MAKING SENSE -- June 8, 2012 at 2:58 PM EDT
In Spain, a Disturbing Lack of Confidence
Bank of Spain in Madrid. Photo by Dominique Faget/AFP/Getty Images.
Jose Antonio Martinez Soler had the longest name in our Nieman Fellowship class of 1976-77, the heartiest laugh and the most harrowing history, having been tortured by the Franco regime for his reporting, which you can read about here. ("Inside," he writes, "there is an English version.")
Soler has been a major newspaper writer and foreign and business editor at Spain's leading daily, El Pais, and a well-known television presenter on Spanish public television, forced out for political reasons, as covered by the New York Times and others. Most recently, he co-founded and ran the Spanish daily "20 Minutos" as CEO for 12 years. He now is a member of the board. His blog, in Spanish, is here.
He and Westley were also our hosts when we visited Spain two summers ago to report on the economic situation there. I had asked both of them to update us on the reign of pain. Here's Soler's response:
What is happening in Spain (I told you so) is much worse than what I thought a few years ago after the double crises: the financial one of the subprime mortgages, Lehman Brothers, etc. (which attacked almost all countries) and the implosion of the real estate bubble (which attacked Spain above all).
At right, Jose Antonio Martinez Soler talks to Paul Solman in Madrid.
It's a serious crisis but not as bad as what we suffered and overcame between 1975 and 1985, the decade that followed the death of dictator Francisco Franco. Back then we had to massively close down basic industries that emigrated to emerging countries (steelworks, shipyards, textiles, shoes, etc.) and a third of 150 banks, all of which raised unemployment to 23% of the active population. At the same time, in a feat of political juggling, we had to build the foundations of democracy, a word that was practically foreign in Spain. As the first Prime Minister of post Franco Democracy, Adolfo Suarez said, "we have to change all the plumbing without turning off the water."
We survived as the 10th largest economy of the world and as an example of peaceful transition from dictatorship to democracy. And we were not yet in the European Union. Now we have the same percentage of unemployed as in 1984 and, in addition, hundreds of thousands of empty houses and apartments. Do you remember our visit to the ghost empire of El Pocero? But there are also rural property lots -- toxic assets deceitfully and illegally valued as urban in the balances of banks and savings banks- that have carried almost half of the Spanish financial system to bankruptcy. Rural land with a value of x went into bank balances as a value of 100x, an overestimated end value of the property -- as if it had been developed, and at the highest of real estate boom values. The authorities -- politicians, bankers, officials at the Bank of Spain, all looked the other way.
In good times, the blanket of economic expansion usually hides vices and inefficiencies. The crisis pulls away the blanket and our disgraces are exposed: public wastefulness, nepotism, underground economy, corruption, welfare abuses, enormous tax evasion, injustices, impunity of white glove delinquency, etc.
In these troubled times, I perceive a huge disrespect for the political class - few young people consider working in politics as something honorable. And what I call the Index of Surrounding Corruption (ISC) has become now unbearable.
The macroeconomic data of the crisis are very well known (GNP falls, consumption sinks, public and private debt grow, public revenue falls, the deficit rises, the stock market plunges, interest rates to finance our debt surge, etc. etc.) That is, all the indicators seem set to favor the vicious circle of the recession.
However -- and although Spain is not Greece -- there is something different in this economic crisis that disturbs me: the deterioration of confidence in the democratic institutions that represent the powers of the State (Legislative, Executive, and Judicial).
We have horrific examples: the political parties finance themselves illegally -and with total impunity -- via generalized corruption in the real estate and banking sector; the conservative government has lost what little credibility it had as it is doing exactly the opposite of what it promised before the elections of November, 2011; judges are hyper politicized and partisan and rank the lowest in social esteem.
Grotesque and ridiculous situations take place: Carlos Divar, the president of the Supreme Court, has lost all prestige after his 22 trips, accompanied by an unknown "public official," (whom he appointed) to deluxe coastal hotels in Malaga and Cadiz (long weekends of Friday to Tuesday with poolside lunches and dinners dubbed "Carribbean weekends" by the press), all paid for by Spanish taxpayers.
The Prosecutor General, who is appointed by the government, not surprisingly dismissed charges of misconduct. Furthermore, the majority of the Council of Judicial Power, which Divar also presides over, predictably defeated calls for his resignation. The impunity of the sleazy Supreme Court President contrasts with the inquisitional persecution against Judge Baltasar Garzon (who ordered the arrest of General Pinochet of Chile, investigated post civil war crimes of "Generalissimo" Franco, and a network of corruption linked to the governing conservative Popular Party). Partisan members of the Council of Judicial Power, the institution that oversees judicial matters, disbarred Garzon from the judicial career on the basis of minutia type technicalities of procedure, routinely practiced by investigating magistrates.
Even the Monarchy -- which was very respected by all sectors of society after the king's role in thwarting the failed military coup of February 23, 1981 -- has lost its luster while the king kills elephants in Africa on a hunting safari and his son in law is indicted for embezzlement of public money. Not very edifying royal behavior.
The worst is unemployment among young people which is almost 50% and the consequential hemorrhage of well prepared young adults who are emigrating en masse to other countries. This is what happens with migratory movements -- the best, the brightest, the most enterprising -- go abroad. I have two of my three children working and living in the United States (Erik in Hollywood and David in Santa Fe). Fortunately my daughter Andrea has a good job in her field in Spain.
I do not like the resurgence of nationalism (especially, again, German nationalism) and the abundance of mediocre European leaders. Also on the rise are quasi racists attacks against the "PIIGS" (Portugal, Italy, Ireland, Greece and Spain) -- all under suspicion for being lazy, profligate spendthrifts.
The worst is that, after what happened not so long ago with the former Yugoslavia, I don't see a future of peace in Europe very clearly. The first great crisis of the euro (the currency of peace?) has exposed our secret ignominies and the tribal lack of solidarity of the European Union where the slogan of the day seems to be every man for himself.
The economic and social pendulum has been stuck too long at the greed side and far from the other side of compassion and solidarity. The confrontation between European partners is more forceful than the necessary and urgent cooperation needed. As you see, despite my suicidal optimism, the answer to your difficult question is practically impossible to summarize.
This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions.