{"id":3621,"date":"2013-10-29T12:38:27","date_gmt":"2013-10-29T10:38:27","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=3621"},"modified":"2013-10-29T12:38:27","modified_gmt":"2013-10-29T10:38:27","slug":"espana-recuperacion-o-mentiras","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/espana-recuperacion-o-mentiras\/","title":{"rendered":"Spain, recovery or lies?"},"content":{"rendered":"

\"\"We cannot ignore articles such as the one just published by Roberto Centeno in ElConfidencial.com<\/strong><\/a>, Neither for its forcefulness nor for its coincidence with many of the arguments that we have been giving since Cluster Family Office<\/strong><\/a>. Before going into the details, it is worth remembering that Centeno was CEO of companies such as Butano, Enagas, Campsa and is currently Chairman of Eneroil. He also holds a PhD in Economics from the Complutense University of Madrid and is Professor of Economics at the School of Mining Engineering of the UPM.<\/p>\n

Although we have linked to the original article at the top of this post, we will summarise some of the arguments here. Be prepared for the traumatic shock of a few slaps of reality, such as we have been warning<\/a> constantly<\/a>, again and again<\/a>. But as in the Matrix movie, most prefer to take the blue pill of the declarations and versions of the virtual reality of recovery, which governments try to hammer into our heads. However, we are already we recommended you to take the red pill 5 years ago<\/strong><\/a>. How time flies....:<\/p>\n

The recession continues and we are already on the brink of deflation.<\/strong> By Roberto Centeno.<\/em><\/p>\n

Liars, irresponsible and heartless, they have driven the poorest into misery and crushed the middle class with confiscatory taxes. These are the qualifications that Rajoy and his cronies deserve as they hypocritically celebrate the deception of a people they have not only failed to pull out of the recession, but have actually driven them out of it.\u00a0on the brink of a deflation that will bring more poverty, pain and tears<\/strong>. The GDP and employment figures for the third quarter of 2013 are clearly incompatible. A 70,000 job destruction in seasonally adjusted terms is not compatible with a rise (even a marginal one) in GDP, a rise which, compared with the 981 Q3Q3T fall in its components, is no longer incompatible, but a metaphysical impossibility, as I will explain later. \u00a0<\/em><\/p>\n

As I said\u00a0Jean Claude Trichet<\/strong>, The former president of the ECB, \u201cSpanish statistics are hard to believe\u201d. Since then, GDP has been so overestimated that, to date, the official figure exceeds the real figure by around 30%. Rajoy\u00a0has launched the same marketing operation as Zapatero did with the green shoots.<\/strong>\u00a0of 2009, which have not yet arrived. Who would have thought that the trio of historical ineptness, responsible for our greatest economic depression in two centuries - Zapatero, Solbes and Salgado - could be\u00a0overtaken by the new<\/strong>(Rajoy, Montoro and Guindos)?<\/em><\/p>\n

But that's just the way it is, the new trio has broken all debt records. In just 18 months,\u00a0debt has grown by 333 billion euros\u00a0<\/strong>-total public debt, not just the computable debt-, i.e. 32.6 1GDP of GDP, which is the highest figure ever known.<\/em><\/p>\n

<\/em>(...)<\/p>\n

Job destruction after 66 months of continuous declines continues at a steady pace.\u00a0an unbearable pace<\/strong>500,000 people up to September and more than a million since Rajoy has been president, which coincides with the loss of Social Security contributors: one million one hundred thousand. And if we go into the small print, the issue is even worse:\u00a0work is becoming more precarious at full speed<\/strong>. The number of permanent contracts in the third quarter fell by 146,300 people and the number of temporary contracts increased by 169,500. They say that the number of households with all members unemployed is reduced by 13,400, but it turns out that the total number of households has fallen by 48,800, i.e. there is an increase of 35,400.<\/em><\/p>\n

The lies of Rajoy & Bankers S.L.<\/strong><\/em><\/p>\n

An example of how Rajoy & Banqueros S.L. manipulate reality has been the publication of the results of Banco Santander, an entity that, despite its enormous international expansion,\u00a0has not created - but destroyed - value for its shareholders in the last ten years<\/strong>, Not so for its directors and executives, who have literally made a killing. The results to September have been spectacular: \u201cWe have increased net profit by 77%\u201d.<\/em><\/p>\n

But as soon as you look at the accounts, you realise that Santander is not getting better, but worse. As I pointed out here on Friday\u00a0Eduardo Segovia<\/strong>\u00a0\u201cThe profit of the purely financial business - in Spain - fell by 511 ptas3T, and margins in the third quarter fell again from the improvement experienced in the second quarter.<\/em><\/p>\n

