Sovereign debt bubble thread

[DGuller]

How is Spanish GDP not utterly tanking?  Were those unemployed people that useless?

[citizen k]

How is Spanish GDP not utterly tanking?  Were those unemployed people that useless?

Are the GDP numbers to be trusted? Serious question for resident Spaniards.

[The Brain]

How is Spanish GDP not utterly tanking?  Were those unemployed people that useless?

Have you ever been to Spain?

[Iormlund]

How is Spanish GDP not utterly tanking?  Were those unemployed people that useless?

To a degree, yes. The work culture here emphasizes work-hours, rather than actual productivity.

In any case, the most affected sectors are inherently low-productivity, like construction. It would also make sense for the weakest companies to disappear first. In addition, with unemployment rampant and firing being much cheaper, bosses can now easily ask for overtime without pay from the remaining employees.

Finally, there's been a huge boost to exports since the crisis started, led by larger, more productive businesses.

[Admiral Yi]

To a degree, yes. The work culture here emphasizes work-hours, rather than actual productivity.

Like the Japanese service sector.

Finally, there's been a huge boost to exports since the crisis started, led by larger, more productive businesses.

Exports still count towards GDP.

[MadImmortalMan]

http://www.econclubny.org/events/Transcript_VolckerMay2013.pdf


Volcker: Effects of QE are "limited and diminishing". Pushing on a string. We should end the dual mandate.

[citizen k]

Spain's obsession with high-speed trains runs into budget reality

(Reuters) - A one-track dirt road used by local farmers is the main access to a magnificent glass-and-steel train station in the small city of Villena, on Spain's latest high-speed rail route.

It is a spanking new 4,500 square meter building - essentially in the middle of nowhere.

The central government financed the rail route, inaugurated on Monday, between Madrid and Alicante on the Costa Blanca. The Valencia regional government was supposed to fund works to connect it to the nearby motorway and Villena, home to 35,000.

But it ran out of money, leaving the station high and dry.

The disconnect says a lot about both Spain and its current finances, about a love affair with grand projects to showcase its modernity and a diminishing ability to pay for them.

The Valencia government has pledged to complete the works but it is now not clear when and where it will be able to find the funds as it is already cutting spending on schools and hospitals as it tries to reduce a deficit.

Ximo Puig, the head of the Socialist opposition in Valencia, says the station is likely to become yet another white elephant in a country where dozens of airports, train stations, motorways or cultural centers built during a decade-long property boom are under-used or have been abandoned.

"The new route was a much needed infrastructure but there was a lot of improvisation and a complete lack of planning and it could all come to nothing, starting with Villena," he told Reuters in a telephone interview on Monday.

Spain has been in and out of recession since its credit-driven expansion ended abruptly in 2008, pushing millions into unemployment and putting the country on the brink of requesting an international bailout.

In order to meet tough Europe-agreed deficit targets, Spain has pledged to reform its administration, its public pensions scheme, its tax system and its energy sector among a list of close to 100 reforms it committed to implement by 2015.

One thing it will not cut, however, is its plan to add more fast trains - called AVE, the initials for high-speed in Spanish and also meaning "bird" - to what is already the second-biggest high-speed network in the world after China.

MORE TRAINS

Far from scaling down the previous Socialist government's plans, the center-right administration of Prime Minister Mariano Rajoy intends to invest more than 25 billion euros over the next decade to almost double the existing 3,100-kilometers network to reach regions such as the Basque Country, Galicia or Murcia.

Rajoy, who rode the debut train service from Madrid to Alicante on Monday with Spain's Prince Felipe, said in a speech in Alicante that building AVE trains would remain a priority.

"Despite our budget woes, one of the objectives of the government is to stimulate investments that are truly productive so that they'll contribute to the shared objective of the government and the society: the economic recovery and job creation," he said.

Although Spain's train system as a whole loses money, most of its high-speed lines break even. However Spain earlier this month cut service on 41 routes, including some AVE lines, praised for their comfort and reliability but expensive to maintain.

Spain's government is drafting a law to reform the railway system and make it more sustainable.

On many routes, Spanish cities lack the critical size to make the system sustainable, partly explaining why the state-owned Renfe train operator and Adif station and rail company are losing money.

Renfe has a 5 billion-euro debt while Adif, rated as junk by Moody's investors service, has debt of more than 11 billion euros.

SPANIARDS ENTHUSIASM

The government aimed to avoid repeating previous mistakes on the Madrid-Alicante line by using second-hand trains and reducing the number of daily train journeys. But the 2-billion-euro project may struggle for profitability.

The biggest town on the route is Albacete with only 170,000 inhabitants and the cost of a ticket for a return trip between Madrid and Alicante on the coast - 125 euros - will be unaffordable for most Spaniards.

