Thursday, November 17, 2011

Here's an interesting perspective on recent events from Paul Feldman. Which is all too accurate, I fear. A taster - The financial markets have effectively “bought” capitalist democracy, turned it into a commodity. They demanded and got deregulation from the politicians. And when they went bust, they demanded and got bail-outs. When governments have proved incapable of imposing the debt crisis on their people, an out-and-out takeover is the result in Athens and Rome. So the democratic achievements of past generations in terms of the right to vote and influence course of events through parties committed to reform are negated. There is even less meaning to voting than ever before, as the people of Spain will discover next Sunday.

I've mentioned that a famous judge (Sr. Varela) lives in a nearby development which is illegal and now scheduled for demolition. An even better example of how things can be here is that of notary in a nearby town who's just been found to be using an office which has no Licence of First Occupation. This - as is the experience I'm having with the sale of my rural property - is a useful reminder that notaries are not the safeguard foreigners need when buying property here. There is no substitute for an honest and experienced lawyer. And, yes, I do know one! As I've said before, many (if not most Brits) are persuaded by the estate agent not to use a lawyer and to rely on the notary. This, of course, is pushed for the benefit of the agent, who wants a quick sale for his commission. Since, as an estate agent once told me, "Brits leave their brains on the plane when they come to Spain", too many of them accept the word of the agent. Who won't be around when problems arise later. And if they are, they won't give a proverbial.

I have a signing to go to . . . . so

Finally . . . Here's Business Week's take on Sr. Rajoy.

Wednesday, November 16, 2011

These are the things I've learned in the two days I've been back in Spain:-

- My bank - Citibank - has (re)introduced charges if you get cash from an ATM which is not in the network to which they belong. Actually, it's worse than that; there are charges if you use any bank branch not belonging to them, whether or not it's in the Servired network. And so it was that I was told there was a charge of 18 euros to take out cash of 600 euros this morning, an operation which I naturally aborted and then walked to the city's only Citibank branch. This is going to be very inconvenient but I wouldn't put it past Citibank to try to dress it up as an improvement in their customer service. Banks appear to be a law unto themselves all over the world.

- If you get notification of a registered letter (certificado) the postman tried to deliver when you were out/away, you need to get to the Post Office to collect it within 15 days. If not, you might find your self waiting, say, 25 minutes to be told this was a waste of time because they've sent the letter back to the sender.

- If you've bought a house and the seller fails to pay the notary for the document (escritura) proving the prior cancellation of his mortgage, you will end up having to pay for this. As if this wasn't bad enough, you'll also have to pay the Property Registry's fee for receiving this document and removing the reference to the (cancelled) mortgage in their records. Of course, you can take the seller to court to force him to comply with his legal obligations but this is not usually an attractive option in Spain.

- There's a material distinction in Spanish between saying of a woman Es buena, as opposed to Está buena. In English, these both mean "She's a good woman". However, if I've got this right, the former means She's kind, generous, simpatico, etc. While the latter means something like She's so fit I'd like to bed her. Or words to that effect.

Finally . . . Here and here is all you need to know about the Gallego who'll be our Prime Minister as of Sunday, Mariano Rajoy. Not yet in office, he's already made his first major official gaffe, and worried the people who apparently make political appointments in Europe these days, the markets.

Tuesday, November 15, 2011

Talking to my lovely neighbour Ester today, I learned that the seventeen (unoccupied) new houses behind mine, being illegal, are now subject to a demolition order. As are two other developments in our barrio, in one of which a famous judge has his house. Only in Spain?

Of course, no one expects the houses to be knocked down - they belong to Spaniards, not foreigners - but it'll be interesting to see what happens next. If they are demolished, it'll mean more noise and dust, to go with that of the six years it took to build the bloody things.

Anyway, here's what William Dalrymple had to say about the "Spanish character" in the final pages of his 1777 book about his trip through Spain in 1774. I stress that I don't necessarily agree with him. Or even, at times, understand him. You can make up your own mind how much things have changed in three hundred years:-

The Castillian, Andalusian, Galician are strongly marked, each a separate people; but since the same government, one religion, and the like education prevail, a similarity of character is conspicuous; the gravity of the natives, is carried to a proverb, and their deportment would convince a stranger that it were true: they have no idea of walking for exercise, or even stirring abroad in the heat of day, but when obliged to it, and then they move with a solemn gait, which becomes habitual; till lately and that only now at the capital, among people of rank in the provinces, they had little communication with strangers, or with each other, consequently a reserved behaviour whenever they met in company, and their turn for gallantry, obliged them to keep a guard on their countenances, lest they should betray their intrigues to their associates: as this long been the seat of of bigotry, the gloom of religion hangs upon their brow; and the inquisition, employing its familiars in every corner of the realm, urged them to have a curb upon their tongue, for fear that they should utter what might be interpreted to their ruin: all these causes combined, naturally produce those effects of external sedateness we see prevalent amongst them; but children of the sun, though not volatile, they have as acute and lively imagination as any people of Europe: sanguine in their dispositions, and warm in their affections, if thwarted in their pursuits, they often become enraged to a degree of passion, with which we are in general unacquainted: they are revengeful, and stabbing still prevails, the lowest peasant will not brook a blow, and that the honour of the soldiers may not be hurt, there is an article in the ordinances for the army and they are to be beaten only with the sword. They have the highest notions of the dignity of their birth: the Castillian, but more the Biscayan, though poor and beggarly, hold the Andalucian in the utmost contempt, as being if immediate descent from the Moors: the latter is crafty and designing, but a nobler spirit runs through the vein of the former. Marriages are generally made between persons of equal distinction: the old nobility seldom contracts themselves with the new; and the superior never connects himself with the inferior. They are temperate, or rather abstemious, in their living to a great degree: 'borracho' [drunk] is the highest term of reproach, and it is rare to see a drunken man, except it be among the carriers or muleteers: both men and women are fertile in resources to the attainment of their favourite pursuits, the latter, in particular, limited in their education, confined with bars at home, and attended by spies abroad, still find means to elude the vigilance of their 'dueñas' [mistresses] and pervade the grates made to restrain them. It is particular, that the people throughout, are free from diffidence, they have a manly character, and speak to their prince with the same sang froid and confidence that they would to their fellow; they never utter anything at which they seem the least abashed, each man appears to have a conscious dignity, which is not so conspicuous in other parts of the world: they treat one another with the greatest civility and respect; if even a beggar ask alms, and it not be granted, the supplicant is refused in most compassionate terms, another time, they tell him, and God go with him, God conduct him, etc. insult is never added to misfortune. Such are my cursory remarks upon the present prevalent character of this people. There was a time when the ardent flame of liberty fired each Spaniard's breast; but it has been extinguished by the malignant blasts of despotism, never to be kindled more.

