Spain started facing economic troubles since 2008 global crisis. Financial crisis caused a huge crash in the property market and significant losses at its banks. These days Spain’s citizens take part in polls in Galicia and Basque regions. Galicia’s PM Mariano Rajoy lost part of national support due to his austerity measures. Basque country’s Socialist Party met opposite influence from Basque Nationalist Party. Unemployment rate in Spain grew to 25% in some regions like Galicia since the crisis began. Spain has already asked for some contribution from Swiss banks. They received 100 billion euro for covering its financial sector. (2012, SPANISH PM MARIANO RAJOY FACES KEY VOTE IN GALICIA)
Spain’s economy grew before 2008; then country faced the recession. When Spain joined euro, house prices rose 44% from 2004 to 2008. Economy grew by 3.7% each year before 2008, but then it stopped on 1% annual growth. Spain’s government faced big problems with the highest unemployment rate in Europe and with high prices on property.
Spain’s 17 regional governments collected large debts. During the boom period they spent money on new infrastructure. For example in Valencia it was built a new airport. The situation got worse when Catalonia protesters citizens went together for a protest march. Total debt for country’s regions is 36 billion euro this year. Most banks in country face difficulties because of high-living in the boom years. After the boom, borrowers struggled with making repayments to bank. Banks made situation more difficult when they borrowed money from international markets. That’s why most of the banks met huge losses.
Over the past generation, more progress has been made in reducing poverty and raising living standards than during any other period in history. In developing countries, life expect ances have increased from 55 to 64 years, Income per person has doubled and Infant Mortality has been reduced by 50 percent. Despite the successes, massive development challenges remain. Three billion people live on ...
Spain’s recession is deep and it means that the government will receive less in taxes and pay more out in benefits. Actions taken nowadays Many of Spain’s small banks were refused to merge or they were rescued by larger ones. So country will be able to borrow up to 100 billion euro. But unlike previous European cases like Greece and Italy; Spain will borrow money from the European Financial Stability Facility and the European Stability Mechanism. Greece and Italy were supported by International Monetary Fund. An independent audit counted that country’s banks will need 59.3 billion euro to handle the situation. (2012, EUROZONE CRISIS EXPLAINED)
On 12th of December Spain asked for eurozone’s financial help for 37 billion euro. Of this amount, 17.96 billion recieved by a group BFA-Bankia, 9,08 billion – Catalunya Banc, 5,425 billion – Novagalicia and 4.5 billion – the Bank of Valencia. On November 28th the European Commission approved the restructuring plans of the nationalized banks. The next day, November 29th, signed an agreement on financial aid, which combines all the documents that establish the specific conditions and terms of Spain’s finances from the European stabilization mechanism. However, Brussels asked the Spanish government to continue the policy of spending cuts and reforms, and proposed to limit the application of the reduced rate of VAT to raise the tax on fuel and labor reform to continue with the reduction of wages.
Last Wednesday, the European Commission required the four nationalized banks significantly reduce costs, close some offices and cut staff. In addition, banks have pledged to cut bonuses for their leaders. EU Commissioner for competition policy Joaquín Almunia said that on December 20 will be approved the next phase of restructuring. This time he touches the banks of Mare Nostrum, Banco Caja 3, Liberbank and Ceiss. Almunia did not specify what exactly the amount they need. (2012, SPAIN’S SHRINKING BANKS SET FOR MORE MERGERS)
Throughout the years from 1500 to the early twentieth century the world saw many examples of European expansion. Many European countries shared the same motives for expansion while others were interested in it for different reasons. The main motive for expansion shared by most European countries was economic prosperity. Great Britain, the Netherlands and Spain were the main leaders in the ...
