Spain 2010: The New European Problem? Ramon Tremosa-i-Balcells. Catalan MEP, ALDE Group Spain 2010: The Next European Problem? Ramon Tremosa-i-Balcells. Catalan MEP, ALDE Group Ciudad Real airport: built in the middle of the Spanish “meseta” (in the middle of no where), has generated an enormous loss which has originated the intervention of Caja Castilla La Mancha by the Central Bank of Spain (€ millions). This airport is the only Spanish airport with high speed train (AVE)… it is one of the best examples of the Spanish real state bubble.

Spanish GDP: incredible quick fall down!!

Spain 2010: The Next European Problem? Ramon Tremosa-i-Balcells. Catalan MEP, ALDE Group Spain: The party is over (The Economist, IX.2009) Spain’s Chronic illness (The Economist, XI.2009)

Causes: negative interests rates during 5 years!!

Accelerated loss of competitiveness, specially under socialist government and socialist policies

Spanish real state bubble: , prices x 4 !!

Spanish immigration boom: x 5 !!

Spanish real state crash: , 50% fall !!

Spanish retail sale crash: , 10% fall !!

Spanish industrial crash: , 35% fall !!

Spanish labour market crash: , from 8% to 19% unemployment rate !! Youth unemployment rate: 35% !!

Spanish increases in productivity = 0%, !! “We don’t need any reform in labour market” (president José Luís Rodriguez Zapatero; ) “The crisis will be much more longer in Spain because Spanish government is not doing reforms” (Joaquín Almunia, Spanish & socialist commissioner European Parliament, )

Forecast European Commission: 2010 = 20%, 2011 = 21% unemployment Spanish labour market, two social classes: young productive labour force with flexible contracts, old non-motivated labour force with inflexible contracts.

Golden parachute Spain banks, 2010: the mother of all carry trades Carry trade = banks take cheap loans at the ECB at 1%interest, without limit of quantity, and buy Spanish public debt at 3.5%-4% interest

Golden parachute Spain banks, 2010: the mother of all carry trades The ECB will finish extraordinary liquidity measures in 2010, in March

Spain 2008: the first current account deficit and trade deficit, in GDP %, of the developed world

Spain 2008: the second largest current account deficit in the world, after the US deficit in volume

Spain 2009: dramatically reduction of imports, which reflects the fall of consumption

Spain : private debt with the rest of the world (mainly banks) x 2

Since the socialist government (2004), external debt grows faster than the GDP

Spain 2009: a long way in to deflation?

Spain = Japan 2.0? Following Japanese steps? Japan, 1990: No recognition of banking losses and of real state fall in prices… long deflation!!

Spain against Eurozone (EZ), : the European kings of private debt (households and non- financial Corporates)

Spain : government accounts into hell

Spanish banks: the next European problem?

Spanish banks: fall in credits for first time in history

Spanish public debt: the next European bubble?

Spanish fiscal deficit: monthly budget deficit evolution in millions euros

Spanish banks, 2009: astonishing access to ECB loans

European Commission forecast, 2012: unsustainable public deficit and debt?

European Commission forecast, 2011: instead of a non-clear GDP growth (?), unemployment will continue growing!!

The Aftermath of Financial Crisis: Recovery begins with industrial exports growth Let Catalan exports go to Europe by train !!

Mediterranean Sea, new center of commerce, 21st c.