# New Austerity Measures



## mrypg9 (Apr 26, 2008)

Rajoy has just announced a 3% IVA rise.....this is crazy. It can serve only to further depress the already stagnant economy.
Apparently 290000 extra public sector jobs have been created since the start of the crisis....utter folly as now many of them will be axed.
Does anyone in this Government have a clue about how to run an economy?
Even by the standards of witless free-marketeers, this is sticking plaster over a bleeding artery.
How can growth be generated against a backdrop of depressed spending and increased welfare benefits, even allowing for the proposed cuts in unemployment pay and other social welfare benefits????


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## jojo (Sep 20, 2007)

heres what the BBC have to say BBC News - Spain PM Rajoy calls for fresh cuts as protests loom

Jo xxx


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## Pesky Wesky (May 10, 2009)

mrypg9 said:


> R
> Apparently 290000 extra public sector jobs have been created since the start of the crisis....utter folly as now many of them will be axed.


Does anyone any more information about this?

I thought the whole idea was to cut public sector jobs as in Education and Health, which has been happening, so where has the growth in the public sector taken place?


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## Alcalaina (Aug 6, 2010)

Sorry, just posted this on the News thread before I saw this.

Madness, but it's one of the conditions of the bank bailout.


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## NickZ (Jun 26, 2009)

Pesky Wesky said:


> Does anyone any more information about this?
> 
> I thought the whole idea was to cut public sector jobs as in Education and Health, which has been happening, so where has the growth in the public sector taken place?


Now think about all the families that have members who are government workers. 

Knowing your job may be at risk you stop spending. 

1) VAT take goes down

2) The shops you used to shop at have less business. At best they pay less income tax at worst they shut down putting more people on the streets.

3) All the people who sold to those shops and the shop workers are now at risk.

The problem with things like this isn't that the unemployed stop spending it's that those with jobs and money stop spending.


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## Alcalaina (Aug 6, 2010)

They are also axing the Christmas "extra" month's payment for public sector workers. This is NOT a bonus; it is part of their annual salary. So it's effectively another big pay cut for them.

Still, it will help the banks because people will have to use their credit cards instead to buy presents for their kids.


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## mrypg9 (Apr 26, 2008)

Here's the list:
*
• Reform of public administration, cutting €3.5bn


• A "drastic reduction" in the number of local public companies, and a reduction in the number at national level


• "Corrective mechanisms" for retional spending, and a new liquidity mechanism to help fund Spain's regions

• Civil servants benefits will be cut, and senior workers will lose the Christmas bonus. Further cuts at ministries are planned.

• Funding for unions and political parties will fall by 20%


• A review of unemployment benefits

• VAT will rise to 21%, from 18%. Property tax breaks will be eliminated, and 'indirect taxes' on energy will be raised


• Income tax will be cut

• State assets including airports and railways will be sold off*



Fact is, as Alca points out, he must do this to comply with the conditions of the bail-out. 
He has four years to go before new elections, has a strong majority, did run for office on an austerity programme (although like Cameron has done a Uturn on IVA) and no constructive and feasible alternative measures have been proposed, apart from the 'Resist!' calls from the usual quarters.

Have just discussed this with our gardiner, Augustin, who shrugged his shoulders...


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## Pesky Wesky (May 10, 2009)

NickZ said:


> Now think about all the families that have members who are government workers.


My husband for one.


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## Alcalaina (Aug 6, 2010)

Pesky Wesky said:


> Does anyone any more information about this?
> 
> I thought the whole idea was to cut public sector jobs as in Education and Health, which has been happening, so where has the growth in the public sector taken place?


El número de funcionarios aumenta un 5,3% durante la crisis


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## mrypg9 (Apr 26, 2008)

As I think that criticising without alternative feasible proposals is an armchair luxury....this is what I think should hasve been announced:
*
A commission to be set up to review Spain's ludicrously top-heavy and overlapping bureaucracy. Sixteen Parliaments with all the attendant penpushers, 'consultants', 'advisors' etc. ....expensive and inefficient. Urgent restructuring needed.

A review of tax structure with focus on a reform of the autonomo system. The current system serves only to entrench the black economy which is itself a hige part of Spain's problem.

Reform of the country's policing structures. Too much overlap and insufficient sharing of information because of separation of functions.

A small increase in tax on foreign owners of second homes that are not their principle residence.

