worth" food in Zimbabwe, and that therefore it was unnecessary to try and subsist on it. Gold has been used as a medium of exchange for ages, and it's still useable in that capacity. It doesn't really matter why, as long as you can trade in it.
You claim that if one "super centre" goes down, all others will follow. That may be true, but it's just as possible that all super centres going down would not affect gold's useability as a medium of exchange. For example, all those piece of shit backwaters outside of your super centres may just happily continue trading in gold and whatever other currencies they happen to use.
It's also possible that all other super centres would not fall in a chain reaction.
> Barter is the normal medium of exchange.
No. Barter is a method of exchange. Gold is a medium of exchange.
Here's how barter works:
Let's say you have 10 apples, and you meet some other guy with 10 oranges. You feel like eating an orange might be fun for a change, so you suggest a trade with him. He figures he could use some apples too, and so, he accepts some apples in exchange for his oranges. You both walk away munching on your newly acquired fruity loot, and there is much rejoicing.
Now, if for some reason you don't feel like eating oranges at the time, but feel like making a trade, then a medium of exchange is necessary. You want to exchange your apples for something that you can later exchange for something other than oranges. So, the guy with the oranges needs to give you a few apples' worth of "money" - be it gold or dollars, or whatever medium of exchange you trust enough. You might even accept cocoa beans, if you believe you can exchange them for something you want later on.
OK, I suppose you get the idea, but let me know if there was a part you didn't understand.
> Your gold has no use in a developing country, despite what you think. People trade in dollars for a reason.
I'm sure we all understand that physical gold is just pretty fucking inconvenient as a medium of exchange when you want to deal with someone who's not standing right in front of you, because it can't be converted into ones and zeroes and zapped across the world. But that is completely irrelevant to gold's "worth" as long as you can, in fact, exchange gold for things of value.
On the other hand, you need to consider the possibility that fiat currencies may actually end up dying, if taken over by de-centralized, cryptographic currencies like Bitcoin. That would be a welcome change, in fact.
> But gold huggers work on a small market, and it is their incentive for others to buy into this farce. Take from that what you will (reminds me of pump and dump and the tulip mania).
You're thinking like someone used to the idea of manipulating markets to their benefit, much like a Wall Street trader might. Do you think that gold's exponential rise in the past few years just might have something to do with the on-going disaster that the world woke up to in 2008? http://www.usagold.com/reference/prices/2012jangoldprice.jpg .. or is it just "gold-huggers" working their evil schemes pumping up the price, in a time where the vast majority of investors are completely oblivious to gold as an investment or even a store of value?
Do you think that the prices of gold in various fiat currencies might actually reflect the their perceived trustworthiness as mediums of exchange?
> Nothing is safer than the US government.
Right, and the fact that your nation's external debt is more than 100% of your GDP, and currently increasing at 1.5 trillion dollars per year does not affect the trustworthiness of your IOUs? Just like it doesn't matter that various US states and municipalities are bankrupt?
> Because if the US government isn't safe, well then, none of this matters.
There are other countries out there you know. No one knows what will/would happen if the US went down in flames. But it might also not be the end of the world.
> The US is a conduit for massive capital. It exports huge amounts of goods and services, and consumes far more.
Its main export seems to be global economic calamity. I'm not sure if iDevices count as US or Chinese exports.
Most of the "assets" sloshing around the globe are of imaginary value. Debt sliced and diced into various financial instruments, etc. Bullshit, pretty much. Tens of trillions of dollars "worth" of bullshit. Again, no one knows what will happen in the world's economy, but I'm sure we could do with less bullshit.
> It's just that you don't know what you're doing.
Well what exactly am I doing? Besides, you know, educating you? :p
Wait until (if) Spain exits, then capitalize. But remember, the work ethic here is not the same as elsewhere. And people who don't fit that mold are leaving the country.
If it doesn't exit... Hard to see what will happen here.
I know a lot of kids there who finished school, live with their parents on (some kind of; I'm not totally clear on this; I know they receive a few $100/month) benefits. I'm from the Netherlands and this concept is alien to me. None of the people from the schools I went to would consider living off benefits unless very ill or something like that; the ones who did not get a regular job opened companies. Probably it depends on the part of Spain but it was a strange experience.
I think it is partly a generational thing. If you find a mid-30's developer with kids, my experience is they will take what they can get. The trouble is, as you said, many have left (I know a few now in Germany) and others have simply created their own little space/niche of work.
