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Spain Is Beyond Doomed: Unemployment Charts

99 points by colinismyname 13y ago

eksith 13y ago
The labor disparity between senior workers and young ones will lead to a lot more trouble. Irrational people take out their frustrations on the easiest target; irrational young people even more so. I'm not sure if the article's doom and gloom is actually reflected in reality though. Most people are averse to letting society collapse (especially when they've had a history of it standing upright and stable for a long time). Spain doesn't "just" need stimulus, it needs well guided and allocated stimulus or it will accomplish nothing.
- fixxer 13y ago
  Spain needs to breed. Their median age is ~41 (US at about 37... ). Not as bad as Japan, but very ominous when you've got a society built on pensions. Ireland is about 35 and it shows (little pale kiddies running around everywhere). That is the only one of the PIIGS I'm betting on.
  - greenyoda 13y ago
    That might be the long-term solution to the nation's problems. But on an individual level, it would be disastrous for an unemployed person or someone worried about losing their job to increase their financial responsibilities by having kids.
    - apalmer 13y ago
      Yes and No In societies of extreme poverty children have long been viewed a hedge against old age
      - w1ntermute 13y ago
        That only works because of the lack of child labor laws and the lack of an advanced economy in which education is required in order to get a well-paying job in countries where extreme poverty is commonplace.
        seanmcdirmid 13y ago
        You didn't read parent right: the child will be an adult when the parents are older. The more kids you have, the more likely at least one will be successful enough as an adult to take care of you.
        w1ntermute 13y ago
        No, I read the parent just fine. The child may be an adult when the parents are older, but that means nothing when the adults are bankrupted trying to give the child an education so that he/she can support the parents, and the child can't work until he's an adult anyway. Of course the probability will be higher with more children, but the cost of having more children in a developed country far outweighs the benefits. There's a huge difference in the results when you do it in a developing country and when you do it in Spain.
      - return0 13y ago
        Just to make it clear: Spain, and the rest of Southern Europe are developed countries with high standards of living; extreme poverty is not even a prospect now.
  - jwilliams 13y ago
    Spain's youth unemployment is astronomical (55%+). Young people with useful skills are increasing choosing to emigrate -- With lots of encouragement too. e.g. Germany is actively recruiting Spanish Engineers to fill labour gaps there. Without structural changes, no amount of youth is going to dig them out.
    - futhey 13y ago
      Yes, and in recent years Spaniards have been immigrating to South America to take incredible cuts in pay to do jobs (Often regardless of legal status) that require few of the qualifications, if any, they had earned in Spain.
      - seanmcdirmid 13y ago
        How is this comment related to parent? As long as we are wildly off topic, a lot of young people in Japan are "encouraged" to move to Bangkok to do Japanese customer service jobs, where they can be paid less.
  - kayoone 13y ago
    Germanys is 42 and they are doing fine, its a longterm issue though. Theyd need something like germanies dual education system that has classic University/College Education plus on the Job apprenticeships were companies train young People for several years. These companies get some Financial benefits and the young get excellent job training plus a low income during that time. Afterwards they are qualified to tackle the more senior jobs. Of course this is a long term process as well, seems already too late.
    - lolcraft 13y ago
      There already is a dual education system. It's called Formación Profesional. Includes on the job apprenticeships, plus a "senior" track, or qualification to college.
  - fixxxxer 13y ago
    Was any part of the above comment offensive? I'm a little perplexed as to why I've been (I assume) banned... I personally don't find my observation about Ireland's large population of pale children particularly offensive. I happen to be pale and half-Irish myself (mom from Cork), as well as married to a pale Irish girl. As for statistics to back up my claim that Ireland is a good bet relative to the remaining PIIGS, here is the % of population under 18 (from 2007, http://childrensdatabase.ie/sonc2008/part1/ http://childrensdatabase.ie/sonc2008/part1/): Ireland: 24.4 Italy: 17.1 Spain: 17.5 Greece: 17.4 Portugal: 18.7 Regardless, if I offended anyone, I apologize. I still think youth is a strong sign of a resilient economy. True, Germany doesn't seem to be effected...I'd argue there are other issues there (a phenomenal capital market, for a start).
    - CamperBob2 13y ago
      Was any part of the above comment offensive? Yes, in the sense that no matter what you post, if there's any substance to your point at all, someone will be offended by it. Don't sweat it. (You're not hellbanned as of this post, if that's what you're wondering.)
      - fixxer 13y ago
        I somehow got an IP ban. That was annoying.
  - homosaur 13y ago
    I feel you on this but the youth that are at breeding age are not going to really be down for that when they can't find work.
- tsotha 13y ago
  >Spain doesn't "just" need stimulus, it needs well guided and allocated stimulus or it will accomplish nothing. The last thing Spain needs is "stimulus". What they need to do is fix the labor market so it's possible to fire people. When employers can't fire people they only hire as an absolute last resort. That means companies can't exploit growth opportunities as easily and it means employers are unlikely to gamble on people who don't have a solid resume, i.e. young people.
  - Sevein 13y ago
    It's not like that anymore. Some agressive reforms have been done in the last years and they didn't help much.
    - pfortuny 13y ago
      Nope. all those "reforms" were cosmetics. As long as public workers cannot be fired -which they cannot be, de facto (show me one)- there is NO reform in Spain. Really. And firing people is as expensive as it used to be, more or less. This govt has done really nothing relevant in this area.