Some kind of 'collar' on regional spending, over which the government has little control.

And...which won't happen, sadly: a Commission set up to examine the pros and cons of Spain's remaining in the eurozone.

The measures penalising small savers should be scrapped. They are appallingly unfair. Millionaire investors get state bailouts, the less well-off get penalised (just as in the UK) . We did all the 'right' things, saved for retirement so we wouldn't be a burden on the less well-off and have seen our savings lose a third of their value, as will those in a similar situation in Spain thanks to this disgraceful attack on the prudent.*


As I've said repeatedly: the first task is to release the grip of the markets from the national economy.
The second task is to set up mechanisms to ensure it never happens again.


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## jojo (Sep 20, 2007)

....and more stuff from the BBC BBC News - Eurozone crisis: North versus South

Jo xxx


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## Alcalaina (Aug 6, 2010)

mrypg9 said:


> 1. A commission to be set up to review Spain's ludicrously top-heavy and overlapping bureaucracy. Sixteen Parliaments with all the attendant penpushers, 'consultants', 'advisors' etc. ....expensive and inefficient. Urgent restructuring needed.
> 
> 2. A small increase in tax on foreign owners of second homes that are not their principle residence.
> 
> 3. Some kind of 'collar' on regional spending, over which the government has little control.


I agree totally ... but

1. They have already started on this, including a 30% cut in the number of counsellors.

2. This exists now, brought in a couple of years ago. But nobody pays it, most people don't even know about it.
Property taxes for Non-residents in Spain | Spanish Property Insight Blog

3. They have just imposed massive cuts on the regions!
UPDATE 1-Spanish regions, central govt agree deep spending cuts | Reuters


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## draken (Feb 28, 2012)

Being half Greek I have a strong deja vu feeling. Exactly the same rhetoric was used over two years ago for roughly the same cuts... and of course I do not have to remind you in what situation Greece is at the moment. Just a pic I saw this morning on The Telegraph.










When you are in crisis budget cuts like that do not work.


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## Solwriter (Jan 10, 2012)

mrypg9 said:


> As I think that criticising without alternative feasible proposals is an armchair luxury....this is what I think should hasve been announced:
> *
> A commission to be set up to review Spain's ludicrously top-heavy and overlapping bureaucracy. Sixteen Parliaments with all the attendant penpushers, 'consultants', 'advisors' etc. ....expensive and inefficient. Urgent restructuring needed.*


Although I agree, I think that any Spain Government would know that this could open a huge can of worms and a rise in nationalism, perhaps even in states which have, up til now, been quiet on this issue.
A less in your face proposal would be for national governments to restructure themselves, getting rid of jobs for the boys. and if they didn't do this, no more funding and loans from central government.



mrypg9 said:


> *A review of tax structure with focus on a reform of the autonomo system. The current system serves only to entrench the black economy which is itself a hige part of Spain's problem.*


Reform of the autonomo system is desperately required. However, the gap between a new fairer system being set up and small businesses coming in from the black economy would leave a huge gap in taxes collected, so at this time I doubt whether a government being forced to bring in more money short term would be able to do this.



mrypg9 said:


> *Reform of the country's policing structures. Too much overlap and insufficient sharing of information because of separation of functions.*


Agreed. But as an immigrant who does not have a full understanding of how the policing system works in Spain (apart from it is complicated with several different police carrying out different functions, but often overlapping), I cant really comment on this.
I do think, however, that any measures put in place to cut down the duties of the Guardia Civil would be met with a great deal of protest from those quarters.



mrypg9 said:


> *A small increase in tax on foreign owners of second homes that are not their principle residence.*


Agreed. But why only foreigners?



mrypg9 said:


> *Some kind of 'collar' on regional spending, over which the government has little control.*


Agreed. But I do not trust this Government to do that fairly across regions, and I would hazard a guess that many Spanish nationals would think the same way.




mrypg9 said:


> *And...which won't happen, sadly: a Commission set up to examine the pros and cons of Spain's remaining in the eurozone.*


Agreed on all counts.



mrypg9 said:


> *The measures penalising small savers should be scrapped. They are appallingly unfair. Millionaire investors get state bailouts, the less well-off get penalised (just as in the UK) . We did all the 'right' things, saved for retirement so we wouldn't be a burden on the less well-off and have seen our savings lose a third of their value, as will those in a similar situation in Spain thanks to this disgraceful attack on the prudent.*


Agreed, but as we have no savings to invest, I cannot comment further on that.