That's it, then. I'd just add for now that Dalrymple regularly - and oddly - refers to women as 'the sex'. As in this reference to the ladies of southern Portugal - In this country, the sex have sparkling black eyes, white teeth and fine hair, to which they add powder and pomatum in such quantities, that they increase their heads to a most enormous size; they wear rouge, but with delicacy, and patch a great deal.

As for Spain, I will add that one quickly forgets just how noisy this place is. In a cafe this morning, I had to ask three times for the (unwatched) TV to be (further) lowered so I could hear my companion speak. True, the staff were very gracious about it but they clearly had no notion of what an acceptable level of (pointless) noise is. Likewise the imbecile who'd removed the noise suppressor from his scooter and who passed us at a manifestly illegal level of decibels when we were walking to my car.

Talking about the Spanish attitude to rules . . . As we landed at Vigo airport last night, there was a reminder that we should leave our phones off until the doors had been opened. Whereupon, every single passenger I could see immediately switched on his/her phone and called someone.

But the good news is that no one has walked into me yet.
Every time I pass through Liverpool airport it's got bigger. But not necessarily better. The expansions always seem to be designed to accommodate more shops. To help fleece the captive clientele with time on it hands.

I took advantage of the two flights necessary to get to Vigo to read from start to finish William Dalrymple's account of his journey through Spain way back in 1774. He doesn't actually hazard any views on the Spanish character until the final pages and I will post these later on. Perhaps tonight.

The good news back in Pontevedra is, firstly, that I have agreed a price for the sale of my house in the hills and, secondly, the construction of two huge roundabouts on the edge of the city has moved closer to completion.

Seen on the streets of Pontevedra this morning - a woman walking along bearing a plaque on her chest saying I WANT JUSTICE. I wonder what for and will have to ask around.

Also seen on the streets - Far more pretty women than one tends to see in the UK. Suddenly, I feel a lot younger . . .

Sunday, November 13, 2011

THIS BEING ENGLAND 1: At 3.30 this afternoon, I thought I'd nip down to the the Sainsbury supermarket before it closed at 4. To find that half of the student population of Headingley had had the same notion. Anyway, accosting two of the store assistants standing by to help the hundreds who can't master the self-checkout machines, I asked them where I could find capers. One of them asked me if I meant 'kippers' and being assured that it really was capers I was after, they both giggled and said they had no idea as they didn't know what they were. Fortunately, another assistant had overheard the conversation and took me to the right shelf.

TBE 2: Yesterday's gloriously sunny autumn day has turned into a dank and dismally damp day as foul as you could imagine. It doesn't help that it's dark by 4.14.

TBE 3: The construction workers transforming a house opposite the supermarket into something as yet undetermined are on the job today and will have finished the project in a little over a week. In Spain, I fancy this would have taken a little longer.

Talking of home . . . What would your guess be for the region of Spain with the most licences to offer flamenco performances? Andalucia perhaps. Well, no. It's Galicia. Where I've yet to see flamenco offered anywhere. Why should this be, I hear you ask? Well, it's because such a licence allows you to stay open until 5.30am and not the 4.30am that disco bars are limited to. The terms of the licence say there must be a raised dais for the performers and no dance floor. I suspect you could search until eternity to find one such place in Galicia, whether or not it has a flamenco licence, There are rules and rules in Spain.

And talking about Galicia . . . Here's a Guardian profile of the Pontevedran who will head the Spanish government after the general elections on 20 November. As the writer says, one of the problems that confront him may require his to employ a stereotypical skill attributed to some Galicians – of doing one thing while persuading people he is actually doing the opposite. Interestingly, a Galician friend has written to me to say he finds the article spot on.

As for the Duke of Palma and his alleged crooked dealings, he's said ‘When I know all the details of the allegations I will make a full statement’, adding that his professional behaviour had always been correct. The Palace, meanwhile, has attempted to distance itself from the monarchs' son-in-law, saying that if he's indicted, he'll have to defend himself ‘like any other citizen’.

Finally . . . I've cited a few warnings about Facebook recently and here's one specific to me:- For no reason in particular, I added my secondary school and university to my profile this week. Within a couple of days, I got a picture of a stunning young woman claiming to be attending the college now and asking me to become a friend. I've little doubt that if I answered, it'd cost me, one way or another.
The ex-editor of the Financial Times, Andrew Gowers, has had the courage to publish this astonishing me culpa this morning in The Times. As I can't just link to it, I've reproduced it in full.

It's a comprehensive recognition that he was wrong to support the introduction of the euro ten years ago and that not all eurosceptics deserved to have their arguments dismissed as lunacy. Of course, like the rest of us, he has no real idea of what should be done now, as Europe's elite struggles with the choice between "the cholera and the plague".

