When Less is a Whole Lot More

Why the Spanish May be Better Off Without a Government

The state’s most important economic role is to get out of the way

James Bartholomew
The Spectator

On 26 October last year, the Spanish government shut up shop in preparation for a general election. This duly took place in December but then a strange thing happened: after all the build-up, the arguments, the posters and the television coverage, the result was… nothing. The various parties were so balanced, so mutually distrustful and ill-assorted that no government could be formed. Since last October, therefore, there has been no government in Spain.

One can imagine that the average political correspondent would think this a terrible problem, maybe even a crisis. The Financial Times has referred to Spain ‘enduring’ months of ‘political uncertainty’. This is assumed to be a matter requiring furrowed brows and grave tones. But the economy seems to be taking a different view of the matter. It is bowling along more breezily than in a long time. The growth rate during the final quarter of last year was an annualised 2.9 per cent, which, in these days of dismal Euro-growth, is a star performance — easily beating the pants off Italy, France and even Germany.

The improvement has continued this year. Unemployment has fallen month after month and is now down to 20.4 per cent which, though awful, is an improvement on a year ago when it was 23.2 per cent. That is a much better showing than in most EU countries.

Letter From the UK (About Spain)

The European Disease Virulent in Spain

The systemic corruption now coming to light within the Spanish banking system is breathtaking.  But, as is always the case, such large scale, systemic graft and corruption can only exist and (temporarily) flourish if the state and politicians run interference and cover. 

Doubtless the ignorant critics will decry the evils of capitalism.  They will call for more social controls and political direction, declaiming capitalism (or the economic system based upon the rights of private property) as hopeless flawed due its spawning greed and exploitation.  The reality is that the "capitalism" of Spain (and the West in general these days) is not free market or private property based.  It is crony capitalism, where the political authorities and the government act as patrons of favoured businesses and certain monied barons who pay. 

The Guardian exposes just how corrupt the Spanish banking system has become.

Letter From the UK (about Spain)

A Cautionary Tale

Debt Fuelled Boom Ends in Spectacular Bust

The abridged article below illustrates why some large Spanish banks are under such stress.

Spanish property: Polaris golf resort homes crash to a third of original price

The Guardian

They were once Europe's most ambitious holiday homes projects, vast developments financed by supersized loans from Spain's cajas and banks. The properties were widely advertised on television in the UK to entice investors chasing the good life in the sun and hoping to profit from the property boom.

But five years on, the Polaris World holiday dream of sun-drenched apartments overlooking golf courses designed by Jack Nicklaus has turned sour. Apartments that once sold for €200,000 (£160,000) are struggling to fetch €60,000. The last resorts built are now ghost villages.

Welcome to Murcia, the very heart of Spain's property boom and bust, where repossessions are sweeping the region and where losses are straining balance sheets of almost every Spanish bank.