The level of investor confidence in Spain rose again – 14 months after the withdrawal of funds from the country in September was recorded inflows of $ 30 billion. Corresponding data were obtained at the balance sheet, which provides the Bank of Spain. For the first time since June 2011, he tested positive in direct investments, stocks, bonds, etc. A year ago, recorded a capital outflow of almost 8 billion euro. (2012, SPAIN BEMOANS RECORD FLIGHT OF INVESTORS)
Representatives of the International Monetary Fund said that Spain will come out of the recession in 2014, with GDP growth rates of 1%, the country’s news agencies reported. By 2015, this figure could reach 1.6%. These data were included in a report on the process of financial sector reforms in Spain and confirm the government’s projections, which put the figure at 1.2% and 1.9% respectively. IMF calls the current situation “difficult.” According to representatives of the organization, it could trigger a reduction of 1.3% of GDP in 2013. However, they said, since last summer, the situation has improved – especially in the area of reform of the financial system and because of the actions of the European Central Bank.
Among the disadvantages faced by the country, the IMF calls the collapse of the “bubble” in the housing market, high debt levels in the population, the tightening of credit conditions, fiscal consolidation and the uncertainty caused by the banking and debt crisis. “The reduction of GDP in 2013 due to a decrease in domestic demand was only partially offset by export” – explains the IMF. Also, as expected, in 2013 unemployment will peak at 25.1% and will gradually decline to 24.1% in 2014 and to 23.2% in 2015. (2012, SPANISH RECESSION TO LAST UNTIL 2014, IMF WARNS)
The head of the Bank of Spain, Luis Maria Linda said that the beginning of economic recovery will occur in 2013, provided that the country fulfills its promise in the tax area. According to the head of the Central Bank, quoted by the Spanish news agency, by mid-2013, the process of restructuring of the financial system in Spain would be, if not completely finished, but at least “start to move in the right direction.” (2012, LINDE SAYS SPAIN MAY MISS DEFICIT GOAL, OPTIMISTIC ON GROWTH)
Korean economic crisis: The intervened Banking system This paper is divided into 2 parts. The first part seeks to validate that government intervention on the banking system in Korea as a primary cause for the collapse of the economy in 1997; the second part examines the intent and rationale behind the intervention. Causes for the collapse of the Korean economy Currency crisis is commonly cited as ...
Spanish Prime Minister Mariano Rajoy said in November that in 2014 the economy will go into growth. Rajoy told about measures to reduce costs, taken by his government. “Our measures hurt people, they were difficult to treat with understanding,” – he admitted. However, they are “indispensable,” added the Spanish prime minister. The Prime Minister said that “the worst is over” and his team laid the foundation for long-term growth, which will come in two years. Among the relevant measures referred to Rajoy last offer made by the Secretary of State for Trade, Garcia-Legas for issuing residence permits to foreigners who buy more expensive housing 160 thousand euros. “We need to sell these housing,” – said the prime minister and said that it should be done “at reasonable prices”, not “disproportionate cost of previous years.” (2012, RAJOY SAYS AUSTERITY PROGRAMME IS HARD ON MANY BUT DECISIVE)
European stabilization mechanism is a stabilization fund; launched in October – in the future to replace the European Financial Stability Facility. Its size is about 500 billion euro. The purpose of the mechanism – the creation of “financial protection against overloads function”: instead of being allowed to financial contagion, the protection mechanism will secure the position of other countries and the banking system by providing guarantees for individual or all debt obligations. After the distribution of the financial chain reaction is stopped, it will be possible to assist the country, unable to meet their obligations. (2012, EUROPEAN STABILITY MECHANISM)
Economy mode vs. Investments
Some economists criticized the austerity measures implemented by most European countries to exit the debt crisis. Some experts argue that such a dramatic return to “non-Keynesian” financial policies is not a viable solution and predict the deflationary monetary policies imposed by countries such as Spain, can lead to longer and more severe economic downturn. The study, undertaken in 2003 by an independent department to assess the effectiveness of the IMF, an analysis of 133 austerity programs initiated by the IMF, which found that the developers of these programs systematically underestimate catastrophic impact hard to reduce the cost of economic growth. Cost-cutting measures, which came into effect in a number of countries, “remain small compared to the scale of their economic problems, and comprehensive structural reforms are extremely rare.” In most cases, the reduction was accompanied by a significant increase in government spending of tax burden. (2012, EUROPE IS IN DIRE NEED OF LAZY SPENDTHRIFTS)
It is no doubt that the world has over the last decade an alarming increase in the number of overweight people. Such have been closely attributed to the increase in the rate of intake of high fat and low nutrition foods and beverages. The American nation in particular has declared its highly increasing incidences of obesity among its citizens to be an epidemic. Statistical evidence has revealed ...
