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Spain’S Building Spree Leaves Some Airports And Roads Begging To Be Used

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http://www.nytimes.com/2011/06/25/business/global/25iht-transport25.html?_r=1&ref=business

In March, local officials inaugurated a new airport in Castellón, a small city on Spain’s Mediterranean coast. They are still waiting for the first scheduled flight.

Castellón Airport, built at a cost of 150 million euros ($213 million), is not the only white elephant that now dots Spain’s infrastructure landscape. Spain’s first privately held airport — in Ciudad Real in central Spain — was forced to enter bankruptcy proceedings a year ago because of a similar lack of traffic.

....

Across the country, nearly empty toll roads are struggling to turn a profit. Other projects are surviving only with continued public financing, which has been cast into doubt by Europe’s sovereign debt crisis.

Over the last two decades, Spain built transportation networks at a rate that few other European countries approached.

Having opened its first high-speed train connection between Madrid and Seville in 1992, Spain overtook France last December as the country operating Europe’s biggest high-speed rail network, covering just over 2,000 kilometers, or 1,200 miles.

Growth in road and air transport has been just as spectacular. Between 1999 and 2009, Spain added over 5,000 kilometers of highways — the biggest road construction endeavor in Europe. And its 43 international airports handle more cross-border passengers than any other country in Europe.

Such expansion has been a source of intense national pride. It has also brought major economic benefits to some previously isolated and impoverished regions.

Yet like Castellón Airport, not all the projects were necessarily well thought out. Some experts suggest that Spain’s approach to development during the boom years placed speed ahead of risk assessment.

.....

In separate interviews, the heads of some of Spain’s largest construction and infrastructure management companies conceded that spending had gotten out of control before the crisis. But they also predicted that most building projects, particularly in transport, would eventually yield profits.

More at the link.

Yet more malinvestment?

As people cut back more and more the toll roads are going to be in big trouble, there's no way the money will be paid back.

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Well at least they spend money on infrastructure that will benefit future generations rather than on equality and diversity coordinators, an army of consultants, useless wars across the world and white-elephant IT projects that never work.

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Well at least they spend money on infrastructure that will benefit future generations rather than on equality and diversity coordinators, an army of consultants, useless wars across the world and white-elephant IT projects that never work.

Yep, creditors can't dismantle roads and move them.

Although if no one uses it will it really benefit anyone?

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Im on the Blanca and have lost count of new footpaths roads with no people or houses around not to mention the roundabouts with new centre sculptures lots of new of floodlit football/basketball areas springing up everywhere you would have thought a boom was on,

Thanks to the EC for the free handout because they will never get a penny back

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http://www.nytimes.com/2011/06/25/business/global/25iht-transport25.html?_r=1&ref=business

[/b]

More at the link.

Yet more malinvestment?

As people cut back more and more the toll roads are going to be in big trouble, there's no way the money will be paid back.

I don't think this (below) is malinvestment. Spain will benefit from it in the next decades. Plus the housing infrastructure they also built. All these will give them strong competitive advantage, internationally, (see my sig., below.), and they should grow strongly from now onwards. I wouldn't be surprised if in 10 years their GDP/person overtakes Britain's.

Over the last two decades, Spain built transportation networks at a rate that few other European countries approached.

Having opened its first high-speed train connection between Madrid and Seville in 1992, Spain overtook France last December as the country operating Europe’s biggest high-speed rail network, covering just over 2,000 kilometers, or 1,200 miles.

Growth in road and air transport has been just as spectacular. Between 1999 and 2009, Spain added over 5,000 kilometers of highways — the biggest road construction endeavor in Europe. And its 43 international airports handle more cross-border passengers than any other country in Europe.

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I don't think this (below) is malinvestment. Spain will benefit from it in the next decades. Plus the housing infrastructure they also built. All these will give them strong competitive advantage, internationally, (see my sig., below.), and they should grow strongly from now onwards. I wouldn't be surprised if in 10 years their GDP/person overtakes Britain's.

I agree that some of Spain's infrastructure investment has been (and still is) good. Especially the high speed rail network that should hopefully stimulate growth in areas away from the major cities. Generally it's easier to build infrastructure in Spain due to the lower population density between cities, and the authorities have more power when it comes to pushing these projects ahead, Unfortunately if the authorities are corrupt (they usually are in Spain) they tend to push a lot of pointless projects through as well, so they can take a back-hander and let the financers (i.e. the tax payer) take the hit.

As for the Spanish economy I think a lot of losses have still got to be realised before things start to pick up. I'm hoping things will turn a corner in 2014.

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Yep, creditors can't dismantle roads and move them.

Although if no one uses it will it really benefit anyone?

Some will, some won't, like the overbuilding of railways did to Britain in the 19th century. Some were useful from the start, some, although not much good for the builders became useful in the future, and some would've been better all round if they'd never been built, sitting around soaking up money until they were eventually pulled up. The net result was probably positive.

Unused building of buildings is more likely to be a problem. If they become derelict you've either got to put up with them sitting there being a mess or spend more money tearing them down. If you leave them long enough then decide you want them they may be in a state where you've got to tear them down anyway and rebuild.

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Well at least they spend money on infrastructure that will benefit future generations rather than on equality and diversity coordinators, an army of consultants, useless wars across the world and white-elephant IT projects that never work.

My thoughts also, surely there must have been an underlying need for the airport in the first place?

If someone can buy the airport cheaply enough, they should be able to make a go of it.

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I'm on the Blanca and have lost count of new footpaths roads with no people or houses around not to mention the roundabouts with new centre sculptures lots of new of floodlit football/basketball areas

It's bizarre, isn't it? (and, god, those statues are hideous). last year, we drove from Santander to the costa brava and back. Huge new roads, largely deserted. I dunno - if you're going to spend money you don't have to stimulate the economy, it seems a better option than just handing it over to the banks, but that's damning with faint praise. Malinvestment on that apparent scale is unlikely to end well.

