Escrache

Imagine you´re a Member of Parliament. And you have decided you are not going to give your support to something. And then you get a group of people protesting against you.

You would say. "Well, nothing new"

... calling you cockroach and threatening to kill you. 

You would say something like "Well, you know. People sometimes say things they don't really think."

... at the street in front of your home. 

... or even inside your building and hitting the door of your flat while your children are inside and you are not there.

I'm very worried. For several reasons

• They are Member of Parliament. They are representing thousands of people.
• MP are being harassed to make them vote something different (at best). Not trying to convince with reasons, but with fear.
• They are being harassed not only at the Parliament or giving a speech in some random place. But at their homes. Threatening their neighbors with "it's not safe to live near an MP". Threatening their families.
• The rhetoric (crockoachs, we are going to kill, you don't deserve living) shows the "objectification of the enemy". The enemy is everybody who does not think the same.
• I hadn't heard the word escrache until a month ago. But it is another symptom of a trend. It is not something new. It is not something big. It's some little thing here. That comic strip there. A little piece of news over there. 

And last but not least, because the unemployment rate in Spain is over 26% for the general population and over 55% for people under 25 y.o.

Some people say "Yes it's violence but...". Yes. Violence is justified against people who think something different. And even other members of Parliament support this form of pressure.

However, every cloud has a silver lining. There are other MP that oppose to this trend.

The rain in Spain(II): Government

Let's start with politics. I guess it's less known abroad, but it's probably more important than the economic situation. First the government. Forget about the past. Let's start by the end. Today August 2nd 2011, one of the more complex days from an economic point of view for the hole world. Every stock market falling through like a knife in the butter. Spanish bonds at what lots of people understand as intervention level (400 basis points over German debt). This guy was planning to take a few days off. He announces he's considering postponing those days...

... and at the end of the day he decides to leave on holidays.

Somebody just at the level of the common sense would have either not announce the postponing (considering that to postpone would be alarming for the people in the country, and that could lead to something worse like a bank run), either he would stay. What not many people would do is announce to stay but leave.

This is just an example. But we could explain he negated there was crisis up to June 2008, and he announced recovery later that year. He continued spending money we didn't have for a couple of years. And many other things. We could even explain this government negotiated with terrorists, apparently offering political concessions to the terrorists in exchange of stop murdering.

This is the government. But the other main political party is not better.

The rain in Spain(I)

I love this video:



A few days ago I received a message from one of my tweeps about the weather in Europe and in particular in Spain. This summer, the weather has been a bit strange so far. But I couldn't help thinking about a different climate. The political and economical climate.

I know people outside Spain are worried about the situation in Spain. What can I tell about it?.

Yes Spain have problems. Several kind problems. Fiscal at federal/state/local level. Economical problems:Zombie banking sector. More than 20% unemployment in the overall population and more than 45% unemployment in young people. Bursting of a real state bubble. Political problems too. Corruption all over the place. Politics far from Main street. We have two regions with a serious problem of independentism. And moral problems too. Again corruption all over the place, people full of rights and with no obligations, and a feeling that everything not strictly forbidden is allowed.

Every cloud has a silver lining, and there are also some good news. But overall, big problems.

It seems similar problems are all over Europe and also in the States. I'm not quite sure, but maybe it's that I live here.

State of Emergency: very serious

It's in the news. Spanish Government has declared "State of Emergency". This declaration gives special powers to the government like the ability to limit the circulation of people, commandeer things or even enter in private properties (but not homes).
It's somewhat similar to State of Siege, but lower in intensity. Being Spain a democracy one could think that this kind of declaration should be reserved to extreme cases. That's true in the law. It can be declared only due to four reasons:

1. Catastrophic events (like floods, earthquakes...)


2. Sanitary crisis


3. Stopping of Public Services but only in connection with one of the other points.


4. Shortage of first necessity products

The declaration of today seems motivated by what seems to be a salvage strike of air traffic controller. It's being restricted to airports. And the declaration invokes Public services (point 3) with references to point 1 and point 4.

Do we have any kind of catastrophic event? NO.

Do we have shortage of first necessity products? NO

Then???

In my opinion this is an extremely abuse of the law.