I'm intrigued to see he uses a phrase I've resorted to several times over the decade, viz. that the euro would "collapse under the weight of its own internal contradictions". So I wonder if it was in common use before I adopted it.

The article also reminds me of that old cynical view that every major reform results in the exact opposite of that for which it was designed.

It’s confession time. Exactly 10 years ago, I was cheering as the preparations to launch notes and coins for Europe’s bold new single currency reached their climax. For more than a decade before that, mine was among the voices egging on Europe’s leaders as they agreed to pool control over their money and form an economic and monetary union (Emu). In the years that followed, with the euro establishing itself as an instrument of European power and integration, I was one of those celebrating its success and urging Britain to join the party.


I now believe I was wrong. In recent months, as Europe’s leaders have struggled impotently with debts and deficits, with stricken banks and sluggish economies, with angry voters and helpless political institutions, the awful possibility has taken shape that they will fail.
Last week, as Italy teetered on the brink of the abyss that has already claimed Greece, Portugal and Ireland, a prospect loomed that I and other advocates of the single currency long regarded as unthinkable — that of the euro collapsing under the weight of its own contradictions, causing a financial crash and depression in Europe and sending economic shockwaves around the world.
This is not (yet) a prediction. It is possible that apocalypse will be avoided and that the EU will find a way of muddling through to save the euro in some form. Some argue that failure is inconceivable given what’s at stake.
But even so, for me something fundamental has changed. The travails of the euro have done irrevocable damage to the political assumptions I have carried around for most of my adult life — that the evolving “European project” is, for all its much-discussed faults, by definition a force for good; that economic integration driven by the EU is the essential motor for peace, prosperity and economic development across the continent.
In fact, watching Europe’s leaders floundering and fumbling for the past 18 months and more, it is hard not to conclude that the single currency is achieving the precise opposite of what its progenitors intended.
Where they promised greater economic stability, the euro has exacerbated uncertainty and volatility. Where the single currency was supposed to promote trade and integration, it has instead created new divisions. Where it was portrayed as a vehicle to enhance Europe’s influence in the world, it has reduced the EU to an international laughing stock, or worse. Where it was promoted as a forge for closer political co-operation in Europe, as part of the formula to end the wars and bloodshed of the 20th century, it has fuelled conflict, undermined democratic structures and reawakened age-old national resentments.
As David Marsh, a banker, former journalist and author, whose recently updated book The Euro remains the definitive study of the subject, puts it: “The single currency bloc stands revealed as a zone of semi-permanent economic divergence, political polarisation and built-in financial imbalance. For the broad mass of the European electorate, the notion of ‘Europe’ has become a byword for unpopular and painful economic restructuring. Emu governments have decided to commit colossal sums of taxpayers’ money they cannot afford to heal internal disparities they cannot conceal to shore up an edifice many believe cannot stand — at least in its current form.
What makes this litany all the more humiliating is that we should have seen it coming. The current euro mess is not merely a story of incompetence and political weakness at the highest levels in Athens, Rome, Berlin and Paris — though it is certainly that. It is not based exclusively in a failure of technical execution by policy wonks — though it is that, too.
More than either of those, it is a comprehensive and devastating failure of political leadership and economic understanding — Europe’s worst fiasco since the second world war. Its roots go back to the origins of the project and, to me regrettably, its consequences now threaten the long-term future of the European Union.
In a sense this is Europe’s Lehman Brothers moment, with plenty of blame to go round.
All of those involved — the political leaders who signed the 1992 Maastricht treaty that created Emu, the central bankers, officials and policy experts who designed the common currency and its institutions, the cheerleaders in the worlds of journalism, economics and business — bear a share of it. All of us paid too little attention to the arguments of those who opposed the project in principle and of those who worried about its viability.
For there were enough voices, both in continental Europe and in Britain, warning of the economic and political risks inherent in the euro’s conception and design as the project gained momentum in the 1980s and 1990s.
They argued variously that there were no examples in history of lasting currency unions being established without the backing of a political union; that the European Central Bank would lack the firepower and authority to underpin the continent’s financial system; that a “one-size-fits-all” interest rate would generate damaging and destabilising imbalances between euro member states; that countries locked into a single currency with no possibilities of exchange rate adjustment could easily develop serious problems of economic competitiveness. Many argued strongly that the project was subject to insufficient democratic consent across Europe, and thus fraught with political risk.
Too often, their arguments were drowned out by the political imperatives driving the project forward and, frankly, by a tendency among euro supporters, including myself, to lump together the critics — the die-hards who had always opposed European integration and who had been mostly wrong, and those who saw the point of Europe but worried about the euro — under the prejudicial label “sceptics”. It was, in that sense, an epic-scale exercise in “group-think”.
Last week I spoke to a number of the British luminaries who were prominent in the pro-euro campaign 10 years ago. They are not a happy bunch. They also, by and large, prefer not to speak for the record (unlike Michael Heseltine, who told fellow Tories last week that Britain should still join the euro “in order to become more like Germany”.) “I don’t want to get involved in polemics right now,” said one leading pro-euro businessman. “If I speak out, I fear I’ll become a target,” a leading economist said. Another very prominent pro-euro figure responded that he had moved on to new areas of study and “I really doubt my views on the euro crisis are of any interest”.
But as they spoke to me, mostly off the record, four key themes emerged. First, most insisted that for reasons of economic structure and competitiveness, the idea of a common currency remains right in principle — with or without Britain. It was needed to underpin the single European market, launched with the strong support of Margaret Thatcher’s government and of British business in the 1990s. It was needed to maintain Europe’s peaceful post-war order.
As a continent of small to medium-sized nation states, Europe badly needs a framework to govern its economy,” said one prominent businessman with new Labour affiliations.
The euro was set up to address a real need which has not gone away, namely to underpin the single market,” said Will Hutton, one of the authors — with Chris Huhne, Adair Turner and others — of the 2002 pamphlet Why Britain Should Join the Euro and one of the few proponents still prepared to carry the banner aloft in public. “I’m not prepared to run up the white flag just yet. There is still a chance that, over time, the euro will have the positive effects on trade, growth and living standards that some of us predicted.
Don’t forget that the shadow of past conflicts hangs heavy over Europe — the shadow of Germany. France was right in its instinct at the outset. Europe needs a system to help it cope with German economic power. That is the benchmark against which all other European economies will continue to be tested: better to do so in an organised framework than with free-floating currencies.”
Second, all agree that the design of the euro as launched 10 years ago was fatally flawed, largely for political reasons involving those former bitter enemies France and Germany.
The politics was present at the moment of the euro’s conception, when France persuaded Germany to give up the deutschmark and embrace the new currency as a quid pro quo for consenting to German reunification. The problem was that the two leaders who struck this grand bargain had fundamentally different ideas on how the new currency should be organised.
France’s François Mitterrand saw it as the precursor to a political arrangement to keep German power in check. Germany’s Helmut Kohl — who as Ken Clarke once said had “no interest in economics” — was more preoccupied with his own people’s political attachment to the D-mark. Mindful of Germans’ memories of the hyperinflation and economic collapse that brought Hitler to power, he wanted a currency moulded in the D-mark’s image. There would be no “economic government” or fiscal transfers from richer countries to struggling ones; no bailouts of governments that got into trouble; no central banking lender of last resort; no possibility of exit from the single currency, or at least not without a country leaving the EU altogether.
Most, if not all, national currencies and economies are underpinned by measures enabling governments to iron out economic imbalances or help regions in trouble. Europe’s leaders decided to do without them. Instead, they agreed on a set of budgetary rules that were supposed to guide euro member states’ taxing and spending decisions, specifically a stipulation that a government’s budget deficit never be allowed to exceed 3% of a country’s gross domestic product.

