Friday, October 29, 2010

The Last Testament Of Don Gerardo

It was a situation that really couldn't continue. The Spanish employers association was being led by someone who was facing an ever increasing number of legal difficulties caused by the fairly rapid collapse of most of his business empire. Even before he lost most of his companies, Gerardo Díaz Ferrán hardly set much of an example although that didn't seem to worry those who had elected him as their representative voice. After the collapse of Air Comet came the fall of his insurance company, to be quickly followed by his extensive chain of travel agents, Viajes Marsans.

If the way in which Air Comet ground to a halt didn't teach us enough about Gerardo's special approach to business management, then the way in which Marsans was disposed of closed the master class. Marsans was sold off to an asset stripper, who took on the dirty work of dismissing all of the employees. Just before the sale took place, Gerardo and his partner put themselves on the payroll of the company and claimed an annual salary of €170,000 each paid in advance.

There were rumours of rebellion inside the employers association for a few weeks before Ferrán finally gave way and agreed to call elections for his position. Still, he couldn't leave his post without a final touch of class. The way out of the crisis, he declared earlier this month, was for Spaniards to work longer hours for less money. We assume he was talking about this as a way out of his own crisis, because Spain already has a longer working week and lower salaries than much of the rest of Western Europe. It's a sign of the vision that these people have of the future, because long hours and low salaries are more associated with poor countries than with rich ones. Or with very unequal societies.

Ferrán had also dismissed the recent labour market reform as being insufficient. This is a surprisingly common view. Companies that use the same creative accounting techniques that they use to avoid paying taxes can now get rid of an employee with only 20 days notice. Add to that the bizarrre proposal from the government to subsidise dismissals next year and you can bring that down to 12 days - from 45. That so many commentators continue talking as if nothing has changed makes you wonder what they are looking for? Severed heads on a stake perhaps? The formal reintroduction of slavery?

We still won't see an end to the flood of crocodile tears over Spain's "dual" labour market until all of the unfairness has been rubbed out by leaving all employees in the same precarious situation. It's not as if the latest reform even affects the usage of temporary contracts anyway. Although the Partido Popular tends to keep much of its neocon economic agenda hidden from sight, they have floated the idea of extending a contract that currently guarantees no rights at all and the minimum wage to workers under 21 to all of those under the age of 30!

Anyway, the pretence that making dismissal easy is the key to creating jobs is now going to be put to the test. Nothing less than an employment miracle can now be expected in Spain. Except that the excuses will change, something else will become the key obstacle to progress. Perhaps it will turn out that education or training, or even changing the culture of Spain's employers are important issues after all. As for Don Gerardo, he will be placing his hopes on the PP returning to power and being generous enough to farm out some public services to him in return for his efforts on their behalf. So that once again he can lead by example.

Monday, October 25, 2010

The Last One Out Of Madrid Won't Need To Turn The Lights Off

Even though José Luis Rodriguez Zapatero managed to avoid the booing during the military parade on October 12th, he couldn't evade everyone who had a bone to pick with him. Zapatero was cornered at least for a few minutes by Madrid's mayor, Alberto Ruiz Gallardón, who tried to convince ZP to lift the credit restrictions imposed on those municipalities who are heavily in debt as part of the crisis measures imposed by the government. Madrid is of course a leader in the debt league table, although it seems that Gallardón has at least found some sort of temporary solution to avoid the rubbish collection in the Spanish capital from coming to a standstill.

Madrid's ruler has, however, opened a new front over the lighting for the M-40 ring road around Madrid - one of the ring roads he didn't get around to burying before the crisis hit. The city administration is responsible for paying for the illumination on this road, and as part of the war over the blocking of further credit Gallardón has threatened to let the lights go out. That is, of course, if the thieves don't get there before him. According to a report I read last week the road is steadily getting darker because the high price of copper is encouraging those entrepreneurs who operate on the wrong side of legality to rip out whole stretches of the copper wiring which enables the lights to work. I'm glad I live in the centre, it's all getting a bit Mad Max out there in the outskirts. The city has for the moment decided its not worth replacing the copper that gets stolen, so at least some of those living near the road might get to see the occasional star...or traffic accident.