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## mrypg9 (Apr 26, 2008)

Solwriter said:


> Although I agree, I think that any Spain Government would know that this could open a huge can of worms and a rise in nationalism, perhaps even in states which have, up til now, been quiet on this issue.
> A less in your face proposal would be for national governments to restructure themselves, getting rid of jobs for the boys. and if they didn't do this, no more funding and loans from central government.
> 
> 
> ...


I really appreciate your detailed comments on my posts...It helps rethink. Thankyou.

Looking closely at the structure and spending power of regions is vital, though, and if the current Government has the will to do this, it certainly has a mandate. 
Out-of-control regional spending is one of the sources of the current economic crisis...but only one. Imposing penalties would indeed be a good way to force regional governments totake a critical look at themselves.

Spain has reported a severely reduced tax take earlier this week. This is serious and it's hard to see how revenue gaps can be plugged quickly. Money is very 'moveable' these days as are wealthy individuals....something Hollande is about to discover.

Taxing Spaniards who own second homes....well, yes, I read that Spain has a very high level of second home ownership. But many of these people are already struggling with mortgages they can't afford so a further tax would push them further into debt. I would guess that most immigrant second-home owners don't fall into that category if they are non-resident.

I don't know that much about the police but I do believe that the UK model of county constabularies is a good one to follow. Why not have unified regional police forces?

As for trusting the Government...well, a majority of those who felt strongly enough to go out and vote seven months ago trusted them enough to give them a strong mandate. Policies must change as circumstances change and thanks to the fickle markets theese change on an almost hourly basis. People must be mature enough to understand that running a country isn't like playing chess..there are no fixed rules or strategies. 

The savings issue is important. We are talking the 'average' saver here, not the market player. These savings are essential planning for retirement and other family needs. They also form the capital which enable others to borrow. 
For many Spanish people in the middle and lower-middle bracket, this will be THE issue that affects them the most. On top of the others, it could for many be the last straw.


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## NickZ (Jun 26, 2009)

mrypg9 said:


> Taxing Spaniards who own second homes....well, yes, I read that Spain has a very high level of second home ownership. But many of these people are already struggling with mortgages they can't afford so a further tax would push them further into debt. I would guess that most immigrant second-home owners don't fall into that category if they are non-resident.
> 
> 
> .



Long term maybe.

Short term this would only make things worse. Higher home taxes would lead to reduced prices. This would hit the banks that the government owns. So they would have that much more money to find.


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## Solwriter (Jan 10, 2012)

mrypg9 said:


> I really appreciate your detailed comments on my posts...It helps rethink. Thankyou.


You're welcome (it is clearing my head after spending the last few days writing about werewolves ).



mrypg9 said:


> Looking closely at the structure and spending power of regions is vital, though, and if the current Government has the will to do this, it certainly has a mandate.
> Out-of-control regional spending is one of the sources of the current economic crisis...but only one. Imposing penalties would indeed be a good way to force regional governments to take a critical look at themselves.


I absolutely agree that regional spending is a huge thorn in the side of the present Government (and the last). I was just saying that someone with diplomacy as well as vision (and awareness of issues which could arise if the wrong _words_ are used) should take charge of this.



mrypg9 said:


> Spain has reported a severely reduced tax take earlier this week. This is serious and it's hard to see how revenue gaps can be plugged quickly. Money is very 'moveable' these days as are wealthy individuals....something Hollande is about to discover.


Yes it is serious. but my argument was that the gap between bringing in a fairer system of autonomo payment and people taking it up could cause even more problems.
Perhaps changes made over a sliding scale and in fixed time periods would work better?



mrypg9 said:


> Taxing Spaniards who own second homes....well, yes, I read that Spain has a very high level of second home ownership. But many of these people are already struggling with mortgages they can't afford so a further tax would push them further into debt. I would guess that most immigrant second-home owners don't fall into that category if they are non-resident.


The reason I asked "why only foreigners?" is because the Government would have to consider the housing market here, plus EU directives.

On the EU front, Spain has already been reprimanded on differences in IHT for non-residents over residents, so taxing foreign second home owners higher than residents could present a further problem for them.

