Saturday, February 07, 2009

Looking at the crisis from Spain


“Courage is grace under pressure.”
Ernest Hemingway

David Seaton's News Links
The most significant thing about the financial crisis, up till now, is that it is universal.

Something with its origins in the US financial sector has hit the entire world economy and the numbers are horrible everywhere. Millions of people are suffering from the effects of an economic philosophy and ideology that was hatched in America's nest, just as those same millions enjoyed the economic boom that nest and philosophy produced, until the bubble burst.


For the first time in history we are all sailing in the same leaky boat.

Spain in no exception. Their wish to be a major player and to end the long isolation Franco brought upon them has been amply granted, for good and for bad.

I have known the country in austere and dignified poverty and as out of the world as Tibet and now, only a few years later, its banks are considered the best run in the world, its film directors and actors win Oscars, and Spanish athletes like, Miguel Indurain, Rafa Nadal, Pau Gasol and the European champion national soccer team have lifted the self confidence and self esteem of all the younger generations.

The Spanish people have taken full advantage of the opportunities a fortunate economic and political context have brought their way and now the best nourished and best educated young people in Spain's history will face a crisis which pales in comparison with what their much less educated and less well nourished grandparents faced with such fierce stoicism in the 1930s.

Spain is not a continental power like the United States with its huge population and endless natural resources, but neither is it Iceland or the Ukraine: Spain is being hit hard, very hard. However I would argue that Spain is a country, a society, that as they say in boxing, can take a punch. I have personally seen Spain take quite a few.

I have seen three really bad recessions here: at the end of the 70s after Franco's death, with double digit inflation, in the late 80s when 50 banks had to be nationalized and at the beginning of the 90s with unemployment as high as 24%... and life went on just the same. I was living entirely on the local economy by then and the good humored "grace under pressure" and lack of self-dramatization of the average Spanish person in times of economic catastrophe made the deepest of impressions on me.

Looking for the formula I came to this, not terribly original conclusion: the Spanish extended family is probably the country's greatest resource in troubled times.

The closest friends of most adult Spaniards I know are their brothers, sisters and cousins, closely followed by people they went to grade school through university with. This correlates with the extreme reluctance most Spanish men and especially their wives, have for moving to another town, even if there are better jobs waiting for them there, since this would mean losing their family social network. If you marry a Spanish girl you can go and work anywhere in the world as long as she can eat lunch with her mother and sisters at least twice a week.


This lack of work force mobility creates several percentage points of normal Spanish unemployment. That is the downside, the upside is the strength of the social fabric.

Spanish social life is an endless round of weddings, baptisms, first communions, pub crawls with friends and late dinners with lively conversation into the small hours over the ruins of a copious, well irrigated, meal. High consumption of hard goods and services adds to the charms of this existence based on eating and drinking with family and friends you've known since childhood, but cutting back on it all doesn't affect the basic underpinnings of this extended family life.

There is just as much pain as anywhere else in Spain when jobs are lost and payments fall behind or mortgages are foreclosed, but in Spain there are many shoulders to cry on and helping hands to turn to. And if you haven't lost your job you are supposed to help family, through the cousins by the dozens, that have.

If we add to this social fabric a modern, universal health system of socialized medicine, where no one, adult or child lacks for a free family doctor, hospitalization, pediatrician etc, even if unemployed, then it is obvious that the stress levels of a Spanish recession are very different from those in the states or even socially advanced northern Europe, where, like the states, nuclear families or single parent families are the rule.

In short people here are not alone for a minute of their lives and not afraid of getting ill, they are usually surrounded, practically suffocated, by their family and childhood friends. I imagine that not a few of my readers could get a little wistful thinking that proposition over.

So, summing up: this recession is going to be hard on everyone, everywhere, for a long time. The traditional Spanish family and social values were developed for hard times: Spain, through its history has rarely known any others. Coming into this universal mess, Spaniards are healthier, better nourished and better educated than they ever were before.