The Partido Popular, to which Gallardón belongs, has something of a double standard when it coes to public debt. Anyone surprised by that? Having criticised Zapatero for the national debt and even proposing at one point that deficits should be made illegal, the administrations run by the PP manage somehow to be amongst the worst offenders. Gallardón, in particular, has shown himself to be a master in this respect. Before becoming mayor in Madrid he managed to triple the debt of the regional government. The PP reminds me of the Republicans in the US who slam a Democratic administration for any budget deficit but then (as under Reagan and Bush jnr) manage to run huge deficits when in office that never produce any general benefit of any kind.

One right wing commentator who I read only occasionally, because reading "Zapatero is to blame for everything" every day isn't that interesting, attempted the other week to explain why Zapatero was personally responsible for the deficits run up in PP strongholds like Valencia. The piece was a classic of the genre, whilst acknowledging that the PP rulers of these regions might bear a teeny share of responsibility for the situation it turned out that Zapatero was really behind it all simply because he allowed them to do it! This leaves people like Francisco Camps as having less personal sense of responsibility than the average two year old. I know, it's a bad example, and in passing let me apologise to any two year olds who might feel offended by the comparison. The comments on this piece were almost worth framing, as it was pointed out to the author in a not very gentle way that this is what they call the "estado de las autonomías".

This weekend, in the PP's regional conference in Madrid, the party leader Mariano Rajoy explained why there was no need for him to be spelling out any kind of alternative to the government's policies. The PP, he said, was already showing what it would do at national level in those cities or regions where it currently holds power. So there we have it, any future PP administration will presumably be run on an ever increasing debt mountain coupled with rampant corruption and favours. As a programme for the elections I think it needs touching up a bit.

Wednesday, October 20, 2010

There's A New Balance Of Power In Spain's Government

Having effectively transformed the agreement with the Basque nationalist PNV from one that supported this year's budget into a broader one that should guarantee the government's survival until the end of its term in 2012, Spain's prime minister Zapatero has today decided to relaunch his team. The changes have been far more significant than expected, as Zapatero had previously hinted that he only intended to replace outgoing labour minister Celestino Corbacho.

The big winner in the reshuffle is almost universally regarded as being Alfredo Pérez Rubalcaba, who remains as interior minister but also gets to be a vice-president with powers overseeing government business. The rise of Rubalcaba involves the departure from the government of María Teresa Fernández de la Vega, who had occupied the vice-presidency since Zapatero was first elected in 2004. Nobody should feel too sorry for her, she gets a cushy position on the Consejo de Estado, a body which does very little except provide a comfortable lifetime paid position for its members! None of that fixed term nonsense on the Consejo.

Rubalcaba generally figures as the most popular minister in opinion polls, but belongs very much to the old guard of the PSOE dating from the times of Felipe Gonzalez. His power behind the scenes has been increasing and this has led to him being seen as one of the possible successors to Zapatero. Other candidates are Jose Blanco, who keeps his post but also gets some of his former power in the party machine back. The defence minister, Carme Chacón, was also once seen as a possible successor to Zapatero and she keeps her post too. Rumours that she would join Corbacho by being sacrificed at the front in the forthcoming Catalan election campaign don't seem to have foundation.

Blanco regained influence through the move that takes Leire Pajín from being in charge of party organisation to taking over the health ministry. It seems that Blanco and Pajín did not get on well and there has been a bit of a turf war between them. Much has been made today of Spain getting a health minister who likes to wear one of these worthless hologram bracelets that work by separating the gullible from their money. Public finances probably don't allow for them being available on prescription, unless the hospitals are simply closed.

Space for Pajín was made with the promotion of Trinidad Jiménez to take over as foreign minister from Miguel Angel Moratinos. There's little doubt that this is a reward for Jiménez for standing against Tomas Gómez in the primaries to decide the PSOE candidate for next year's regional election in Madrid. She's done quite well out of losing that battle, you have to say. Moratinos has been running an increasingly lacklustre and low profile foreign policy which largely seems to consist of not doing anything that might annoy anyone. Not that this is likely to change now.

Then we have a new labour minister, Valeriano Gómez, who was photographed participating in the demonstration against the government's labour market reform on September 29th, the day of the general strike. If I was in the parliamentary opposition I think I would already have tabled a question on whether he decided the reform was actually a good idea before or after getting into the ministerial car for the first time? His close links to the unions are seen as a conciliatory gesture, perhaps the only one that will be offered now that the markets are given first call on all policy decisions.