On the housing market front, Spain needs new blood coming into the country and buying property, even if some of those buyers are second home owners.
Yes, Spain wants people who can pay their way and not be a burden on the state and I'm sure that younger new blood would also be preferred - more taxes to collect over a longer period and less short term risks of the immigrant being a burden on the health system.

However, Spain also has a building industry in a state of collapse and empty houses all over the country. Spanish nationals cannot afford to buy all these homes, even if they wanted to, and the only way to get building work going again is for a housing market with at least a hint of vibrancy.

As it is, those investing in a property in Spain are faced with huge obstacles, not to mention the fact that their property will likely fall in price before it gains that price back (if ever...).
If you then add what could be seen as a discriminatory tax onto the cost of buying a property in Spain, what good would this do long term to the housing market?
As we tell people coming to this forum, there are plenty of other countries they could consider instead.



mrypg9 said:


> I don't know that much about the police but I do believe that the UK model of county constabularies is a good one to follow. Why not have unified regional police forces?


The problem is that the UK system appears to be pushed to the limit, with volunteers being used to police many areas, particularly in the cities.
The UK police force is also split more than people realise - security police for one thing are members of the police, but do not have the same rights. Then there are the disparate forces concerned with particular types of crime.
But yes, in principal a unified force appears to be a better idea.



mrypg9 said:


> As for trusting the Government...well, a majority of those who felt strongly enough to go out and vote seven months ago trusted them enough to give them a strong mandate. Policies must change as circumstances change and thanks to the fickle markets these change on an almost hourly basis. People must be mature enough to understand that running a country isn't like playing chess..there are no fixed rules or strategies.


But we know that just because someone votes for a particular political party that does not mean they trust them. It is usually a choice of the lesser of several evils.
And we also know that voters can be fickle, just like the markets.
Rajoy does have time to bring in policies which will alienate many of those who voted for him and may even get away with it the next General Election, but this does not mean that the path he chooses will be an easy one. 



mrypg9 said:


> The savings issue is important. We are talking the 'average' saver here, not the market player. These savings are essential planning for retirement and other family needs. They also form the capital which enable others to borrow.
> For many Spanish people in the middle and lower-middle bracket, this will be THE issue that affects them the most. On top of the others, it could for many be the last straw.


Yes I do agree, it is just that I know little about savings, not having the luck (some would say foresight) to have any.
And I do agree that those in the middle and lower-middle bracket are vital to consider.
Not wanting to harp on about history, but it is often from these groups that the extreme right wing arises (or at least, causes the most trouble).


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## thrax (Nov 13, 2008)

Whoa Solwriter, your head might now be fixed not writing about werewolves but my head is now hurting because I am having to think about everything you and Mary have said. For me, in a nutshell, austerity measures simply won't work. A government needs income from taxes; austerity measures drive up unemployment and will close down businesses thus less income from tax. Mary will tell me what form of economic theory my views are based on (I have no idea) but for me an economy must be invigorated not starved to create more jobs. The creation of jobs is surely at the heart of any society??


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## jojo (Sep 20, 2007)

thrax said:


> Whoa Solwriter, your head might now be fixed not writing about werewolves but my head is now hurting because I am having to think about everything you and Mary have said. For me, in a nutshell, austerity measures simply won't work. A government needs income from taxes; austerity measures drive up unemployment and will close down businesses thus less income from tax. Mary will tell me what form of economic theory my views are based on (I have no idea) but for me an economy must be invigorated not starved to create more jobs. The creation of jobs is surely at the heart of any society??



Its all too much for me too Thrax lol!! I think Spain should concentrate on getting its tax evasion issues sorted rather than simply piling more tax onto the population, which to mind will just encourage even more tax evasion and "black" money! I still think they could get away with just upping the tax on ciggies and booze lol!!!!

Jo xxx


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## Alcalaina (Aug 6, 2010)

The Spanish government (and all others in the eurozone) signed away their right to determine their own budgets last year. There are now only two options for any country in financial difficulties; make the required cuts and watch the nation's life-blood go down the drain, or leave the EU.

The IMF, who are behind the drive for austerity, are urging the rest of the world to invest in growth in Europe. The way to do this, they believe, is by easier credit, lowering wages and reducing workers' rights - effectively making it as cheap and easy to produce goods in southern Europe as it is in the developing world.


