Monday, May 21, 2018

Thoughts from Galicia, Spain: 21.5.18

Spanish life is not always likeable but it is compellingly loveable. 
- Christopher Howse: A Pilgrim in Spain. 

If you've arrived here because of an interest in Galicia or Pontevedra, see my web pagehere.

Life in Spain
  • That paean of praise for Spain from the British pianist, James Rhodes, is now available in its original English here. Interestingly, there's a note at the end saying: A previous draft of the English version of this article included a mention of the Civil War that was removed by the author before publication. El Pais published this English draft copy in error but has now removed the reference. One wonders what he said, who he offended and who indulged in a bit of censorship.
  • I think this is something I read in last week's Business Over Tapas . . . The family network disappears’. A major article from 'El Independiente'. ‘The number of older people living alone is skyrocketing. In Spain, a country where care has traditionally been provided by the family, the challenge is greater than in other neighbouring countries that have developed more public resources to manage ageing'. As it happens, there was an article on the increasing number of Galicia's solitary senior citizens in yesterday's Voz de Galicia. 
  1. Germany: In 2014, the journalist (Dominic Lawson) who reported Nicholas Ridley's explosive 1990 comments about Germany wrote an article - posted below - asking whether it had turned out to be true that the EU was a German racket to take over Europe. Naturally, he concludes is wasn't/isn't. In fact he goes so far as to say: Europe's real problem is not so much German hegemony as a complete absence of leadership. I suspect that - 4 years on - some people will find this true but not quite the complete picture. But there might be a lot of agreement with Lawson's comment that: The truth is it is Germany’s obsession with being seen as ‘good Europeans’ which may well lead to the biggest mess of all.
  2. ItalyBrussels’ nightmare - a Eurosceptic government in one of the EU’s largest countries — could become reality as soon as next week. See here for more on this.
  • A Trump tweet: “Melanie is feeling and doing really well. Thank you for all of your prayers and best wishes!” Nice, except that her name is Melania. YCMIU.
  • Here's a fascinating video on Fart from Noam Chomsky. 
The UK
  • Below is a wonderful Sunday Times article on that wedding.
  • And here's a Guardian article on the (inevitable) replacement for mindfulness – sophrology. Get with it. Which, it seems, the UK has so far failed to do. And Spain??
  • Yesterday witnessed the first group of tourists being followed around Pontevedra's old quarter by a guide with a flag on an erect pole. This is a common enough sight now in Sevilla, Granada, Córdoba and, closer to home, Santiago, but it's a truly depressing development here. Unless you own a restauant. I didn't recognise the flag but it might have been of an East European country. Or Russia even.
  •  I must crack on with my guide to the city for 'pilgrims'. Or start a tour business.
Duff Cooper
  • DC not only had to act as an intermediary between Churchill and de Gaulle (both of whom could be rather petty as regards the other) but also between de Gaulle and the Americans, who clearly detested him and tried to exclude him from the post-war French government. In which challenge they roundly failed, of course. Here's an extract on de Gaulle from DC's diary entry of January 1945: We had a rather foolish telegram from the Foreign Office about the Levant[Lebanon and Syria], saying that they relied upon me and my staff to persuade the French not to be stiff-necked. I am replying that unfortunately General de Gaulle’s neck is naturally stiff and that nothing has happened recently to render it more supple.
  • As I've said, DC was at the epicentre of both London and Paris societies and British politics during the 20s, 30s and 40s. In the last decade he worked closely with Anthony Eden - then the Foreign Secretary, later the Prime Minister. DC was very clearly an admirer of Eden. By pure coincidence, I read yesterday that a Labour politician of the time described Eden as a 'half mad baronet and half beautiful woman'. Perhaps this explains DC's affection for him.
  • As regards real women . . . Here's DC on the lady (the wife of Count Palffy ) who was to become his 1944 squeeze: Louise Palffy took me to the door. I found myself kissing her and falling in love. As you can see, herein lies yet another meaning of 'love' for DC – getting the hots for, as it'd be put these days. Or even just getting an erection. Some time later he complains (to himself) that: She takes our love affair too seriously. No danger of this with DC, of course. Not long after this, he moves on to a woman 30 years younger than himself. As this reviewer says: His son says he was a nice man: that's not obvious from these pages. There is a lot of eating, prodigious amounts of boozing and plenty of adulterous sex. 'I feel guilty of no faithlessness, only of filthiness,' writes Cooper in one typical aside after betraying his wife yet again. 
  • Interestingly, the possibility of DC's 'beloved' wife being unfaithful is never touched on in the diary. Or not so far, anyway. Which is a shame, as it'd be nice to know what his attitude would have been.
Finally . . . 
  • A UK ad agency devised a campaign for a gas company client which involved the free London paper, The Metro, looking as if it'd been soaked in water. This brilliant idea resulted in many, many copies being left untouched at tube and bus stations. Cue unhappy client.
© David Colin Davies, Pontevedra: 21.5.18


1. Is the EU just a German racket to take over Europe?: Dominic Lawson

Nearly 25 years ago, a Tory minister told Dominic Lawson it was - and lost his job in the firestorm that followed. But was he right all along? 
In the wake of David Cameron’s unsuccessful battle to prevent the German-backed Luxembourger Jean-Claude Juncker from becoming President of the European Commission, the Conservative MP Stephen O’Brien bellowed across the chamber of the House of Commons that the PM should ‘take inspiration from the fact that in a previous battle of Britain we saw off many Junkers before’.

This contrived attempt to link the current power struggle within the EU to the fight against the Nazis in World War II — Junkers was the company that built the Stuka dive-bomber — brings back memories of what a much more distinguished Conservative MP said to me 24 years ago. This was Nicholas Ridley, the Secretary of State for Industry in Margaret Thatcher’s final administration.

In the first week of July 1990, I had gone to his Oxfordshire home to conduct an interview for The Spectator, which I then edited. At some point I asked him, in quite a desultory fashion, about the drive towards European Monetary Union. It was a light-the-blue-touch-paper moment — emphasised by the way the chain-smoking Ridley dragged hard on his cigarette between making his explosive points: ‘This is all a German racket designed to take over the whole of Europe. ‘It has to be thwarted. This rushed takeover by the Germans on the worst possible basis, with the French behaving like poodles to the Germans, is absolutely intolerable . . . I’m not against giving up sovereignty in principle, but not to this lot.  You might just as well give it up to Adolf Hitler, frankly.’

Startled, I interjected that the then German Chancellor, Helmut Kohl, was surely preferable to Hitler — he wouldn’t be dropping bombs on us, after all. If anything, this made Ridley even more vehement: ‘I’m not sure I wouldn’t rather have the shelters and the chance to fight back, than simply being taken over by economics. He’ll soon be coming here and trying to say that this is what we should do on the banking side and this is what our taxes should be. I mean, he’ll soon be trying to take over everything . . . You don’t understand the British people if you don’t understand this point about them. They can be dared. They can be moved. But being bossed by a German — it would cause absolute mayhem in this country, and rightly, I think.’

I should add that Ridley was completely sober (he drove me back to his local station afterwards) and would occasionally glance at the tape-recorder that I had placed in front of him. But he clearly underestimated just how much offence his words would cause — especially as the then President of the Bundesbank, Karl Otto Pohl, was due to visit Britain the following week.

In the uproar that ensued following the publication of the interview, Margaret Thatcher immediately demanded Ridley’s resignation.