The reshuffle also sees the end of two ministries, equality and housing. These have been merged into health and public works respectively. The equality ministry, headed by Bibiana Aído, has been a favourite target of the right-wing media. Mainly because they hate the idea of equality anyway, but also because Aído steered through the abortion law reform. The decision to abolish the ministry is surprising because it was one of Zapatero's own flagship innovations. To merge it with health is a very arguable decision, you could put a better case for it to belong to economy.

The housing ministry will not be missed as most of the powers in this area already belong to regional and local administrations. With no money available, the job of minister Beatriz Corredor had been more or less reduced to the annual, and still over-optimistic assertion, that house prices in Spain have stopped falling and that it was time for everyone to buy. Even Zapatero took that task upon himself recently. A further surprise came with the appointment of Rosa Aguilar, once a prominent and popular figure in Izquierda Unida, to be environment and agriculture minister. It's hard to avoid the conclusion that she gets the job as much for the political journey she has made as for any other reason.

So it's a relaunch of the government, rather than just a reshuffle, and one which allows Zapatero to hand out rewards and adjust the equilibrium between those who might be looking over his shoulder. In doing so he keeps the issue of his own future open, with a stability agreement for the first time in this parliament that he hopes will give him time to close that ominously large gap in the opinion polls. He knows the strategy of his opposition, Mariano Rajoy continues to seek a place in the record books for sleeping the longest ever siesta as he relies on the crisis continuing to chip away at the government's support. The PP have been robbed of the prospect of early elections, but the question is whether 18 months is enough time for Zapatero to recover lost ground?

Tuesday, October 19, 2010

Tea With Espe

Much has been made of Esperanza Aguirre's declarations last week in favour of the ultra right wing Tea Party movement. Leaving to one side the xenophobic and fanatical nature of those who believe that Barack Obama is a foreign islamist/communist terrorist, Aguirre praised the movement as being about lower taxes and "more nation".

Whilst some claimed that these declarations implied that Aguirre wanted to import the movement to Spain, others pointed out that there is really no need. Not only does Spain have a larger lunatic right wing than it really deserves, many of its members also have television and radio licences. To the extent that they are even beginning to fight each other as the market share for ranting loonies in areas like Madrid is now divided between 4-5 contenders who all seek prime shouting time.

The only PP politician whose declarations I have much time for, Manuel Cobo, has of course pointed out that saying you're an economic liberal and acting like one is not necessarily the same thing. It looks like this difference could be emphasised quite sharply as the Gürtel corruption case has now incorporated the investigation into the Fundescam foundation allegedly used by the Madrid PP to disguise much of its expenditure during Aguirre's election campaigns.

The issue is not just one of illegal funding for the party, or even of underlining the very close links between the Madrid PP and the Gürtel companies. The money that went into Fundescam came from companies that have also benefitted from contracts handed out by Aguirre's administration, something that would fit nicely with the clientilism that is really much closer to the heart of the way Espe's government works than any notion of free market liberalism.

Thursday, October 14, 2010

A Magnificent Display Of National Unity

Once again press coverage of Spain's national day on October 12th has been dominated by the fallout from the day's military parade being used by those from the far-right who seem to turn up only to shout insults at Zapatero. Liberty of expression, say their defenders in the Partido Popular, who you wouldn't consider to have much expertise to offer on that particular issue. It's fairly common for the Spanish right to view liberty as something which only they are entitled to exercise, but at the same time you have to argue in their defence that true freedom cannot exclude the option of acting like a complete jerk.

The attempts by the some in the PP to claim that the boos and abuse are simply a demonstration of growing popular indignation over Zapatero's handling of the crisis could perhaps have some distant relationship to the truth were it not for the fact that the same "facha" nutjobs turn up year after year regardless of whether the economy grows at 20% or -50%. The really odd thing about this behaviour is that you would have thought these people would be more respectful with an occasion that involves the monarchy, lots of soldiers and military hardware, flags going up and down, homages to the fallen etc. Yet they boo through everything, to the extent that even members of the royal family have started to protest.

Zapatero now turns up for this event in a semi-clandestine fashion, whilst every year sees the areas designed for the general public being pushed further and further back so that the ceremony doesn't end up as a complete farce. Those of us who don't have much time for military parades and other patriotic tosh wouldn't care if the whole thing was scrapped - that would be a justifiable austerity measure. We could all live our lives quite happily without having military jets practising over Madrid for a week before the parade. Undoubtedly those who would protest the loudest about such a move are the same ones who end up showing the least respect for the whole event.

Tuesday, October 12, 2010

How To Cut The TV Signal With A Single Sheet Of Paper

On today's edition of Handy Hints we're going to show you how you can use a sheet of paper to stop your local TV station from transmitting. I know what you're thinking - it sounds ridiculous but bear with me for a minute. In the best traditions of this kind of programming, here is an example we prepared earlier:

See how easy it is? There is some debate about what you should put on the paper to achieve the best results. It does seem that in Valencia the words "Gürtel" or "corruption" produce the goods, although there may well be others that work too. In future episodes we'll look at how to use the same TV station, a simple papal visit, and your neighbourhood bunch of thieves to make millions.

Tuesday, October 05, 2010

Polls Apart

In the wake of last week's general strike, El País published an opinion poll showing the PSOE over 14 points behind the Partido Popular. This was a significantly greater gap than most recent polls had shown. Following the general trend since the gap between the two parties started to widen, this poll didn't show any significant increase in PP support; the difference comes from the collapse in support for the governing PSOE.

This factor makes it even stranger that El País made no attempt to account for what is happening to those voters who have deserted the government. If the PP is only 3-4% above its vote in the last election, and the PSOE is 14% below then that means 10% of that fall in support is not accounted for. El País have taken to showing the results only for the two major parties, as if Izquierda Unida, the nationalist parties and UPyD didn't even exist.

Of course they are not the only ones who use polls to offer a distorted version of what is happening. The media in Spain are frequently accused of getting the results they look for from polls. In the case of La Razón, it is hard to find any evidence for the existence of their pollsters outside the pages of the newspaper itself; leading to the suspicion that pollsters and publishers belong to the same company and possibly share the same office.

Opinion polls are also published by a government agency, the CIS. The PP has frequently claimed that the results of CIS polls are manipulated by the government, although they seem to be quite a lot more trustworthy than many of those found in the media. Recently, the woman who was in charge of the CIS was replaced, allegedly because she refused to bow to pressure to change the time the organisation did its fieldwork in July to a moment potentially more favorable for the government. All of which boosts the credibility of the organisation, at least under its previous management.

Monday, October 04, 2010

Zapatero's Primary Problem Is Not Madrid

The right-wing press in Spain were gleeful today with the result of yesterday's primary election to choose the PSOE's candidate to contest the regional presidency of Madrid in next year's elections. The narrow victory for Tomas Gómez over the health minister, Trinidad Jiménez, is presented as being a snub to Zapatero because he had made it clear his preferred candidate was Jiménez. It is even leading some commentators to talk of this election as being the beginning of 'postzapaterismo', the start of the battle to succeed Zapatero as PSOE leader. It is claimed that Zapatero wanted a candidate capable of displacing Esperanza Aguirre to compensate for what are expected to be heavy losses in other regions in next year's elections.

Zapatero can hardly complain that people interpret the result as a slap in the face for him, even where there are obvious political interests at work in reaching that judgement. He made it clear that he didn't want Gómez to be the candidate, and rather than just allow his own choice to contest the primary both he and other senior PSOE figures tried to force Gómez to withdraw from the contest. The national PSOE machine also seems to have been involved in the campaign to promote Jiménez with clear support from friendly media, notably El País. Rather than being a vote against Zapatero, the rejection of Jiménez probably has at least as much to do with party members simply not liking the attempt to link a vote for Gómez with disloyalty to the party leadership.

The contest itself was a dismal one, nobody is any the wiser now after weeks of campaigning about what either candidate thinks should be done for Madrid. Jiménez based her entire campaign around the idea that she was more popular in opinion polls than Gómez, whilst Gómez countered as being the candidate of the party base with the (unspoken) implication that Trini was being imposed on the party. It was all very uninspiring and inward looking, an opportunity for both candidates to present an alternative vision for Madrid was lost. One good thing comes out of it for Gómez, at least people now know who he is! That always helps.

Not that those parties who don't even bother electing their candidates have too much to celebrate. The Partido Popular has a couple of major candidate problems of its own. In Asturias the attempt by former PP general secretary Francisco Álvarez Cascos to force his way in as candidate for the regional elections has provoked a revolt in the Asturian PP. Cascos is hated by many of the influential figures in the party there, and it has so far only been the intervention of the national leadership that has kept his hopes alive against the local attempts to choose an alternative candidate. Cascos is a dinosaur from Aznar's PP, and it's hard to see why PP leader Mariano Rajoy would want another potential critic from that period in a position of influence. He's already got Esperanza Aguirre for that. It's no surprise that Aguirre is an enthusiastic backer of Cascos.

Then there is Valencia. The PP failed last week in an attempt to halt the transfer of that part of the Gürtel corruption case affecting Valencia to the courts in the region. This is no longer just about the suits that Francisco Camps is alleged to have received in return for political favours. The case now accuses the Valencian PP of far more serious offences, and the PP seems determined to try and slow down the judicial process as much as possible in the hope that nothing happens before the election next year. It helps that the highest court in Valencia is still in the hands of the man who last year came to the rescue of Camps, Juan Luis de la Rúa. This judge is supposed to be have been replaced, but political wrangling over who gets which position has so far kept De la Rúa in his post. Mariano Rajoy no longer likes to be photographed with Camps and there are those in the national PP who think the latter's position is untenable, but neither does Rajoy want the Valencian election to be dominated by Gürtel.

Sunday, October 03, 2010

Spanish Salaries Are Just Outrageous

I had a Skype exchange on Friday with a colleague of mine who I'd worked with in Germany. Knowing that I was having one of my occasional "rest" periods in Madrid, he pointed me to a job position that might be of interest. Based in Madrid, the job is for a senior programmer in my field, with the requirements - being a "senior" position - of appropriate qualifications and several years experience. Then there is the salary; 25-30,000 per annum. Euros I assume, although it could have been in dollars. Life in Spain must be very cheap, he suggested. Not so, I replied. Not any more. He couldn't believe that a position with such high requirements would offer such a low salary. It's not just unemployment that makes many Spaniards look overseas for better prospects.

Friday, October 01, 2010

Financial Times Alphaville....Where Comment Is Not Free

Yesterday the Alphaville blog at the Financial Times kicked off its day with a potentially explosive story. They printed a summary of a report alleging that Spain had hugely manipulated statistics on the decline of its Gross Domestic Product (GDP) during the crisis. The central allegation was that it was impossible for there to be such a high increase in unemployment together with a relatively small fall in GDP. The implication of the report was that Spain had maybe "done a Greece" by hiding the reality of its economic situation. The source of the report printed by the FT was anonymous and apparently it had been sent from a gmail account created only for the purpose of circulating the document. The FT claimed that the general strike had prevented them from getting a response before publication from Spain's national statistics institute (the INE).

The publication was enthusiastically received by many of those who follow this blog. However, as the day progressed it seems that others did the basic analysis on the report that the FT itself had failed to do. In the best traditions of classical economics the report had ignored factors - such as international trade - which have an important impact on the performance of the economy. Then came suggestions that perhaps the origin of the report had a political motivation as it had also apparently been sent to the extreme right wing Libertad Digital site. We don't know whether this is the case or not, although it wouldn't surprise me at all if sections of the Spanish right tried to provoke a Greek style crisis for Spain; regardless of the potentially disastrous consequences for their fellow citizens.

Nor, it has to be said, would it be any surprise if Alphaville and their keen followers in the markets also hoped for a bit of action following the publication of the report - nicely timed for the same day as the revision of Spain's credit rating by Moody's. Instead the FT ended up pulling the original article (if anyone has a copy please send it to me) and replacing it with a fairly lame piece telling us what a stressful day they'd had and how much they needed a drink! Now we are often given the impression that the markets take their decisions assisted by a legion of highly paid expert analysts and the professionalism of the journalists who cover economic issues. The sadder reality is what happened yesterday with Alphaville. Forget professionalism, the reason this story got published is because those publishing and many of those reading badly wanted it to be true, such stories help the roulette wheel to spin. You can feel the disappointment as the game ended on a whimper. One comment I read this morning lamented the possibility that Spain's economy might start to recover before the "truth" is revealed. Yes, that would be terrible wouldn't it? We don't want recovery to start anywhere until the takings have been counted!

I left a comment on the FT's revised post. It wasn't an abusive or insulting comment. I simply made the point that the FT's publish rumours without checking and accept no responsibility for the consequences line, combined with the evident enthusiasm of their readers for such stories, made an excellent case for curtailing the power of the markets. The comment was published on the site, but then about 5 minutes later someone inside the FT removed it. No criticism please, we're British.