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## Solwriter (Jan 10, 2012)

thrax said:


> Whoa Solwriter, your head might now be fixed not writing about werewolves but my head is now hurting because I am having to think about everything you and Mary have said. For me, in a nutshell, austerity measures simply won't work. A government needs income from taxes; austerity measures drive up unemployment and will close down businesses thus less income from tax. Mary will tell me what form of economic theory my views are based on (I have no idea) but for me an economy must be invigorated not starved to create more jobs. The creation of jobs is surely at the heart of any society??


Lol! Thrax. 
(Sorry! Ill go back to writing in a moment - perhaps a female werewolf based upon 



...).
I agree with you that austerity measures will not work for Spain at this present time.
But the Government now has no option but to implement them, owing to the conditions now arising from the banks bailout.

Me and Mary have already discussed how the German model, based partly upon austerity and balanced growth relying on national industries, will not work in Spain, but it appears now there is no alternative to the austerity side of the model (and sod the growth ).
Apart from leaving the Euro that is.... 
But that would open up a can of worms I do not think this Government is capable of addressing.


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## tone55 (Jul 11, 2012)

NickZ said:


> Long term maybe.
> 
> Short term this would only make things worse. Higher home taxes would lead to reduced prices. This would hit the banks that the government owns. So they would have that much more money to find.


Sadly I cannot see a real solution to the present situation. Austerity breeds austerity and where most countries have failed is in the communication of the real situation, politicians seldom do communicate accurately.Thus the borrowing ethos is wide spread and impacts directly on each country individually . This linked with the cultural differences between say north and south Europe only indicates the stupidity of one European monetary system. 
However we are where we are and the Germans are intent on an even tighter contract! The less fortunate of the euro users will suffer further.


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## mrypg9 (Apr 26, 2008)

Alcalaina said:


> The Spanish government (and all others in the eurozone) signed away their right to determine their own budgets last year. There are now only two options for any country in financial difficulties; make the required cuts and watch the nation's life-blood go down the drain, or leave the EU.
> 
> The IMF, who are behind the drive for austerity, are urging the rest of the world to invest in growth in Europe. The way to do this, they believe, is by easier credit, lowering wages and reducing workers' rights - effectively making it as cheap and easy to produce goods in southern Europe as it is in the developing world.


Too simplified...

Firstly, the IMF is responding to the debt crisis...it is responsible for providing rescue funds paid for by European taxpayers aka you and me and the rest.
The debt was caused by irresponsible governments (Greece) or profligate imprudent companies and individuals(Spain, ROI) taking advantage of the cheap credit available under the terms of the Single Market.

Leaving the euro is perhaps essential for Spain, Greece, Portugal...but that cannot be accomplished at a time of economic weakness. It must be planned for just as the adoption of the euro was. Leaving the EU itself is a different matter altogether and would be very bad for Spanish exports. 

As for the IMF pushing 'easy credit'....it is lack of any kind of credit that is crippling PYMEs and SMEs. 'Lowering workers' wages'....wages have to be paid by profits from private enterprises or from taxpayers via public sector jobs. It is a fact that in the years of boom Spanish wages rose three times faster than those of German workers yet in the same period productivity fell.
Redundancy payouts are still too high and should be brought to the European average.
We hear a lot about workers' rights but there are also workers' responsibilities. Trades Unionists in Spain as in the UK are a minority of the working population. 
The irresponsibility of left-wing British Trades Unionists in the 1970s in rejecting the Bullock Report and Castle's 'In Place of Strife' legislation that came from it because they didn't want to make capitalism work gave us the Thatcher decade.
Hopefully Spanish workers will turn their backs on the siren calls of the ultra-left.

This crisis, although extremely severe in nature and lengthy in duration, will pass. Such events are endemic to capitalism. 
Socialism is of course one long disaster and produces only equality of misery. 
Capitalism however can mutate and adapt. The chief objective post-crisis is to create an economy where the market is the servant not the master of the economy.
The Scandinavians, Dutch and Germans have managed it....with the necessary will, so can Spain and the UK.


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## Solwriter (Jan 10, 2012)

tone55 said:


> Sadly I cannot see a real solution to the present situation. Austerity breeds austerity and where most countries have failed is in the communication of the real situation, politicians seldom do communicate accurately.


I think you have hit the nail squarely on the head there.

Those who joined the Euro tried to promote their country's assets whilst hiding their problems.
Those who welcomed other countries to the Eurozone promoted its benefits and marginalised its drawbacks.

