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The Ugly Truth Behind Spain's First Trade Surplus In Over 40 Years

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Presumably though it's even worse news for the people they used to buy stuff from. Now why do I suspect that's us?

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Falling population? Inevitably, if you have the EU, people are free to leave, a bit like people are free to leave Detroit and move to Texas or wherever.

Indeed - an old school friend has just returned after nearly 20 years there, along with his Spanish wife. She lost her job, the schools are falling apart, etc. Not good news.

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Not only Spain but entire Euro-zone!

THE BIGGEST trade surplus in the history of the Eurozone was recorded yesterday, following the return of France and the Netherlands to recession this week.

The massive €18.7bn (£15.76bn) surplus was almost entirely driven by falling domestic demand for foreign goods, as exports stagnated and imports fell by 10 per cent on the year. The extent to which the surplus increased was not foreseen by the markets, where a smaller rise to €13bn was expected.

The consumer price index in the euro area was also announced yesterday, plunging to a 38-month low of 1.2 per cent

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Presumably though it's even worse news for the people they used to buy stuff from. Now why do I suspect that's us?

No, we have a negative trade balance with Spain, and the rest of the EU except Ireland (maybe a tiny surplus with the Netherlands..)

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a keynesian success story?

?

An Austerian caused depression story.

As predicted.

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Not only Spain but entire Euro-zone!

not good news for the UK, which is the Eurozone's biggest trading partner. Their growing surplus is likely our growing deficit.

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real keynesians would have saved during the good times.

Yes, the bit about saving during the good times is conveniently forgotten by most Keynesians.

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?

An Austerian caused depression story.

As predicted.

Yes clearly they would be much better off pumping vast amounts of cheap money into the system and creating millions of public sector non-jobs.

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Yes clearly they would be much better off pumping vast amounts of cheap money into the system and creating millions of public sector non-jobs.

It always amazes me how some just can't seem to understand that there's no 'magic bullet' that's going to make the consequences of the credit boom go away. They think that deficits can just be maintained ad-naseum (or even increased) .. with printed money if necessary .. and that will somehow fix the problem.

Quite clearly the vast amounts of credit extended by the financial sector (and borrowed by governments, organisations and individuals) can not and will not be made good. The default will either be hard or soft. Soft default will appear to lessen the blow but will drag the crisis out and in the case of money printing, prevent any underlying issues being addressed (i.e. state deficits, insolvent banks) leading to a bigger crisis down the line as the system becomes increasingly untenable.

Hard default means facing up to the losses - clearly this is bad news for an economy fuelled by credit and will entail - gasp - real economic hurt, especially for those who over-extended. However, that's the way the cookie crumbles. Attempting to dodge it by destroying the currency will just trash the whole system in the long term.

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Yes, the bit about saving during the good times is conveniently forgotten by most Keynesians.

They are not Keynesians.........but brownites

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not good news for the UK, which is the Eurozone's biggest trading partner. Their growing surplus is likely our growing deficit.

New car sales across Europe rose in April for the first time in 18 months, helped by strong demand in the UK and by the early Easter break. Link

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No, a depression caused by massive expansion of credit.

Yup. Spain actually ran a government surplus in the 3 years leading up to crisis, got its government debt down to below 40% and did everything by the Keynesian book. It was being touted as the model economy by the EU. Of course they conveniently ignored the reason behind all this apparent "growth" - negative real interest rates fueling a private debt boom- but that was fine as long as they were spending it on German cars. Now they have stopped buying German cars they must be punished.

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The Spanish and the EZ are doing the hard stuff while the UK is still playing at it. 10 years from now the real losers will become apparent.

+1. Remember when brown and his nu-lab fanatics were calling Germany the 'new sick man of europe' 10 years back.

These Keynesians cant see further into the future than the next quarter.

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Yup. Spain actually ran a government surplus in the 3 years leading up to crisis, got its government debt down to below 40% and did everything by the Keynesian book. It was being touted as the model economy by the EU. Of course they conveniently ignored the reason behind all this apparent "growth" - negative real interest rates fueling a private debt boom- but that was fine as long as they were spending it on German cars. Now they have stopped buying German cars they must be punished.

