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3/11/2008

Economic situation of Spain.

Lately I have been thinking if this article would have to write or no, but I on the contrary who the politicians I believe that people must know as the events can evolve if we do not do anything.

Until now, the Spanish economy has been based on:

  • Industry Automobile. The exports of automobiles suppose 25% of total, being Spain 8º producing world-wide.
  • Construction. It supposes 18% of the GDP, as much as the total of Investment of EE.UU., but with the particularitity of which the residential construction is not a productive good.
  • Tourism. Spain is 2º more tourist country of the world. In if it is not a disadvantage but on the contrary, the problem is that in the present situation of crisis, this source of income (exports of services) can be seen damaged.
  • Use Civil service. They suppose more than three million people. In 1977 there were 700,000 civil servants in Spain, is certain that the population has increased, but so that they have served the computers. It is not necessary to blame them to them, but to who it has generated those positions in some “nonproductive? cases.
  • Financial system. The banks and savings banks have an important weight in the system, as example nº of offices by each 10,000 inhabitants is of 9.5, whereas in the rest of developed countries he is right in half 4,5.

Other countries had their economic base in the machinery export (Germany) development of technological articles (Japan) innovation (EE.UU.), but we chose these. If we analyzed the composition of the GDP according to EUROSTAT of they 2007en base 100:

If we detachhed the Spanish GIP in numbers would be in million Euros and he bases 100:

Analyzing the data we paid attention to four points:

  1. We have the Trade balance (Export. - Import.) more decompensated. In addition in 2008 it seems that the forecasts are even worse. We buy to the outside a 6.6% more than we sell. In order to pay that excess of imports, we must borrow that money to other countries, means that we get into debt ourselves. This is not something that sells of now indeed, has been taken place every year until reaching a national indebtedness of the 150% of the GIP.
  2. Since that indebtedness has taken place. It is certain that the Spanish Government has a low indebtedness as far as emitted national debt, but Spain has get into debt itself through its financial organizations that requested money outside and they lent soon it in Spain, but well that money was given. The Bank of Spain determines percentage of financing that do not have to exceed, they do if it, the organizations must equip more provisions. These are: If a lot finances 40% of the value of appraisal, if a 60% are an industrial ship and if 80% are a house.
  3. To this they have destined it money to lend it to promoters to buy grounds and soon to construct houses, but they have followed the percentage recommended? All we know that the 100% of the acquisition of houses financed but also in ships and lots the limits were exceeded.
  4. The Gross Formation of Capital is a 10% superior to the rest of countries. Here the investment takes shelter and within her it is all the construction that financed with money of outside. For that reason the construction weighs in Spain a 18% almost as much as all the Gross Formation of Capital of the other countries. As that 18% in construction are unreal, the Construction is going away to reduce. If we reduce the construction inscription so that the Gross Formation of Capital represents 21% (average of the EU) the numbers they would be:

Parón in the construction has a double negative effect: to the intensive being in manpower, it increases unemployment and when reducing the GIP, causes that the Trade balance is still more negative and we need that the outside gives money still more to us.

The crisis of present liquidity causes that the possibility does not exist of requesting financing to the outside, but this is a problem that sooner or later it had to arrive, one cannot be get into debt until the infinite. A country is still like our familiar economy, if we spent more than we entered we get into debt ourselves vice versa (negative trade balance) and. We are going to see since it has been the evolution of the facts and as they would have to be developed in the future:

  1. Spain has bought itself/constructed muchíiiisimas houses and for that it has requested muchíiiiisimas mortgages to other countries, that have given us the money. The banks and savings banks requested the money in the outside and they later gave to Spanish promoters and citizens who subrogated themselves.
  2. Now we were whereupon we must pay those “mortgages? but to pay it is necessary them to have money and as the money is obtained? …
  3. Then easy, spending less and winning more.
    1. How is spent less? Then tightening all the belt, politicians, civil servants, employees, industralists to us. What he cannot be is that all we want that they raise us pay, that the politicians rise the allocation, that are 18 ministries of health and education (power station and one by each Independent Community), etc. One is not to stop consuming, but consuming what we needed. Especially important he would be to reduce the imports since they are the base than we must pay.
    2. How gains more money? This point is more difficult because it is not obtained overnight. To turn Spain into a productive country requires formation, structure and a cultural change to want to be used to want to be industralist., but nonindustralist of the construction, but an industralist who dedicates themselves to develop heavy machinery, technology, investigation,… In this point it is necessary to indicate a sector in we have done that it well, are the renewable energies, this would have to be an action model. Also we must in the last fight against the loss of competitiveness of Spain years that take shelter in the following graph.

As it is more difficult to win more than to spend less, which first we would have to do is to save, from the administrations to the people, is certain that if we stopped buying plasma televisions the employees of the store can remain without work, but also we will matter (we will spend) less

If we did not spend less and we gained more, to Spain it will pass like a somebody to him that wants to maintain its standard of life when it requests a mortgage or that it remains in unemployment having one, we will not be able to pay and then that usually happens? that the bank obstructs to us.

 

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