Spain begs to be at upcoming G-20, Brazil says no

We are starting to get a sense of who the winners and losers of the Great Unraveling are. Spain is definitely a loser.

Just think, a few years ago Spain was the envy of Western Europe with a dynamic and booming property market and prodigious GDP growth. The country was THE holiday-maker’s paradise, with many buying second homes. It ranked with Ireland as a perennial winner in economic growth in Western Europe.

Today, Spain has 4 million unemployed citizens and 1 million households where every member is unemployed. The overall unemployment rate is now edging ever closer to 20%. Property prices have plummeted. And  In Spain’s version of General Growth Properties‘ bust, two major property companies, Martinsa Fadesa and Drac, have hit the wall. The banking crisis is only just beginning in earnest as Spanish savings banks are weak and only one major savings bank, Caja Castilla-La Mancha has gone under. Just recently, Mexico surpassed Spain as the largest Spanish-speaking economy.

Spain is suffering from, in a word, depression. And this must be a great come-down for a nation once lauded as one of Europe’s most promising economies.

Unfortunately, more humiliation is being dumped on Spain. You see, Spain is NOT in the G-20. Last November, a lot was made of this because John McCain had dissed the Spanish government during the Presidential elections in the United States and Spain was not invited to the G-20 meeting in Washington D.C.  Eventually, Spain – along with the Netherlands – got a hall pass.

Now, another G-20 meeting is coming up – and Spain has not been invited… again. But, to add insult to injury, Brazil is saying that Spain should not ever be invited. After all, it is not a member of this club of the richest, largest economies.

With more economic pain in store for Spain, the country will have to accept its newly diminished status.

Sources
España pide la entrada formal en el grupo de países G-20 – El Pais
Brasil dice que España no estará más en el G-20 – ABC

13 Comments
  1. Thomas says

    I find it rather bizarre that Argentina is part of G-20, but Spain isn’t.

  2. Edward Harrison says

    @Thomas, it IS bizarre and this is one reason the Spanish feel a lot of angst about not being in the club.

  3. Spanish says

    Hi I am spanish and I profoundly disagree with this article. It is highly Tabloid-like!. Spain IS NOT in depression, and Spain IS NOT a loser of course, and Spain IS NOT being humiliated at all. Spain isnt a member of G20 simply because we havent still claimed to be a member!. G20 is G8 plus emerging economies. Spain is the eigth industrialised economy of the world but we are neither members of G8 neither an emerging economy. fact. simple. final.

    1. Edward Harrison says

      Spanish, you seem a tad sensitive here. I would suggest you look at the data (unemployment, GDP, housing). All of this points to depression. By the way, I see the situation as no different in the U.S., the U.K. or Ireland. So, perhaps your definitions of depression is more severe.

      Spain has been a loser in all of this because a previously dynamic economy has been laid to waste. Personally, I find it a bit tragic, so I reckon we have similar sentiments on that score.

      But, this does not change the facts. Spain is in a deep economic slump and unlikely to get out of it until 2010 at the earliest. This does make them a loser in the Great Unraveling.

  4. Spanish says

    Ahh.. I was forgetting. Brasil said no to Spain being invited to future G20 summits JUST BECAUSE IT IS NOT YET A MEMBER. It has nothing to do with Spain itself but with the fact Brasil doesnt like to invite non-members!.

    Spain will claim membership and it has the support of the main powers of the world. Spain will be a G-20 member for sure, and you will see that clearly in the short term.

    Inform yourself a bit better and stop writting tabloids, please!.

    1. Edward Harrison says

      Spanish said: “It has nothing to do with Spain itself but with the fact Brasil doesnt like to invite non-members!.”

      I wouldn’t disagree. But, I would suggest you calm down a second and read the post with some degree of detachment.

