lunes, septiembre 07, 2009

The pain in Spain

La cosa está así:

Spain, and the rest of the European periphery, can solve their problems either through massive productivity gains, which is highly unlikely, or through a reduction in wages and prices in the order of 20-30%, which is what will happen slowly and painfully. You could call such a reduction of wages and prices an "internal devaluation".

Such an internal devaluation will imply large losses to domestic banks and to external creditors. In the case of Eastern European countries, the damage will be bad, but not very large. In the case of Spain, writing off mortgage debt will be massive. We estimate that Spanish real estate losses will be over €250 billion when all is said and done. Clearly Spanish and foreign banks are unwilling to admit to the size of the problem and write off the debt. That is why the losses are being hidden.

Resumiendo para los que no parlan el English: que toca bajar los sueldos gradualmente un 20-30%. Ya lo dijo ese progre tan amigo de ZP, pero buen economista Paul Krugman. Y aún hay mas:

Oddly, even though inflation is negative, and unemployment is high, unions are still winning pay rises. Most wage agreements in Spain are reached through collective bargaining on an industry level. So far, wage increases are happening above the ECB's 2% target inflation rate. (It should come as no surprise that businesses try to get around wage bargaining. Last year almost five million jobs were temporary in Spain.)

Given how far out of line wages are with unit labor costs and the reality of deflation in Spain, we see Spain's unemployment level heading towards 25%. With a 25% unemployment rate and a debt deflationary dynamic, how exactly do the banks think they'll be paid back? Who will earn the money to pay the mortgage payments, and how will housing be affordable when wages have been deflated? Assuming the worst has passed in Spain does not pass the common sense test.

Osea, que nos vamos al 25% de desempleo, al 100% de deuda pública sobre el PIB, a un PER nacional para comprar votos (los 420 euros y ... lo que viene), a un caos jurídico e institucional que se agudizará con la crisis (autonomías-Madrid-Cataluña), .... Los periodistas van a tener mucho trabajo...



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