There was an interesting front page from the ABC on May 14th. It reads ‘The Government criticises the lack of judicial pressure on Podemos’. It might almost be understood from articles like this, by both the right-wing media (and indeed the Partido Popular), that the function of the judiciary is to be at their political beck and call, and not merely to act as a constitutionally independent body. Odd, one might think, that the Minister of the Interior would send an investigator to New York in April to meet with an ex-minister from Venezuela to discuss improper payments to Podemos (here). Understandably, the Establishment is worried, the old behind-closed-doors understanding between the two traditional parties is now at risk. With a possible new leader who simply doesn’t understand the system, who knows what could be knocked loose from the Building of State?
From Mark Stücklin’s Spanish Property Insight: ‘The latest housing market figures from the Property Registrars show that foreign demand for property in Spain increased by 16.4% in the first quarter, with British demand still growing strongly despite a weaker pound and Brexit fears...’. The article shows homes bought by nationality in the first quarter of 2016.
Two major UK banks set to stop offering mortgages to expats. The Royal Bank of Scotland and Natwest will stop offering mortgages to expats from May 19. From then on, applicants must be resident in the UK in order to be eligible. Many claim the banks are turning their backs on Britons abroad, but some experts have said new EU regulations on home loans, which took effect on March 21, have meant more work for lenders due to increased complexity of the process...’. Story at The Olive Press.
FromEl Diario: ‘"Concern and uncertainty" among those affected by demolition sentences by the slow and uncertain demolition orders from the judiciary. The AMA (a Cantabria-based group called ‘La Asociación de Maltratados por la Administración’) is planning an act of support for buyers of good faith and the laws that protect them. The AMA Association has highlighted the "concern" of those affected by the judgments for house demolition by the "judicial drip system" that is happening in recent weeks, and the "uncertainty" over the new legislation protecting buyers in good faith...’.
In a turn-around for Spanish news, the ABC features Helen and Leonard Prior in an article called ‘A British Family live in their Garage since their House in Almería was demolished. Now, ten years on, a judge says they must be indemnified for the trouble caused’. Europa Press announces Thursday’s demonstration in support of the Priors in Vera. Locally, La Voz de Almería also covers the story, with a surprisingly earthy final sentence: ‘…El Estado español, con sus resoluciones administrativas, lleva diez años jodiendo a esta familia’.
Off-Plan news from the BBC: ‘Up to 100,000 UK investors who lost money when the Spanish property market collapsed could be in line for payouts, a law firm has estimated. It follows a Supreme Court ruling in Spain last year, telling banks to pay investors back for the deposits they put down on homes sold off-plan. A law firm representing UK buyers has said that could amount to as much as £20,000 per investor. In total, Britons who lost money before 2008 could be owed as much as £2bn...’.
‘Ibiza has started a campaign of inspections for holiday rentals. Six inspectors and a Department of Tourism lawyer will be tracking this summer on the Internet apartments on offer. The Consell de Ibiza has just 1,500 homes involving 5,000 beds registered so the campaign will focus on those that are not yet listed. Owners can be fined up to 40,000 euros for failure to register...’. FromPreferente.
‘Brussels asks Spain for €8,000 million in new spending cuts. The EU postpones sanctions for deficit target miss but demands more adjustments between now and 2017’. Report found at El País in English. An excerpt: ‘...The European executive wants Spain to bring down its deficit to 3.7% of GDP in 2016 and 2.5% in 2017. The Spanish deficit at the end of 2015 was 5.1% of economic output, far above its target. The country has the second-largest deficit in the entire EU...’.
‘Tens of thousands of Spanish consumers, most of them paradoxically right-wing PP voters, probably owe radical left-party Podemos a long-awaited recognition. They will have benefitted from several rulings issued by the ‘Tribunal Supremo’ against banks and financial institutions in one particular year, 2015. Podemos, a left-wing populist party that seeks to address the problems of inequality and corruption, including banking abuses suffered by ordinary citizens, was founded in March 2014 in the aftermath of the 11-M Movement...’. Story at The Olive Press.
‘Zara, Santander and BBVA, among the world’s most-valuable brands. Three Spanish firms make it into the ‘Forbes’ list, dominated by technology giants this year’. Headline from the El País in English.
‘Spain’s public debt over 100% of GDP for first time in more than a century. First-quarter debt figure of €1.095 billion (Spanish long scale) takes Spain back to early 19th-century levels despite growth...’. FromEl País in English.
‘The Spanish financial crisis: Lessons for the European Banking Union’: analysis from the Real Instituto El Cano: ‘In the first years of the Global Financial Crisis, Spanish financial institutions were not as severely affected as those of other countries. However, their apparent success was short-lived. As the crisis intensified, Spain’s banking sector could not escape its dramatic effects. Our analysis of the Spanish crisis confirms a long-standing tenet: financial systems collapse when they take on too much risk and when they do not have sufficient capital in reserve to absorb the losses of their risky investments and loans...’.