  - paradoja 13y ago
    Firing costs in Spain are lower than in Germany: http://www.tradingeconomics.com/spain/firing-cost-weeks-of-wages-wb-data.html http://www.tradingeconomics.com/spain/firing-cost-weeks-of-w... http://www.tradingeconomics.com/germany/firing-cost-weeks-of-wages-wb-data.html http://www.tradingeconomics.com/germany/firing-cost-weeks-of...
mseebach 13y ago
The problem with stimulus spending in a place like Spain is that someone will have to lend them the money to spend. They either have to charge pretty high interest (which exacerbates Spain's already high deficit) or give a discount on the interest, such that it no longer reflects the risk the lender is taking. Most anti-austerity calls seem to suggest the latter, which basically amounts to redistribution from those countries (Germany, Netherlands et.al.) that did not enjoy the easy living during the boom years that Spain did.
- jwcooper 13y ago
  Germany isn't completely innocent here though either, even though it can look like they were frugal during the boom years. From Michael Pettis [1]: The strength of the German economy in recent years has largely to do with its export success. But for Germany to run a large current account surplus – the consequence I would argue of domestic policies aimed at suppressing consumption and subsidizing production – Spain and the other peripheral countries of Europe had to run large current account deficits. If they didn’t, the euro would have undoubtedly surged, and with it Germany’s export performance would have collapsed. Very low interest rates in the euro area (set largely by Germany) ensured that the peripheral countries would, indeed, run large trade deficits. The funding by German banks of peripheral European borrowing, in other words, was a necessary part of deal, arrived at willingly or unwillingly, leading both to Germany’s export success and to the debt problems of the deficit countries. [1] http://www.mpettis.com/2011/07/19/current-account-dilemma/ http://www.mpettis.com/2011/07/19/current-account-dilemma/
  - mseebach 13y ago
    It was certainly very convenient for the germans to have some takers for their cheap bonds, but the fact remains that nobody forced the peripheral countries to live beyond their means and to refrain from implementing necessary reforms.
    - gyardley 13y ago
      Nor did anyone force countries like Germany to share a common currency with them. I've never really gotten why one country would want to share only a currency with another country, while leaving their social and economic policies independent. But now that that's happened, the combination gets to stand or fall as a whole.
Tangaroa 13y ago
Long-term unemployment is happening in the US too: http://blogs.cfr.org/kahn/2013/04/17/our-long-term-unemployment-challenge-in-charts/ http://blogs.cfr.org/kahn/2013/04/17/our-long-term-unemploym... Unemployment in the US is near 15% including U6, or near 23% if using pre-1994 counting methods: http://www.shadowstats.com/alternate_data/unemployment-charts http://www.shadowstats.com/alternate_data/unemployment-chart... (On that subject, I'm looking for work in the north SF bay area, Sonoma/Marin region)
- ashleyblackmore 13y ago
  > (On that subject, I'm looking for work in the north SF bay area, Sonoma/Marin region) Why not put a CV/homepage link in your profile?
- brianbreslin 13y ago
  You might want to link to your LinkedIn if you want a new job.
- rayiner 13y ago
  The SGS numbers are basically fictional. See this contemporaneous discussion of what really changed between the pre-1994 and post-1994 counting methods: http://www.bls.gov/mlr/1995/10/art3full.pdf http://www.bls.gov/mlr/1995/10/art3full.pdf. The current U4-U6 do include discouraged workers, they simply require the person to indicate on the survey that they have searched for a job in the past year rather than the unworkably vague prior methodology that simply asked whether the person wanted a job. See: http://www.ritholtz.com/blog/2012/08/discouraged-by-the-media-again http://www.ritholtz.com/blog/2012/08/discouraged-by-the-medi.... The most sensible employment measure is U4 (official unemployment + people who have searched for a job in the last year). U5 and U6 are far too sensitive to demographic changes to serve as a good basis for comparison. E.g. since the 1950's the work force has added a lot of female part-time workers that are counted in U6, but would have been stay-at-home wives in the 1950's and thus not counted as unemployed at all. Also, older people have always been over-represented among the marginally-attached, part-time work force, and as the population ages there are naturally more of this demographic. Both trends inflate U6, but neither are a negative indicator for the economy per se.
krugmanlol 13y ago
And we still think krugman is a god.
- antiterra 13y ago
  I'm guessing you're not here for any kind of rational discussion, but, could you explain a little bit about your motivation to post that comment? I'm not sure I've seen a pro-Krugman bias on news.yc. Even among most of those who think he's right, I'm not sure that deification is an accurate description. In this case, it's particularly confusing, since Spain is one of Krugman's "look, austerity is bad" poster children.
  - icambron 13y ago
    It would also be very surprising if he didn't outright loathe the employment regulations that are strangling Spain. He is an economist, after all. I'm not Krugman accolite, but the "there are bad things happening so Krugman is wrong" logic is just weird.
- Afforess 13y ago
  Krugman has been against the austerity in Europe from the start. So Krugman was right all along.
  - Houshalter 13y ago
    Yes, austerity caused their ridiculous employment regulations.
  - PKop 13y ago
    So called austerity has nothing to do with it. And.. http://blogs.ft.com/beyond-brics/2012/12/13/estonia-path-to-growth-via-austerity-defies-eurozone-doubters-and-krugman/#axzz2RjGuJzqD http://blogs.ft.com/beyond-brics/2012/12/13/estonia-path-to-...
robryan 13y ago
What the is the precedent for austerity? What countries have used it successfully to get out of recession and improve unemployment?
- skylan_q 13y ago
