After five years of economic crisis



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Spain is back on the U.S. campaign scene. This time has been President Obama, who said in an NBC show that Spain is a tangible example that Europe did not act quickly enough when the economic crisis and the housing bubble erupted. For that reason the Spanish Treasury has had “many problems” to get market credit, he said.

In George Soros' words–we'll quote him with Spanish former PM Rodriguez Zapatero and former Economic minister Pedro Solbes permission–“the 2008 economic crisis outbreak can be set officially in August 2007 when central banks had to intervene to provide liquidity to the banking system.”

Therefore, it's been already five years of the economic crisis that has ruthlessly affected western economies and especially peripheral countries in an unknown way to the latest generations. However, the first serious government measures were not adopted until May 2010.

In Spain, as in some other countries, the crisis was added to a housing crisis hard to define in terms of its magnitude and severity. It was between April and May 2007 when destabilizing factors merged such as housing prices, rising interest rates, the gap between wages and housing advance payments collapsing prices, some of which are not shown in official statistics.

These five years have been especially hard for Spain, no matter if they have been reflected on the GDP. They have been marked by ongoing destruction of labor and credit, as well as a falling domestic demand, only partially offset by the evolution of the external sector.

For economic observers it has been a five-year period in which all shortcomings and miseries have been exposed. We have seen staled and outdated politicians–let alone unions–who have failed to live up to the current severe circumstances.

International analysts have seen how that kind of behaviour have been more noticeable in peripheral countries such as Greece, Portugal, Italy and Spain, where the political class has been clearly overwhelmed by the crisis and its devastating effects. This has caused effects difficult to assess such as the appearance of hard-to-define political movements.

As for Spain, international economic organizations such as the European Commission and the IMF are highly concerned because of the absolute lack of harmony between the two major parties in a time when some agreement between them would be needed and would make “certain solutions much easier.”

However the situation is quite the contrary. For international observers, the behaviour of PP and PSOE, to name only the two major national parties in the national parliament, is the behaviour of two political forces in continuous campaign. They are constantly attacking each other, which gives a poor image of Spanish politics in international organizations and the markets where we get funding.

Without analyzing what has lead to this situation in Spain since the beginning of the crisis, it is important to note how the PP, in the opposition back then, became a merciless adversary of former Zapatero's government decisions or indecisions. Just in the same way as today the Socialist Party has taken, from day one, an opposition role that too often does not pass a minimally technical exam. They choose to take the streets, something that has a devastating effect on the markets mark and on the already damaged Spanish brand.

International media often speak about the abruptness of confrontations between the two major parties, and–it couldn't be otherwise–, enjoys the full battery of actions of the PSOE and other outraged left forces deploy, sometimes for any reason.

We will see if this kind of politics reflects on the polls. Galicia and the Basque Country's regional elections in October have been a first test that deserves to be analyzed carefully. If we listen to the “doctrine” that says real estate crises do not last less than seven years, we'll have still two years to suffer ahead.


About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.