Monday, June 2, 2008

Crisis? What crisis?

Spanish Prime Minister Jose Luis Rodriguez Zapatero finally presented his new government's economic plan on Saturday, while avoiding saying anything that might make it sound like Spain is facing serious economic problems. I think the reaction published in this Sunday's El País hit the nail on the head:
“Crisis? What crisis? 'A difficult scenario', 'a difficult period of adjustment' or 'a deep deceleration of the economy'. These are some of the terms the president of the government, José Luis Rodríguez Zapatero, employed yesterday when referring to the current state of Spain's economy, which receives a blow each time a new economic indicator is revealed. The president attributes the deterioration to external factors (increased oil and food prices). Still, he announced a package of 'structural reforms' to make things more tolerable. There is nothing new in this battery of urgent measures.
Unemployment is on the rise, inflation has gotten out of control, sales of homes have collapsed, sales of cars cannot even get off the ground, and the gross domestic product is losing wind. But Zapatero resists thinking that this is a crisis situation...
The measures were neither new nor quantified. consists of a 30% reduction of administrative charges that businesses bear. [However,] This was an action that had been announced in April of 2007...with the aim of lowering bureaucratic costs by 2012... ...other plans [included enhancing] railway competition and energy sharing with France.”
And this less than enthusiastic coverage was from a news organization sympathetic to Zapatero's socialist party! Imagine what the center and right leaning media wrote!!
Most distressing to me was the revelation that this “plan” is to be incorporated into a national program of reforms which will be presented to the European Commission in October. A lot can happen between now and October!! What is the government planning on doing to address the so-called “difficult scenario” before then -- more thumb twiddling?!!!
Perhaps the most interesting part of the El País report was the following:

“Microphones are treacherous -- above all when they are on without the speakers' knowledge. That was the case yesterday with the President of the Government, José Luis Rodríguez Zapatero, and the owner of Planeta Publishing Corp., José Manuel Lara, who before the presentation made several recommendations regarding the crisis, as recorded by Channel Four:

Lara: 'For the time being, [the crisis] is not going to stop. I am afraid it's going to get worse in the second half of the year. That's what I fear.'

Zapatero: 'It's not clear'

Lara: 'I would advise that you not burn yourself...'

Zapatero: 'What?'

Lara: 'You shouldn't speak; have [Finance Minister] Solbes speak. You shouldn't burn yourself, because it could look bad as president'.

Zapatero: 'There is another factor you have to consider. That is, if you instill a lot of pessimism, if you don't say anything positive...'

Lara (interrupting him) : 'No, no, you make the crisis worse, yes, yes. ..'

Zapatero: 'That's what we're doing.'

Lara: '...but let the the Economy Minister, the Industry Minister affect optimism and the president be reserved. That's what I mean.' ”

Well, it seems we get a lot of optimism from Zapatero, Solbes and others, but not much action. Meanwhile, other Sunday headlines about the economy were not so optimistic: "The worst is yet to come" , "Everything about the crisis" , and one headline which quoted the President of the European Bank, "We must stay alert, now is not the time for complacency." It sounds like others believe that optimistic talk is not realistic.
To be fair, from this consumer's viewpoint there was at least one good piece of news that came out this weekend: Spain's state-regulated electricity prices will not rise by the 11.3 percent the industry was hoping for. During an interview with the radio network Cadena Ser, Zapatero said the increase would be close to the rise in inflation. "The National Energy Commission proposal is not going to be adopted by the Government of Spain," he stated. Spain's inflation hit a record high of 4.7 percent in May, so I am hoping rates won't go up much more than 5%. If that's what happens, many of us in Spain will let out a “Phew!” of relief while bracing ourselves for whatever comes next in this non-crisis that the government seems dead set on being so upbeat about.
Hasta luego amig@s,


Colin said...

Things are very grim here too. I don't know if you check out my blog from time to time but I'm trying to sell the house so I can move to Belfast and it is getting pretty desperate. I'm faced with pricing the house at 2K less than I paid for it and minus the 20K that was spent improving it. :(

Hopefully this slump will pass sooner rather than later huh?!

Carloz said...

Hey Colin, I sure hope things get better -- here, there and evrerywhere! Chao, Carloz