Three months later, she gave the go-ahead for the pound to join the European Exchange Rate Mechanism (ERM), then seen as the precursor to membership of full European Monetary Union. That made me feel less bad about Ridley losing his job over my interview with him, since I imagine he would have detested the idea of being part of a government that had joined the ERM.

And when German refusal to countenance sterling devaluation within the ERM led to Britain’s humiliating exit on September 16, 1992 (Black Wednesday), he would probably have felt vindicated. Largely as a result of that fiasco, which all but destroyed the  Tories’ reputation for economic competence, there was never much chance of Britain giving up its currency for the euro — however much that disappointed Tony Blair as Prime Minister.  Instead, it was the Greek people who demonstrated what Ridley warned would be the consequence of joining a common currency run along lines approved by Germany.

When the German Chancellor Angela Merkel declared that her government would have to have ‘oversight’ — Uberwachung — of the grotesquely over-indulged Greek public sector, to ensure the necessary reduction of their euro-denominated debts, there were riots in Athens.  Greek newspapers depicted the German government as Nazis, with Merkel as Reichsfuhrer, complete with swastika armband.

While it is true that Nazi Germany had occupied Greece during World War II, the only present-day Nazis in Athens are Greek, in the form of the unrepentantly fascist party Golden Dawn, which won seven per cent of the popular vote in 2012. Golden Dawn is, in fact, the most odious of the national political reactions not just to the euro but also another aspect of the attempt to build a federal Europe: completely uncontrolled immigration within the single market.

The Front National in France is perhaps the most powerful of these movements — like Golden Dawn, the party led by Marine Le Pen wants its government to withdraw from the euro, and to re-establish a national currency free of any direct German political influence. This, however, is where the French should only blame themselves, rather than Germany.

While Ridley saw France as ‘a poodle’ going along with a German strategy to control Europe through a single currency, the truth — as leaked official documents later revealed — was that it was all along the French who had pushed the rapid adoption of the euro on a reluctant Germany.  The French President, François Mitterrand, saw a reunified Germany with the mighty Deutschemark as too powerful an independent force and believed that somehow the loss of its own currency would make the country, with which it had fought three bloody wars since the 1870s, a less threatening neighbour.
Chancellor Kohl agreed to this with some misgivings, knowing that the German people trusted the Deutschemark and the Bundesbank more than any other institution — and it was only by promising his electors that there would be no pooling of national debts within the eurozone, that he was able to do the ‘fix’ with Mitterrand.

On the other hand, it is a nonsense to have a common currency without the richer parts of the zone underwriting the debts of the poorer geographic areas: it is the German refusal to do this that has helped to blight Southern Europe.

All this could be described as conforming to the dystopia predicted by Nick Ridley to me 24 years ago. But in other respects I believe that Ridley — who was 16 when the full horror of the Nazis’ concentration camps was revealed in 1945 — traduced modern Germany. While Adolf Hitler, indeed, had a plan to dominate Europe, and World War I (which was triggered 100 years ago this week) was principally caused by Germany’s desire for mastery on the continent, the German political class post-1945 has been characterised above all by the desire not to throw their weight around within Europe and to subsume their national identity within a European one.

That is one reason why Angela Merkel broke her promise to David Cameron to help in the fight to prevent the ultra-federalist Juncker from becoming President of the European Commission. She was confronted in her own country by the claim that the European Parliament had agreed to Juncker’s candidature and that it was deeply un-European for her to override its wishes, whatever her view as a purely national leader.

And the one thing that a modern German leader cannot be seen to be is ‘un-European’ (not for nothing is it said that when someone tells you only that he is ‘European’ then he has revealed himself to be a German). This has been most brilliantly set out in a recent paper by the German historian Andreas Rödder titled From Kaiser Wilhelm To Chancellor Merkel — The German Question On The European Stage.  As Rödder writes: ‘Particularly after German reunification, the German political elites, fearing any suspicions of hegemonic aspirations and resolved to avoid any new 1914 experience, finally reinforced the German propensity to prioritise European integration at the price even of the strategic demands of leadership.’  And he unearths an extraordinary remark from a rueful Chancellor Kohl back in 1990 (the year of my interview with Nick Ridley): ‘The alternative to EMU [the Economic and Monetary Union] is back to Kaiser Wilhelm and that doesn’t help us.’ More ominously, Rödder sees no happy resolution of the ‘discrepancy between Germany’s veritable pro-European ideology on the one hand and massive foreign suspicions of Germany’s aspirations to hegemony and ruthless dominance’.

But perhaps it should gratify British readers of his tract that he quotes Margaret Thatcher as provider of the most penetrating analysis of this problem, after she had retired from the fray: ‘The desire among modern German politicians to merge their national identity into a wider European one is understandable enough, but it presents great difficulties to self-conscious nation states in Europe. In effect, the Germans, because they are nervous of governing themselves, want to establish a European system in which no nation will govern itself. Such a system could only be unstable in the long term.’

That is a subtler and more profound insight than provided by Nick Ridley, and infinitely more so than by the odd present-day Tory MP, intoxicated by David Cameron’s grand-standing but futile battle to influence the appointment of the man now charged with running the entire system of EU-wide treaties and legislation. Cameron made the error of thinking that if he could get on the right side of the leader of Germany, he could achieve what he wanted for Britain in Europe.

The late Nicholas Ridley would probably have said: well, that’s what comes of putting your trust in Germans. But the truth is it is Germany’s obsession with being seen as ‘good Europeans’ which may well lead to the biggest mess of all.

The problem in Europe is not so much German hegemony as a complete absence of leadership.

2. A hair’s breadth from 'It’s a Royal Cockup'... and so brilliantly British: Camilla Long, The Sunday Times

It is an immutable law of British weddings that they should come within a bride’s titter and a groom’s sweaty jitter of total gurning horror and calamity. Something about our collective urge to silliness, our native inability to keep a straight face in the event of solemnity, makes British marriages, or at least the best ones, feel like hard-won victories snatched from the jaws of defeat.

Ballsing up, or looking as if we’ve ballsed up, is our thing. It’s our national pastime, our unifying birthright, our truest pleasure — it is the one thing that says we’re us. Think of all those humourless foreign train-timetable Luxembourgish royal weddings featuring sad photocopied princes marrying inbred Spanish girls called Nana. And then turn your loving gaze onto the precarious figure of Prince Hazza of the dropped boxers.

And, oh my God, didn’t you just die of laughter? If Prince Harry’s wedding was meant to tell us where we are as a nation, it appears that where we are is about five minutes away from the 5pm brawl in the cheapo enclosure at Ascot. Far from the holistic, humanitarian quadrille that Meghan “Hypnotherapy” Markle had been masterminding since November, complete with curated crowds and bussed-in poor people, where we are as a nation is apparently King Ralph meets Hollywood Botox and Oprah Winfrey hobbling up to the gates of the castle like Nursie in Blackadder.

I’m not even going to waste time on the bride’s father, Thomas Markle, a dumbo Dr Faustus who stood down from his duties last week, only to stand back up again, only to stand back down again, all “out of embarrassment”, before being escorted to his local hospital in Rosarito, Mexico, where he was firmly placed under general anaesthetic.

By the time the crowds gathered in Windsor, everyone had forgotten the Markle debacle, even though his name remained on the order of service. By this stage television commentators had far more pressing worries: scrambling, for example, for ever more precise descriptions of the wedding dress, even though they hadn’t even seen it yet.