These were the central elements eventually agreed in the Maastricht treaty, and as many observed at the time, they were a fudge. It was not clear how the budgetary rules would be enforced. Nor was it obvious how the monetary union would cope if any of its members got into financial trouble.

To make matters worse, a queue of European countries rapidly formed at the door, begging to be let into the euro, including countries with mountainous debts and questionable governance such as Italy and Greece. Reservations expressed by the Bundesbank and other guardians of economic stability were overruled. The political need to build an inclusive club overrode the imperative to build one that was sustainable.
Here is the verdict of elder statesman Helmut Schmidt, a man with a lifetime’s experience and more understanding of economics than all of his successors as German chancellor put together: “They invented the euro and invited everybody to become a member of the euro area. And this was done without changing the rules or clarifying the rules beforehand. This was when the great mistakes were made. What we are suffering now is the consequence of that failure.”
A leading British pro-euro businessman agrees. “It was a fundamental flaw that there was no exit clause. A great many of the problems we have today would not exist if a country in trouble such as Greece had been able to leave the euro.
Greece should never have been admitted to the club in the first place. People knew it was coming in under false pretences and with fiddled figures. Finally, a single currency has to have a single fiscal authority. The absence of such an authority was a serious birth defect.”
Of course the design of the euro was flawed,” Hutton agrees. “Of course it should have been confined to an inner core of EU member states to begin with and should not have admitted Italy or Greece.”
Third, even the project’s staunchest supporters concede that since the launch, member states’ management of the euro has been somewhere between miserable and catastrophic. One obvious sign of trouble came a few years in when France and Germany, having agreed to cap government deficits at 3% of GDP, agreed to throw the rule overboard when they found keeping a lid on spending too hard.
Was it naive to expect that France and Germany would stick to rules which the latter had been most insistent on imposing in the first place?” one pro-euro economist said. “Possibly. But the fact that they disregarded it was a serious blow to any hope that the euro would bring with it prudent management of the public finances.”
In the growth years that followed the euro’s introduction, many of its members went on a public and private-sector borrowing spree. The financial markets obliged them by shrinking the differentials between interest rates charged to government and private borrowers in the weakest economies and those in the strongest to almost zero. In other words, investors were behaving as if they believed that there was exactly the same — minimal — risk of a default by Italy, Spain or Greece as by Germany.
And all the while, the peripheral members — the countries that came to be known collectively as “Pigs” (for Portugal, Ireland, Greece and Spain) — were steadily losing competitiveness, thanks to the fixed exchange rate and inflexible economies. Mountainous debt, sluggish growth, poor productivity — it is the combination that led directly to the crisis Europe faces today; and it is a treadmill from which these economies have no chance of emerging for a decade or more if they stay in the euro.
Other countries, of course, have had a boom-and-bust problem in recent years — notably our own. The difference, though, is that having made a mess, we are clearing it up under a government that can claim a popular mandate — and being given the credit, in the form of ultra-low borrowing costs. For euro members, given the warped system by which the currency is governed, the task of resolving the crisis is infinitely more complicated and contentious.
Miserable is also the word for the eurozone’s crisis management. In attempting to mop up the mess, Europe’s leaders have been constantly behind the curve, coming up with half-measures that buy them a moment’s calm before a fresh and even more vehement burst of market fury.
If it appears as if they have been acting with one hand tied behind their back, that is because they have — thanks to the flaws built into the Maastricht treaty, and the political difficulties caused by exposure of those defects.
The “no bailout” clause was a fiction that was brutally exposed with the first, failed Greek rescue in May of last year.
The “independent” central bank is struggling to maintain its independent status, as it faces mounting pressure — against vehement opposition from Germany — to act as lender of last resort and buy up the troubled economies’ debt.
Willem Buiter, another of the economists behind the original Why Britain Should Join the Euro pamphlet, is now chief economist at the global banking giant Citigroup. He wrote in a recent note to investors: “Europe was utterly unprepared, institutionally, politically, ideologically and culturally, to handle such fundamental financial and economic crises and the distributional conflicts that they entail. The result has been a succession of panic- driven policy measures and provisional, tentative institutional innovations that often were revised as soon as they had been announced.”
Yet the fourth point our pro-euro businessmen and economists make is that having set out down the road, Europe is doomed to carry on. There can be no turning back. It may be messy, but the consequences of failure and the collapse of the single currency would be much worse.
It is absolute and total nonsense to pretend, as some in Britain appear to, that there is some kind of low-pain escape,” says a company chairman. “If anyone in the UK — europhile or eurosceptic — thinks we can just sit by while the euro implodes without incurring serious damage, they’re mad.”
Failure is unthinkable,” says another businessman. “Germany won’t let it happen.”