When crisis struck Spain; its government used Keynesian model to overcome the crisis. It means that government spent 8 billion euro for investments on infrastructure of the country (roads, railways etc).
It had to create a lot of new jobs. This helped only small part of people and on a short period of time. Keynesian model is good on theory but it has to be handled well on practice. If the government could do the process better instead of just pushing the money into different districts; it could’ve helped Spain to handle the crisis. (KLAS FREGERT & LARS JONUNG, 2010, P287-303) Saving mode can be a successful tool to overcome the crisis only if it is based primarily on reducing government spending and at the same time promoting the “private investment and venture enterprises, increase mobility and flexibility of the labor force, the termination of price controls, the introduction of tax rates, makes it profitable to attract capital … “, as it was done in Germany in the decade before the crisis, rather than increasing the tax burden on the population.
Regardless of the debate about what kind of macroeconomic policies will enable countries to get out of the debt crisis (austerity, increasing or maintaining the same level of public expenditure), be aware that the consequences of actions of economists, investors, bankers and government mistakes in economic policy affect the position of the working population, and not the real perpetrators (as claimed by union representatives throughout Europe).
After the global economic crisis in 2007-2010; More than 23 million workers have lost their jobs, many experts began to call for the introduction of additional measures of bank regulation, not only in Europe but around the world. (2012, EUROPEAN CITIES HIT BY ANTI-AUSTERITY PROTESTS)
Our Government Government today is a lot different then the government that was created by our founding fathers. When they sat down to sign the declaration of independence, I wonder what they would have thought of our country as it exists today. The government has become an uncontrollable beast much like the government those heroes gave their lives to escape. One of the key reasons this nation was ...
Private ways to improve economy
* Increase taxes on tourism:
Tourist business in Spain is closely linked with the economy of the country. This means the creation of more jobs, and large amounts of foreign currency, continuously arriving in the government budget. Particular attention is paid to the Spanish resort areas of environmental ecology. There are certain restrictions on the movement of road transport, trees are grown at new parks, the beaches and streets of coastal towns are constantly exposed to thoroughly clean. Old resorts in Spain are converted in accordance with the new trends, such as Benidorm and Torremolinos. In summary, all this presents Spain as the world’s potential biggest tourist state. There are also negative features of the Spanish outbound tourism, among which – pronounced seasonality of tourist flows (Spain, despite its immense potential for cognitive organization, event, or even ski tours perceived as more than 70% of Europeans as a country of beach holiday).
Spain is the world’s 2nd country (after US) in tourism business sector. It attracts tourists from Europe and all around the world more and more every year. Tourists’ growth annual index is 5%. This industry generated 16% of country’s GDP in 2011. Government has to focus on this sector and improve fit. Government has to attract more foreign investors to develop country’s tourism, because Spain is one of the largest countries in Europe. And it has lots of place to visit, except beaches and islands: Catalunya, Madrid, Mountains, Camping, Historical cities and places.