How “exquisite” her neck looked! How long and slender her clavicles! It was definitely a boat neck, shrieked, I think, Kay Burley. If Prince William’s wedding was a coldly restrained Victorian spectacle filled with dismal heads of state and rugby players stuffed into suits the size of sofa cushions, Prince Harry’s would be a warts’n’all Tudorbethan circus set at the ground zero of royal chocolate-boxery. Exposed necks and court jesters: it was exactly what Henry VIII would have wanted.

Windsor itself had been turned into a giant gift shop where TV anchors desperately hunted for unwitting victims to fill the hours of commentary. It was less a case of not letting daylight in on the magic; more: when was the unrelenting daylight going to bloody stop? When would the torrent of fancy dress and beleaguered children and royal body-language experts cooing that “the queen’s signature pose is the hand clasp” come to a close?

“Outside the Henry VIII gate, I’m with some 50,000 well-wishers!” shrieked one helium blonde. This was 'The Royal Wedding: the Reality Show', in which everyone was either a star or an extra. As the guests arrived at St George’s Chapel, you could practically feel an army of set-dressers melting away — the pansy stylists, dew technicians and homeless wranglers, all receding into the Shakespearean mist.

It became clear that the atmosphere outside the church — innocent, ruddy, jovial — was different from the one inside. Inside, it was the Eton branch of Soho House. There were no prime ministers, no senior statesmen (unless you count John Major) nor even anyone spiritually over 50. The atmosphere was decidedly frothy: you could just tell it would get super-filthy later.

Guests were free to work the red carpet up to the chapel entrance. Idris Elba desperately tried to speak to George Clooney while David Beckham — now sporting the full briar patch of tattoos — chewed gum.

At about 11.45, grown-ups started to straggle in, in the shape of Sophie Wessex and the Yorkies. Camilla glided past in a hat that looked as if 12,000 flamingos had been sacrificed to make it. The bride’s mother, Doria Ragland, slid out of the bridal car in a dress made of WhatsApp green silk. She firmly upheld one of the laws of royal weddings: that the mother of the bride behaves even more regally than the royals. Inside the car, Meghan, parcelled up in shimmering Givenchy, looked beautiful and firmly set to “coy”.

“A modern bride,” breathed the commentators. “A self-made woman,” lisped the body-language experts. As the ceremony started and magic finally began to seep in, it became clear what sort of magic this was: it was the full panto, rabbit-out-of-the-hat, balloon-animal type of magic, rather than the divine right of kings.

Prince William tried to keep a practically weeping Harry calm by dazzling him with his military uniform, a funereal get-up decorated with enormous gold ropes, apparently fashioned out of Chelsy Davy’s hair. Bishop Michael Curry, an American Episcopalian priest, shrieked a hilarious sermon, “The Power of Love”. Charles, Camilla, Kate and William nearly had to stuff hankies down their throats.

All in all this was the heartiest, silliest, funniest royal knockout anyone could have wished for.

Sunday, May 20, 2018

Thoughts from Galicia, Spain: 20.5.18

Spanish life is not always likeable but it is compellingly loveable. 
- Christopher Howse: A Pilgrim in Spain. 

If you've arrived here because of an interest in Galicia or Pontevedra, see my web pagehere.

  • More lack of compromise from the new Catalan president. It's as if he wants to actually raise emotions before his meeting with President Rajoy.
  • Good news for shoppers in Spain. Unless you don't like being trackable.
  • There's been a lot of coverage recently of the growing boldness and violence of the drug smugglers in Spain's south west corner. See here on this. And last night I read that our own drug clans are planning to up their involvement there. Apparently, our police are more effective at  busting narcotraficos than their colleagues down south. Or are less susceptible to bribery. Or both, of course.
Life in Spain
  • As far as I recall, King Juan Carlos was never known as John Charles in the UK. In contrast, here in Spain Prince Harry is Principe Henrique. Cultural differences.
  • The smoking habit is reported to be down to around 25% of the Spanish. Must say I find that hard to believe. And wonder what it is among young women, many of whom aspire to appear sophisticated by destroying their lungs.
  • Suddenly, the news is all about Germany. I guess it's what happens when you achieve de facto power, even if you don't want it. Following on from the article I cited on the alleged fall of the German empire, there's been these items in the last day or so:-
  1. An article on stereotypical views of Germans around the world.
  2. Rather more seriously, here's an article on US threats of a trade war on Germany, if the latter continues with the implementation of an oil pipeline from Russia
  3. Finally, here's a paragraph from Duff Cooper's diary, written in Paris in 1944. It's rather shocking but has to be seen in the context of the time and circumstances: The Prefect of Police came, and we set out to visit some of the torture chambers which the Germans had made use of in Paris. It was a moving and terrible experience. We were shown things that only could be believed after being seen. My own hope is that the fullest publicity will be given to these horrors in order that the English and American people may never again make the mistake they have so often repeated of believing that the Germans are normal people and that the Nazis are any different from the ordinary Germans. 
  • I have to confess this reminded me of the sacking of Nicholas Ridley by Mrs Thatcher in 1990, after he'd rather unwisely commented that the EU was all a German racket designed to take over the whole of Europe. As if that weren't outrageous enough, he then went on to say: It has to be thwarted. This rushed take-over by the Germans on the worst possible basis, with the French behaving like poodles to the Germans, is absolutely intolerable. I have to say that this might well now be the view of the Greeks, the East European states and, most recently, the new Italian government. And quite possibly some of the British Brexiteers.
The UK
  • Best wedding scene? The train-toting page-boy, with his gap-toothed mouth wide open in wonder as the trumpets greeted the bride-to-be at the door of the chapel. Priceless.
  • El playback – Lip synching.
  • Good to see Galicia's less-well-known wines getting an honourable mention in this article.
  • The Galician president is saddened that one of his closest friends has become a turncoat and left the PP party to join Ciudadanos. I'll bet he is. Things can only get worse for him and his party.
  • Apart from the beggars, the camino 'pilgrims' are once again thick on the streets of Pontevedra. Their average age and their income seem to me to be creeping up. I'd be surprised if some of them had walked all the way from Lisbon. Or even Oporto. Maybe Valença/Tui on the border with Portugal. So that they can do the stipulated 100km+, if they want a Compostela as proof they're a real pilgrim. Of sorts.
Finally . . . 
  • As indicated above, I did my bit and watched that wedding, until she lifted her veil. I'm pleased to report I recognised very few of the alleged celebrities. But I did identify Mr and Mrs Beckham. Does the latter ever smile? And, dresswise, was she aware it was a wedding, not a funeral?

© David Colin Davies, Pontevedra: 20.5.18

Saturday, May 19, 2018

Thoughts from Galicia, Spain: 19.5.18

Spanish life is not always likeable but it is compellingly loveable. 
- Christopher Howse: A Pilgrim in Spain. 

If you've arrived here because of an interest in Galicia or Pontevedra, see my web pagehere.