From the Wall Street Journal (pay-wall): ‘Battle Brews in Spain, Portugal over Negative Rates’. An excerpt: ‘As interest rates in Europe fall near or below zero, lawmakers and consumer advocates in Spain and Portugal are attacking an ancient tenet of finance by insisting that lenders can owe money to borrowers. Banks in the two countries, struggling to recover from recessions that shook their financial systems, are fighting back, with billions of dollars in mortgage interest payments potentially at stake. ... Banks in both countries are rewriting new mortgage contracts to warn homeowners that they could never profit from subzero rates. In Spain and Portugal, banks typically tie interest rates on mortgages to the euro interbank offered rate, or Euribor, a fluctuating rate banks pay to borrow from each other. In addition, interest rates in both countries include a fixed percentage of the loan, called the spread. In much of Europe, by contrast, fixed mortgage rates are common.
Euribor began turning negative last year after the European Central Bank cut interest rates below zero—charging lenders to hold deposits—to stimulate the Continent’s economies. That has pulled mortgage rates into negative territory in a few isolated cases in Portugal...’.
‘Do you have the feeling that in (our country), young people have been marginalized by the economic crisis that is to say excluded from economic and social life? – The result for Spain was 79% of young people – Spain’s future – consulted thought ‘yes’. FromWolf Street.
General Elections June 26:
The Partido Popular says it will weed out anyone ruled ‘corrupt’ from its candidate lists, and that it will study ‘case by case’ any one of its members who is involved in a judicial inquiry. Ideal has the story.
‘More than a dozen senior Ciudadanos candidates have campaigned in the past as candidates for other parties’, saysEl País primly.
Following the union of Podemos and IU into ‘Unidos Podemos’, Alberto Garzón, the leader of Izquierda Unida said: ‘I’m a communist. The Unidos Podemos is not. It is a coalition of diverse people with different ideas, of course there are people within who are communist, but there are others who prefer not to be under that label. The important thing is that we all have a common project to transform our society’. The story is at El Ventano.
Pablo Iglesias formally presented himself as the leader of Unidos Podemos in Córdoba on
Saturday with the support of the historic leader of the IU Julio Anguita. So enthusiastic was Anguita in his speech, that Pablo Echenique, the organisation secretary of Podemos (the man in the wheelchair), could be heard over the microphones saying ‘Julio, you’ve made the jefe cry’. Story at Idealhere.
Alberto Rivera, the leader of Ciudadanos, is to visit Venezuela next week, invited by the opposition parties there to see what’s going on, and to speak in the opposition-dominated parliament. Venezuela and its eccentric government is a hot topic in Spain with its implied connections with Podemos.
There’s still a way to go... ‘UK minister on flight to Gibraltar denied access to Spanish airspace’, saysEl País in English. The poor fellow had to fly around by Portugal.
‘Uncovering Corruption Is a Risky Endeavour in Spain’, article from the New York Times.
‘In Barcelona, do it in Catalan—or pay the fine. Secessionist Catalonia is cracking down on businesses that communicate only in Spanish. FromThe Economist.
‘The leader of the Junta de Andalucía is to be grilled over her involvement in the billion euro Operation Edu scandal (the fake training scheme fraud). Both Susana Díaz and her husband have been ‘implicated’ in the massive fraud that saw billions poured into bogus training schemes that did not exist. The PP is now demanding her resignation, after she was ordered to explain her links to some of the courses that were set up and administered by the UGT trade union...’. A story from The Olive Press.
A Gran Canary judge is recorded plotting to lead an accused to invent a story attacking the honour of his predecessor in the court, another judge who is now running as a Podemos candidate. The judge says he will treat the accused lightly if he gets the statement he wants. A fabrication? No - there a recording of the telephone conversation between the judge and the accused. Wrong? None of the mainstream media even give it a mention. The story at El Diariohere. Later:According to El Confidencial, the judge is now under investigation
‘The British Chamber of Commerce in Spain (BCCS) has ‘almost unanimously’ voted against Brexit. A total of 97.4% of Chamber members want the UK to remain part of the EU, while 78% believe the UK economy would be ‘negatively affected’ should Britain vote to Leave. Speaking at a meeting of around 50 Costa del Sol businessmen and women in Marbella, regional vice-president for Andalucía Derek Langley stressed that the Chamber was ‘categorically against Brexit’...’. Story at The Olive Presshere.
‘A vote to leave Europe would throw into doubt the rights of hundreds of thousands of British expats living in the EU, a committee of peers has warned’, saysThe Telegraph. ‘The Lords' European Union Committee said that determining the "acquired rights" of the two million UK nationals estimated to be living in the EU would be a key element of the withdrawal negotiations...’.