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I agree that some of Spain's infrastructure investment has been (and still is) good. Especially the high speed rail network that should hopefully stimulate growth in areas away from the major cities. Generally it's easier to build infrastructure in Spain due to the lower population density between cities, and the authorities have more power when it comes to pushing these projects ahead, Unfortunately if the authorities are corrupt (they usually are in Spain) they tend to push a lot of pointless projects through as well, so they can take a back-hander and let the financers (i.e. the tax payer) take the hit.

As for the Spanish economy I think a lot of losses have still got to be realised before things start to pick up. I'm hoping things will turn a corner in 2014.

Yes, it would be better if corruption distortions were taking away from investment decisions, of course, but at least they build something there. Better than our clogged-up system.

At least their tax-payers get something from their taxes. Here we have a bigger deficit, a bigger total national debt (gov.+households+companies), and the only thing we have to show for it is a bloated public sector and bloated house prices. These won't help at all the recovery.

New deficit data in this table, below. And then some older posts, with accumulated debt.

20110625_INT400.gif

Source: http://www.economist.com/node/18867642?story_id=18867642

A very important new report by the Bank for International Settlements (BIS).

UK Total Debt (Gov.+ Households + Companies) / GDP still going up.

First solid data that I am aware of since the McKinsey report showed total debts up to 2008. This BIS report comes all the way up to 2010.

debttogdp2010.png

Source: http://www.bis.org/publ/qtrpdf/r_qt1009e.pdf

IMO the debt/GDP going up is only partially explained by the UK GDP reduction - of around 5% since the crisis IIRC.

Notice that the data excludes the financial sectors. In this case Ireland and the USA are not as bad as I had thought. France is though.

Japan and UK are getting even worse. We knew already that Canada and Germany were fine, and that Spain was as screwed up as us.

Our government's budget defit is bigger than Greece's. The only difference is that Greece can't print Euros, and is being forced to adjust immediately. Brown is delaying the adjust, to.. well... after the election, you understand...

And look at this chart, that adds the total national debt (government + households + companies):

debt-sovereign.png

McK%205.jpg

Source: Mckinsey Institute. http://www.mckinsey.com/mgi/reports/freepass_pdfs/debt_and_deleveraging/debt_and_deleveraging_full_report.pdf

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Yes, it would be better if corruption distortions were taking away from investment decisions, of course, but at least they build something there. Better than our clogged-up system.

At least their tax-payers get something from their taxes. Here we have a bigger deficit, a bigger total national debt (gov.+households+companies), and the only thing we have to show for it is a bloated public sector and bloated house prices. These won't help at all the recovery.

New deficit data in this table, below. And then some older posts, with accumulated debt.

20110625_INT400.gif

Source: http://www.economist.com/node/18867642?story_id=18867642

While those graphs give a useful comparison, I doubt if they show the whole picture. Spanish banks are hiding bad assets, the autonomas are hiding bad debt, and Spain still needs to rebalance the economy away from construction. It is still much easier to start up a company and do business in the UK than it is in Spain.

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While those graphs give a useful comparison, I doubt if they show the whole picture. Spanish banks are hiding bad assets, the autonomas are hiding bad debt, and Spain still needs to rebalance the economy away from construction. It is still much easier to start up a company and do business in the UK than it is in Spain.

And we're not?

Can someone confirm something for me. It sounds so insane that I'm reluctant to believe it's true, but are house prices essentially included in calculating GDP?

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And we're not?

Can someone confirm something for me. It sounds so insane that I'm reluctant to believe it's true, but are house prices essentially included in calculating GDP?

I've stopped looking at the PFI figures. Didn't someone once claim we had 1 trillion in debt hidden away via PFI schemes?

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I don't think this (below) is malinvestment. Spain will benefit from it in the next decades. Plus the housing infrastructure they also built. All these will give them strong competitive advantage, internationally, (see my sig., below.), and they should grow strongly from now onwards. I wouldn't be surprised if in 10 years their GDP/person overtakes Britain's.

The train lines are already doing surprisingly well, for what's been such a tough recession. They've been able to increase services on new routes due to strong demand - link that follows is in Spanish. It explains how the Madrid-Barcelona route has increased from 5.8 million passenger journeys in the first year to 7.7 million in the 3rd year. There's also a quote from the PP boss (right-wing) in Valencia stating that the AVE high speed train is fundamental for creating wealth and prosperity for industry and tourism

AVE train

The big pay-off however may come from outside Spain. There are strong rumours that Renfe (the Spanish rail company) are about to land Spain's biggest ever contract, to build a high-speed line in the Middle-East. Plus the Yanks are interested, too. Watch this space.

Spanish high speed train best in world

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I can vouch for that, have used the AVE and honestly it makes our trains look shameful in comparison....when in the future fuel becomes even scarcer and far more expensive, when we may get more toll roads or pay as you travel....Spain might be thankful they invested so well. ;)

The biggest problems with ours aren't usually the speed or the fact that they're old but simply because they're badly run. Undersized, overcrowded rolling stock with horribly high fares. That's what puts me off using them for a journey I make fairly regularly. Used to be quite easy to do it for £10 return, on a full-sized train, and I used it fairly often. Now the cheapest is twice that and the train has gone down to three carriages. That can be changed back to a decent enough service without building a high-speed network. Beware of investing in projects just because they look impressive! That was part of Labour's problem, pouring money into the fancy-looking side (new school and hospital buildings) and not being interested in the less glamourous issues of what was going on inside them.

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  • 284 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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