A Greek exit from the euro would be a disaster,” Hutton adds. “There would be massive capital flight from other peripheral countries and the resulting tensions could scupper the entire European Union.”
John Llewellyn, an independent economist who has written extensively on the euro, says Germany’s chancellor, Angela Merkel, may have been criticised for weak and dithering leadership during the crisis, but we should not underestimate her determination to keep the show on the road. “Would [Nicolas] Sarkozy [the French president] and Merkel build the euro if they were starting today? I doubt it. But they may well ultimately conclude that it’s better — and cheaper — to fix it than to let it collapse.”
The big question is: on the road to what? For every imagined solution to the crisis put forward in recent months has been countered with a formidable array of objections or obstacles.
A financial “big bazooka”, in David Cameron’s phrase, to intervene in the market and show the world that the eurozone is serious about supporting its weaker members? Too difficult, according to participants in the last round of summits. Germany won’t sanction the funds; France is deep in debt itself; and China — the target of a humiliating begging mission from Brussels two weeks ago — won’t help either.
A fiscal union — involving the pooling of national budgets and/or the issuing of joint euro-bonds by eurozone governments? Desirable but unfeasible, Buiter says. “Whatever the pros and cons of fiscal federalism as a means of imposing fiscal discipline on EU or euro area member states, it is, for the foreseeable future, a political non-starter,” he says.
Secession from the euro by one or more member states? It was not a possibility the currency’s founders were prepared to contemplate. But after George Papandreou, the Greek prime minister, had the temerity last month to propose holding a referendum on the latest bailout, Greece’s forced departure was openly discussed by Merkel and Sarkozy.
An “inner euro” comprising Germany and other countries who understand budgetary discipline? Sounds attractive. But getting there would make unscrambling an omelette seem like child’s play. And who would be in? Without France it would make no sense at all, and France with its own considerable debt burden is widely seen as the next domino in line after Italy.
That exposes the real problem for all to see: not just debt and deficits or banks and finance but politics with a capital P. That is why I wonder whether the euro will in the end be saved and why I fear for the future of the European Union.
Euro-politics has already felled five governments out of the eurozone 17: Ireland, Portugal, Slovakia, Greece and Italy. The demise of a sixth in Spain’s forthcoming election seems a foregone conclusion. And no one has the faintest idea if new governments being formed in Greece or Italy have a chance of getting to grips with their problems. Hence the alarming upward trajectory of interest rates on Italy’s debt at the end of last week. The crisis had simply moved beyond anyone’s control.
The point that looks so obvious in hindsight is that countries such as Greece and Italy do not respond in predictable ways to rational Teutonic calls for discipline and hard work. Their politics are chaotic and corrupt. Handed an easy option — such as a hard currency and guaranteed low borrowing costs with no real pressure to reform — they took it. Now that the emergency is forcing governments to act, it is understandable that the voters protest — and blame Europe as well as their own politicians. In some of the problem countries, violent protests are on the rise, sometimes featuring anti-German slurs of a historically uncomfortable variety.
But everywhere you look in the eurozone, governments are in trouble. Sarkozy’s poll ratings are in the tank — lower than any other president in the history of France’s Fifth Republic. Merkel is under severe pressure at home for presiding over what Germans, in one of those phrases that can become electoral poison, call a “transfer union”. In the words of Sir Richard Lambert, my predecessor at the Financial Times and subsequent CBI boss, “the big political problem is that nobody voted for this”.
That is why I now conclude that the rush to create the euro in the past 20 years has been a historic mistake with risks far outweighing the likely rewards. Europe’s leaders should never have launched a currency based on such flimsy economic and political foundations. But they did and the current mess is the direct result. To resolve it, Merkel in particular has to choose between cholera and the plague.
Either she uses the European Central Bank to throw hundreds of billions more into supporting Italy, Greece and the other delinquents, thus saving the euro but enraging her electorate, or she starts urgent talks to reshape the euro with fewer members and tighter rules.
The latter course is fraught with danger. It could easily collapse in acrimony and turn current market tremors into a meltdown and a deep global recession. So in the circumstances, and for the sake of avoiding that fate, there is nothing for it but to overlook the history of this misshapen creation and throw money at it. The political consequences, though, hardly bear thinking about.

Saturday, November 12, 2011

Here are a few more observations from Michener's book Iberia. They were made in the late 60s, and not the 15th century:-

This is part of the address of a senior admiral to the statue of St James (Santiago) on the 25th of July 1968. One would be forgiven for believing the statue was human. Or divine:-

- Spain will never forget that she received the Light of Faith and the Doctrine of Christ from your lips nor that you selected these marvellous lands of Galicia for the repose of your glorious remains. Every year on this day we come to hear your message of apostolic impatience, which is like a sunrise testimony which reaches into our blood and fills it with fidelity and missionary zeal.

We will never permit either error or false doctrine to snatch away our great treasure of Religious Unity, the foundation of our political and social unity, which thanks to you, O Glorious Apostle, we have enjoyed during these past thirty years.