More on The Rabbit Trick
by Andrew Brociner
To continue last week's topic, we turn to the budget deficit. In appearance, it looks like it is being reduced and going in the right direction.
But there are several things underlying these numbers which are not as they appear. As we said in the last issue, the budget deficit would not have been reduced by as much had the government not withdrawn large amounts from the reserve fund, whittling it down to its current state which no longer provides a buffer against future shocks. Moreover, note that between 2014 and 2015, the deficit decreased from 5.9% to only 5.1%, notwithstanding a withdrawal of 10 billion euros. And between 2013 and 2014, the deficit was apparently reduced from 6.9% to 5.9%, but to do this the government withdrew 12 billion euros from the fund. Evidently, things are not as well as the government would want us to believe. This is how the government was able to mask the truth, since if one were to factor in these amounts in percentage terms, the result would be that the deficit actually increased. And to do this, it removed a crucial safety net for future pension payment shortfalls at a time when demographic concerns will begin to take effect. And just to add insult to injury, the government, always thinking of elections, even offered an increase in pensions in real terms, given that we are in deflation, just like a third world country might offer its electorate tee-shirts for the vote, instead of thinking about the problems which are mounting for the future.
The other thing wrong with this picture is that while the government masks the deficit figure, which would have increased, to show that it is in line with the austerity measures, in current times, increasing the budget deficit is just the remedy required, as any Keynesian will tell you. And austerity is not the answer.
At the current rate, the reserve fund will be depleted in about three years. In that case, with nothing left to meet pension payment shortfalls, a major reform will have to take place with the debt increasing. The debt is already about 100% of GDP.
Pretending that austerity is working while distorting the numbers is a disingenuous argument which befits the character of a mendacious government.
‘Rich in sunshine, Spain is the only country to tax renewable energy self-consumption’, says Mark Stücklin’s Spanish Property Insight. ‘Sunshine is one of Spain’s blessings. Reliable sunshine, and a nice climate, are reasons why so many tourists visit Spain every year, and why people buy property here. And reliable sunshine is ideal for renewable energy generation at home with solar panels. Given that Governments everywhere want to encourage green energy and self-consumption, you would think the same would be true in Spain, given its natural advantage when it comes to sunshine...’. But no.
‘Spanish scientific infrastructure has taken one more step forward to stay in the vanguard of tech and innovation. A JEOL JEM Grand ARM 300cF microscope – the most powerful electron microscope – was installed in Madrid. There are only two other of these microscopes in the world, and they are to be found in Tokyo, Japan, and Dresden, Germany...’. Report at Marca España.
The gigantic mausoleum, La Valle de los Caídos, is falling down, and there’s no one who is willing to repair it, says El Diariohere.
From New York’s Amsterdam News, an interesting story: ‘Oliver Law, Black commander during the Spanish Civil War’. More on the American participation in the Civil War of 1936 to 1939 can be found here at The Abraham Lincoln Brigade Archives.
‘The Iberian Peninsula (what is now Spain and Portugal) during the Middle Ages was a cultural, linguistic, and religious crossroads where Islam, Christianity, and Judaism were in constant contact. This lecture explores five examples of what this world looked like through its literature, drawing on Arabic, Hebrew, Latin, Spanish, and other Iberian Romance languages’. A cultural exchange in the languages and literatures of Medieval Spain: Video with Professor David Wacks fromMedievalists.net.
‘I drew a bunch of illustrations comparing Spain and the United States. Maybe some of you expats can relate!’. Silly article with pictures from The Accidental Spaniard.
‘El Marco is a bridge across the river/stream Abrilongo in Badajoz. It is a little more than 3m long and less than 1.5m wide. It would be just another country bridge if its ends were not in different countries, for it connects Spain to Portugal. This makes it the world’s shortest international bridge...’. FromMarca España.
How to understand a Picasso. An analysis and explanation of Pablo Picasso's ‘Night Fishing at Antibes’ here on YouTube.
‘Ten fascinating museums in Spain you really must visit. While millions of tourists flock to Spain every year to visit amazing galleries like the Prado and the Reina Sofia, the country is also home a wealth of other lesser-known museums you may not know. Here are ten of the best...’. FromThe Local.
We are enjoying your BoT, as our Spanish is not really good enough to read the Spanish papers properly, though the television news is easier of course – but not particularly unbiased I feel. Jennifer.
Every time interesting and a good overview of the week. J.O.
Andrew is excellent about PP and Social Security Fund! Per
Eurovision can be such fun – especially when things go wrong. Ten moments when ‘I just wished that the earth had opened up and swallowed me’. FromIdeal with videos.
Business Over TapasMay 19 2016 Nº 161
A digest of this week's Spanish financial, political and social news aimed primarily at Foreign Property Owners:
with Lenox Napier and Andrew Brociner
For subscriptions and other information about this site, go to businessovertapas.com
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