  What the is the precedent for austerity? To have enough money left behind to pay the bills. What countries have used it successfully to get out of recession and improve unemployment? This worked in the (now seemingly ancient) past. Governments were a much smaller portion of the economy and taxes were much lower to begin with. These days, up to 50% of people can be employed by the government. When governments get that large, there is no possibility nor space for a recovery: Stimulus: add more debt to an unpayable debt? increase taxes and chase out people who pay the largest sum of taxes? Austerity: cut gov't pay and jobs? that leads to less tax revenue and higher unemployment... nevermind the fact that the party won't ever be elected again. The only way to win at this is to not have an economy that depends so heavily on indebted government nor one that removes risks for the banking system. If a country is already at that point there is no moving forward. Declare bankruptcy, destroy your credit ratings and start over.
  - robryan 13y ago
    How does declaring bankruptcy help creating more jobs? (Honest Question) Would seem to me that it would been even harder to get credit flowing once all your previous creditors have been wiped out. From an admittedly fairly uninformed position it appears to me that cutting spending is only going to further erode businesses positions and tax revenue, leading to an even worse position.
    - WalterBright 13y ago
      What bankruptcy does is reallocate resources from non-productive operations to productive ones. At least that's how it used to work.
    - skylan_q 13y ago
      In the short-term it doesn't help the employment situation. Like in (software) engineering, there is no free lunch. Here's another example in Canada of austerity working: http://articles.businessinsider.com/2010-06-07/markets/29978945_1_canada-debt-eurozone http://articles.businessinsider.com/2010-06-07/markets/29978... They have 5 bullet points, and I think only 4 really applies. But even then, Canadians weren't getting heavily leveraged, especially since the BoC had a single mandate of keeping inflation in check which means high interest rates (and no mandate to respond to labor market conditions, which usually results in more leveraging and higher inflation) This austerity something most hated Chretien for, but people didn't make too much of a fuss. 10% expenditure reduction? grumble grumble... Today's reaction: sacrificing a 2.4% increase in the federal budget for a 1.8% increase? BRUTAL AUSTERITY DON'T YOU REMEMBER NAZIS??? Ontarians all hate Mike Harris. After he was done the deficit was gone and debts reduced, schools and medical care resumed as before and everyone had jobs. We brought in automotive emissions tests, many new provincial parks, many new lands for natives and the environment was much cleaner than when he showed up. He was hated because he made everyone do what they were supposed to do. As far as I've seen, people only like the politician that promises the moon and loads on debt that "someone else" will pay for. :( From an admittedly fairly uninformed position it appears to me that cutting spending is only going to further erode businesses positions and tax revenue, leading to an even worse position. Many people use their gut to voice their opinions on these things, and that's not to say that they're wrong. People often extend the concept of household finances to the economy. Simple analogy might help explain where that notion might come from: Your parents are heavily indebted seniors that do some chores for you in order to live with you. You are working to support yourself and them, financially. Your company is having money issues and decides you are working 30h weeks instead of 40h weeks. (25% pay cut) Would you then take money from your heavily indebted parents to then buy product (economic stimulus) from the company so that their earnings increase just enough to be able to afford to hire you back to full capacity? Would you have your heavily indebted parents borrow more money to buy enough product? Not likely. You'd probably rather just look for other work or start a company and take the financial hit/cost of having to look for new work or starting a company. Basically starting over. You could also just tough it out and stick to eating cheap canned goods, cancel netflix, and slowing down repayment of your parent's debt and getting them the cheap diapers and only absolutely necessary meds (austerity option) Applying moral of the story: If Spain doesn't go through bankruptcy, (or severe, short-term austerity) it's keeping the 30h work week while the parents are still saddled with huge debts while also trying to maintain the lifestyle that it could maintain working 40h weeks. So the less Spain spends today and tomorrow, the less it has to tax today and tomorrow. The above is all for illustrative purposes. Would seem to me that it would been even harder to get credit flowing once all your previous creditors have been wiped out. For sure, no one will be keen on buying 30-year government bonds. This is a huge problem for the credit markets. We've seen some mixed results in Iceland, though. But a larger economy like Spains? Might not fare as well.
dade_ 13y ago
It's called bankruptcy. I'd get on it. Austerity is going to start civil wars at this rate. Oh yeah, and next time, don't bail out banks run by sociopaths.
- barking 13y ago
  This week the Irish government who now unwillingly own a huge chunk of bank of Ireland said it could do nothing about the chief executive's generous salary. This despite further losses at the bank. Meanwhile further cuts in the rest of the economy.
  - AnthonyMouse 13y ago
    The executive compensation thing is a red herring. People keep talking about it because of the manifest unfairness of allowing these people to wreck the economy and still take home 100 times what their victims do, but reducing their compensation wouldn't bring back any jobs. The problem is that a million dollars is a huge amount of money for an individual and a drop in the ocean for a government or a bank. Taking the money from them to try to undo what they've done wouldn't make the slightest dent, so all it would do is to punish them. And if that's what you're after then stop with pussyfooting around and just put them in prison already.
    - barking 13y ago
      There's a perception amongst the 'ordinary' people that those at the top scratch one anothers backs. The government spin is that we're all in this together but the reality seems to be different. It's not surprising when you see how politicians when they retire often go on to get directorships at banks. Or how in the case of our most toxic bank, the chief executive apparently used to personally handle loans to politicians and other influential people. Politicians have talked the talk but when it has come to punishing those responsible nothing happens. Constitutional property rights are cited. They'd love to do something but their hands are tied or it would spook the markets or to paraphrase you the effect would be negligible so let's not bother. Much more would be raised by milking the masses some more.
