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Spain's Stimulus Money Only Helping Germany

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Spain's Stimulus Money Only Helping Germany

One 'Euro perspective' guy I follow a lot is Edward Hugh, who writes on the excellent 'A Fistful Of Euros' site.

He doesn't preach any particular point of view, but always points to the way things unravel.

This article has a Spain focus, but it's a pain focus for anyone thinking that the various stimulus methods to distort markets will end in anything other than tears. (Pass handkerchief to Obama.)

Car sales in July were down 30% on June, after the Spanish version of cash-for-clunkers was withdrawn and VAT rose 2%. Is that indicative of what the rest of the economy might look like if we took away government stimulus?

He also writes:

So when are people at the EU Commission and the IMF going to finally wake up to reality? This isn’t going to work like this, and Spain needs to adopt concrete measures to restore competitiveness, and not find ever more ingenious ways to kick the can even further down the road.

It's roughly the conclusions he has about some other economic sad cases, like Bulgaria and Latvia.

I'm fairly pessimistic about the UK, but to read AFOE, you might think the Eurozone stands a better chance of falling apart first.

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The catch is this:

Spain can't compete with Germany, even if production in Spain is cheaper, while the German government has restrictive employment laws.

If a company has a factory in Spain, and another in Germany, and due to recession needs to shut one, even if the Spanish plant costs half as much to run, they have to close the Spanish plant as it's illegal to make people redundant in Germany.

The efficiency thing only applies during global economic expansion... during contraction it's down to who has the most ridiculous anti-competitive laws.

Game over man, the Germans outsmarted us all.

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The catch is this:

Spain can't compete with Germany, even if production in Spain is cheaper, while the German government has restrictive employment laws.

If a company has a factory in Spain, and another in Germany, and due to recession needs to shut one, even if the Spanish plant costs half as much to run, they have to close the Spanish plant as it's illegal to make people redundant in Germany.

The efficiency thing only applies during global economic expansion... during contraction it's down to who has the most ridiculous anti-competitive laws.

Game over man, the Germans outsmarted us all.

Sorry - but wasn't the presence of these laws in Germany but not in places like the UK trumpeted as a reason why the German economy was stuck in recession/stagnation as other economies boomed during the early part of the decade?

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Sorry - but wasn't the presence of these laws in Germany but not in places like the UK trumpeted as a reason why the German economy was stuck in recession/stagnation as other economies boomed during the early part of the decade?

No where boomed, the only place to dodge the recession then was the UK and at what price now.

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Spain's Stimulus Money Only Helping Germany

One 'Euro perspective' guy I follow a lot is Edward Hugh, who writes on the excellent 'A Fistful Of Euros' site.

He doesn't preach any particular point of view, but always points to the way things unravel.

This article has a Spain focus, but it's a pain focus for anyone thinking that the various stimulus methods to distort markets will end in anything other than tears. (Pass handkerchief to Obama.)

He also writes:

It's roughly the conclusions he has about some other economic sad cases, like Bulgaria and Latvia.

I'm fairly pessimistic about the UK, but to read AFOE, you might think the Eurozone stands a better chance of falling apart first.

I found this program interesting, the EEC is certainly in a mess.

The Euro is in deep trouble.

As the project intended to unify the European Union causes even deeper divisions, questions are being raised about whether nations as diverse as Germany and Greece can really share the same currency.

The repercussions spread far beyond mainland Europe. Britain is affected as British firms struggle to sell to the Eurozone.

Jonathan Charles was the BBC's Europe correspondent in the 1990s, when the euro was first introduced to great fanfare. He travelled widely around the continent, reporting on the years of preparations leading to the final launch of the euro.

Now he retraces his steps, returning to some of those places and speaking to the likes of former Chancellor of the Exchequer Norman Lamont, the UK's treasury minister and ambassador at the time, and prominent European figures including the former Dutch Prime Minister Wim Kok and some top European bankers. Jonathan also talks to ordinary workers whose livelihood has been fundamentally changed by the advent of euro zone.

Having taken Europe's temperature, Jonathan asks if the Euro will survive, and what does it mean for Europe's dream of political integration?

Producer: Kati Whitaker

A Whistledown production for BBC Radio 4.

http://www.bbc.co.uk/programmes/b00tgcsv

They talk about Spain towards the end, one in five people are unemployed.

Edited by Zing

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as it's illegal to make people redundant in Germany.

...is this not the case in France also ...as our UK Peugeot workers found to their detriment a few years ago....?... :rolleyes:

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  • 141 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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