The development of this sector will partially resolve the high unemployment rate as new jobs would be created after new resorts, hotels would be created. Nowadays for most of Europeans Spain is like a summer 10-14 day holiday country with beaches. So most of south and coast hotels workers are being unemployed most part of the year. This situation can be resolved if country improve and develop their tourism industry. France could be an example for doing tourism business well; with their cities, beaches, mountain resorts, historical guide travels around the country. (2012, CAN SPAIN’S TOURISM INDUSTRY SURVIVE A TAX RISE)
Chile In this project we are going to summarize the main points concerning the history of CHILE, its independence, and bring the country to present day CHILE. We are also going to mention some important facts about CHILE'S economy. I. COLONIZATION PERIOD CHILE is a country located in the wester coast of South America, on the Pacific Ocean. It is known for the famous Andes Mountain Range that ...
* Increase taxes for visa and citizenship policy:
As Spain receives tourists more and more every year and attracts investors due to cheap apartments; government could increase taxes for visa and for citizenship. Increase of fees will increase government budget. This may influence government to regret from their austerity measures. And the nation would stop protesting and taking part in strikes.
* Improve car manufacturing industry:
Nowadays Spain has only one national major car manufacturer – Seat. It is a part of the Audi Brand Group, division of concern VAG. The company’s headquarter is located in Barcelona. Automobile industry contributes 5.6% into country’s GDP. The largest production of cars in Spain are: brand «Renault» – more than 455 thousand cars per year, as well as «Ford», «Opel» and «Peugeot» – 374, 370 and 369 thousand vehicles per year, respectively. National brand «Seat» also a large share in the total Spanish automobile industry: in 2003, it produced about 424 thousand cars of this brand. As we can see national brand “Seat” is not as popular as French Renault and Peugeot, German Opel and American Ford. Car imports accounts for 8.9% of total imports of goods and services by Spain, but it could be more if “Seat” brand would be more respectable and recognizable across Europe as French and German cars. (2012, AUTOMOTIVE MANUFACTURING INDUSTRY)
According to these figures, “Seat” and Audi top-management can start organization development in the firm. They need a large process of rebranding, implementing new technologies and producing new car models; that would be exported to eurozone countries. “Seat” needs to request for investments from Audi, because it’s a part of it, just like Volkswagen. French car manufacturers did the same before with their Renault and Peugeot, which are well known all around the world. This initiative could create a lot of jobs and partially would resolve the unemployment problem in country. Spanish government can help “Seat” with their new business plan as it may improve whole country’s economy. Government can reduce taxes and fees for “Seat” on their export, so that their cars would not be more expensive than French or German. Also “Seat” can start producing cars in CIS region, like their Japanese and Korean colleagues did it: Toyota, Hyundai, Mazda. All these actions lead to big revenue for Spanish economy, but it can be supposed only in a long-term process.
* Increase tax for real estate for foreigners
Nowadays Spain attracts foreign businessmen and investors to start their business in the country or to buy a flat/house/villa. Spanish government could increase the fees and taxes for real estate only for non-citizens of country. Houses/offices/apartments’ cost rapidly fell down after the crisis, the demand of foreigners for the estate increased. But even if government raises taxes, they will not lose much of investors because the real estate sector is now inelastic in Spain. Price goes 5x times up, but quantity will not fall on 5x time (Elasticity Law).
This will create the big revenue for government and will not force them to use austerity measures against people. In the result no government budget will be cut and people will start receive their money again. This will reduce or even neutralize all civil strikes.
2012, “Spanish PM Mariano Rajoy faces key vote in Galicia”, BBC, <http://www.bbc.co.uk/news/world-europe-20019669> 2012, “Eurozone crisis explained”, BBC, <http://www.bbc.co.uk/news/business-17549970> 2012, “Spain’s shrinking banks set for more mergers”, Reuters, < http://www.reuters.com/article/2012/10/26/us-spain-banks-idUSBRE89P0QH20121026 > 2012, “Spain bemoans record flight of investors”, DW, < http://www.dw.de/spain-bemoans-record-flight-of-investors/a-16212343-1 > 2012, “Spanish recession to last until 2014, IMF warns”, TheGuardian, <