And those ostensibly in power in each country are afraid of telling the truth to the electorate, either because the truth would implicate them, or expose their incompetency, or simply because the truth would hurt too much and/or cause knock on effects.


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## mrypg9 (Apr 26, 2008)

Solwriter said:


> Lol! Thrax.
> (Sorry! Ill go back to writing in a moment - perhaps a female werewolf based upon
> 
> 
> ...


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## mrypg9 (Apr 26, 2008)

thrax said:


> Whoa Solwriter, your head might now be fixed not writing about werewolves but my head is now hurting because I am having to think about everything you and Mary have said. For me, in a nutshell, austerity measures simply won't work. A government needs income from taxes; austerity measures drive up unemployment and will close down businesses thus less income from tax. Mary will tell me what form of economic theory my views are based on (I have no idea) but for me an economy must be invigorated not starved to create more jobs. The creation of jobs is surely at the heart of any society??


It's called common sense, Thrax..

The question is, where do you get the money to create jobs.....

Only a healthy and productive private sector can produce tax revenue to fund job creation in the public sector. The balance public/private has to be right.

Problem is that any move by governments with huge debts and deficits to use public money to create jobs is resisted by the markets which push up the cost of state borrowing. It's a vicious circle.

What is needed is a fund to enable Governments to invest in huge infrastructure projects - every EU country needs them - to kick-start growth and job creation.
Banks had to be bailed out, for obvious reasons as they provide liquidity, the life-blood of the economy. But there should have been also a growth bailout fund.

I guess you could call it Keynesianism..


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## Solwriter (Jan 10, 2012)

mrypg9 said:


> Anyone who can write about werwolves demands the greatest respect....Did you know the term 'werwolf' comes from the Old Germanic 'wer' ='man' ?
> The Nazi underground resistance in 1945 styled itself Werwolves.


I do remember reading that somewhere, but as my story was for a horror anthology I didn't think it was appropriate to go into the history of the term. 

However, you have given me an idea.... 
Thanks 




mrypg9 said:


> No, I don't reject altogether the German model for Spain...not in its structural aspects, for example worker representation and a kind of modernised corporatism.
> 
> This Government is as capable as any other of addressing the question of a euro exit...why shouldn't it be? But this is not the time.
> 
> Until the debt burden is reduced and the markets no longer call the shots there must be austerity....but of the right kind aqnd any policy must have a plan for growth.


Yes, I was over-simplifying that recent debate.
But I really do not see this Government as capable of addressing the question of a euro exit, at least in a direct way.
Despite the fact that I would not have voted for them, I look every day for examples of their competence to carry out measures without being hidebound by their history, or simply by what appears to be their unplanned and disorganised strategies , but so far I cannot share your confidence.




mrypg9 said:


> Just out of interest: why are vampires so often portrayed as lesbians?
> I sense deep discrimination...


No idea.
Mine was a teenage male.


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## tone55 (Jul 11, 2012)

Not all wolves are lesbian. Some are Irish


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## NickZ (Jun 26, 2009)

There is a saying that when you owe the bank 1000 it's your problem. When you owe the bank 1,000,000 it's the banks problem. At some point somebody is going to push Spain or Italy too far and the choice will be made to leave the Euro. Letting everybody feel the pain. 

What you people are suggesting is Spain endures an internal devaluation. People like to leave out what that really means.


Roubini On Internal Devaluation - NYTimes.com


The Unbearable Slowness of Internal Devaluation - NYTimes.com

Now think about this. The Fiat plant opened in Serbia with EU funds pays around €400 a month in salaries. In Serbia those are high wages. Many EU companies are paying far less then that . When people are saying salaries need to come down understand what they're suggesting.


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## mrypg9 (Apr 26, 2008)

NickZ said:


> There is a saying that when you owe the bank 1000 it's your problem. When you owe the bank 1,000,000 it's the banks problem. At some point somebody is going to push Spain or Italy too far and the choice will be made to leave the Euro. Letting everybody feel the pain.
> 
> What you people are suggesting is Spain endures an internal devaluation. People like to leave out what that really means.
> 
> ...




Peugeot opened a plant in Trnava, Slovakia. Wages paid there were lower than in 'western' EU countries. Four years ago when I was there it was booming.

It's closed now. Peugeot have moved on elsewhere.