In a universal recession/depression, where there is nowhere to run to, nowhere to hide, there are a lot worse places to ride it out than Spain. DS

11 comments:

Anonymous said...

It's a global market, si, certo.

Obama's new stimulus program would be well served to remove provisions that scream 'protectionism'. We're all so connected, the american financial guys get it, now the american politicians need to get it, pronto.

Malta is doing well, housing prices still stagnate as the banks dont' loan much, ever, so credit ramifications don't mirror other countries, like Spain.

And Barcelona, like Berlin, did well to put their past where it might live best.

I think many would agree no one will suffer like the UK and the US, riding so high, and now, like Iceland, it's hittin hard, very.

My US consulting company, small though it is, got hit hard at Microsoft and I'm hearing from techie consultants I hadn't talked to for years saying 'please, find me a job in Seattle'...well, as I sit here in Paris, working with my contacts in Seattle, I'm tryin...

But I take exception to your comment about banking in Spain. We bank in Austria, Malta and Paris, with the few quid we have left and I doubt anyone in Europe would place Spain above, or rather, anywhere near Austria in banking competence.

Spain is similar to Italy and Malta in the family hanging out dept, yes, get that.

Nice to read you are so grateful to play host in that country. Bully and bravo for you.

Anonymous said...

I live in one of the early colonies {of Spain}. It is much the same here, but the health system is not so great. Like yourself, David, I expect the location to be a good place to ride out the next down decade. Additionally we have an all year growing season here and the Atlantic and the Caribbean to fish in. We've never had much employment anyway, so the alternative economy is highly developed here. We are, in essence, already collapse experienced. It's the norm.

David Seaton's Newslinks said...

Bailey.
Austria?
There are no Austrian banks that can compare in size and profitability with the Santander or BBVA or even Popular.

Anonymous said...

I was referring to 'competence', not size.

Popular is an association of banks, not just one.
And yes, Santander is the 2nd or 3rd largest in Europe, but that wasn't what I said, was it.

It's like the Swiss, they are small but manage 70% of the world's wealth and assets for a reason, they're simply more competent.

Hope you're not getting defensive about Spain in general...I often sense their resentment..Italy has exported their culture so much more successfully but it's not as if the olive oil is that much better in Italy or is it....; )

Anonymous said...

I believe I was talking about competence rather than size.

Popular is an association of banks and Santandar is the 2nd or 3rd largest in Europe.

It's like the Swiss, they manage 70% of the world's wealth for a reason; they're competent, but certainly not the largest.

David Seaton's Newslinks said...

When we talk about banks as components of a major economy, I think we mean their social function, not just their opaqueness in protecting tax-evasion. Spanish banking is retail banking and they are totally competent at taking care of people's, savings and supplying credit to families and business.
BTW: Banco Popular is run by the Opus Dei

Anonymous said...

We banked at the Popular @ their Riva del Garda branch. I didn't know about Opus Dei, not sure of the relevance but we're not going to rely upon the cliche that the Italians are 'so corrupt'...no, no, no, not with what I've seen front row center, mio marito owned a public company in the States. Now THAT was unethical behavior...we've not started over, privately, sensibly.

You have every right to defend Spanish banking, I'm sure it's great, although I think the tax evasion comment unnecessary. If I had any money I'd put it in an Austrian or Swiss bank only because I've had to set up shop in many countries and find them the most competent. Not because I wish to evade taxes.

That's why you have Austrian banking theories, but then, that's as unnecessary as my Spain/Italy comparison, isn't it, which you can delete, David, svp, as I was having problems posting last nite due to getting thrown offline...hence the newly written post without the 'snarky' comparison.



Olé!

David Seaton's Newslinks said...

Bailey,
No problemo.
All the best!

Marcy said...

Your post reminds me of my family history during The Great Depression; when times got tough family members went home to the farm in Massachusetts. Not many family farms to go home to now of course, one of the many ways we've sacrificed quality of life for a higher so-called standard of living?

Anonymous said...

Marcy, it isn't too late to start a new family farm. But choose a warm place. It is so much easier there.

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