  • El País has published a paean of praise to Spain and the Spanish from the British pianist James Rhodes. Click here for it in Spanish. Or see the (machine-translation) below. Being very happy living here, I agree with it as far as it goes. But it does represent only one side of a coin and is, therefore, more than a tad unbalanced. I doubt Vincent Werner would go along with all of it but it will certainly allow many Spaniards to preen themselves. And it will doubtless be much tweeted.
  • Incidentally . . . When I searched El País for this article under all the obvious words, all I got was No se han encontrado resultados. No idea why. Has it been withdrawn?
  • Remember that rugby match in which Spain claimed that they'd lost out on the world championship because of some Rumanian skulduggery? Well, it turns out that both Spain and Belgium – inter alia – were fielding illegitimate players and have now been disqualified. See the article below for details of this fiasco, and its bizarre consequences. You might have to read it twice if you really want to understand what's happened. 
Life in Spain
  • Come the warmer weather, come the bull-taunting events around Spain. Such as this one. It's hard to imagine they'll still be taking place in 50 years' time. 10??
  • Here's The Local with a list of 10 fascinating museums around Spain. As opposed to the 8 hidden museums in Madrid of March this year.
  • The largest of the Oasis class cruise ships can accommodate more than 6,000 passengers. Imagine the impact of 2 of these at once in the ports of, say, Cádiz or Malaga. Or even just one. Spring 2021 will see the launch of a 5th Oasis class ship and it will be even larger. As yet without a name, perhaps it should be called Excess. Though I can easily think of rather ruder names.
  • Yet another school massacre, this time in Houston, with 9 pupils and 1 teacher left dead. So routine, it didn't even make page 1 in the UK papers. Cue more pro-NRA nonsense from Fart, I fear. Bullet-proof school uniforms, perhaps. So far, all we've had is his usual twitter banalities: This has been going on too long in our country. Too many years. Too many decades now. He might well have added. But I've no real idea how to stop it and certainly won't do anything about the conditions which produce these maniacs, nor their access to firearms of prodigious capability.
  • The Washington Post reports that, so far, 2018 has been deadlier for students at US schools than Americans in the military. There have been 29 deaths in 16 incidents at schools and 13 deaths of service members in seven incidents. So, American kids would be safer joining the armed forces when they reach 11 than going on to high school.
The UK
  • Apparently there's nothing happening there today except a royal wedding.
  • That TSB/Santander IT problem . . . I'm not sure it's been solved but yesterday's news was that other banks are reporting up to an 8-fold increase in the number of customers joining them from TSB, as droves of customers abandon the bank after its IT meltdown.
  • A temperature of 31 degrees yesterday. Too high for us Gallegos.
  • The one-chord guitarist has given up one even that. Last night, he was sitting on the floor, smoking, with his guitar leant against the wall and a cap on the floor in front of him. Empty, of course.
Duff Cooper
  • After mentioning, back in the 1920s, that his then fiancée was fond of injecting herself with morphine, he writes of a 'new drug' which she and her socialite friends are now into. It's not named, so I guess it was cocaine. Though later on DC writes of friends who are opium smokers.
  • Later on, in the 1930s, when his now wife was acting in a play in the USA, DC satisfies his needs with 2 mistresses in parallel. But no one spoke about this in public, so no rules broken. Hard, nay impossible, to believe his wife didn't know about these affairs. She later told her son that she hadn't been much interested in sex and that all DC's women had been only flowers, while she had been the trunk around which they flourished.
  • In the 1940s, DC has to act an intermediary between Churchill and de Gaulle each of whom had an an enormous ego and could be very difficult. One gets the impression that, on balance, DC felt that De Gaulle was the more difficult of the two. Though French historians probably disagree.
Finally . . .
  • A travel tip I forgot to mention: Buy a universal plastic plug. Spanish hotels (even 4 star ones), seem to have a problem with the theft of the original sink and bath plugs. Or deliberately remove them.
© David Colin Davies, Pontevedra: 19.5.18


1. Debacle in European rugby sees Russia qualify for the World Cup

European Rugby has been left embarrassed after Romania, Spain and Belgium all fielded ineligible players in the Rugby Europe Championship. All three teams were deducted five competition points for each game that they had ineligible players on the field, regardless of the result. This meant that they each finished with negative points.

Georgia, which went through the competition undefeated, had already secured a place at next year’s Rugby World Cup. This meant that the next best team would gain direct qualification to the tournament, while third place would enter a playoff series with Samoa for a spot.

Romania, Spain and Belgium were the second, third and fourth ranked teams in the Championship. Their penalties meant that Russia, which only won two games in the tournament, moved into second place and claimed a spot in Japan. Germany, which finished last with no wins and zero competition points, took out third place and will play against Samoa.

This farce followed on from an earlier European rugby scandal in the game between Belgium and Spain. Romania was, at that point, in second place and needed Spain to win in order to guarantee them entry to the World Cup. The referee was a Romanian who allegedly penalised Belgium out of the game, effectively handing Spain the match.

World Rugby declined to intervene at this point, which infuriated the Belgians – and then Belgium discovered that Spain had used ineligible players in that match. They again tried to have the match overturned, and the International Rugby Board (IRB) decided to investigate. They found that Spain had indeed been fielding ineligible players throughout the tournament – but so had Belgium.

Romania was also caught up in the scandal, which meant that they lost their qualification spot and will miss the world cup for the first time ever. European rugby will be represented by Georgia and Russia along with the Six Nations teams, and Germany will enter for the first time if they can beat Samoa in a home and away playoff series (which they won’t).

2. The open letter from James Rhodes in El País.

"You may not believe me, but I'm not lying if I tell you that in Spain everything is better" 

I've never really understood the whole home thing. Okay, it's the place where you sleep and you're under cover, but other than that, the concept of home didn't make much sense to me. I guess I've spent half my life running away. Me or the disasters I've caused myself, as a rule. But nine months ago I stopped running. I settled in Madrid. I found a home. And I found out what it's like to have it.

It is one thing to know that Madrid that the Prado, the Thyssen and the Reina Sofía offer us. Escape at lunchtime to go to see the Guernica and then have a picnic at the Retiro, visit the Royal Palace and have a drink in the Plaza Mayor. But falling in love with the Cava Baja or the street of the Holy Spirit, which to you will seem most normal but which for me are full of magic, is another level.

Seeing people walking, so quiet (impossible in London), or waiting for the light to turn green (I've never seen it before). Count the number of couples that go hand in hand. Smile at the majesty of Serrano, where a jacket costs the same as a car. See an incredible play at El Pavón Teatro Kamikaze, chop up a few croquettes that can literally change your life at the Santerra restaurant, laugh at how good the croissants are at the Café Comercial, watch the professionals at Sálvame analyze Letizia's body language in front of an enthralled audience.

The differences between this country and the United Kingdom are countless. I am writing this sick, from bed, at two in the morning, after a three-day trip to the UK in which I caught the Brexit flu. When I arrived in Madrid, I called my health insurance. An hour later a doctor showed up at my house and prescribed antibiotics. Here I pay 35 euros a month for health insurance (it may seem like a luxury, but I need it for my past back operations). In London he paid 10 times more. And there the medical visits in your home cost about two hundred euros.

You may not believe me, but I'm not lying if I tell you that everything is better here. The trains, the subway, the taxi drivers, the very friendly strangers, the quiet rhythm of life, the amazing ability to insult each other (passing from mother to mother or from anyone's sexual activity, you resort to fish, asparagus and milk, an art worthy of Cervantes), the incredible language (you have fussy, scuffle, ñaca-ñaca, sob, left-handed or tiquismiquis, which could be my nickname). Your dictionary is the verbal equivalent of Chopin. I think it's guay de Paraguay the amount of heavy smokers here, telling all the doctors and moralistic assholes in Los Angeles to fuck off. The cordiality of living and letting live and the generosity are amazing. The Croquette of the Year Award. The respect that books, art, music inspire in you. The time you devote to family and rest. The things that matter.