The banking business in Spain is \u201ca f... disaster, non-performing loans are going to eat them by the foot, if Brussels doesn't swallow the tax credit scam (1), not a single Spanish bank will pass the stress tests\u201d, a well-known analyst told me. Santander\u00a0has camouflaged the reality with the 1 billion reduction for insolvencies<\/strong>\u00a0just when the official NPL ratio keeps rising, up to 6.4% from 3.6% a year ago; the real NPL ratio is more than twice as high. The end result is that the main analyst houses have downgraded the share price, with the\u00a0recommendation to sell<\/strong>.<\/em><\/p>\n

(...)<\/em><\/p>\n

And in the case of BBVA, same story: \u201cEarn 86% more\u201d. The reality is exactly the opposite and moreover\u00a0has been even more disappointing than Santander.<\/strong>\u00a0the market consensus. Net profit grew well below expectations, 195 million against 614 million, the NPL ratio rose to 6.71 bps3T (more than 120 bps) and the coverage ratio fell to 601 bps3T (less than 860 bps).<\/em><\/p>\n

Another example,\u00a0that of Sabadell, which is already aurora borealis<\/strong>. \u201cThere is little to say when in the quarter, defaults increased by 2.1 billion and provisions were just 261 million, NPLs rose to 12.61 bp3T (more than 199 basis points) and the coverage ratio fell to 42.41 bp3T (less than 550 basis points),\u201d says a leading analyst.<\/em><\/p>\n

How is it possible for the stock market to rise when the results of Ibex companies are the worst in the western world? The reason is simple:\u00a0the inflow of speculative money,<\/strong>\u00a0The fact is that the market has not been able to absorb the huge amount of liquidity, but it has not been transferred to the debt market. And there is only one explanation for this: the lack of confidence in the\u00a0recovery of the Spanish economy<\/strong>, This can also be seen in the real estate market. In this sector, investor interest does not translate into the closing of more deals (still at the same pace as in previous years) for the simple reason that the prices asked by banks are still far from what investors think, who are still far from what they are looking for.\u00a0expect significant declines<\/strong>\u00a0(2).<\/em><\/p>\n

And in the same vein, Rajoy and his henchmen tell us that \u201cthe recession is over, we are growing at 0.1%\u201d. Well, if the recession is over, the results of his big banks, mainly responsible for it, should have improved and not be \u201ca p.... disaster\u201d. Their star joker is exports, but if we analyse the situation today,\u00a0export growth rate is one third of that of its predecessor<\/strong>. Moreover, in the third quarter of this year the rates have halved compared to the previous quarter, and the contribution of the foreign sector to GDP remains stagnant at 2 points. But the most serious aspect is the\u00a0sharp fall in inflation<\/strong>, which from June to September has gone from 2.0% to 0.3% and which is presented as a success, when it is a real disaster.<\/em><\/p>\n

Debt deflation leads to depression.<\/strong><\/em><\/p>\n

\u201cSpain is on the brink of deflation's grave,\u201d said the Daily Telegraph last week. Last August,\u00a0Juan Laborda<\/strong>pointed out that \u201cSpain has gone into debt deflation\u201d. Faced with constant taxes and subsidies,\u00a0CPI has been negative for several months now<\/strong>, and that is a full-blown deflation.<\/em><\/p>\n

What is debt deflation? During the Great Depression, the well-known American economist Irving Fisher (1867-1947) developed an explanation of the Great Depression according to which economic and financial crises (our own), originate in the\u00a0bursting of a credit bubble<\/strong>.<\/em><\/p>\n

(...)<\/p>\n

The easy money brought about by our entry into the euro and the criminal behaviour of the government and the Bank of Spain were the cause of the crisis. The links are these:<\/em><\/p>\n

Bubble bursts and debt liquidation leads to distress sales. Fall in asset prices. Reduction in wealth. Falling profits, increasing losses.\u00a0Construction and production collapse<\/strong>. Unemployment. Hoarding and speculative movements. Banks stop lending to protect themselves. Banks sell emergency investments. Bank failures, in our case, unfortunately, temporarily propped up with rivers of public money.\u00a0It is the combination of debt and deflation that causes the most damage<\/strong>, because a deflation caused by debt reacts on debt.<\/em><\/p>\n

And this is the most serious aspect: debt liquidation cannot keep up with the fall in prices, and then the key to the depression occurs: the more debtors pay, the more they owe. \u201cThe more the ship of the economy tilts, the more it will tend to tilt.<\/strong>. The tendency is not to right itself, but to overturn itself\u201d. The current public and private debt in Spain is the largest ever known, both nominally and in reality, and unless a fall in the price level is avoided - and the policy of these fools is just the opposite, more wage deflation and all kinds of deflation - the Spanish economy will be in a state of crisis.\u00a0recession tends to deepen<\/strong>\u00a0in a vicious spiral that ends in bankruptcy, unemployment and hunger.<\/em><\/p>\n