- The two excursions outside Santiago take me through the countryside of Galicia, which hardy English travellers have considered the best region in Spain. . . Even a few miles' travel into the countryside of Galicia shows the observant traveller the secret of this land: the granite rock which is both the glory and the curse of the region.

- The reader has probably noticed [as if!] that the Way of St James lacked one thing to make it an almost perfect pilgrims' route: nowhere was the cult of the Virgin Mary exploited, so that a good half of the mystical wonder of the Catholic Church was unprovided for. . . . It fell to the little town of Pontevedra to correct this. There . . . a new cult grew up around a legend claiming that the Virgin Mary had been the first pilgrim to the tomb of Santiago, who had given his life for her son. [This tripe would be bad enough from a Catholic but Michener is a Quaker!]

- Percebes: Much of the excitement of eating these stems from the fact that each year men lose their lives gathering the repulsive things. When served, they look like a plate of miniature rotting turkey legs with the skin on the legs turned black and flabby and the nails on the toes become coarse. But when the skin has somehow been torn away, beneath lies a stem of delicious, chewy meat somewhat like octopus, while the hideous toes, if properly gouged, can be tricked into giving up morsels of solid meat which is much like the best crab. [In my view, not worth the bloody effort but there are some reasonably intelligent people who take the opposite view and reject my suggestion that it's like eating a bit of inner tube which has been dipped in salty water. I don't much like octopus either.]

Friday, November 11, 2011

Here's a few quotations from James Michener's Iberia, which - we've established - has nothing at all to say about the western bit of the peninsula which we call Portugal.

The book was published in 1968, when Franco was nearing the end of his long tyranny.

Everyone who knows a little or a lot about Spain can decide for him/herself just how many of these observations remain valid. And to what degree.

- Spain is a very special country and one must approach it with respect and with his eyes wide open. He must be fully aware that once he has penetrated its borders he runs the risk of being made prisoner . . . I have spent many trips endeavouring to unravel its peculiarities. I have not succeeded, and in this failure I am not unhappy, for Spain is a mystery and I am not at all convinced that those who live within the peninsula and those who were born there understand it much better than I, but that we all love the wild, contradictory, passionately beautiful land there can be no doubt.

- One of the sure signs that this is Spain is the number of young married women who have allowed themselves to get fat. . . I commented on this to a Spaniard and he said approvingly, "It's one of the most beautiful sights in Spain. To sit in the plaza at dusk and watch the fat married woman roll by with their husbands and children. It's beautiful because in Spain once a woman gets married, she no longer has to fight the dinner table. She has her man and nothing on earth can take him away from her, so she doesn't give a damn how fat she gets. In Spain there's no divorce and her children cannot be taken away from her, nor her home either. Of course her husband will probably take a mistress. But he'd have one whether his wife was slim or fat. So our women eat and love their children and go to the movies and gossip and put their faith in the Catholic Church and to hell with dieting, and you won't find a more contented group of women in the world."

- In the days that followed I was reminded again of the first essential for anyone who wishes to understand Spain: in every manifestation of life Spain is a Catholic country . . . There is no education that is not under the control of the Church and its orientation is to the past.

- An Englishwoman had been molested by a gang of gypsies. Two Guardia Civil officers came on the scene and began to rough up the gypsies, whereupon the latter cut their throats to the neckbone. Someone ran to report the murders to a neighbouring station, whereupon four pairs of guardia climbed into a truck, drove to the scene of the murder, threw a cordon around the gypsy encampment and proceeded to machine-gun every human being therein.

- The man then used a phrase I'd never heard before: "We have the old spirit of Viva yo. In Spain you must always take into account Viva yo." The phrase won't be found in a dictionary. It could be translated 'Hurray for me and to hell with everyone else'. Some time ago there was a competition for the cartoon which best expressed the Spanish character. The winner, without a close second, was one showing an arrogant little boy urinating in the middle of the street and spelling out the words Viva yo.

- The attendant brought my car promptly now, for like a good Spaniard he needed words as much as money, and the words he wanted had to be the most expansive and inflated available. Estupendo. Maravilloso.


Back in the here-and-now . . . Amidst all the gloom about economic growth, there remains the beacon of Galicia's massive international success story - Zara. Here's something on the company from, of all things, The Jakarta Globe. Checking on line, this seems to be an article which did the rounds in the Far East only. One wonders why.


As it happens, IberoSphere featured an article on the challenges being faced in 2011 by young Spanish women who almost certainly have not let themselves go to fat.
THE EU AND THE EUROZONE


Well, here is that bugger Simon Jenkins, once again articulating brilliantly what I think and have always thought about the EU and the euro. Emphases are mine.


I could have given you just the link but reproducing the whole article makes it easier for you to read it. And permits the emphases.