    - 13y ago
yekko 13y ago
Nothing a little austerity can't fix, right? Time to fire more government workers.
- seanmcdirmid 13y ago
  Yes! At this point, taking more money out of the economy will increase economic activity...no...wait...I'm with Keynes that this is the wrong thing to do.
raheemm 13y ago
It seems Iceland was in worse shape than Spain but they have managed to resolve their issues by revaluing their currency (similar to declaring bankruptcy?). Why is Spain not able to do the same? I'm guessing it's because they are part of the EU and do not have their own currency?
- jiggy2011 13y ago
  10 points! Iceland is also a lot smaller than Spain.
  - mynameishere 13y ago
    Pretty much. Iceland is about the same size as Stockton, CA, which is currently in Chapter 9 (IIRC). Iceland isn't all that much more important than a smallish US city.
- graeme 13y ago
  That's a large part of it. Spain can't devalue it's currency easily, or get rid of their debt. Europe won't let them default and stay in. They'd basically have to leave the Euro to do what Iceland did. And that would be complicated.
  - return0 13y ago
    What's happening now is actually more complicated. The economies of the south are never going to take off with measures that are planned by a committee of 3 world institutions. The more the south sticks to the euro, the more complicated it's going to get. There is a good chance that a 'southern euro' might actually work, as the southern economies are all in similarly bad shape and in need of stimulus.
- Herbert2 13y ago
  I'd purposely avoid drawing any lessons from Iceland. We have the world's smallest independent currency and devaluation cut our purchasing power in half.
lolcraft 13y ago
I don't know why journalists, when writing about economics, invariably pick the least adequate people to be interviewed. Some time ago, there was a feature about unemployment for college graduates in the US... which talked about a woman with a dance degree. Now it's about a fucking cani [1] whose major accomplishment in life is pasting some rubber and metal together, earning 1200 undeserved euros a month. Before that, he did the same thing, earning 2500€ -- that ridiculous salary is the reason his Social Security benefits are so high. For comparison, many engineers here consider themselves lucky for earning 1000€/month. What I find missing is how entrepreneur-social culture in Spain is, basically, the least funny joke you'll hear in all Europe. 23.3% of GDP are black market operations. The European country with highest quantity of 500€ banknotes per briefcase. 10% unemployment for workers with tertiary education. Esperanza Aguirre wanting to exile the poor from Madrid (it's a long story). Widespread, also not very covert, abuse from employers. That sort of thing. Fortunately, the country is sort of duct-taped together, so it all works fairly well in the end. Not at all as gloomy as pictured here. [1] Like a chav, but Spaniard.
- auctiontheory 13y ago
  What, pray tell, is a "chav"?
  - tsotha 13y ago
    http://www.telegraph.co.uk/news/uknews/1478863/Cheltenham-ladies-and-the-chavs.html http://www.telegraph.co.uk/news/uknews/1478863/Cheltenham-la...
  - martythemaniak 13y ago
    Ali G
  - jiggy2011 13y ago
    As hilariously parodied by an amateur filmmaker. http://www.youtube.com/watch?v=BNaCHXrnr9U http://www.youtube.com/watch?v=BNaCHXrnr9U
  - edderly 13y ago
superflit 13y ago
Why complain? The Economy is only taking a 'siesta' (nap).. These 'uptight' anglo-saxon coutries only think about work... (sarcasm)
anuraj 13y ago
Spain's problems are endemic; but most of Europe shows similar tendencies now - High level of entitlements, soaring deficits, lower cost efficiency and lumpen youth. Europe's post developmental problems need high level of innovation - but the youth do not seem particularly ready for it.
brianbreslin 13y ago
Semi off topic, but I'm going to Spain in June, anyone recommend anything startup related? People i should meet?
- znq 13y ago
  Check out http://barcelona.io http://barcelona.io or contact me at stefan@barcelona.io
pinaceae 13y ago
but if you actually go to spain, it does not look like somalia. nasty secret - all those unemployed? work anyhow, "black" as we say in austria - unofficial, tax free. 50% youth unemployment? if all that were real, there would be open war. yet bars, stadiums, beaches are full. the official economy is getting smaller, the unofficial one is growing. as long as there are illegal immigrants from africa working the fields in spain and not spanish people, the economy is not that bad. lies, damn lies and statistics.
guelo 13y ago
Tell the Germans to fuck off, leave the Euro, pull an Argentina, watch the new peso exchange drop to 1000 to 1 Euro, get a flood of French and Germans hunting for bargains, which generates jobs. But make customs treat these tourists like shit, just for a little passive aggressive revenge.
known 13y ago
http://www.lietaer.com/2010/03/the-worgl-experiment/ http://www.lietaer.com/2010/03/the-worgl-experiment/ will create millions of new jobs.
pfortuny 13y ago
I -Spaniard here living in Spain- tend not to believe those figures. Also: 1) Hiring is unbelievably costly due to Social Security. 2) Hence you tend to pay "in black". 3) People HAVE TO pay for the Soc Sec even though they do not earn enough for a living. At the very leas, 250 bucks per month whatever your earnings are. 4) We are spectacular liars at polls. Nobody in the black market will say he has a job. So a grain of salt is required. EDIT: although the outlook is really really bleak, there is no denying it.
- forgottenpaswrd 13y ago
  True. Americans can't understand it without traveling and living abroad. It is very easy for them to make business. Also, lot of people here are in "paro" subsidy earning 400euros a month and working in the black, 600 or 700 euros. There are also lots of other subsidies like PER witch is part of the "social net" that make Social Security so expensive(a millennial is earning more than 2000euros before taxes make it 1000). If they report they are working, they lose the subsidy.