I don't like what air controllers have done. I would like that the government acted like Ronald Reagan did. But I don't feel comfortable at all with a Government that can limit my freedom because it has lost any perspective.

This is very serious.

Civil service: How to improve

A few days ago I promised to explain some of my ideas to improve the civil service in Spain. Of course there is no silver bullet. Instead, as you can see the links, all the bricks are in place:

1. Try to introduce economic incentives. People who work should be rewarded. Of course that could be misused to give more money to friends instead of giving it to the people who work.


2. Proper evaluation of how money is spent, trying to spend the money where it is better used.


3. Encourage initiative in modernization of the Public Service. Good ideas should be praised. Bad ideas should be turned into good ideas. All Ideas should be taken into account for the first point. It doesn't cost money and for some cases it's very useful.

In the end, nothing new. More money, better spent, not only money.

If it's nothing new and is not being applied, somebody could ask what makes some people work harder even if they know they won't succeed. You'll have to wait.

Corruption

Wow. It seems Wikileaks is going to publish some documents showing implication of some world leaders in corruption practices. I don't have any other information but the Reuters piece of news.

I wouldn't have brought it to this blog if it weren't for the last paragraph of the first page:

Two of the sources said Assange has also made the documents available to at least two other European publications -- the newspapers El Pais of Spain and Le Monde of France.

That would suggest that government leaders implicated could be Spaniards or Frenchmen. Don't know if it's true.

But watching financial markets regarding peripheral European bonds I can't help thinking that this could have connections with Spanish politics.

Civil service in Spain: Productivity

I wrote yesterday about why job security is a good mechanism to protect civil service from corruption. But I also explained that it's a mechanism that makes difficult to punish slackers.
That wouldn't be a serious problem if there were mechanism to reward people who do right. And the truth is that there aren't. The salary has a variable part but could be more or less explained as "if you come to work twice a week in the afternoon, you get it". Not very rewarding to productivity.
If you come to work but don't do anything, you get paid. If you come to work in the afternoon, but don't do anything, you get paid more.
Of course money isn't everything. At least in my case, a challenging environment is a great part of the deal. But here again civil service is difficult. It's slow and innovations are difficult to pass through.
It's surprising that people do anything. But, truth to be told, there are lots of people who work. There are all sort of tricks, but in general, people work.
Tomorrow, I'll try to explain additional ideas.

Civil service in Spain: Job security

I'm a civil servant. Civil servants in Spain can't be fired. Well, in fact they can be fired, but only because of extremely serious infringements, and after a complicated procedure.
This protection is intended to give security so that one civil servant can oppose employee's chief orders if the employee thinks that what is being ordered is illegal. Let's imagine I'm asked to delete certain documents in some repository. If I worked in a company and I don't do delete them, I could be fired. As Civil Servants have to do special things concerning laws, they (we) are given special job protection.
But the protection makes nearly impossible to fire lazy employees. And with the term "lazy employees" I mean people that only go to the office to clock in, or people who go to work to play Tetris all day. I've seen them. For me is something mysterious how anyone can go to work to play Tetris day in, day out. But there are people like that.
Anyway, the situation in Spain (with more than 20% unemployment rate) is not quite well. And people start to point at that job security as something wrong. Tomorrow I will write about productivity in the Civil Service in Spain, which is related to job security, but it has more issues. But today I wanted to stress that job security, by itself, is not something wrong.

God help us

It turns out that I was wrong when I wrote last week's post. Well, maybe I came to a rather good end result but for the wrong reasons:

1. Income data from May 2009 (and probably June) was tricky because taxes returns were accelerated so that people could vote with their money back in the pocket.
2. Data for income and expenses was only for the national services. But in Spain we have nearly federal organization, so local and regional services must be taken into account. That means actual incomes and expenses are higher than predicted.

The first reason would decrease the predicted deficit. The second reason would increase the predicted deficit. It turns out that last predictions (from "Banco de España" which is Spanish Central Bank) deficit will be in the range 11-12%. I predicted 11.3%.

Right result for bad reasons

I'll try to redo my calculations and repost my results. I'm starting to be scared about Spanish situation after this report,this rebuttal, and this rebuttal to the rebuttal.

Lies, damn lies and statistics

Disclaimer. I'm not an economist or a statician, and I don't have any governmental internal information. I'm only a spaniard.