This is the way the world ends, not with a bang but a cliche. Crisis spirals out of control and Armageddon moves to the brink of abyss. "Europe" is too big to fail yet too big to succeed. Each newscast is a crash course in economics, each headline an incitement to suicide. But since we are not at war and few understand what is going on, the rest cannot believe it. As if watching the fall of Icarus, they sense the gods are angry but return quietly to the plough.
This week the European backwash of the crash of 2008 moved way beyond high finance. Economics may have pushed politics to the wall, but in Greece, Italy and, more important, Germany, politics is hitting back, hard. Yelling, spitting and choking with frustration, it has had enough of economics, and has beaten it to the ground. Yesterday it claimed its first scalp, demanding a new ruler of Greece.
There is no point in European Union acolytes loftily opining that "it was a pity" Greece was admitted to the euro. It was more than a pity, it was a crime. There is no point in bewailing the reluctance of Germans to bail out Greeks or Latins, or let their bankers print billions of cash. There is no point in hectoring or dreaming. A 50-year fiction is over. As often before in history, a new Europe must be built on the ruins of the old, and we had better get used to it.
It is a massive irony that old Europe's last gasp should be to seek the very outcome it sought in the 1950s to avoid, German supremacy. The one thing on which I agree with my colleague, Timothy Garton Ash, on Comment is free yesterday, is that "if the eurozone is saved, it will be as a fiscal union on largely German terms". Substitute the word political for fiscal, as honesty dictates, and we are back to the ghoulish first half of the 20th century. European union is always on someone's "terms", and they rarely have much to do with consent.
There is one difference today. Garton Ash may want "the kind of budget, debt and wage discipline [Germany] has practised with such impressive results over the last decade, and now seeks for the whole eurozone". It may be "precisely what Europe needs". But what Europe needs does not embrace the enforcement of what Germany would like to see.
We might have said the same of the British empire in its heyday, that British discipline was "what the peoples of India and Africa" needed. We could mow them down when they disagreed. Germany has no Panzer divisions, nor does it desire to dominate Europe politically, and without that desire there is no means of enforcement. The implied German supremacism of the EU's last-ditchers, under the euphemism of "fiscal union", is archaic, elitist, dangerous and mercifully impossible.
The paradox is that this impossibility is to the credit of the postwar European movement itself. It has achieved what it set out to do, to liberate the nations of Europe from fear of German overlord-ship. This liberation has allowed France to walk proud, Britain to enjoy semi-detachment, Scandinavia to think for itself and middle Europe to breathe free. The EU lobby may have cobbled together institutions for a united states of Europe, but it was a fool's errand, and one that could only play into the hands of German revanchism.
The tragedy is that the chosen vehicle of European union should have been a common currency. This ostensibly innocent tool is a weapon of mass economic destruction. It has imposed its clammy grip on divergent national economies, forcing hundreds of thousands of workers and their families to flee the "overvalued" countries of east and south Europe to seek work in the north. Others were kept at home only by government jobs funded by reckless foreign indebtedness. The reason was not just the fixing of the value of the euro to the Deutschmark, but the fixing of any weak currencies inflexibly to stronger ones. The resource cost of the euro over the past two decades must have been stupendous.
A common currency as a means of imposing wage or fiscal discipline on uncompetitive states is a crude economic sanction. As with all sanctions, it corrupts and distorts domestic politics and makes electorates hostile to external pressure. To Eurocrats this hostility, like democracy itself, is a little local difficulty. But sooner or later, push comes to shove. Greeks and Italians are toppling leaders who fail to listen to them, and voters in Germany are threatening likewise. European political union, the universalist dream of visionaries, has met its Waterloo.
Some confederacies have worked, such as the US, India and the United Kingdom (so far). But the EU was always a confection of elitist diplomacy, supported by Europe's peoples only for as long as they thought it would bring them money. It sought to craft a political entity from cultures whose differences have defied Hapsburgs, Bourbons, Napoleon and Hitler alike. Political union is a discredited orthodoxy and its advocates should retreat gracefully.
The sensible route forward is not underpinning the euro at some new and temporary frontier, and "kicking the can down the street". It is for those states that sincerely wish to merge their political institutions with their neighbours – there must be precious few – to find common ground within the euro.
Countries in southern Europe must recover their economic separateness and their political souls, writing off debts and devaluing their currencies, as Britain has done. Then Europe can find a new equilibrium. Metaphors of "two-speed" Europe, inner and outer clubs, and trains or planes being missed are meaningless. Nicolas Sarkozy and Angela Merkel are right, as is David Cameron. A new and more flexible constitution for Europe is blatantly needed.
This constitution will be easier to define than to engineer. It must somehow retain the (overrated) gains of free trade, but accept that there will be many unlevel playing fields. The German Reichstag or Bundesbank cannot legislate for Greek labour laws, Italian opening hours or British tax havens. The currencies of less competitive states must float. The lash of devaluation and domestic austerity is one thing when self-imposed. When edicts emanate from unaccountable foreign agencies, as now in Greece and Italy, it is not. There could be no more disastrous last chapter to this sorry saga than the crude imposition of German "discipline" on the weaker members of the EU. Who would enforce it?
Europe is a continent, not a panacea. It can no longer be seen as an ideological construct, whose adherents treat all challenge as an offence against infallibility. Historically, its strength has been its diversity, a high street not a hypermarket of nationalisms. Each time a centralised power has denied this and struggled to impose "union", the outcome has been catastrophe, followed by the need to restore and reassert the sovereignty of nations. This time round, the catastrophe has remained economic. It could yet be a near-run thing.

Thursday, November 10, 2011

I went to the local Sainsburys supermarket today. At the checkout, I paid the four or five quid bill and asked for fifty quid cash-back. As I was using my debit card, I was asked for proof of identity. Except I wasn't, as - in contrast with Spain - you're never asked for this in the UK. What I was asked - as on all previous visits - was whether I had the store's Nectar card. I merely said No. But, such is the British eagerness to apologise, the student in front of me had actually answered "No, sorry." to this question, as if he were guilty of something reprehensible.

Corruption cases are not exactly rare in Spain - some of them involving truly incredible sums of money. And it's probably not too unusual for members of the aristocracy to be involved from time to time. But it is rare for the monarchs' son-in-law - the Duke of Palma - to be implicated. Specifically, the anti-corruption prosecutor in the Balearic Islands suspects the Duke and his business partner of setting up a corporate network to divert public and private funds received by the Nóos Institute, a non-for-profit organisation over which they both presided. It'll be interesting to watch events unfold. And the regal reactions.

The EU Commission has cut next year's economic growth forecast for Spain from 1.5 to 0.7% and said that Spain won't meet her deficit objectives either this year or next year. And that's under currently envisaged circumstances. If the eurozone breaks up or is re-formed in any way, it's anyone's guess what will happen next year.