  5. Spanish says

    So if you see the situation in Spain as no different in the U.S. , then the US is a loser too. Simple logic. Its true we have a high unemployment rate, but our economy growth is expected to decrease less than the European average. That is -3% with respect to -4%. UK, France and Italy are expected to slow down their economies more than Spain and Germany is expected to move back t a rate of -6%. So it is not true we are a loser. We are mantaining and even increasing relative wealthness. Our banking system is much stronger than that of the US or the rest of Europe too and we have some sectors like energy, aeronautics, telecom, banking, construction or biogenetics in which we are leaders and will continue to be. Yes we have to change our economic model from too much construction dependant to more value added. This doesnt mean we are losers. On the contrary, this means we have a great opportunity to change the growth model in this country.

    A country that has positioned itself during the last 20 years between the 10 big powers of the world with a per capita index higher than that of Italy and over the European average is not a loser. Look also the Human development index of Spain and you will see we are between the best.

    I dont feel a loser and NOBODY in Spain feels Spain is a loser!. You are the only one that says so!. Inform yourself a bit too. You know very little about muy country!

    1. Edward Harrison says

      Spanish, you should try not to take this personally. Present your arguments and move on. I know a lot more about Spain than you suggest, by the way.

      As to the U.S., yes, the U.S. is going to be a major loser here irrespective of whether the Eurozone growth dynamic is weaker than the U.S. The U.S. had an unsustainable consumption binge and will need a long time to repair the damage of malinvestment and overconsumption.

      I would question your numbers regarding growth in Spain. The estimates you should be seeing at present suggest a large gap between output potential and actual output. For example, Spain is estimated to have 17.3% unemployment, whereas the Netherlands will have 3.9%.

      http://www.businessweek.com/globalbiz/content/may2009/gb2009054_305452.htm

      Unemployment is structurally higher in Spain but not that much higher. The unemployment alone should tell you that Spain will be one of the most to ‘lose’ in this recession given its climb down from previously enviable growth. It is no different in the U.S., Ireland and the U.K.

      In my view, you are much too concerned about defending the Spanish honor and not focused on the general principle. I apologize if you find the term ‘loser’ harsh. The fact is the slowdown in Spain has been and will continue to be dramatic because of the collapsing property market.

      Had I written this piece in regards to the U.S., the U.k. or Ireland, the content would be much the same sans the G-20 rhetoric.

  6. Spanish says

    Well ok, whatever you say!. An article that begins with the title:”Spain begs to be at upcoming G-20, Brazil says no” is much closer to tabloids than to serious press, wether you like to admit it or not.

    First of all, Spain is not begging anything at all to anyone. Spain is only fighting for its own interests in a very licit way. Spain is between the 10 most relevant economies of the world and should and will be in G20. For that we must claim for admittance. Until then we only can be guests.

    Secondly, Brasil hasnt say no to Spain being a member and I already explained that. In fact Lula da Silva gave his support for Spain membership personally to Mr. Zapatero.

    The title of your article is DECEPTIVE, and you know it perfectly well. You should rather try not to use the easy resouce of sensationalism and be more objective with the information.

  7. spanish says

    This article is stupid…I guess you are american cause only an american could speak that much worse lies against Spain. Spain is not living a depressing, hopefuly. You don’t know much about Spain, only some stadistics but this isn’t enough. To say were are living that much crisis you say. Furthermore in Spain we hadn’t to rescue any bank, like in US or Netherlands(I guess), or Companies like General Motors…US is the one that make that crisis and you are attempting to see the worse facts in other countries to make you imagine think you are still living in a paradise where US is the superpower of the world. But this won’t still be like this.

    1. Edward Harrison says

      What Spain is suffering in terms of depression level unemployment is already apparent in the U.S., where the underemployment level rivals Spain’s. The housing bust in the U.S. was also very large. There is no schadenfreude here. What Spain feels is also what we see in Ireland, Latvia, the U.K. and the U.S.

      Rather than deny that things are in a critical state in Spain, understand that it is not just Spain.

  8. object says

Comments are closed.

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