Also impressive is the number of talented people called Javier (Bardem, Cámara, Calvo, Ambrossi, Manquillo, Del Pino, Marías, Perianes, Navarrete, among many others). Guess what I'm going to call my next child.

You invented the siesta, and yet you work more hours than almost any other country in Europe.

I have met strangers in the subway with whom I have ended up playing Beethoven, grandmothers who have made me toast and have told me about when they played the piano, psychiatric patients whose bravery has left me amazed, a boy who plays the piano much better than me at his age and whom I have been able to give some free lessons to. Even Slowly it sounds great in the subway at half past eight in the morning if it is touched by a smiling old man, and when I watch the other passengers I realize that it is a contagious smile. I have spent hours in the Carrefour de Peñalver overwhelmed by the colours, flavours, smells and freshness of everything (in London something like this is unthinkable), I have seen tomatoes the size of a football in the fruit shop on my street, I have received biscuits from some neighbours who, instead of complaining about the noise, ask me to play the piano a little more loudly. And I discovered natillas.

And I could go on for hours.

There's a lot of good stuff here, sometimes hidden. I have witnessed the extraordinary work done by organizations such as the Fundación Manantial, Save the Children, the Vicki Bernadet Foundation, Plan International and many others, large and small, capable of alleviating some of the pain in this world. And they don't ask for praise, prizes or acknowledgements.

Obviously, there are also problems. How could there not be? The frightening, offensive and inhumane laws that apply to sexual assaults (seen in the case of The Herd) that of course have to change. Drugs, destitution, human trafficking, abuse, cuts in health care, mental illness, economic problems. Corruption in power. Politicians (seriously: why don't we let Manuela Carmena, the super grandmother, take care of Spain for a few years and fix it?). The daily scourges and from time immemorial. However, all this has not made you insensitive, cold, unpleasant and closed as it has happened in so many countries, but it has made you open, it has brought to light a little bit of the purity and goodness that there is in the world, and, hell, how proud I am to be a tiny and lonely figure that wanders around this country amazed by its collective vitality.

This year, for work, I'm going to Ibiza, Sitges, Seville, Granada, the Costa Brava, Cuenca, Vigo, Vitoria, Zaragoza and many other incredible places. I've visited dozens of cities over the last two years. I am a foreigner, a guest, and as an Anglo-Saxon, I do not think I have the right to speak about politics, but what I can say is that in Barcelona, Gijón, Madrid, Santiago or Girona, everywhere, I have always found the same thing: affection, hospitality, smiles, generosity. There are also different gastronomies: the Valencian paella is the only real, obvious one, and the same goes for the churros in Madrid and the salmorejo in Andalusia. The best thing you can put in your mouth is in San Sebastian (well, maybe I'm messing around, so I'd better leave it alone). I have found different accents (Galicia, I'm sorry, but I don't understand a single word of what your inhabitants say, not even when I watch First Dates with subtitles; it's my fault, but they speak too fast), but behind every accent there was always a huge heart, dedication to work, hugs, tremendous hospitality.

I love this country. For me, it's at the top. Metaphorically and literally. Before, I never looked up; I walked with my eyes fixed on the sidewalk or my mobile phone. Here in Spain I look at everything with amazement. I look at you and your beauty blinds me. Now I'm looking up. Because I feel safe. And visible. And supported. And welcome back.

I was in London recently and I visited Billy, my psychiatrist. He told me that 10 years ago he doubted my survival. That even a year ago I wasn't quite sure, and rightly so. And that I've never looked as good as I do now. And you know what? I owe a lot to Spain.

Some will say that people treat me differently because of my relative success, the fact that I stay in nice hotels and dine in good restaurants. So let me finish with a memory.

A long time ago (too long), when I was very young, we spent our summers in Mallorca every year. In August we stayed for a couple of weeks in a shitty little apartment on the beach in Peguera. In my memory, that vacation is the safest, most perfect and incredible refuge of my childhood. It meant moving away from the war zone that was my life in London: violent, monochromatic, dominated by the rapes I suffered. For a brief period of time, when I was eight or nine years old, I was able to buy tobacco (a packet of Fortuna for a few pesetas), in the little shop on Pedro's beach. I was able to drink Rioja calentorro (thanks again, Pedro), contemplate the stars, swim in the sea, trick someone from time to time into inviting me to go water skiing, enjoy the sun. And, above all, enjoy the feeling of being safe, protected. 30 years later, you give me the same thing. And I can never express my gratitude to you for that.

Friday, May 18, 2018

Thoughts from Galicia, Spain: 18.5.18

Spanish life is not always likeable but it is compellingly loveable. 
- Christopher Howse: A Pilgrim in Spain

If you've arrived here because of an interest in Galicia or Pontevedra, see my web pagehere.

  • Possibly not the most auspicious start for the new Catalan president.
  • More here on opposition to Spain's macho culture.
  • And here's Don Quijones on the issue of the turn-round in the winds which have helped Spain grow impressively in the last few years. At the macro level, that is. DQ points out – as I have – that the good times have been [very] good to some, not so good to many others. Incidentally, I've referred many times to Spain's phony construction boom but I actually prefer his label of her madcap property boom. Which some suggest is about to happen again. Do people never learn? For example that bankers make huge slugs of money no matter which way a market moves. They just don't care. So need to be controlled. Trump, anyone?
Life in Spain
  • Here's The Local's advice on how to properly party in Spain. Might be useful for younger reasons, if any.
The EU
  • Some of us have long thought the EU would eventually collapse under the weight of its internal incongruities, born of different histories, religions, languages, ethnicities, moralities, cultures and economic and political fundamentals. It's not that the original stimulus - avoidance of war – was wrong. Nor that its 'liberal' societal and economic objectives were/are wrong. Rather, it's the speed – and, it has to be said, the duplicity and arrogance - with which it has been progressed. A case, then, of excessive rather than erroneous ambition. First Greece, then Brexit and now these Italian developments make this crystal clear.
  • The essential problem is that post-trauma Germany doesn't want to be in thrall to the rest of Europe (specially the (profligate) southern part of it), and the rest of Europe doesn't want to be dominated by Germany. As it increasingly is. As I say, Italian developments present this dilemma rather starkly. Below are 3 (overlapping) articles by Ambrose Evans-Pritchard on the subject. In the last of these, the language from both Germany and Italy is apocalyptic but I guess things won't come to this. 
  • En passant, it was inevitable that I'd agree with AEP's comment that the EU had lost the UK – maybe – through a mixture of inflexibility, misjudgement and strategic ineptitude. Of course, this is now being matched by the UK government in its negotiations with Brussels over Brexit.
  • Needless to say, I also agree with AEP's comment that: The volcanic developments in Italy doom Emmanuel Macron’s hopes of a "grand bargain" for the eurozone. It's really hard for me to believe that some folk were so optimistic a year ago as to think this had any chance of success in the foreseeable future.
  • And I also agree with his conclusion that: Intra-EMU politics are turning particularly toxic. The project will face an ordeal by fire when the economic cycle turns in earnest. Some of us have always felt this was inevitable.
Postscript, written after I drafted the above . . . Fascinatingly, this article in the NY Times today talks of the fall of the third German empire. The current one. As the writer puts it: The system is effectively imperial in many ways, with power brokers in Berlin and Brussels wielding not-exactly-democratic authority over a polyglot, multiethnic, multi-religious sprawl of semi-sovereign nation-states. And thinking about the European Union this way, as a Germanic empire as well as a liberal-cosmopolitan project, is a helpful way of understanding how it might ultimately fall. Been there, said that.