Such is the volume of fraudulent activity on Facebook, an organisation called Facecrook has been established "to monitor and chronicle the seedy, unsavoury and silly side of social media." More here.

Tuning in my daughter's digital box today, I landed on the gutter TV program, The Jeremy Kyle Show. Just as he was about to open an envelope containing the results of a DNA test which would establish if the man on the screen was really the father of the child he and his wife had reared as his. He wasn't. At which point I changed channels, recalling that we hadn't come up with this application of DNA technology when in 1985 we'd brainstormed the issue on licensing the technology from the later be-Nobled and be-knighted Alec Jeffries. But, as someone (Mr Barnum?) once said, no one ever went broke by under-estimating the taste of the public.

My Iranian Bahai friends have sent me this link to a talk by a musician - Khadem-Missagh - which is well worth watching. Especially if, like me, you enjoy the way Persians speak English. Contrasted with the Dutch. Except my friend Peter. And probably a few others as well.
Here's an article on Greece, originally published by the Daily Mail in June last year and since reproduced widely across the blogosphere. Reading it, you can understand why the Germans have an aversion to using more of their money to rescue the place. And then there's Italy.

Finally . . . My American friend, Rick, is having difficulties making comments to this blog. If anyone else is having this experience, could they please write to me here.

Finally, finally . . . Here's one very stupid Italian with her ridiculous opinions on herself and another Italian clown. The latter may be able to dance but the former - one Nancy Dell 'Olio - certainly can't. Vertically, I mean. I wonder if I'll get sued now. For libel by innuendo.

Oh, just realised it's The Times and there's a paywall. So here's the article in full. Enjoy.

Italians will miss Silvio Berlusconi. It’s strange to think of him leaving the political stage, even though it is definitely time for him to go. He had not just lost the confidence of the markets; he had lost the plot. When you are in the public eye you have to be more careful about what you do in your private life. But in the end it was the financial crisis, not the scandal, that pushed him out.

It was inevitable that he would be demonised for his behaviour. He brought it on himself. But like everything in life, he isn’t black and white.

I worked as an organiser on his first political campaign in 1994, when he stood to be an MP and Prime Minister. He is absolutely charming and very charismatic — but definitely too vain and too misogynist for my taste. If you met him at dinner, you could have a lot of fun.

Those of us working on the campaign thought that we were starting a revolution. Before Mr Berlusconi all politicians were the same. But he talked another language, one that spoke to normal people. He was a breath of fresh air. Mr Berlusconi was like John F. Kennedy in America and Tony Blair in Britain: a great communicator who really understood the power of television.

He was very clever in the way he created a business and political empire and manipulated it to suit his ambitions. With Mr Berlusconi it was always about power, but not about using it in a sinister or negative way.

He used the power of the media and of football to talk about a modern kind of politics. All of us felt that it was our duty to be involved in something that was going to change the face of politics in Italy for the better.

I have the same feeling now. We have a generation of great young people in Italy — on the Left, on the Right and liberals — who feel the same way as we did in 1994. They know that we need another revolution. I cannot wait to see the kind of changes that are to come.

But right now we face a problem. They are not old enough to step up and fill the breach and we don’t have a strong opposition. At the moment there is no one to lead Italy. People talk about having a bureaucrat as leader, but what we need is politicians, people with ideas.

Nothing will change dramatically this year. We’re not going back to the communists or changing how we live. Things will be tough for Italians, just as they are tough right now for people in Britain and everywhere in the West. But nothing will stop Italians eating good food and wearing good clothes.

I love politics. I might even get involved myself one day. I quite fancy being Italy’s foreign minister. But I love living in London right now. If they need me, they’ll have to call me.

Don't hold your breath, Nancy. And you're far too old for Silvio so it's pointless ingratiating yourself with him.

EU SPECIAL

The car-crash which is the eurozone is now hurtling down a steep slope and those with the power to take the decisions to stop it - to permit quantitative easing, I guess - don't appear willing to do so. For which read the German government. Threatening a different sort of European destruction from the last time round but destruction all the same. With chaos to follow, it's universally predicted.

Our Ambrose has put on paper that the USA and China should combine their political and economic forces to compel Germany to see their particular view of reason but one wonders how possible this is. And how successful it would be if they tried it. I guess they do have the combined might to strong-arm Germany to commit what it sees as folly. An accurate view from their narrow Teutonic perspective but rather less so for the EU and the world at large. In the context of the global economy, a provincial stance.

Here's Ambrose this morning on the subject of Germany's stance. There appears to be a glimmer of hope - Hans Redeker from Morgan Stanley said the ECB must cap yields at 6.5pc by soaking up an "unlimited supply" of Italian bonds if necessary. "At the end of the day, we all know what the ultimate solution is going to be. They are going to have to monetise," he said. This does not seem likely yet. On Tuesday, Germany's two ECB members warned that the bank must not stray into debt monetisation or start quantitative easing, though there are at last signs that parts of the German establishment are starting to think creatively.

Incidentally, when (ex?)reader Moscow and I used to cross swords on the EU and, more so, the eurozone, he was wont to accuse me of not just being sceptical but of actually wanting them both to fail. This is nonsense and about as daft as saying anyone who predicts a disaster, say an earthquake, wants it to happen. The consequences of the eurozone collapsing or even morphing into something more manageable and sensible are clearly going to be so bad for the global economy, you would have to be beyond stupid to actually want them to happen simply to prove yourself right.

Like Ambrose, I hope that the German government, despite being the only sensible one around, is dragooned into doing what is wrong for them but right for others. As someone has written - You created this monster and you benefitted greatly from it. Now pay the price. In euros. Lots and lots of them.

I published a late post last night, on Spain. Scroll down if you haven't seen it.

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