Important Notice: 24 November 2019 - This blog and the related website '' will be taken down permanently over the next few months, although there is as yet no precise date for this, but is unlikely to be later than 31st March 2020. More information about this change will be added here in due course.
Note added on 11 February 2020: I have made the associated website '' dormant/inactive yesterday, although certain elements of it remain accessible for now (.pdf files and the like), but the whole website, and this blog, will be removed completely in the next few weeks.

'Fair and softly goes far' - Miguel de Cervantes

Sunday, 22 July 2012

Murcia Region to ask for financial help from Spanish government

(Please see IMPORTANT UPDATE at end)

Over the past few days I have been reading increasingly alarming (but not unexpected) reports that the 100 billion Euro 'bail-out' agreed by fellow Eurozone members to help bolster Spain's banking industry has largely been discounted by the markets, a mere few days after the agreement was reached - Spain's borrowing costs in the markets have edged back above 7 per cent for 10-year bonds and even shorter term bonds are now edging higher too (above 6 per cent I gather).

Last week the Spanish government announced an 18 billion Euro fund (itself to be funded by a 6 bn loan from the Spanish national lottery, with the rest coming from the Treasury - where the Treasury is getting it from is not revealed) to help those regions of the country which need it. In any case, a couple of the regional governments have already indicated that they would like some of this funding - the Valenciana regional government on Friday was the first to indicate it would ask for help "because it cannot find the funds to meet its financial obligations", and although no amount was mentioned. according to the linked report El Pais have discovered today that the amount is likely to be about 2 bn Euros.

Today, Murcia Region becomes the second region to indicate it needs help, with the regional President, Ramon Luis Valcarcel, reportedly today telling local media outlet La Opinion de Murcia that 200 or 300 million Euros would be requested, adding that: "No one should think that they will give us the money as a gift". Without being unduly cynical, I wonder if this has got anything to do with the 200 million Euro guarantee that the Murcia Region government issued a year or so ago to allow construction of the so far unopened new regional airport at Corvera to be completed and which requires urgently to be refinanced (or so I read recently).

This is unfortunately only one aspect of the troubles facing Spain right now. Continuing high unemployment, generally but especially amongst young people, sees regular large demonstrations in major cities and I have been reading regular reports about the numbers of Spaniards, again particularly amongst younger better-educated ones, seeking their fortunes abroad, either in other EU member countries or in Spanish-speaking Latin American countries and others. No doubt those who are successful will send remittances back home, but the country will still have lost some of its younger, brighter people.

It would not be so bad if it was likely the Eurozone bail-out and the other 'austerity' measures the government is implementing would help in the longer term, but my own view is that these measures will only put off for a little longer the day of reckoning. The real solution, although very painful in the short term, is obvious .. Spain and some of the other weaker economies need to ditch the Euro and revert to updated versions of their former currencies as quickly as possible. (I have mentioned this in earlier articles so I won't repeat myself.)

IMPORTANT UPDATE (Monday 23JUL2012 07.55 BST) The Murcia Region government has now roundly denied it will ask Madrid for financial assistance and admits merely to studying it. It says that locally-based media outlet La Opinion de Murcia had misinterpreted/misreported what Sr Valcarel had said; he was apparently referring to the need to set up "hispanobonds" to be backed jointly by all regions in order to meet debt and deficit payments. Well let's wait and see what happens; my own feeling is that just as Germany in the context of the wider Eurozone has shown extreme unwillingness to take similar action, not all Spanish regions would be enormously happy at having to stand behind more profligate regions to save them from their own financial mismanagement, specially when their own budgets are likely to be under severe pressure.

Wednesday, 18 July 2012

Bank of Spain says Spanish banks' bad loans hit new high ratio

The ratio is now the highest since 1994 (AFP), according to the Bank of Spain, with 8.95 per cent of loans, mainly relating to property, considered "doubtful" by end May this year - in monetary terms 155.841 billion Euros (USD 192 billion). The figure has been rising all year from 8.15 percent in February to 8.37 in March and 8.72 in April, from its perhaps 'optimistic' low of 3.37 per cent in late 2008.

Thursday, 5 July 2012

Rajoy's attempt to reverse gay-marriage law rejected by Constitutional Court

(Please see UPDATE at end)

Spain's economy may be in a complete shambles, but at least some sense still prevails. The Constitutional Court has rejected an appeal by the governing Partido Popular and President ('Prime Minister') Mariano Rajoy against the 2005 change in the law which permitted same-sex marriage on the grounds that it was 'unconstitutional', asserting at the time the law was changed that it flouted article 10.2, relating to protection of the family, women and children. Of course he ignored the fact that a ban on same-sex marriage would constitute gender discrimination, and segregation on the grounds of sexuality, two situations forbidden by the Constitution.

I may think that Zapatero's PSOE was a lousy manager of Spain's economy (just as was the last Labour government in the UK), but both introduced reforms of the law which brought their countries into the forefront in terms of granting badly-needed rights to enhance the equality of their gay, lesbian, bisexual and transgender citizens.

It is great to know that the Spanish Constitutional Court is prepared to stand up to the government when it seeks to deprive a segment of the population of recently-won and hard fought-for rights. I recall at the time the last government introduced the change how vehement was the opposition of the then opposition and the Roman Catholic church. We are seeing exactly the same opposition to the changes currently under discussion in the UK from the very-same Roman Catholic church. Although Spain is nominally a Catholic country, whereas the UK is not, both are modern democracies which have, fortunately, moved well beyond the crude propaganda efforts of the Church and neither is a theocracy, a concept the main churches in both countries (Catholic and CofE respectively) will just have to learn to live with!

And referring back to the first line of this article, doesn't Mariano Rajoy have more important things to worry about than attempting to reverse gay-marriage laws, for example the urgent task of sorting out the Spanish economy, which still has a very long way to go (quite frankly)?!

UPDATE (Tuesday 6NOV2012 22.55 GMT) The Constitutional Court has again ruled to uphold the 2005 law granting same-sex couples the right to marry - read more here.

Bonds - Italian 10yr spikes above 6%, Spanish rises even higher

Are the wheels coming off the latest Euro-bailout? It looks like it. No surprise, really, as this crisis is unlikely to be solved until some of the weaker economies within the Eurozone are decoupled from the stronger economies - either the weaker currencies must leave or one or two of the stronger currencies must do so. Until that happens, expect this charade to lurch from one crisis to the next!

Italian 10 year bonds spiked above 6% today at 6.016% (from 5.755% at Wednesday's close).

For Spain the situation is even more adverse - although it achieved desired sales on its 10 year bonds, this was at the expense of increasing yields to 6.786% from 6.775% on the secondary sovereign debt market. Average 10 year yields rose to 6.430%% from 6.044% on 7th June, the last comparable sale.

Source: Expatica/AFP

"New co-payment scheme for Spanish medical prescriptions"

(Please see UPDATE at end)

The cost of being ill in Spain, or requiring regular medication, is going up from 1st July this year. Read more here.

This follows on from reports I read a few weeks ago that pharmacies in the Balearic Islands are having to charge full price up-front for all medications they dispense, with customers being told to claim back reimbursement subsequently from the state medical service. This is because of a large amount of unpaid bills for drugs dispensed previously which have not been reimbursed by the state medical service and pharmacies can no longer afford to go on covering these deficits.

UPDATE (Tuesday 17JUL2012 20.50 BST) Iberosphere has an update on how the new co-payment scheme for medicines is to work; it seems to be quite complex and requiring or many photocopies of various documents; the post relates specifically to the Valencia region so the details may be different in other parts of Spain.