(...)<\/p>\n

Many analysts applaud the government's measures of higher taxes, lower wages and drastic cuts for the weakest. That these pseudo-experts overlook the fact that confiscatory fiscal policy, government deficits and the lack of credit make any way out of the crisis impossible.\u00a0crisis is not only unpresentable, it is also despicable.<\/strong><\/em><\/p>\n

And secondly,\u00a0we are not coming out of recession because the independent figures prove it.<\/strong>. To begin with, in a macro scenario, the discrepancy between the data on the economic performance of companies in all sectors (industry, services, exports, i.e. a 20% sample of GDP) obtained by the Central Balance Sheet Data Office of the Bank of Spain, on the one hand, and the operating surplus published by the INE, on the other, must run in parallel because they measure basically the same thing; however, they have followed different paths since 2008. And since that is impossible, the question is:\u00a0Who do you trust the most?<\/strong>\u00a0In the first quarter of this year, the Central Balance Sheet Data Office survey gave a year-on-year decline in the economy of -5.61 QoQ, the National Accounts of -21 QoQ. In the second quarter, the figures were -3.81 QoQ and -1.81 QoQ, respectively.<\/em><\/p>\n

And with regard to the positive 0.1 in the third quarter, it does not coincide with any indicator of activity and demand. Private demand was 59% of GDP, sales of large companies in the third quarter fell by 4.7% compared to a fall of 3.6% in the previous quarter, and the retail trade index declined by 3.7%. Gross fixed capital formation, down by 201 QoQ GDP.<\/em><\/p>\n

The availabilities of capital goods in the third quarter fell by 31 TTP3T compared to a rise of 3.01 TTP3T in the second quarter. Exports of goods have increased by 2.51 Tbp3T compared to 11.91 Tbp3T in the previous quarter; imports have fallen by 3.31 Tbp3T.<\/em><\/p>\n

Other indicators: electricity consumption in the third quarter fell by 2.21TDP3T, adding to the 1.51TDP3T decline in the previous period; financing to the private sector fell by 9.61TDP3T. You don't have to be an economist to realise that\u00a0either these figures are false or those of the Bank of Spain on the orders of the government are false.<\/strong>. Independent indicators give a quarterly fall in GDP in the order of 2.51GDP3T. You decide which you believe.<\/em><\/p>\n

    \n
  1. Deduction of tax on future profits on account of their past losses and advance provisioning expenses. Basel III banking legislation obliges to remove them from capital since 2014. If this is done, the solvency of Spanish banks would plummet.<\/em><\/li>\n
  2. Borja Mateo, the leading independent expert states that \u201cin real terms, flats will fall by 75-80% from their peak in large urban areas and 80-85 % in second home areas. 2013 is one of the worst times to buy a home: what looks like a bargain today will be very expensive in the coming months.<\/em><\/li>\n<\/ol>\n

    In short, whether we believe Centeno's 100% statements or not, Spain is sinking even if the orchestra continues to play euphorically. And the state has become, unbeknownst to many, an S.A. that has lost its sovereignty and its status as a public entity. It is and will be treated as a corporation, as we explained in \u00abSpain, S.A.\u00bb<\/strong><\/a>, which is bankrupt. And although so far the casualties caused in this failed corporation have been minimal (preference shareholders, bank shareholders, property owners, tax increases, businessmen, etc.), the disaster could potentially affect the pockets of the majority of its owners, i.e. the less cautious and less well-informed Spaniards when it comes to investing and protecting their assets.<\/p>","protected":false},"excerpt":{"rendered":"

    No podemos ignorar art\u00edculos como el que acaba de publicar Roberto Centeno en ElConfidencial.com, ni por su contundencia ni por su coincidencia en muchos de los argumentos que venimos dando desde Cluster Family Office. Antes de entrar en los detalles, cabe recordar que Centeno fue Consejero-Delegado de empresas como Butano, Enagas, Campsa y actualmente es […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[38,45,41,39,40,37],"tags":[],"class_list":["post-3621","post","type-post","status-publish","format-standard","hentry","category-actualidad","category-asesoramiento-deportistas-artistas","category-economia-y-finanzas","category-crear-mi-propio-family-offices","category-gestion-financiera","category-reflexion"],"_links":{"self":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/3621","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/comments?post=3621"}],"version-history":[{"count":0,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/3621\/revisions"}],"wp:attachment":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/media?parent=3621"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/categories?post=3621"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/tags?post=3621"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}