A while after the UK but before other EU countries, has omicron peaked here in Spain? . . . The Voz de Galicia: Tercera jornada consecutiva de descenso en Galicia de positivos covid .
Cosas de España/Galiza
The Voz de Galicia again: Galicia is different, more so even than Spain, especially as regards railway infrastructure. The AVE has taken years to reach Ourense and now has a narrow gauge track to go deeper into Galicia. Following on from the difficulty of entering Galicia due to our orography*, we have now moved on to the challenge of a different track. The relevant minister arrives in Santiago on Friday and will be given a petition to change this.
It’s claimed that updating the track from Ourense to other Galician cities will be good for competition from the French and Italian companies who’ve already said they’re going to be taking on Renfe’s AVE elsewhere in Spain. Let’s hope so.
* The branch of physical geography dealing with the formation and features of mountains.
See below for a negative take on the EU’s economic future, surprisingly not from AEP.
There’s a difference, I’m told, between a barbacoa and a churrasqueira. The latter seems to be the Portuguese and Gallego for something much grander. Here’s my neighbours’. Which took 2 years of dust and noise to construct some time ago. Notably, the guys building it apologised to me for those but my neighbours of the time never did . . .
That monstrosity was built during the phoney construction bum which ended with an almighty crash in 2007. Having lived – suspending belief – during the last one, I shivered at the sight of this headline in El Pais: Is Spain heading for another property bubble? God forbid. .
Finally . . .
Oh, no . . . I went to a perfume counter in Corte Inglés yesterday and now my bank card smells of perfume. I suspect they cologned it. Bum, Bum.
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The eurozone’s trade deficit exposes its industrial decline. Underperforming exports and more money printing will likely lead to a serious balance of payments crisis: Matthew Lynn, The Telegraph
Exporters are struggling. Imports are surging. And the balance of payments is starting to look precarious.
We all knew it was going to be tough for the UK outside the European Union, and that sooner or later we would be facing a full-blown trade crisis.
Oh, but hold on. Actually, this is Europe we are talking about. Ever since the eurozone was created, it has prided itself on being an export machine. And yet last week it reported an overall trade deficit, reversing years of huge surpluses.
True, there are some special factors which help explain that. The price of energy has soared, and an awful lot of that is imported. And shortages of microchips, along with other key components, have made trading tough for powerhouse sectors such as automobiles.
Even so, the eurozone’s trade surplus is still in relentless decline, and that is likely to continue. Its competitiveness is waning; it is stuck with the wrong industries; and an addiction to printing money to prop up a dysfunctional currency means imports will inevitably keep on rising.
In truth, the deficit symbolises the industrial decline of the bloc – and that is only going to get worse.
It may not have led the world in very much, but in the two decades since the single currency was launched the leaders of the eurozone have at least been able to boast about one thing.
The Continent wracked up massive trade surpluses year on year. On that measure, it remained an industrial superpower, and, of course, all those exports helped keep economies that might otherwise be struggling afloat.
And yet, right now, that is starting to change, and very quickly. The eurozone’s surplus has been falling steadily for months, and, for November, it has just reported an overall deficit of €1.5bn (£1.25bn).
Within that, France is recording massive trade deficits, up to €9.7bn last month, the highest level on record, while the once mighty German trade surplus fell once again, with imports outpacing exports.
No one would deny there are some special factors at work that help explain that. Complete dependence on Russian gas to keep the lights on is not great for security, and it is not great for the balance of payments either when the price soars as it has this year.
Chaotic supply chains in the wake of the pandemic have disrupted a whole range of important industries. Even so, the trend is clear. Exports are relentlessly underperforming, while imports steadily rise.
Exports to its two main trade partners, China and the US, are falling, with only Turkey (hardly anyone’s idea of the future of the global economy) showing any significant rise.
Even worse, that decline has come over a year when the currency is relatively weak – the euro is down from $1.21 a year ago to $1.13 now – which should be helping exporters. Whatever else it might be going to do, the eurozone is not going to export its way to a recovery any time soon.
In fact, its falling trade balance is a reflection of three huge weaknesses in the zone’s economy.
First, its declining competitiveness. The eurozone is completely focused on the huge manufacturing industries of the 20th century, from cars to aerospace, defence to machine tools and engineering.
With a few exceptions, almost all in Sweden and France, it has failed to create any digital companies of any significance, and even now it is intent on regulating growth sectors such as artificial intelligence out of existence.
China and the developing world was willing to import from Europe for a while, but sooner or later was always going to start making that stuff for itself.
Next, punishing welfare bills and high taxes mean exporters are always going to struggle to remain competitive in global markets, especially when rival economies are developing fast. Bright ideas such as Emmanuel Macron’s push for an EU-wide minimum wage are hardly going to help with that.
Finally, the European Central Bank no longer has any choice but to keep printing money on an epic scale to prop up a dysfunctional currency.
There aren’t any other buyers for all that Italian, and increasingly French, debt, so the ECB has to keep on taking it onto its own books.
In an open economy, printed money typically finds its way into more imports, and that is what we are seeing right now.
And, of course, to a very minor degree, the rising deficit is also a reflection of Brexit, since the EU always ran a huge surplus with the UK, and that is now shrinking as well.
But let’s not dwell on that – the British market, in fairness, is hardly big enough to make a huge difference one way or another.
True, you can argue about whether a trade deficit matters very much. The UK runs a persistent deficit, although now much smaller than France’s, without anyone worrying about it very much. But, as it happens, the leaders of the eurozone think they are vital measures of economic success.
“There is no great nation with a foreign (trade) balance that remains in deficit,” argued Bruno Le Maire, France’s finance minister, commenting on last month’s terrible data for his country.
In reality, the eurozone has focused on racking up trade surpluses as a key driver of demand, as a measure of the zone’s success, to allow it to use its muscle as a trading bloc to dictate terms to the rest of the world, and to turn its currency into a serious rival to the dollar as the world’s reserve money.
The surpluses helped pay for lavish welfare programmes, and for a huge state. They were hardly just a balancing item. They were crucial to the success of the whole project.
And yet, right now, the eurozone is heading into rising and persistent deficits, and while a fall in energy prices may fix that temporarily, the trend is clear enough. In reality, that is a symbol of the zone’s industrial decline – and sooner or later it will turn into a serious balance-of-payments and financial crisis.