fred, although in general you are right that the times of endless budgets are over, there still exists clients who are willed to pay a lot for getting the best they can get.
and the situation in spain isnt as it is in greece, but also not as in rest of europe or in us.i live with my famliy in the south of spain ( my wife is spanish ) meanwhile my office is in germany and i can tell you the situation in spain's situation is reminding me more and more like in the third world ( as was the behavor in the last 15 years to throw out money for incredible crazy things as/ and to build 2 million houses too much which are all empty now, with a very corrupt and also very ineffective government, fiscal authorities. it
was a bonanza as i havent seen it nowhere and which reminds to brazil in the 70s. the price therefor will have to be paid and thats what you describe. we in andalucia have over 60% unemployd young people between 17 and 25 years old, search a develloped country with similar numbers, even greece is far better.
thats not europe, and hopefully as well not the future of europe. situation in germany or in france and in many other countries is quite different, so is the economy. lets hope that the south european disaster and the unability of the north to manage it adequately will not lead allover to similar results than i see in spain, but i doubt that this will happen.
Rainer,
the situation is much, much worse in Spain than you think.
The banking system is bankrupt. Half of that system were Cajas, formerly small banks which were concentrated and in the hands of politicians. It is impossible for Spain to pay for that huge hole. Impossible.
The public sector is a nightmare. The "federal" state, the central government, accounts for only 1/3 of the total public expenditures, whereas 2/3 are in hands of local governments and regional governments. In Germany there are 4000 local governments, in Spain more than 8000. In Germany you have Länder, in Spain 17 Comunidades Autónomas, but now, look at this: Cataluña, a small region in the mediterranean north, is making heavy cuts in Health expenditures... but they have 6 public regional television channels!!! All the Comunidades Autónomas have a parliament and a government, and one or two public TV channels with huge red numbers!!!! Many large cities also have local public television channels. In Seville, for instance, "Giralda TV" needed 10 million euros for avoiding bankruptcy, and the new mayor, from the conservative party, paid. The funny thing is that the local government in Seville is bankrupt too.
País Vasco and Navarra are two of the richest regions in Spain, but they don't make any tax contribution to the nation. They have a special tax system (called "concierto económico"): they collect all the taxes and then, in a political negotiation process, they transfer an amount to the central government accounting for the unpaid "services" the central government gives to those regions (defense, etc). In practice, that amount is intentionally underestimated (the regional parties support the party in power, in Madrid, in exchange for more privileges). The nation transfers income to those rich regions!!! Cataluña is looking for the same. Now they are pressing for a "concierto", but, for the moment, they have a new "estatuto" (the law that regulates the Comunidad Autónoma) with unbelievable privileges. For instance, that law establishes how much the central government has to invest in that region (a particular % of the total investments).
Central government, Comunidades Autónomas, local governments... and "diputaciones"... there are more than 40 diputaciones in Spain. These institutions cover the "provinces", an arbitrary administrative division from the XIX century that is preserved. On top of this there are another arbitrary administrative division from the XX century (the Comunidades Autónomas). All the associated institutions are preserved, of course. Thousands of politicians, civil servants, etc.
The Trade Unions? If I tell you about the trade unions in Spain you will not believe me. The "official" trade unions (UGT, a branch of the PSOE, the socialist party; and CCOO, a "communist" trade union) are two almost official "institutions" and are heavily funded with public money without control. Just a point: in Spain we have "liberados". A "liberado" is a worker in a private company or public administration who is relieved from his work tasks and goes to work for the trade union. If your (private) company has, for instance, 1000 workers, you have to have, say, 10 "liberados". They go to work for your workers (sic) in the trade unions, but YOU pay the salaries. The law establishes the number, but politicians have increased that number in the public administrations. There are thousands and thousands of "liberados" in the public administrations. None knows the exact number. These liberados are specially dangerous when the trade unions call for a strike. Just like in Argentina (not Brazil)...
Trade Unions fix salaries at an aggregate level (the whole country, and then by sectors) by negotiating with the CEOE, and artificial organization that represents the employers. There are more than 30 different types of labor contracts! The unemployment rate is 20% (5 million people, most of them young people and people expelled from the construction sector, now collapsed), but those numbers are manipulated. I think the real number is even higher. Temporal contracts, with no social protection or with low social protection accounts for more than 30% of the total workers... The lay off compensation for "permanent" workers is so high that many small companies go bankrupt by trying to reduce somewhat the total number of workers when the economy goes mad... Etc.
The central government reduced public servants' salaries by 5% last year, but the total number of workers of the public administration is still growing!!! The central government is lying about the public deficit, just like Greece did. For instance, and this is only an example, the public administration takes 9, 12 or more months to pay any bill to companies who sell goods or services to them. This is some kind of "hidden" debt. It is just like the government forcing you to buy bonds at 0% for a year.
Do you know how many universities we have in Spain? 78. Yes, you have read well: seventy eight, 78 (public and private). Many of them bankrupt, of course. All of them full of public servants. Thousands. I work in a public university in Madrid and the corruption and inefficiencies are just unbelievable. And it was the same craziness for the last 25 years. No changes, no real reforms. Only 4 or 5 public universities have a good level, the remaining ones are from mediocre to pure garbage.
I have tried to show you, by means of a few examples, the kind of craziness, of absolute chaos and decomposition, that Spain is. Spain is much, much worse than Greece or Italy, because of the political problem. Berlusconi or Papandreu are great political leaders if compared with Mr. Zapatero. The situation is now so bad that I cannot see how Spain can be saved from the disaster, even if the government changes.
I understand Angela Merkel. The problem in Europe is what to do with these zombie countries who never will change. The Euro was a huge mistake. Now the program of reforms have to be imposed by the Union, and narrowly supervised under the menace of expulsion from the Euro.
http://www.economist.com/node/21536651.