The official projection for passenger capacity on the route was raised by 40 percent to put it at 2.2 million people every year, twice the number of people who used the 50-minutes-slower existing train service in 2012.

AVE believers say that Spain's obsession for high-speed trains has helped Adif winning majors contracts abroad such as the one to build a high-speed train to Mecca in Saudi Arabia. It now plans to compete for other projects in Brazil and Russia.

But on board the opening train and at the unfinished stations along the route, there was little enthusiasm.

In Alicante, about 200 people staged a demonstration against the new infrastructure and no more than 50 people welcome the new train at the Villena station.

[CountDeMoney]

They are pretty trains, though.

[Iormlund]

There are a couple routes where AVE makes a lot of sense (like the original Seville-Madrid-Zaragoza-Barcelona). It is cheaper, faster, cleaner and more comfortable to jump into the train at your local station and step down at Atocha than going to the airport, passing security checks, checking in, flying, checking out, and taking a taxi downtown. Imagine travelling from downtown DC to Manhattan in less than two hours.

However, for regional politicians having a high-speed connection became a matter of prestige (like having an airport or university). Thus, all the useless lines (and airports and universities).

[Duque de Bragança]

The Greens in France are now against (high-speed) trains and use Hollande's floppyness and money shortage to get lots of projects cancelled. Including the important Bordeaux-Hendaye (Spanish border) at the European level linking at last on international gauge France with Spain via the Basque Country. A project criticised and attacked by ETA for Blut und Boden reasons not so far away from those given by the Greens, the ignorant, sometimes xenophobic and at least willingly obtuse local NIMBY folks.

Of course, having congested national roads and motorways or planes for short trips does not seem to bother them.
Saying the traffic predictions are always optimistic is one thing but what they do not seem to know is the link is international gauge which would allow Iberian freight trains to access the European market. Something limited to links with Iberia which never happened before when linking the French high-speed railway system with Germany, Belgium, Switzerland, Italy or even the UK.
Not all goods and people can go through Figueres/Figueras (Catalonia)...

First they say there's not more room to expand the local railway from 2-track then 4-track, and insist on a detour to avoid the Landes natural zone (acceptable) then they complain about the detour since it will mean more km and less time gain 
Of course, they seem to ignore than having multiple train types e.g local trains, freight, intercity and TGVs with different speeds on the same line does not work wonders as in saturating it. But then one cannot expect much from peasants not exactly known for travelling or interesting to things beyond their villages...
Blame it on Das Kapital, the public works lobby, the Parisians bourgeois (all of them are of course?!) and voilà.

The last part of the current link is so crappy that for 90 km (Dax-Hendaye) it takes more an hour and a half now for the TGV to cross it but that does not bother them. Some of it is linked to works on the track but still...

Last thing, the last part of the proposed track was a mixed freight/passenger train devised for speeds around 220 kph (à la Figueres/Perpignan) so the bobo leftist criticism about the TGV being for the bourgeoisie only is way off.

/rant over

PS : seems the Spanish mixed high-speed rail link between San Sebastian and Hendaye is cancelled, one the critical high-speed train projects 

[Crazy_Ivan80]

High-speed trains make much sense, but not if you do it à la belge: HS trains from Ostend to Brussels (ridiculous) and from Liège to Brussels (also ridiculous) as in both cases the distances are so short that the train can't be used efficiently, nor do the trains ride with many passengers (sometimes less than 10). result: millions of euros wasted

[Valmy]

No, she knifed all of them in the back.

I guess if they needed a successor right now it would be Ursula von der Leyen.

I know this is a weird thing to notice on a politician's wiki but holy crap she has seven kids?  Nobody can accuse her of not doing her part in combatting the German demographic decline.

[Syt]

No, she knifed all of them in the back.

I guess if they needed a successor right now it would be Ursula von der Leyen.

I know this is a weird thing to notice on a politician's wiki but holy crap she has seven kids?  Nobody can accuse her of not doing her part in combatting the German demographic decline.

Yep. And she was held up as a model for how family and career are both possible together. Never mind that she can probably afford a live-in nanny, unlike most people.

[Ed Anger]

No, she knifed all of them in the back.

I guess if they needed a successor right now it would be Ursula von der Leyen.

I know this is a weird thing to notice on a politician's wiki but holy crap she has seven kids?  Nobody can accuse her of not doing her part in combatting the German demographic decline.

And what is wrong with that young man? I note a hint of disapproval in your post.

[Valmy]

And what is wrong with that young man? I note a hint of disapproval in your post.

I do not disapprove, I am rather just amazed.  I did not think Euros did that sort of thing anymore.