We are only 5 weeks away from Christmas, in what ought to be the start of the peak shopping period, and the crowds are nowhere to be seen, even in spite of suspiciously low prices brought on by the deflationary whirlwind we find ourselves under. Still, if you happen to live in any country other than China these days, you probably think there's nothing surprising or unusual about this scene. After all, the vast majority of western economies have been suffering severe economic malaise since some "wise" fellow decided to question wether residential real estate prices could not rise indefinitely...
Whilst as of today, you'de be right to question the singularity of the scene I described earlier, it is not this current state of affairs that concerns me, but rather what's in store for this nation in Europe's southwestern corner. For you see, unlike at our (almost) equally damaged neighbours, our leaders and key economic agents have decided that the way out of this dire situation lies somewhere between doing nothing and pursuing the same policies that got us into this mess in the first place.
Anyone who's tried to either get a job, let go of an under-performing employee or god-forbid, act out an entrepreneurial desire, knows all too well the structural barriers to be faced. Our antiquated economy with its toxic mix of outdated utopian sentiment that is so prevalent among law-makers and the disproportionate power granted to its self-serving trade unions results in a formidale barrier to that much-loved yet little-attained "progress".
Amazing as it seems, our nation, or at least, its leaders has not woken up to the sad fact that doing things in the same way will not yield different results. As we face the toughest economic environment in my lifetime no challenges are made to the current labour regulations or the clearly unsustainable tax regime. More to the point, the actions that are taken are squarely aimed at perpetuating the downward spiral via tax increases and incremental fiscal deficits. Personally this policy appears more ground in arrogance than in ignorance given the evidence of more "advanced " nations such as Germany which are taking the opposite view in their tax policies. But not us.
In our quest to perform the first economic miracle of the 21st century, Spain will seek to resolve its chronic and ever-growing unemployment problems via, wait for it..., granting better and longer lasting benefits for those that find themsleves in this unfortuante situation!, and all at the expense of a public sector deficit that is partly financed via higher personal an capital income taxes!. As you can see, having a full-time job in Spain does not necessarily translate into economic well-being but rather serves to justify our "exemplary" degree of social concern...
With such perverse incentives, it is hardly surprising that we lead the unemployment tables among so-called developed nations. To return to the topic in the title of this week's rant, with fundamentals like these, I'd be hard pressed at this time to recommend an investment in my much cherished homeland.
I honestly hope that sooner rather than later, Spain Inc. makes it into my investing shortlist.
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