What I am suggesting is very simple: no business can afford to pay its employees more than it earns after all overheads and taxes are deducted plus a reasonable profit for those who put up and risked the capital investment needed for the business to operate.

How come the EU subsidised FIAT in Serbia which is a non-EU state? Are you sure of your facts?

But yes, of course, the bigger your debt the safer you are. Look at the example of the Channel Tunnel....
That's why no bank should be too big to fail and why retail and investment banking should be separated.


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## NickZ (Jun 26, 2009)

mrypg9 said:


> How come the EU subsidised FIAT in Serbia which is a non-EU state? Are you sure of your facts?
> 
> 
> That's why no bank should be too big to fail and why retail and investment banking should be separated.



You want more Northern Rocks or Lehmans? Okay that's safe.

You're asking why the EU would hurt EU workers? Really? Why did the EU last month sign the free trade deal with Morocco for farm products? How won't that destroy farms in Spain and the rest of the Med?

Serbia - Financial Assistance - Enlargement


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## mrypg9 (Apr 26, 2008)

NickZ said:


> You want more Northern Rocks or Lehmans? Okay that's safe.
> 
> You're asking why the EU would hurt EU workers? Really? Why did the EU last month sign the free trade deal with Morocco for farm products? How won't that destroy farms in Spain and the rest of the Med?
> 
> Serbia - Financial Assistance - Enlargement



Could you explain what Northern Rock or Lehmans has got to do with lower wages in the UK and the US? Surely more to do with lax regulation or absence of any regulation which allowed for sub-prime mortgages to be bundled up and 'lost' in the sale of complex financial products...Or as some say Clinton's policy of enabling home-ownership amingst disadvantaged sectors of the community....Or the U.S. practice of allowing borrowers to simply drop off their keys without repaying their home loans...
Or the ratings agencies which approved these packages which included 'toxic' loans..

Of course you could blame 'low wages' for all sorts of things, tooth decay (poorer people can't afford dentistry), road fatalities (poorer people driving unsafe cars)
and many other things.

But wages have to be linked to a multiplicity of factors and will therefore depend on many variables including national GDP.

Also free trade deals with Morocco aren't wquite the same as a direct EU *subsidy* to a non-EU state, is it? Morocco is a candidate for EU membership.... Serbia is too.
Can you give a link to the Serbia subsidy to an industry? The one you've given is about funding for transitional arrangements, constitutional adaptions etc. to facilitiate Serbia's entry to the EU and not for relocation of industry.


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## gus-lopez (Jan 4, 2010)

NickZ said:


> You want more Northern Rocks or Lehmans? Okay that's safe.
> 
> You're asking why the EU would hurt EU workers? Really? Why did the EU last month sign the free trade deal with Morocco for farm products? How won't that destroy farms in Spain and the rest of the Med?
> 
> Serbia - Financial Assistance - Enlargement


They've been dishing out money to Morocco for a few years. Even Spain has given financial assistance.! This is why tomato production has fallen in Spain as they have moved a lot to Morocco as land & labour are cheaper.


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## Alcalaina (Aug 6, 2010)

Best soundbite of the day so far:

"Acabamos de vender el coche para comprar la gasolina." (We've just sold the car to pay for the petrol.)


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## NickZ (Jun 26, 2009)

mrypg9 said:


> Could you explain what Northern Rock or Lehmans has got to do with lower wages in the UK and the US? Surely more to do with lax regulation or absence of any regulation which allowed for sub-prime mortgages to be bundled up and 'lost' in the sale of complex financial products...Or as some say Clinton's policy of enabling home-ownership amingst disadvantaged sectors of the community....Or the U.S. practice of allowing borrowers to simply drop off their keys without repaying their home loans...
> Or the ratings agencies which approved these packages which included 'toxic' loans..
> 
> Of course you could blame 'low wages' for all sorts of things, tooth decay (poorer people can't afford dentistry), road fatalities (poorer people driving unsafe cars)
> ...


You asked for simple non universal banks. Northern Rock and Lehman type banks. When you say you want the banks split up you're saying you want more of exactly the type of banks that failed. If that's safety 

Lets look at it from the point of view of a business.

You have the choice of improving your local plant or opening a new plant abroad. Abroad you get various kinds of aid. Do you update your old plant? Improving the productivity ? Letting you pay higher wages. Or do you run the old plant into the ground?