99 points by colinismyname 13y ago

The labor disparity between senior workers and young ones will lead to a lot more trouble. Irrational people take out their frustrations on the easiest target; irrational young people even more so. I'm not sure if the article's doom and gloom is actually reflected in reality though. Most people are averse to letting society collapse (especially when they've had a history of it standing upright and stable for a long time). Spain doesn't "just" need stimulus, it needs well guided and allocated stimulus or it will accomplish nothing.

fixxer 13y ago
Spain needs to breed. Their median age is ~41 (US at about 37... ). Not as bad as Japan, but very ominous when you've got a society built on pensions. Ireland is about 35 and it shows (little pale kiddies running around everywhere). That is the only one of the PIIGS I'm betting on.
- greenyoda 13y ago
  That might be the long-term solution to the nation's problems. But on an individual level, it would be disastrous for an unemployed person or someone worried about losing their job to increase their financial responsibilities by having kids.
  - apalmer 13y ago
    Yes and No In societies of extreme poverty children have long been viewed a hedge against old age
    - w1ntermute 13y ago
      That only works because of the lack of child labor laws and the lack of an advanced economy in which education is required in order to get a well-paying job in countries where extreme poverty is commonplace.
      - seanmcdirmid 13y ago
        You didn't read parent right: the child will be an adult when the parents are older. The more kids you have, the more likely at least one will be successful enough as an adult to take care of you.
        w1ntermute 13y ago
        No, I read the parent just fine. The child may be an adult when the parents are older, but that means nothing when the adults are bankrupted trying to give the child an education so that he/she can support the parents, and the child can't work until he's an adult anyway. Of course the probability will be higher with more children, but the cost of having more children in a developed country far outweighs the benefits. There's a huge difference in the results when you do it in a developing country and when you do it in Spain.
    - return0 13y ago
      Just to make it clear: Spain, and the rest of Southern Europe are developed countries with high standards of living; extreme poverty is not even a prospect now.
- jwilliams 13y ago
  Spain's youth unemployment is astronomical (55%+). Young people with useful skills are increasing choosing to emigrate -- With lots of encouragement too. e.g. Germany is actively recruiting Spanish Engineers to fill labour gaps there. Without structural changes, no amount of youth is going to dig them out.
  - futhey 13y ago
    Yes, and in recent years Spaniards have been immigrating to South America to take incredible cuts in pay to do jobs (Often regardless of legal status) that require few of the qualifications, if any, they had earned in Spain.
    - seanmcdirmid 13y ago
      How is this comment related to parent? As long as we are wildly off topic, a lot of young people in Japan are "encouraged" to move to Bangkok to do Japanese customer service jobs, where they can be paid less.
- kayoone 13y ago
  Germanys is 42 and they are doing fine, its a longterm issue though. Theyd need something like germanies dual education system that has classic University/College Education plus on the Job apprenticeships were companies train young People for several years. These companies get some Financial benefits and the young get excellent job training plus a low income during that time. Afterwards they are qualified to tackle the more senior jobs. Of course this is a long term process as well, seems already too late.
  - lolcraft 13y ago
    There already is a dual education system. It's called Formación Profesional. Includes on the job apprenticeships, plus a "senior" track, or qualification to college.
- fixxxxer 13y ago
  Was any part of the above comment offensive? I'm a little perplexed as to why I've been (I assume) banned... I personally don't find my observation about Ireland's large population of pale children particularly offensive. I happen to be pale and half-Irish myself (mom from Cork), as well as married to a pale Irish girl. As for statistics to back up my claim that Ireland is a good bet relative to the remaining PIIGS, here is the % of population under 18 (from 2007, http://childrensdatabase.ie/sonc2008/part1/ http://childrensdatabase.ie/sonc2008/part1/): Ireland: 24.4 Italy: 17.1 Spain: 17.5 Greece: 17.4 Portugal: 18.7 Regardless, if I offended anyone, I apologize. I still think youth is a strong sign of a resilient economy. True, Germany doesn't seem to be effected...I'd argue there are other issues there (a phenomenal capital market, for a start).
  - CamperBob2 13y ago
    Was any part of the above comment offensive? Yes, in the sense that no matter what you post, if there's any substance to your point at all, someone will be offended by it. Don't sweat it. (You're not hellbanned as of this post, if that's what you're wondering.)
    - fixxer 13y ago
      I somehow got an IP ban. That was annoying.
- homosaur 13y ago
  I feel you on this but the youth that are at breeding age are not going to really be down for that when they can't find work.
tsotha 13y ago
>Spain doesn't "just" need stimulus, it needs well guided and allocated stimulus or it will accomplish nothing. The last thing Spain needs is "stimulus". What they need to do is fix the labor market so it's possible to fire people. When employers can't fire people they only hire as an absolute last resort. That means companies can't exploit growth opportunities as easily and it means employers are unlikely to gamble on people who don't have a solid resume, i.e. young people.
- Sevein 13y ago
  It's not like that anymore. Some agressive reforms have been done in the last years and they didn't help much.
  - pfortuny 13y ago
    Nope. all those "reforms" were cosmetics. As long as public workers cannot be fired -which they cannot be, de facto (show me one)- there is NO reform in Spain. Really. And firing people is as expensive as it used to be, more or less. This govt has done really nothing relevant in this area.
- paradoja 13y ago
  Firing costs in Spain are lower than in Germany: http://www.tradingeconomics.com/spain/firing-cost-weeks-of-wages-wb-data.html http://www.tradingeconomics.com/spain/firing-cost-weeks-of-w... http://www.tradingeconomics.com/germany/firing-cost-weeks-of-wages-wb-data.html http://www.tradingeconomics.com/germany/firing-cost-weeks-of...

mseebach 13y ago

The problem with stimulus spending in a place like Spain is that someone will have to lend them the money to spend. They either have to charge pretty high interest (which exacerbates Spain's already high deficit) or give a discount on the interest, such that it no longer reflects the risk the lender is taking. Most anti-austerity calls seem to suggest the latter, which basically amounts to redistribution from those countries (Germany, Netherlands et.al.) that did not enjoy the easy living during the boom years that Spain did.

jwcooper 13y ago
Germany isn't completely innocent here though either, even though it can look like they were frugal during the boom years. From Michael Pettis [1]: The strength of the German economy in recent years has largely to do with its export success. But for Germany to run a large current account surplus – the consequence I would argue of domestic policies aimed at suppressing consumption and subsidizing production – Spain and the other peripheral countries of Europe had to run large current account deficits. If they didn’t, the euro would have undoubtedly surged, and with it Germany’s export performance would have collapsed. Very low interest rates in the euro area (set largely by Germany) ensured that the peripheral countries would, indeed, run large trade deficits. The funding by German banks of peripheral European borrowing, in other words, was a necessary part of deal, arrived at willingly or unwillingly, leading both to Germany’s export success and to the debt problems of the deficit countries. [1] http://www.mpettis.com/2011/07/19/current-account-dilemma/ http://www.mpettis.com/2011/07/19/current-account-dilemma/
- mseebach 13y ago
  It was certainly very convenient for the germans to have some takers for their cheap bonds, but the fact remains that nobody forced the peripheral countries to live beyond their means and to refrain from implementing necessary reforms.
  - gyardley 13y ago
    Nor did anyone force countries like Germany to share a common currency with them. I've never really gotten why one country would want to share only a currency with another country, while leaving their social and economic policies independent. But now that that's happened, the combination gets to stand or fall as a whole.

Tangaroa 13y ago

Long-term unemployment is happening in the US too: http://blogs.cfr.org/kahn/2013/04/17/our-long-term-unemployment-challenge-in-charts/ http://blogs.cfr.org/kahn/2013/04/17/our-long-term-unemploym... Unemployment in the US is near 15% including U6, or near 23% if using pre-1994 counting methods: http://www.shadowstats.com/alternate_data/unemployment-charts http://www.shadowstats.com/alternate_data/unemployment-chart... (On that subject, I'm looking for work in the north SF bay area, Sonoma/Marin region)

ashleyblackmore 13y ago
> (On that subject, I'm looking for work in the north SF bay area, Sonoma/Marin region) Why not put a CV/homepage link in your profile?
brianbreslin 13y ago
You might want to link to your LinkedIn if you want a new job.
rayiner 13y ago
The SGS numbers are basically fictional. See this contemporaneous discussion of what really changed between the pre-1994 and post-1994 counting methods: http://www.bls.gov/mlr/1995/10/art3full.pdf http://www.bls.gov/mlr/1995/10/art3full.pdf. The current U4-U6 do include discouraged workers, they simply require the person to indicate on the survey that they have searched for a job in the past year rather than the unworkably vague prior methodology that simply asked whether the person wanted a job. See: http://www.ritholtz.com/blog/2012/08/discouraged-by-the-media-again http://www.ritholtz.com/blog/2012/08/discouraged-by-the-medi.... The most sensible employment measure is U4 (official unemployment + people who have searched for a job in the last year). U5 and U6 are far too sensitive to demographic changes to serve as a good basis for comparison. E.g. since the 1950's the work force has added a lot of female part-time workers that are counted in U6, but would have been stay-at-home wives in the 1950's and thus not counted as unemployed at all. Also, older people have always been over-represented among the marginally-attached, part-time work force, and as the population ages there are naturally more of this demographic. Both trends inflate U6, but neither are a negative indicator for the economy per se.

krugmanlol 13y ago

And we still think krugman is a god.

antiterra 13y ago
I'm guessing you're not here for any kind of rational discussion, but, could you explain a little bit about your motivation to post that comment? I'm not sure I've seen a pro-Krugman bias on news.yc. Even among most of those who think he's right, I'm not sure that deification is an accurate description. In this case, it's particularly confusing, since Spain is one of Krugman's "look, austerity is bad" poster children.
- icambron 13y ago
  It would also be very surprising if he didn't outright loathe the employment regulations that are strangling Spain. He is an economist, after all. I'm not Krugman accolite, but the "there are bad things happening so Krugman is wrong" logic is just weird.
Afforess 13y ago
Krugman has been against the austerity in Europe from the start. So Krugman was right all along.
- Houshalter 13y ago
  Yes, austerity caused their ridiculous employment regulations.
- PKop 13y ago
  So called austerity has nothing to do with it. And.. http://blogs.ft.com/beyond-brics/2012/12/13/estonia-path-to-growth-via-austerity-defies-eurozone-doubters-and-krugman/#axzz2RjGuJzqD http://blogs.ft.com/beyond-brics/2012/12/13/estonia-path-to-...

robryan 13y ago

What the is the precedent for austerity? What countries have used it successfully to get out of recession and improve unemployment?