Finally . . . There's been a spate of articles on attempts in Amsterdam to deal with the modern plague of excess tourism. Reference has been made to the Disneyfication of the Dutch capital. Rather like my acid comment that visiting Granada and Córdoba these days was like going to DisneyWorld.

© David Colin Davies, Pontevedra: 18.5.18



Populist plans set Italy on a collision course with Brussels

Italian populists on the brink of forming a government remained defiant yesterday as markets trembled over leaked revelations that they plan to write off billions of euros of debt.

Italian stocks slid on the news and borrowing costs increased as financiers reacted to a policy document saying that the Five Star Movement and the anti-migrant League had considered procedures for leaving the euro and writing off €250 billion in debt.

The spread between Italian and German bonds widened sharply — showing a lack of confidence in Italian economic plans — despite the parties claiming that the document had been superseded since it was written on Monday and that they no longer wanted to leave the euro.

Matteo Salvini, the League leader, dismissed the turmoil as a “cynical board game of high finance”, and said in a Facebook video that he was determined to push on with plans for big tax cuts, earlier retirement and a wage for the jobless.

More than two months after inconclusive elections, the League and Five Star are locked in talks to form the first populist government in Europe, with Eurosceptism written into its programme. A year after Emmanuel Macron appeared to curb Europe’s populist surge by seeing off the challenge from Marine Le Pen to win the French presidency, a free spending Five Star-League government in Rome will alarm EU leaders traumatised by Brexit and concerned about nationalist governments in Poland and Hungary.

The document, published by the Huffington Post, also spelt out the Italian parties’ determination to overturn sanctions against Russia.

The draft contained plans for “procedures that allow member states to leave monetary union”, as well as the intention to ask the European Central Bank to cancel Italian government bonds worth €250 billion bought under the bank’s quantitative easing programme.

Claudio Borghi, the League’s economic spokesman, claimed yesterday that the party merely wanted the EU not to count the bonds when it calculates Italy’s debt, which stands at 130 per cent of GDP, second only to Greece.

Lorenzo Codogno, an analyst at LC Macro Advisors, said by merely considering pulling out of the euro the parties revealed “the true extent of their oddity, inexperience and off-track nature”.

The League’s plan to cut taxes has been priced at €80 billion, while Five Star says its wage for the jobless will cost €17 billion in the first year.

Mr Salvini shrugged off all criticism, reminding supporters that Silvio Berlusconi had resigned as prime minister in 2011 thanks in part to a widening spread in bond prices. Claiming that he would rather be a “barbarian than a slave” to Brussels, he said: “The more they insult us, the more they threaten us, the more desire I have to embark on this challenge.”

League officials have said that they are more Eurosceptic than Five Star, leading to tensions. However after Jyrki Katainen, European Commission vice-president for jobs and growth, warned against violating EU spending agreements this week, Five Star’s leader, Luigi Di Maio, condemned “Eurocrats that nobody elected”.

Beppe Grillo, the comedian who founded Five Star, also renewed his party’s calls for a referendum on leaving the euro, a plan that Mr Di Maio had dropped. Adding to the confusion, Mr Grillo told Newsweek on Monday that he also favoured two euro currencies, one for northern Europe and one for southern Europe.

Mr Salvini also attacked the EU commissioner Dimitris Avramopoulos, who called on Italy’s new government not to change its migration policies. “We heard some unelected commissioner say that Italy has to continue to do what it’s always done, or rather, pull its trousers down,” he said. Mr Salvini has promised to expel all 500,000 illegal migrants in Italy and to halve the funds Italy spends on migrant centres, using the cash to beef up expulsions.

He said that a final draft of the alliance’s policies would be ready by yesterday for submission to President Mattarella, who has the last word on forming a government.


