Tuesday, Oct 20, 2009

Things aren't as bad as they seem in Spain

Telegraph: Recession-hit Spain goes back to black economy

Spain doesn't feel like a country with an unemployment rate of 19% [and youth unemployment of 39.2%]. Bars, shops and restaurants are full and only 3% of mortgages have gone sour. What gives? Unemployment benefits in Spain are very generous and family support networks are stronger. But the Spanish may also be falling back on a less attractive tradition – dodging taxes. Anecdotes abound of people working in side jobs while collecting unemployment benefits. Consider the surprisingly small number of people who applied for extended unemployment benefits. One reason may be the requirement to take training courses to qualify. That's difficult if you're already working at another job.

Posted by drewster @ 01:43 AM (1526 views)
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15 Comments

1. bystander said...

'It is still to be hoped that a windfall tax can be averted. But to avoid this fate, the banks need to restrain mega-bonuses this year. They should also put much more money back into society through donations to charity. If they don't act rapidly, they will have only themselves to blame if society turns against them.'..............
.......First off this tax should be permanent, not just for this year and secondly, what does he mean 'if society turns against them', surely anyone with an ethical bone in their body already hates and despises the scum who inhabit the trading floors and lap dancing clubs of the city, sipping their thousand pound glasses of champagne and quaffing on quails eggs sprayed with yaks urine etc. etc. Seriously this pandering to the financiers has got to stop and dayus where they had to go to work in 'muffty' should become the norm, they are self serving parasites who need to be reigned in. I can't believe we rioted about the poll tax and yet sit quietly by while these banksters use our childrens' and grandchildren's future earnings to make huge corporate profits and pay themselves disgusting bonuses. WTF!!!!!!!!!!!!!!!!!!!!!!

Tuesday, October 20, 2009 06:51AM Report Comment
 

2. tyrellcorporation said...

Bystander, I couldn't agree more. I'm a big fan of the Capitalist system - when it's allowed to work unhindered. These guys should have burned in the recent maelstrom but they've been propped up and now carry on as if nothing has changed. I too wonder where are the anti-capitalists, the anarchists, the student rioters the 'man on the street'? It's a sad day for democracy when you get zero action from the populace after a calamity and an injustice such as this. My only guess is that the powers that be are now so sophisticated that they truly have reached a nirvana in social control systems.

Tuesday, October 20, 2009 08:28AM Report Comment
 

3. fubar said...

tyrellcorporation It's my feeling that things are still simmering and when TSHTF you'll see the explosions of rage against the system. There's also the issue of fear. You have to reach an inflection point where people's anger outweighs their fear of the forces of law and order before people accept jail time as a price worth paying. That takes time. You are just ahead of the game.

Tuesday, October 20, 2009 09:22AM Report Comment
 

4. Billybob said...

"A less attractive tradition- dodging taxes". Are you serious? Why is it less attractive? When the ruling elite systematically misuses tax payers money to enrich themselves and increase their power over ordinary people why should people not dodge taxes? In fact it is getting to the point that it is almost a moral responsibility to do so. If you don't then you are, in effect, condoning criminality by the various elites.

Tuesday, October 20, 2009 09:30AM Report Comment
 

5. tyrellcorporation said...

@Fubar

You may be right but I can't help thinking that the time for action is when the red mist descends rather than waiting for some sort of calculated vendetta further down the line. As the economy gradually improves the desire for justice (and regulation) will abate even more - this is what the politicians calculate. My guess is that even they are quietly shocked at the apparent lack of popular action.

IMO the stuff has already hit the fan and the population was actually quite happy to simply use their own hankies to wipe it up!

All a bit sad really...

Tuesday, October 20, 2009 09:31AM Report Comment
 

6. stillthinking said...

When will the savers get angry? They have the attitude of saints. When the deflation phase ends, and the UK gets a real good and proper dose of serious inflation, will the savers get angry then as they realise the bankers bonuses ultimately come from their appropriated purchasing power, or will they just be happy that their house prices are restored?

Tuesday, October 20, 2009 09:40AM Report Comment
 

7. matt_the_hat said...

why do you think the government is so worried about unemployment - the devil makes work....

Tuesday, October 20, 2009 09:43AM Report Comment
 

8. mark wadsworth said...

While nobody should encourage "dodging taxes", this is a salutary lesson. Unemployment benefits in the UK may or may not be as generous as in Spain, but our claimants face a 100% withdrawal rate for the first hundred pounds a week and a 70% withdrawal rate if they're on tax credits (which for a couple, two kids, can be on incomes up to £25,000 or so a year), so half the battle in reducing unemployment is to reduce the total withdrawal rate and deal with benefits withdrawal via the PAYE system (which can easily cater for a 31% withdrawal rate via normal PAYE/NIC and a 50% withdrawal rate via K-codes).

Tuesday, October 20, 2009 09:57AM Report Comment
 

9. fubar said...

@tyrellcorporation
I hope you're mistaken - this is a once in a lifetime opportunity to improve a badly out of kilter system. The artificial stimulus is just making the future bleaker and the hole, when we finally fall into it, deeper.

Tuesday, October 20, 2009 10:09AM Report Comment
 

10. happy mondays said...

Endless pit fubar Endless pit...

Tuesday, October 20, 2009 10:56AM Report Comment
 

11. nickb said...

@Tyrell
Is not what we are seeing precisely the capitalist system left to work unhindered? A permanent windfall tax on bonuses, yes, but that would be a medium scale intervention. Even then, would not the system lurch and crash as it always has done? The banks had to be propped up because otherwise the money supply (largely credit) would have shrunk so much the economy would have collapsed. IF we moved away from fractional reserve banking perhaps we could start to get somewhere, as then the banks could not create (and destroy) money from (into) nothing.

Tuesday, October 20, 2009 11:16AM Report Comment
 

12. cat and canary said...

"Unemployment benefits in Spain are very generous"...

..not strictly true, the Paro system requires you to first pay into the system, and the amount that you can claim is linked to how much/long you have paid into the system.

i guess there are pros and cons to their system, but at least it prevents people from deliberately living off the system indefinately because they can't be a***d getting a job.

Tuesday, October 20, 2009 12:39PM Report Comment
 

13. quiet guy said...

@nickb

"Is not what we are seeing precisely the capitalist system left to work unhindered?"

No, it's emphatically not. The capitalist approach to insolvent banks is liquidation - not public subsidies.

"The banks had to be propped up because otherwise the money supply (largely credit) would have shrunk so much the economy would have collapsed."

My understanding is that the main fear was of the effect a bank collapse would have on current accounts and business accounts that ceased to function. Imagine being told by your employer that they can't pay you, your bank has closed its doors and all the ATMs have been emptied.

I've not come across a serious argument for abandoning fractional reserve banking altogether but I do believe that there is a good case for separating investment banking from retail banking.
(have a look at http://market-ticker.denninger.net/archives/1487-Sound-Banking-A-Capitalist-Imperative.html which says it better than I ever could)

Tuesday, October 20, 2009 12:57PM Report Comment
 

14. timmy t said...

Quiet Guy - hit the nail on the head. I too am in favour of free markets but they must be FREE. The framework must be in place such that if businesses, including banks, go to the wall then they go to the wall but the outcome is not armageddon! What we have had is free markets when the going is good and taxpayers picking up the tab when it goes Pete Tong. This is NOT a free market. Let them burn but so the rest of us can still get paid I say.

Tuesday, October 20, 2009 03:34PM Report Comment
 

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