skylan_q 13y ago
What the is the precedent for austerity? To have enough money left behind to pay the bills. What countries have used it successfully to get out of recession and improve unemployment? This worked in the (now seemingly ancient) past. Governments were a much smaller portion of the economy and taxes were much lower to begin with. These days, up to 50% of people can be employed by the government. When governments get that large, there is no possibility nor space for a recovery: Stimulus: add more debt to an unpayable debt? increase taxes and chase out people who pay the largest sum of taxes? Austerity: cut gov't pay and jobs? that leads to less tax revenue and higher unemployment... nevermind the fact that the party won't ever be elected again. The only way to win at this is to not have an economy that depends so heavily on indebted government nor one that removes risks for the banking system. If a country is already at that point there is no moving forward. Declare bankruptcy, destroy your credit ratings and start over.
- robryan 13y ago
  How does declaring bankruptcy help creating more jobs? (Honest Question) Would seem to me that it would been even harder to get credit flowing once all your previous creditors have been wiped out. From an admittedly fairly uninformed position it appears to me that cutting spending is only going to further erode businesses positions and tax revenue, leading to an even worse position.
  - WalterBright 13y ago
    What bankruptcy does is reallocate resources from non-productive operations to productive ones. At least that's how it used to work.
  - skylan_q 13y ago
    In the short-term it doesn't help the employment situation. Like in (software) engineering, there is no free lunch. Here's another example in Canada of austerity working: http://articles.businessinsider.com/2010-06-07/markets/29978945_1_canada-debt-eurozone http://articles.businessinsider.com/2010-06-07/markets/29978... They have 5 bullet points, and I think only 4 really applies. But even then, Canadians weren't getting heavily leveraged, especially since the BoC had a single mandate of keeping inflation in check which means high interest rates (and no mandate to respond to labor market conditions, which usually results in more leveraging and higher inflation) This austerity something most hated Chretien for, but people didn't make too much of a fuss. 10% expenditure reduction? grumble grumble... Today's reaction: sacrificing a 2.4% increase in the federal budget for a 1.8% increase? BRUTAL AUSTERITY DON'T YOU REMEMBER NAZIS??? Ontarians all hate Mike Harris. After he was done the deficit was gone and debts reduced, schools and medical care resumed as before and everyone had jobs. We brought in automotive emissions tests, many new provincial parks, many new lands for natives and the environment was much cleaner than when he showed up. He was hated because he made everyone do what they were supposed to do. As far as I've seen, people only like the politician that promises the moon and loads on debt that "someone else" will pay for. :( From an admittedly fairly uninformed position it appears to me that cutting spending is only going to further erode businesses positions and tax revenue, leading to an even worse position. Many people use their gut to voice their opinions on these things, and that's not to say that they're wrong. People often extend the concept of household finances to the economy. Simple analogy might help explain where that notion might come from: Your parents are heavily indebted seniors that do some chores for you in order to live with you. You are working to support yourself and them, financially. Your company is having money issues and decides you are working 30h weeks instead of 40h weeks. (25% pay cut) Would you then take money from your heavily indebted parents to then buy product (economic stimulus) from the company so that their earnings increase just enough to be able to afford to hire you back to full capacity? Would you have your heavily indebted parents borrow more money to buy enough product? Not likely. You'd probably rather just look for other work or start a company and take the financial hit/cost of having to look for new work or starting a company. Basically starting over. You could also just tough it out and stick to eating cheap canned goods, cancel netflix, and slowing down repayment of your parent's debt and getting them the cheap diapers and only absolutely necessary meds (austerity option) Applying moral of the story: If Spain doesn't go through bankruptcy, (or severe, short-term austerity) it's keeping the 30h work week while the parents are still saddled with huge debts while also trying to maintain the lifestyle that it could maintain working 40h weeks. So the less Spain spends today and tomorrow, the less it has to tax today and tomorrow. The above is all for illustrative purposes. Would seem to me that it would been even harder to get credit flowing once all your previous creditors have been wiped out. For sure, no one will be keen on buying 30-year government bonds. This is a huge problem for the credit markets. We've seen some mixed results in Iceland, though. But a larger economy like Spains? Might not fare as well.

dade_ 13y ago

It's called bankruptcy. I'd get on it. Austerity is going to start civil wars at this rate. Oh yeah, and next time, don't bail out banks run by sociopaths.

barking 13y ago
This week the Irish government who now unwillingly own a huge chunk of bank of Ireland said it could do nothing about the chief executive's generous salary. This despite further losses at the bank. Meanwhile further cuts in the rest of the economy.
- AnthonyMouse 13y ago
  The executive compensation thing is a red herring. People keep talking about it because of the manifest unfairness of allowing these people to wreck the economy and still take home 100 times what their victims do, but reducing their compensation wouldn't bring back any jobs. The problem is that a million dollars is a huge amount of money for an individual and a drop in the ocean for a government or a bank. Taking the money from them to try to undo what they've done wouldn't make the slightest dent, so all it would do is to punish them. And if that's what you're after then stop with pussyfooting around and just put them in prison already.
  - barking 13y ago
    There's a perception amongst the 'ordinary' people that those at the top scratch one anothers backs. The government spin is that we're all in this together but the reality seems to be different. It's not surprising when you see how politicians when they retire often go on to get directorships at banks. Or how in the case of our most toxic bank, the chief executive apparently used to personally handle loans to politicians and other influential people. Politicians have talked the talk but when it has come to punishing those responsible nothing happens. Constitutional property rights are cited. They'd love to do something but their hands are tied or it would spook the markets or to paraphrase you the effect would be negligible so let's not bother. Much more would be raised by milking the masses some more.
  - 13y ago

yekko 13y ago

Nothing a little austerity can't fix, right? Time to fire more government workers.