Italy's insurgents enrage Germany and risk ECB payment freeze
The European Central Bank may be forced to sever credit lines to Italy in a drastic financial showdown if the country’s insurgent coalition tears up EU spending rules and subverts the treaty foundations of the euro.
Professor Clemens Fuest, head of Germany’s influential IFO Institute, said the EU authorities cannot stand idly by if the neo-anarchist Five Star Movement and anti-EU Lega nationalists press ahead with revolutionary policies and endanger the stability of monetary union.
Prof Fuest warned that the ECB would have to cut off Target2 credits to the Bank of Italy within the internal payments system, potentially bringing the crisis to a climactic head. “If they start to violate eurozone fiscal rules, the ECB will reluctantly have to act.  It will be like the Greek crisis. Italy will have to introduce capital controls and will be forced out of the euro,” he said.
It would be a massive blow but I think the euro would survive with France and Germany, and Spain still in there. It would be a different euro,” he said.
Boom beckons in Italy as post-austerity rebels slash taxes and spray money. 
Prepare for a roaring economic boom in Italy. Nothing works so marvelously in the short-run as radical tax cuts and a fiscal spree worth 2 or 3% of GDP.
Markets have great trouble pricing political surprises. They misread Brexit even though it should have been obvious that sterling devaluation was a form of macro-economic stimulus. They misread the election of Donald Trump even though he was promising a Keynesian blitz of New Deal infrastructure and rearmament. They are now misreading the economic logic of Italy's bizarre drama. 
Austerity is over. We are going to see some rock and roll at last in this stale eurozone. I am incredibly bullish,” purred one senior Italian banker in the City. He is quietly helping the twin-headed revolution in Rome. 
If you look closely, the anti-euro Lega nationalists in the new coalition are low-tax, supply-side Friedmanites, or an Italian variant of Pinochet’s Chicago boys in Chile if you prefer. What is unexpected is that the Five Star ‘Grillini’ seem to be going along with much of this, and many of them are in any case techno-utopian, libertarian anarchists. 
The stimulus packs an extra punch in a country that still has plenty of slack and a negative "output gap" of 0.7% (IMF estimate). The combined flat tax of 15% on incomes up to €80,000 (£70,000), and 20% for the rich, is a free marketeer’s dream.  It would be no great surprise if hard-nosed Anglo-Saxon hedge funds soon become the loudest cheerleaders of the Lega-Grillini adventure. 
The proposed "citizens income" of €780 a month for all is an injection of high-powered spending money directly into the veins of the retail economy, a bonanza for swaths of the depressed Mezzogiorno. Seen through this lens there is something not quite right about today’s wild sell-off of Italian bond and equities.
Investors are of course in shock. They thought Italy’s rebel twins had been tamed and that there would be no challenge to the European order or to fiscal probity. They awoke instead to read a leaked "contract for government" – albeit an old draft – that spoke of “cancelling” €250bn of Italian debt held by the European Central Bank and re-establishing “monetary sovereignty”. 
The text speaks of an Article 50-style clause offering a “shared and agreed exit path” for any state that wants to leave the euro. It rips up the EU Fiscal Compact. It calls for EU treaty change on the bail-out fund (ESM) and the Stability Pact, and for political control over the Bank of Italy. It demands a drastic reversal of the "Fornero" pension reform, lowering the retirement age again by several years. The "citizens income" has not been watered down into irrelevance as previously supposed. There is to be a concordat with Vladimir Putin. 
In other words, the Lega-Five Star comrades have not backed off on their original pledges after all. Five Star "guarantor" Beppe Grillo drove home the defiant message this week with fresh calls for a referendum on the single currency, and for splitting monetary union into northern and southern blocs.  “It might be a good idea to have two euros,” he told Newsweek. 
The coalition text is being reworked. The €250bn debt write-off is to become an accounting clause to eliminate the ECB’s €300bn holding of Italian bonds from the official debt-to-GDP tally. “It is modelled on the way the ONS treats bonds held by the Bank of England,” said Lega drafter, Claudio Borghi. Needless to say, the ECB cannot accept such a proposal. To do so would be to admit that QE was covert ‘monetary financing’ of states in violation of the Lisbon Treaty, as German critics alleged all along. It would set off an instant challenge in the German constitutional court.
The market reaction to the bombshell leak is incoherent and likely to prove fleeting. While the risk spread on 10-year Italian debt instantly ballooned 16 basis points to 151 there was no corresponding sell-off in the debt of Portugal, Spain, France, Slovenia, et al.  
Either Italy is suddenly a threat to the integrity of monetary union – in which case the entire project is in danger of unravelling – or it is not. There is no plausible scenario where Italy alone blows up while the rest of the eurozone sails calmly on. The country is too big. There is no plausible scenario where Italy alone blows up as the rest of the eurozone sails calmly on
Lorenzo Codogno,  former director-general of the Italian treasury and now at LC Macro Advisors, fears that the new government is now on “a Syriza-like trajectory within Europe” and heading for a disastrous showdown. “They risk losing market access. If bond spreads and bank spreads widen, Italy could face another credit crunch like 2011.”
The counter-argument is that Brussels cannot plausibly risk a confrontation with Italy. Any attempt to bully the Lega-Grillini rebels into retreat – let alone to crush them à la Grecque – risks setting off a disastrous chain of events. The coalition would retaliate by activating its plans for a "Minibot" parallel currency that subverts the monetary control of the ECB and would rapidly call into question the political viability of the euro.
Italy does not require a bail-out. It has a current account surplus of 2.8% of GDP and is a net contributor to the EU budget. The country is not remotely comparable to Greece.
Brussels has at last met its political match. Just as Brexit was the first referendum that the EU could not overturn (though hopes persist), Italy’s revolt is the first act of really serious defiance by a eurozone state that cannot be broken. It would be courting fate for the EU authorities to risk an existential battle with a big EU founder-state when it is already fighting brush-fires across half of Eastern Europe, and after having already lost Britain through inflexibility, misjudgement and strategic ineptitude. 
Brussels will have to put the best face on events and join the pretence that Lega-Grillini fiscal arithmetic mostly adds up. This charade can be achieved by creative use of "dynamic scoring" and penciling in a heroic fiscal multiplier. 
Some €15bn to €20bn can be plucked out of thin air from a fiscal amnesty (another one). A host of tricks and "agevolazioni" are at hand, along with a putative €200bn privatization fund which sounds impressive but will never come to much. Such a smokescreen would let the EU turn a blind eye.
A messy compromise along these lines would allow the Lega-Grillini duet to go ahead with turbo-charged deficit financing. Markets are likely to let them get away with it as long as the eurozone economy holds up and the global expansion rolls on.
In a benign world, the fiscal stimulus will (ostensibly) pay for itself through higher growth. Mr Borghi argues that the debt-to-GDP ratio might actually fall faster from a peak of 133pc through the magic of the denominator effect. It is not impossible.
I have long presumed that Italy would start running into trouble when the ECB switches off its bond purchases later his year and ceases to be a buyer-of-last-resort. The country must finance debt equal to 17pc of GDP in 2019, one of the highest ratios in the world. Chronic capital flight over recent years – showing up in the Target2 liabilities of the Italian central bank – suggests that few obvious buyers are waiting to step into the breach.
Yet I am not so sure any longer. It is possible to imagine a glorious Italian summer stretching deep into 2019 and even 2020 before the music stops. The problem will come in the next global downturn. 
Recession will quickly expose the deterioration in the underlying "cyclically adjusted" deficit. It will then be clear that the evisceration of the Fornero pension reform puts Italy’s long-term debt on an unsustainable and dangerous trajectory. 
Bond vigilantes – capricious as ever – will awaken suddenly. By then German political consent for monetary union will have been stretched to near breaking point. 
Enjoy the Prosecco for now.

Italy's insurgents enrage Germany and risk ECB payment freeze

The European Central Bank may be forced to sever credit lines to Italy in a drastic financial showdown if the country’s insurgent coalition tears up EU spending rules and subverts the treaty foundations of the euro.

Professor Clemens Fuest, head of Germany’s influential IFO Institute, said the EU authorities cannot stand idly by if the neo-anarchist Five Star Movement and anti-EU Lega nationalists press ahead with revolutionary policies and endanger the stability of monetary union.

Prof Fuest warned that the ECB would have to cut off Target2 credits to the Bank of Italy within the internal payments system, potentially bringing the crisis to a climactic head. “If they start to violate eurozone fiscal rules, the ECB will reluctantly have to act.  It will be like the Greek crisis. Italy will have to introduce capital controls and will be forced out of the euro,” he said.

It would be a massive blow but I think the euro would survive with France and Germany, and Spain still in there. It would be a different euro,” he said.

The German establishment has reacted with fury to a leaked plan by the Lega and the Five Star "Grillini" to overthrow the disciplinary architecture of the euro project, warning that it kills off any chance of German assent to shared debts or tentative fiscal union.

The bottom line is that they are issuing almost an ultimatum. They are saying that either there are fundamental changes to the eurozone, with fiscal transfers for Italy, or they will leave the euro,” he told The Daily Telegraph. Prof Fuest said the original draft text prepared by the two radical parties exposed their ideological reflexes and fatally damaged trust, even if the final text is being toned down. It has confirmed people’s worst fears and had a very bad impact in Germany. How can you have a shared deposit insurance (for banks) with a government like that in Italy? It is just unthinkable,” he said.They are threatening to undermine the Fiscal Compact and the Stability Pact and the entire institutional basis of monetary union.”

German economists have been stunned by radical demands for a cancellation of €250bn (£220bn) of Italian bonds held by the ECB. The clause has since been removed but the damage is done.

Italy’s policy is unmasked. They want others to finance their debt,” said Lars Feld, one of Germany’s "Five Wise Men" on the Council of Economic Experts. Why should there be any risk sharing in EMU if the new Italian government asks for a €250bn haircut? It is time to ring-fence against Italian risk,” he said on Twitter.

Whether the fall-out from "Italexit" really could be contained is an open question. Many think contagion would spin out of control. Furthermore, it is the express intention of some Lega-Grillini hardliners to force Germany to leave the euro by making it unworkable. They would retaliate by issuing a parallel currency within the eurozone and sending troops into the Bank of Italy if necessary. This vastly complicates the picture.

Italy’s Target2 debt within the ECB’s internal payments nexus has become a neuralgic subject. The liabilities topped €426bn in April – 26% of GDP – reflecting chronic capital outflows from the country. The worry is that they might spike to systemic levels in a crisis.

Willem Buiter, Citigroup’s chief economist and a former UK rate-setter, says weaker EMU central banks are little more than currency boards. They can go bankrupt and are not “credible counterparties”. He argues that the ECB may ultimately have to suspend funding lines to “irreparably insolvent” central banks in order to protect itself.