Where were they getting the money from to buy the German cars?.......couldn't the Germans buy more olive oil or tomatoes to help them to balance it out a bit. :unsure:

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Where were they getting the money from to buy the German cars?.......couldn't the Germans buy more olive oil or tomatoes to help them to balance it out a bit. :unsure:

Yes. The fact that people have no money whatsoever is entirely missing from these kind of analyses.

You know, the Troika is still maintaining that Greece will exit from the slump in 2014. Reasoning? Well, it is because the 'reforms' and wage cuts (with still more to come) have put salaries back to 1995 levels, making the country 'really competitive'.

Never mind about German cars, there isn't enough money around to have a domestic economy, let alone imports. 1995 level salaries won't support 2013 prices and Troika tax hikes.

And just how competitive do olives and tomatoes need to be? Spain and Greece never had an export led economy and never will.

Only a currency devaluation will save countries like Spain and Greece. For which they need a currency other than the Euro.

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No, we have a negative trade balance with Spain, and the rest of the EU except Ireland (maybe a tiny surplus with the Netherlands..)

Yep Spain probably comes in at number 2 (6 trillion deficit) with Germany (16 trillion) presumably the highest deficit. Brits love of the Costa Plonka and fondness for cheap cars leaves our trade balance with Spain with no hope.

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Yes. The fact that people have no money whatsoever is entirely missing from these kind of analyses.

You know, the Troika is still maintaining that Greece will exit from the slump in 2014. Reasoning? Well, it is because the 'reforms' and wage cuts (with still more to come) have put salaries back to 1995 levels, making the country 'really competitive'.

Never mind about German cars, there isn't enough money around to have a domestic economy, let alone imports. 1995 level salaries won't support 2013 prices and Troika tax hikes.

And just how competitive do olives and tomatoes need to be? Spain and Greece never had an export led economy and never will.

Only a currency devaluation will save countries like Spain and Greece. For which they need a currency other than the Euro.

Devaluation is a temporary fix that primes a downward spiral. In 1967 £1=DM10........late 90s DM2.20. Higher import prices feed in priming a second.....a third.......an nth devaluation. Denizens of the devaluing countrt become paupers at home and abroad.

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+1. Remember when brown and his nu-lab fanatics were calling Germany the 'new sick man of europe' 10 years back.

They were largely correct in this but misunderstood the effect of the single currency.

The heart of the Eurozone's problem is that monetary policy is set for the benefit of the Germans. 10 years ago the Germans were "sick" so the ECB ran a very loose monetary policy to help them; the problem is that at the same time the PIIGS were doing very nicely, this loose monetary policy was wholly inappropriate for them but thanks to the single currency they were stuck with it anyway.

What followed was a debt fueled boom in the peripheral countries, house prices rocketed, wages followed and most significantly they lost competetiveness with Germany. Wages are now fundamentally misaligned between the various Eurozone countries and the only way to correct this is real wage cuts.

If monetary policy had instead been run from Madrid for the last 10 years it's fair to say that they Spanish would be lecturing Merkel about lazy feckless German workers.

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I look at that export graph and all I see is average export growth. Imports have dropped so that there is now a slight surplus.

Am I missing something here? How is that bad?

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Where were they getting the money from to buy the German cars?.......couldn't the Germans buy more olive oil or tomatoes to help them to balance it out a bit. :unsure:

The germans were lending them it?

DB holds a lot of southern euro debt, doesnt it?

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It always amazes me how some just can't seem to understand that there's no 'magic bullet' that's going to make the consequences of the credit boom go away. They think that deficits can just be maintained ad-naseum (or even increased) .. with printed money if necessary .. and that will somehow fix the problem.

Quite clearly the vast amounts of credit extended by the financial sector (and borrowed by governments, organisations and individuals) can not and will not be made good. The default will either be hard or soft. Soft default will appear to lessen the blow but will drag the crisis out and in the case of money printing, prevent any underlying issues being addressed (i.e. state deficits, insolvent banks) leading to a bigger crisis down the line as the system becomes increasingly untenable.

Hard default means facing up to the losses - clearly this is bad news for an economy fuelled by credit and will entail - gasp - real economic hurt, especially for those who over-extended. However, that's the way the cookie crumbles. Attempting to dodge it by destroying the currency will just trash the whole system in the long term.

When I am PM I shall appoint you chancellor! Well spotted. :lol:

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  • 242 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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