Answer to a written question - Relocation of Fiat production operations to Serbia - P-8072/2010

Money is fungible. The EU aid that Serbia gets for X lets it offer money to companies. Or to keep taxes low. So taxes paid by EU workers are used to drive down the wages of EU workers.

The companies then let the local plants fall behind. Which means the productivity drops. Which gives them an excuse to ask for wage cuts. Or to just shut the plant down.


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## mrypg9 (Apr 26, 2008)

*


NickZ said:



You asked for simple non universal banks. Northern Rock and Lehman type banks. When you say you want the banks split up you're saying you want more of exactly the type of banks that failed. If that's safety :eek

Click to expand...

*


NickZ said:


> :
> 
> I said retail banking should be split from the investment arm of banking - which is what the UK Government is planning to do. It simply means old-fashioned banking where your deposits will not be used on risky financial products. So yes, it is safety for depositors which is why the Government is doing it. So I am asking for - and going to get, thankfully, - the complete opposite of what you have interpreted my post to say.... Nothing to do with creating more banks. Different kinds of banks.
> 
> ...



I wonder if you have any idea of how difficult it is to just 'shut a plant down' and relocate.
The wages of an employee at a Fiat plant in Serbia or a Peugeot plant in Slovakia have very little bearing if any on the wages of a tomato grower in Spain or a sardine fisher in Portugal.
I'd like to see some specific examples of what you see as flexible use of EU subsidies which are usually although not always dedicated to specific funds or projects.
Again, I have had some- albeit limited - experience of EU funding and subsidies and the whole stricture of EU finance. A few years back I was a European Parliamentary candidate and also worked on European Employment legislation as embodied in UK law. So I had to gen up on various EU regulations from sheep meat regimes, fishing and sugar beet quotas and rules governing grants and subsidies. Thrilling stuff.......
The EU budget is a disgrace and hasn't been signed off for decades.

But to return to my original point: low wages are bad for the economy and for those who earn them. But money is not so 'fungible' that it can be created out of thin air...unless your name is Mervyn King. Increased wages have to be paid for in terms of higher productivity or subsidy and subsidies come from wage-earning taxpayers and business and cannot be sustained indefinitely and certainly not in times of market pressure to reduce deficits.

Btw, your link does not mention EU aid to FIAT in Serbia, though.,..it refers to 'state' aid to the industry which is not allowed under EU rules...'state' refers to Serbia.


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## Solwriter (Jan 10, 2012)

Proud Spain again humbles itself to the euros demands - Telegraph
Some interesting observations in the comments too.


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## mrypg9 (Apr 26, 2008)

Solwriter said:


> Proud Spain again humbles itself to the euros demands - Telegraph
> Some interesting observations in the comments too.


I think that you actually get a more nuanced view from right-of-centre organs like the Torygraph. That's why I like Conservative Home - contributors are focused firmmly on what is, rather than how they think it should be. Much easier to distinguish fact from opinion and to disagree.

As events progress it seems more and more the case that the whole concept of monetary union was deeply flawed. It's certainly possible to point the finger at the euro and the single market as the root cause of Spain's very seThe general rise in the rious problems.

One of the consequences of the single market, the pure expression of free market economics, was that we were all encouraged to live beyond our means. In order to disguise the fact that huge amounts of capital were being amassed by the few at the summit of the economic pyramid, the rest of us proles were encouraged to think that we too were a part of this progress of general enrichment and well-being by the availability of cheap credit in order that we too could buy the second homes, the new car, the holidays abroad.

The interest we poor suckers paid on this mountain of debt further added to the vast gulf between the have and have-nots. The general Europe-wide increase in the material standard of living, not matched by an increased social wage, was funded entirely from credit...at a national, corporate and personal level. The average per capita debt in the UK exceeds £50k...for every man, woman and child.

This is the_ real_ culture of entitlement. I can remember only too well the advert promoting the Barclaycard when the whole notion of 'buying on plastic' was quite novel: 'Take the waiting out of wanting'.

The only way out for Spain and other peripheral EU states is to exit the eurozone. 
How and when is the crucial dilemma. Not exit from the EU....Spain needs the EU for more than trade and economic purposes. The EU for Spain represents a return to European democracy, as it does for the former Socialist bloc states.

Something I heard just now on Radio 4 'Today' gives some perspective: forty of the world's major economies are not states but corporations.
There's something for us to ponder over our coffee and churros...


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