Hans-Werner Sinn, a celebrated economist at Munich University, said there is no mechanism for Germany to retrieve the vast sums that it has sunk into the eurozone, including the €923bn of Target2 credits owed to the Bundesbank. “We will never get the money back. It is already lost,” he said. Prof Sinn said the structure is equally unworkable for Europe’s North and South, leaving both in a state of smouldering resentment. “There is no possible solution to this. The catastrophe is happening. This is going to lead to the destruction of Europe, to say it bluntly. It will also bring AfD (Right-wing populists) to power in Germany,” he told The Daily Telegraph.

The Lega and Grillini were still arguing over the terms of the coalition deal on Thursday. There is no agreement yet on the choice of prime minister. Five Star intends to submit the coalition plan to an online vote. The deal may yet fall apart.

Italy’s constitution gives president Sergio Mattarella de facto power to impose the premier and the finance minister. He can order the government to stay within agreed EU treaties. But these are largely untested waters in the Italian post-War republic. If he pushes too hard, talks will collapse and lead to a fresh elections. Polls suggest that the insurgent parties would increase their votes. President Mattarella must pick his poison.

The volcanic developments in Italy doom Emmanuel Macron’s hopes of a "grand bargain" for the eurozone. The French leader had been gambling that Germany might accept some steps towards economic union, with a eurozone budget and finance minister, if France delivered on economic reform. It was already a hard sell. The Dutch-led "Hanseatic League" of Nordic states warned that they will not be dragged into "romantic” adventures, calling for strict budget rules. Each state must be responsible for its own debt. The Lega-Grillini démarche is the last straw.

Olaf Scholz, Germany's Social Democrat (SPD) finance minister, has warned that much of the Macron plan will never see the light of day. This week he rowed back further, suggesting that there will be no fiscal backstop for the Single Resolution Mechanism until deep into the 2020s. This eviscerates a key pillar of the EMU banking union.

It was wishful thinking to suppose that an SPD finance minister would deviate far from the "Ordoliberal" reign of Wolfgang Schauble. “Macron will not get anything from Germany. Scholz is exactly the same as Schauble,” said Heiner Flassbeck, the former German economic state secretary. The German view is that they are right all the time and the only way to run the eurozone is for everybody to be like them,” he said.

The resounding German "Nein" means the eurozone will remain unreformed and naked when the next global downturn arrives. Little has been done to avert a repetition of the “doom-loop”. Vulnerable banks and sovereign states can still drag each other down in a vicious spiral.

The situation is bleak. Almost a decade after the Lehman crisis, eurozone interest rates are still negative and quantitative easing has reached technical and political limits. The bloc is still in a Japanese "lowflation" trap. Debt levels are much higher. 

Now intra-EMU politics are turning particularly toxic. The project will face an ordeal by fire when the economic cycle turns in earnest.

Thursday, May 17, 2018

Thoughts from Galicia, Spain: 17.5.18

Spanish life is not always likeable but it is compellingly loveable. 
- Christopher Howse: A Pilgrim in Spain. 

If you've arrived here because of an interest in Galicia or Pontevedra, see my web page here.

As ever on a Thursday, I'm indebted to Lenox Napier of Business Over Tapas for some of today's items.

  • Supporters of independence in Cataluña are reported to now comprise 48% of the population, up from 44% in February. So . . . well done, Madrid.
  • Spain has suffered another setback in its pursuit (persecution?) of Catalan politicians, with the Belgian rejection of the extradition request in respect of 3 of these. Cue Spanish rage about stupid foreigners who don't really understand the concept of justice.
  • An interesting development in Spain's gender war.
  • And an interesting El País article on what I've oft described as the (growing) gap between Spain's macro and micro economic growth.
  • Thanks to (until very recently) the freezing of pensions, Spain's senior citizens are amongst the most unhappy – and most vociferous – about this situation. Click here for the latest developments,
  • On that economic growth and its future, here's a quote from an El Mundo article cited by Lenox:- 'The tailwinds that had saved Spain are running out: expensive oil, less tourism and an end to free money’. The piece begins: ‘The former Minister of Economy, Luis de Guindos, always defended that Spain had been able to take advantage of the so-called tailwinds better than any other country. That low interest rates or the fall of oil "play into everyone's hands", but that the Spanish economy grew "almost twice as much as the euro zone". However, these constant references by Guindos - as well as by all the members of the Government - to the good economic management of Mariano Rajoy's Executive failed to hide the obvious: that external factors were key to Spain's beginning to emerge from the crisis. And so the exhaustion of those winds that is now taking place is just as dangerous as its arrival in the past was beneficial...’.
  • One wearies of reporting cases of corruption in Spain but here's an interesting example, in English. Note the support of the accused from the PP party/government.
Life in Spain
  • Here's a video explaining why jamón can be so expensive.
  • Yesterday, I was hassled by 6 beggars. More in one day than in 3 weeks in the south of Spain. I suspect it's a nuisance that our mayor and his colleagues don't want to do anything about. The funny thing is that, apart from the regulars, the supply is endlessly reinvigorated by new ones. Maybe it's because the San Francisco church hands out a free midday meal to anyone who turns up. Someone who works there tells me the numbers have soared. I'm reminded of Richard Townsend's 1786 comment that Spain would always have thousands of beggars so long as her countless convents and monasteries went on handing out food to the (feckless?) poor.
Duff Cooper
  • His diary gets a lot more interesting – and less replete with details of romantic engagements – once he becomes a minister and then a Secretary of State in the pre-WW2 British government. His notes on the 1938 and 1939 cabinet meetings are as fascinating as you'd expect. He was clearly very close to Winston Churchill, no appeaser and no fan of Neville Chamberlin and his negotiations with Hitler. On the former, DC writes this telling comment:- I believe that Hitler has cast a spell over Neville. After all Hitler’s achievement is not due to his intellectual attainments nor to his oratorical powers but to the extraordinary influence which he seems able to exercise over his fellow creatures. I believe that Neville is under that influence at the present time. ‘It all depends’ he said ‘on whether we can trust Hitler.’ ‘Trust him for what?’ I asked. ‘He has got everything he wants for the present and he has given no promises for the future.’ Neville also said that he had been told and he believed it that he had made a very favourable impression himself on Hitler and that he believed he might be able to exercise a useful influence over him. Blood curdling.
Finally . . .
  • Needless to say, Skype started working as soon as I wrote about it not working elsewhere.
  • And need I say that El Tráfico was quick to welcome me back to Pontevedra, with a letter informing me of a fine for driving at 90pkh in an 80 zone east of Malaga. This was on the A7, an autovía/motorway/highway. As I've said, it's almost impossible to keep track of the changes of speed limits on these, raising suspicions about their real purpose. But I'm pretty sure one of my (overseas resident) colleagues was driving my car that morning. . . . 
  • This is a recipe I found in my father's things, dating from 1941, when he was a 19 year old RAF pilot training American pilots in Alabama[sic]. I suspect it's for hooch/moonshine . . . .
1 lb wheat
1 lb large raisins
7 oz yeast
1 lb potatoes
4.5[?] sugar
I gallon of cold water
Put wheat into large vessel. Peel potatoes and grate into wheat. Add raisins (worked . . . . . . . . . .). Then add sugar and water, keeping a cupful back. Warm the cupful to blood heat and put yeast into bowl[?]. As to the other ingredients into vessel, cool and stir each morning for three weeks. Let it set again and then bottle. But down cork down tightly until finished fermenting.
Can anyone confirm my suspicion?

© David Colin Davies, Pontevedra: 17.5.18

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