The younger gen seems exactly as you say: back to home, parents footing the cost (I know one guy whose parent's are paying the loan on his BMW!).
At some point the pain is going to become too much and the "ni-ni"s, as they call them, are going to have to do something. Their country has already been sold, what next?
I see that mentality everywhere; builders (who are all out of a job now), pool cleaners, car repair etc. If something is slightly out of the comfort zone it's usually a no. How bad does it need to become before people see it doesn't work that way (anymore; obviously before 2008, if you were lucky and not too greedy, money was rather 'free' for a lot of people; for instance the local bar owner didn't have to work at all; his bar was packed every day before 2008 so he hired people, put the profit into building; unfortunately he got out too late and there you go; hard working which he 'doesn't do'. Rather live in poverty.).
I wish some form of serious, respected Spanish person, who isn't in politics, would stand up and stir the people into action as what happened in Iceland. Its sad to see a country rotting out from its core, the anger yet the complacency, the loud voices but muted actions...
We have a huge problem with nationalism (specially in Catalonia, Basque Country, and some testing in Galicia) and in the autonomous communities (regions) without that kind of problem --like Andalusia or Valencia-- the political caste is a real tribal mafia.
Of course, in the nationalist zones the political caste is a mafia as well. 'The Caste' is the only common denominator in Spain.
Adding more emotion to the Spanish puzzle, Catalonia is trying to annex Andorra, a piece of Southern France, Valencia, and the Balearic Islands.
Basque Country is trying to annex Navarre, and another piece of Southern France.
Worth mentioning the very different Tax system in every region (in some places with huge privileges).
I'm sure it's not exact but I met people who had a high paying job, decided to leave/were fired and immediately got unemployment benefits from the government while they were looking for a new job.
Which is cool but mmmm maybe premature? If you had a high paying job for 3 years why should the government immediately step in giving you something like €500/month while you are looking for a new one? kinda removes the pressure to find a new one from day 1, doesn't it?
"The government" here is the tax payers, including the person in question, who has decided to pay into an insurance system exactly to avoid that pressure and give people a chance to look for a job without panicking over how they'll be able to pay the mortgage next month.
I'm Norwegian - the Norwegian system is similar - and was shocked when I moved to the UK, where unemployment benefits are a joke (still better than most US states) and notice periods are ridiculously short by my standard (in the UK 1 months notice is pretty standard; in Norway it's 3 months). In Norway you also get most of your salary for the first 12 months or so, I believe (it's been 12 years since I moved out, so not kept up to date how it's changed) so for most people it's way above €500/month).
If you look at unemployment in these countries when the economy is good, it's still usually low - the people who don't want to work will eventually be moved over to the regular benefits system which is far stricter and with lower amounts, and the people who do want to work rarely see unemployment benefits as some kind of paid holiday, but want to get back in work ASAP. Especially since a gap in employment will be something prospective employers will see as a worrying sign, so people are acutely aware that the longer they wait the harder it will be to get a new job at the same level.
And when times are not good is exactly when these benefits are important: We pay or dues to have a safety net in particular for those situations when it's not our fault we can't get a new job right away.
I'm sure there are situations where really "it's not your fault" but most of the time I talk to people in dire situations they completely failed to do anything when things were going great for them. I have little sympathy for them, especially when they end up blaming everything but themselves.
This is not "free money" - it is insurance payments that people in most cases have paid premiums for.
Why should people need to set aside additional money to avoid claiming benefits they are paying towards their entire working life?
please note I always referred to "people who had great periods" work and money wise
> Why should people need to set aside additional money to avoid claiming benefits they are paying towards their entire working life?
because if you are doing great how fair is it for you to be careless only because "if I need it the state will support me?" Looks to me like it quickly becomes your fault and you only subtract funds that should better be used for the people who really need the support (the people you mentioned at the beginning of your reply)
Probably better both for society and business if people take a month or two to find a job that's a good fit rather than having to jump on the first one that comes.
Interesting: a uniformly distributed, uniformly crippling debt. The public will be forced to adopt whatever the business community's EU/IMF proxies ask for in exchange for debt maintenance.
I have just got a better perspective on the Euro crisis than all the newspapers and tv of recent weeks. I never knew the debt delegation issue had been happening.
I would like to know how we can see the total level of debt for each country. If we can find a reliable source let's put it on wikipedia :-)