seanmcdirmid 13y ago
Yes! At this point, taking more money out of the economy will increase economic activity...no...wait...I'm with Keynes that this is the wrong thing to do.

raheemm 13y ago

It seems Iceland was in worse shape than Spain but they have managed to resolve their issues by revaluing their currency (similar to declaring bankruptcy?). Why is Spain not able to do the same? I'm guessing it's because they are part of the EU and do not have their own currency?

jiggy2011 13y ago
10 points! Iceland is also a lot smaller than Spain.
- mynameishere 13y ago
  Pretty much. Iceland is about the same size as Stockton, CA, which is currently in Chapter 9 (IIRC). Iceland isn't all that much more important than a smallish US city.
graeme 13y ago
That's a large part of it. Spain can't devalue it's currency easily, or get rid of their debt. Europe won't let them default and stay in. They'd basically have to leave the Euro to do what Iceland did. And that would be complicated.
- return0 13y ago
  What's happening now is actually more complicated. The economies of the south are never going to take off with measures that are planned by a committee of 3 world institutions. The more the south sticks to the euro, the more complicated it's going to get. There is a good chance that a 'southern euro' might actually work, as the southern economies are all in similarly bad shape and in need of stimulus.
Herbert2 13y ago
I'd purposely avoid drawing any lessons from Iceland. We have the world's smallest independent currency and devaluation cut our purchasing power in half.

lolcraft 13y ago

I don't know why journalists, when writing about economics, invariably pick the least adequate people to be interviewed. Some time ago, there was a feature about unemployment for college graduates in the US... which talked about a woman with a dance degree. Now it's about a fucking cani [1] whose major accomplishment in life is pasting some rubber and metal together, earning 1200 undeserved euros a month. Before that, he did the same thing, earning 2500€ -- that ridiculous salary is the reason his Social Security benefits are so high. For comparison, many engineers here consider themselves lucky for earning 1000€/month. What I find missing is how entrepreneur-social culture in Spain is, basically, the least funny joke you'll hear in all Europe. 23.3% of GDP are black market operations. The European country with highest quantity of 500€ banknotes per briefcase. 10% unemployment for workers with tertiary education. Esperanza Aguirre wanting to exile the poor from Madrid (it's a long story). Widespread, also not very covert, abuse from employers. That sort of thing. Fortunately, the country is sort of duct-taped together, so it all works fairly well in the end. Not at all as gloomy as pictured here. [1] Like a chav, but Spaniard.

auctiontheory 13y ago
What, pray tell, is a "chav"?
- tsotha 13y ago
  http://www.telegraph.co.uk/news/uknews/1478863/Cheltenham-ladies-and-the-chavs.html http://www.telegraph.co.uk/news/uknews/1478863/Cheltenham-la...
- martythemaniak 13y ago
  Ali G
- jiggy2011 13y ago
  As hilariously parodied by an amateur filmmaker. http://www.youtube.com/watch?v=BNaCHXrnr9U http://www.youtube.com/watch?v=BNaCHXrnr9U
- edderly 13y ago

superflit 13y ago

Why complain? The Economy is only taking a 'siesta' (nap).. These 'uptight' anglo-saxon coutries only think about work... (sarcasm)

anuraj 13y ago

Spain's problems are endemic; but most of Europe shows similar tendencies now - High level of entitlements, soaring deficits, lower cost efficiency and lumpen youth. Europe's post developmental problems need high level of innovation - but the youth do not seem particularly ready for it.

brianbreslin 13y ago

Semi off topic, but I'm going to Spain in June, anyone recommend anything startup related? People i should meet?

znq 13y ago
Check out http://barcelona.io http://barcelona.io or contact me at stefan@barcelona.io

pinaceae 13y ago

but if you actually go to spain, it does not look like somalia. nasty secret - all those unemployed? work anyhow, "black" as we say in austria - unofficial, tax free. 50% youth unemployment? if all that were real, there would be open war. yet bars, stadiums, beaches are full. the official economy is getting smaller, the unofficial one is growing. as long as there are illegal immigrants from africa working the fields in spain and not spanish people, the economy is not that bad. lies, damn lies and statistics.

guelo 13y ago

Tell the Germans to fuck off, leave the Euro, pull an Argentina, watch the new peso exchange drop to 1000 to 1 Euro, get a flood of French and Germans hunting for bargains, which generates jobs. But make customs treat these tourists like shit, just for a little passive aggressive revenge.

known 13y ago

http://www.lietaer.com/2010/03/the-worgl-experiment/ http://www.lietaer.com/2010/03/the-worgl-experiment/ will create millions of new jobs.

pfortuny 13y ago

I -Spaniard here living in Spain- tend not to believe those figures. Also: 1) Hiring is unbelievably costly due to Social Security. 2) Hence you tend to pay "in black". 3) People HAVE TO pay for the Soc Sec even though they do not earn enough for a living. At the very leas, 250 bucks per month whatever your earnings are. 4) We are spectacular liars at polls. Nobody in the black market will say he has a job. So a grain of salt is required. EDIT: although the outlook is really really bleak, there is no denying it.

forgottenpaswrd 13y ago
True. Americans can't understand it without traveling and living abroad. It is very easy for them to make business. Also, lot of people here are in "paro" subsidy earning 400euros a month and working in the black, 600 or 700 euros. There are also lots of other subsidies like PER witch is part of the "social net" that make Social Security so expensive(a millennial is earning more than 2000euros before taxes make it 1000). If they report they are working, they lose the subsidy.