Sovereign debt bubble thread

[The Larch]

Well, I can't really argue with you based on perceptions and anecdotal evidence, I can only argue based on the official statistics and those suggest that inflation was lower than ever and that purchasing power relative to the rest of the union rose. That's not to say what you write is not correct, but I have no way to refute you or even to comment on it because I don't actually know the situation in Spain.

I've found some figures from the Housing Office. They are about renting, which is relatively rare, and from 2010, when prices had gone down significantly in the renting market. But in essence they estimate housing costs as percentage of young people's income as going from 38% in Larchie's region to 48% in Balear Islands. Madrid and Cataluña, where many young people move to, were at 45%.

Maybe Larchie can add some other data or insight, since IIRC he has lived in Madrid.

That was a loooong time ago (2003-05). Things have changed a lot since then, as renting prices went down in the last few years, IIRC. Still, there's a reason why most young people share their homes with a couple of housemates at that point in life, and it's in order to meet rent.

[Sheilbh]

Well, Spain has got to be pretty comfy when compared to Orbanist Hungary.

Even if you're living in Hell it doesn't mean that everything outside of it is Paradise.

Yeah, but what if you're living in Hungary?

[Tamas]

Ok so we have Spaniards telling us how it is impossible to fire old pipple from jobs over there, and when I point out that aspect of their laws, I am being ridicoulous?

If it's so funny, then YOU tell me why it is that so many Spanish young people are unemployed, and jobs are still being created in India and China instead of there.

[The Larch]

Ok so we have Spaniards telling us how it is impossible to fire old pipple from jobs over there, and when I point out that aspect of their laws, I am being ridicoulous?

If it's so funny, then YOU tell me why it is that so many Spanish young people are unemployed, and jobs are still being created in India and China instead of there.

Obviously you only read what you want to read. It's very expensive to fire the small subset of workers in indefinite contracts, while the young workers get the sharp end of the stick with pitiful job security. Where's the leniency, confiness and welfare state, besides in your warped worldview?

[Sheilbh]

Ok so we have Spaniards telling us how it is impossible to fire old pipple from jobs over there, and when I point out that aspect of their laws, I am being ridicoulous?

If it's so funny, then YOU tell me why it is that so many Spanish young people are unemployed, and jobs are still being created in India and China instead of there.

But the trouble with too simply blaming the welfare state is that, for the most part, Northern Europe has a far, far larger and more comprehensive welfare state than Southern Europe.  I would take your point if the Netherlands, Finland, Germany and the Scandis were going through an economic and debt crisis.

[Tamas]

[Admiral Yi]

But the trouble with too simply blaming the welfare state is that, for the most part, Northern Europe has a far, far larger and more comprehensive welfare state than Southern Europe.  I would take your point if the Netherlands, Finland, Germany and the Scandis were going through an economic and debt crisis.

Tamas wasn't talking about the welfare state in general, he was talking about labor market rigidity.

[Ed Anger]

I'm enjoying the Greeks bowing up at the rest of Europe.

[Sheilbh]

Tamas wasn't talking about the welfare state in general, he was talking about labor market rigidity.

Which is a problem and may be helpful for the necessary reforms to get some growth again.

But the idea that the problems boil down to the decadent welfare states of Western Europe simply doesn't make sense when the countries that are growing in Europe have far stronger welfare states than the ones that aren't. 

[Admiral Yi]

Which is a problem and may be helpful for the necessary reforms to get some growth again.

But the idea that the problems boil down to the decadent welfare states of Western Europe simply doesn't make sense when the countries that are growing in Europe have far stronger welfare states than the ones that aren't.

Tamas wasn't talking about the welfare state in general, he was talking about labor market rigidity.

[Gups]

Which is a problem and may be helpful for the necessary reforms to get some growth again.

But the idea that the problems boil down to the decadent welfare states of Western Europe simply doesn't make sense when the countries that are growing in Europe have far stronger welfare states than the ones that aren't.

Tamas wasn't talking about the welfare state in general, he was talking about labor market rigidity.

Is this a closed loop or can anyone join in?

[Sheilbh]

Tamas wasn't talking about the welfare state in general, he was talking about labor market rigidity.

Doesnt many of these, at the end of the day, come down to two things:
-there really isn't as much need for workforce, comperatively, than in the past
-the lenient, comfy, and worker-friendly welfare states of western europe, like Spain, must compete with not only the Far East, but east euro EU-member shitholes as well? And skilled labor is accessible at these places, on a rising level.

How does Germany, the Netherlands, Sweden or Denmark fit into that?  They can compete fine. 

They've not got a two-tier labour system, but there's plenty of worker protection in those countries (largely through the huge unions who also deliver part of the welfare state) and they are far more lenient and comfy - the Southern European welfare state is incredibly weighted towards the retired.  So I'm not sure that's the sole issue that this all boils down to, no.

[Gups]

As I understand it, in Spain you are either on an indefinido contract (which makes it prohibitively expensive to fire you or make you redundant  if you've been there for any length of time) or you must be on a fixed term or temporary contract.

If that's right then it is extremely inflexible and very much a bar to hiring people on permanent contracts and must be at least partially responsible for why Spain had such a huge unemployment rate even when it was booming.

[Admiral Yi]

How does Germany, the Netherlands, Sweden or Denmark fit into that?  They can compete fine. 

They've not got a two-tier labour system, but there's plenty of worker protection in those countries (largely through the huge unions who also deliver part of the welfare state) and they are far more lenient and comfy - the Southern European welfare state is incredibly weighted towards the retired.  So I'm not sure that's the sole issue that this all boils down to, no.

I don't know the particulars, I can only discuss in the abstract.

Aspects of the welfare state that are tied to employment are a drag on competitiveness and hiring, whereas those that are funded out of general revenue are not.  If an employer has to provide X euros for pensions, Y euros for unemployment compensation, Z euros for maternity leave, etc, he's going to care and be aware of it when making hiring decisions.  Whereas if a state offers free university (it's not free, someone has to pay for it!!) and free healthcare not tied to employment it's not going to affect hiring decisions.

I though that was what Tamas was referring too, combined with the de facto impossibility of firing anyone.

[Iormlund]

As I understand it, in Spain you are either on an indefinido contract (which makes it prohibitively expensive to fire you or make you redundant  if you've been there for any length of time) or you must be on a fixed term or temporary contract.

If that's right then it is extremely inflexible and very much a bar to hiring people on permanent contracts and must be at least partially responsible for why Spain had such a huge unemployment rate even when it was booming.

Yes that's it. About 7% of contracts signed are indefinidos.


In any case, there are a couple factors I think are at least as important if not more than rigid labour laws:
I think Larchie posted it here some time ago, that the number of skilled employees has actually gone up since the crisis began. While it is true that this group is more likely to be under an indefinite contract and thus more protected, the truth is many < 40 yo are not really insiders since unlike our parents we hop around a lot (I've only been 5 years at my current job for example so I'm pretty cheap to let go).
So that brings us to one of the main reasons behind unemployment in Spain: lack of proper education. The number of vocational trained workers is especially scarce. And that's something that's not going to be fixed anytime soon. It also explains fairly well why all that money from cheap loans went into real state. There was just no skilled workforce to work in anything else. And it eventually created a feedback, with young men dropping out to work construction because of the lure of inflated salaries there.

Another big factor is that we like to own. A lot. Less than 20% of homes are rented. That ties people out of job opportunities and makes them more averse to risk. It is, by the way, also common in some of the other troubled economies.