I've just read a piece of news about Moody's considering Spanish outlook stable. Although I don't foresee a default's risk, I completely disagree. I think Spanish conditions are deteriorating very fast. I recommend reading this article on Moody's decision.

Anyway, I remembered reading that in recent months Government's income and expenses figures have been alarming. Usually, when I get contradicting information I tend to go to the original source. In this case I went to this official paper containing income and expenses. The report is in Spanish, and considers two methods for calculating data. One would be in terms of cash flow, and the other in terms of obligations. It shows data up to June 2009. I went to pages 22 and 23, and compared this year cash flow data with data from 2006 to 2008, so that I could figure out total non financial income and non financial expenses for this year.

Expenses seems to be rather predictable. For the past year month by month one can see similar expenses in terms of the total expenses amount for the whole year. This year seems odd, but I don't thing I'll miss if I write that total expenses for the whole year would be in the range of 180 billion euros (180,000 million euros).

However, when looking at incomes, one can see the problem. And the problem is that incomes figures have crashed. To the point that from April to June, income was 470 million euros, which is roughly 1/20th the amount in recent years for that period. I don't see it recovering in coming months, so I wouldn't expect more than 60 billion euros.

Subtracting expenses from incomes, I get a total deficit for the year of 120 billion euros. Which means that expenses are three times the incomes.

Hey. I wish I could spent 3 times what I earn.

Anyway, what's more shocking for me is that usually we don't get deficit as a part of expenses, but as a part of GDP. If I divide 120 billion by 1060 billion (total Spanish GDP), I get 11,3%. The usual prediction you can get it's in the range of 10%, so probably my figures are wrong (see disclaimer above).

But then I thought "What deficit would Spain have if incomes were 0?". 180 billion divided by 1060 billion. I get 17%.

Deficit as percentage of GDP has no value for me as a citizen. Because I cannot evaluate how good or bad is the figure.

What can I do for my country

And so, my fellow Americans: ask not what your country can do for you—ask what you can do for your country.
J.F. Kennedy

A couple of weeks ago Jose Manuel Campa was nominated new Secretary of Economy in Spain. The position was being held by David Vegara, but he had expressed his intention to leave the job when his former boss Pedro Solbes was removed from the Ministry position.

That seems something uninteresting even for Spaniards. Not the kind of post I should write in this blog. And certainly with no apparent connection with the quote at the beginning.

But the fact is that I find this piece of news rather inspiring.

Jose Manuel Campa is a Bussiness School teacher, respected academic, and a successful professional. He seems wealthy enough, and Spanish Secretaries don't make more than say $110000/year (which for the record is much more than I earn, but seems pretty low if compared even with people managing a medium-sized company, not to say a whole European country)

And the more puzzling part of this story is that current Spanish administration seems to have an economic leftist view, whereas Jose Manuel Campa seems to have more rightist views. The Government is more "liberal" (in the American meaning), and he seems more "conservative". His views seem quite the opposite of current government views. He even signed a petition advocating for a change in labor market, something that is very controversial in Spanish politics.

And the job is going to be an "ugly" one. The whole world is under economic turmoil, but Spain seems to have an even more difficult position, because of a number of reasons. First, for 15 years we've been building houses, and now don't know how to do anything else. Second, we don't have control over interest rate (we depend on ECB who set rates on whole Europe). And although our banks didn't buy American subprime mortgages, they DO have loans to housing developers, with land of little to no value as collateral, and now those loans are starting to default. Also, we have 4 million people unemployed, and 100k more each month, for a total population of 44 million. And last but not least, current government did take a bunch of measures, but without a long term goal, hoping that in two years World will be better and Spain will recover. In conclusion, in the coming months, Secretary of Economy is going to be a hard position, giving bad news, and proposing tough measures.

So Mr. Campa won't earn more money (in fact, probably less). He already had a respected position. He'll have to fight every measure, every law, and every budget. And he'll be the bad guy in a government ready to give money everyone until money disappear.

Many people in the Spanish financial sector think that he won't last in the position.

Then, why did he accept the job?.

Maybe he wants to be well known. Maybe he's going to lose money a couple of years, then make much more.

Or...

... maybe he has asked himself what can he do for his country.