EU Commission Seeks Sanction on Spain, Portugal on Deficits

[Ulmita]

Um, from these numbers, it is clear that Spain is better off staying in EU, since EU spends more in Spain than Spain contributes to EU.

1.6 billion are peanuts in comparison to be able to devalue your own currency and be more competitive, oh and have your sovereignty back.

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May be wrong here, but i think you're late, at least regarding Portugal. Its been decided alreasy that the country wont be sanctioned over budget disprencies.

Yeap, rules have been bent.

[Zoibert the Bear]

Um, from these numbers, it is clear that Spain is better off staying in EU, since EU spends more in Spain than Spain contributes to EU.

We had one of the lowest deficits in the whole union before the crisis came in. We would be in a much better situation if the housing bubble could have been mitigated.

But the Euro screwed us over.

The EU sucks major balls and looks like it only exists to serve Germany at the moment. They can sell cars (and other goods) much more competitively and then come over to the south and enjoy their super-cheap vacations and then expect us to pay fines.

Fuck off, Spaxit anyone?

[nextormento]

They decided to not fine either member state last week.
They're requesting more severe deficit adjustments going forward.

[May90]

1.6 billion are peanuts in comparison to be able to devalue your own currency and be more competitive, oh and have your sovereignty back.

What makes you think it would make Spain more competitive, rather than completely irrelevant, when no one wants to deal with its isolated economy?

http://www.tradingeconomics.com/spain/gdp-per-capita

The historical data doesn't support your assumption.

We had one of the lowest deficits in the whole union before the crisis came in. We would be in a much better situation if the housing bubble could have been mitigated.

But the Euro screwed us over.

The EU sucks major balls and looks like it only exists to serve Germany at the moment. They can sell cars (and other goods) much more competitively and then come over to the south and enjoy their super-cheap vacations and then expect us to pay fines.

Fuck off, Spaxit anyone?

Deficit doesn't mean much in itself. If the economy is barely above a third world level, then even if you have a huge surplus, you are still not very well off!

And again, look at the graph above. Euro didn't screw you, your recent economical policies screwed you.

[Ulmita]

What makes you think it would make Spain more competitive, rather than completely irrelevant, when no one wants to deal with its isolated economy?

If you don't understand why lower product prices make you more competitive, you are beyond any help i could give you.

[May90]

If you don't understand why lower product prices make you more competitive, you are beyond any help i could give you.

What, again, makes you think that Spain would have lower product prices, if it wasn't a member of EU?

[willtron]

1.6 billion are peanuts in comparison to be able to devalue your own currency and be more competitive, oh and have your sovereignty back.

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Yeap, rules have been bent.

If Spain leaves they'll also have to deal with Catalonia wanting to become independent. While they're in the EU they can use Scotland as a precedent.

[Ravenblade]

Neither Spain nor Portugal won't leave the EU. That'd be silly for several reasons. I mean they have their economic problems but they are also working on reforms. Also the commission in the end decided against sanctions, for more or less agreeable reasons. Also there's been like 666 cockzillion tourists to Mallorca this year, maybe all the German, Dutch and British binge drinkers can save Spain from the icy claws of Schäuble & Co..

Um, from these numbers, it is clear that Spain is better off staying in EU, since EU spends more in Spain than Spain contributes to EU.

What do you mean? Going by the numbers 10bn. is almost bigger than 11.5bn. €! Only like 1.5+ bn. difference! Not so big.... Simple math!

I didn't know Spain gets so little money from the EU. That's actually laughable considering they're being fucked by having the €.

Spain is not a country in ruins or some Eastern-European country requiring extensive funding on infrastructure and construction projects. A lot of the funding they receive is quite selectively used. I mean I've been there this summer and there's been a lot of signs and plaques denoting funding from the EU.

[alexw]

They decided to not fine either member state last week.
They're requesting more severe deficit adjustments going forward.

If bleeding the patient doesn't cure him/her the first time then clearly you have not bled the patient enough.

[Ulmita]

If Spain leaves they'll also have to deal with Catalonia wanting to become independent. While they're in the EU they can use Scotland as a precedent.

I am against such scenario. I am just explaining to the other poster that being able to devaluate your own currency works.

[willtron]

I am against such scenario. I am just explaining to the other poster that being able to devaluate your own currency works.

I know, I was talking about your sovereignty comment, and just addressing that having that back will create some pretty big internal problems for them.

[alexw]

What makes you think it would make Spain more competitive, rather than completely irrelevant, when no one wants to deal with its isolated economy?

http://www.tradingeconomics.com/spain/gdp-per-capita

The historical data doesn't support your assumption.


Deficit doesn't mean much in itself. If the economy is barely above a third world level, then even if you have a huge surplus, you are still not very well off!

And again, look at the graph above. Euro didn't screw you, your recent economical policies screwed you.

No it was the Euro. The euro is what caused the economic imbalance problems in the first place. It gave Germany an undervalued currency. That meant Germany ran large trade surpluses bringing in large amounts of Euro currency beyond what they were spending. The German banks then recycled those surplus savings into lending into the peripheral nations - personal loans, car loans, and above all lending into real estate. When the US bubble blew up European banks and financial players looked into their own lending. They saw how bad it was and got spooked. They then stopped all the lending, Europe got a credit crunch, and the whole thing blew up. The rest is history.

[Sunseeker]

Sort of reminds me of when the bank charges you an overdraft fee. Yes, the money wasn't available, you returned my check AND charged me 30 dollars. So now there is 30 less than there was when there wasn't enough.

Don't see how the EU is going to avoid another financial crisis by increasing the debt of a nation, as punishment for not suitably reducing their debt. Sounds more like how a credit card company would keep you in debt, than a debt-resolution.

[Ravenblade]

I am against such scenario. I am just explaining to the other poster that being able to devaluate your own currency works.

I am not sure whether leaving the Euro fixing the economical problems is that clear-cut solution for them. The problem is that growth slowed down and so they missed their deficit target. It's not that Spain is in terrible shape, who knows in 2-3 years they could be back to where they were in 2007. It's more that the commission has realized that recovery at moderate pace paired with demands is a more acceptable option than adding more cracks to the glass.

[alexw]

Neither Spain nor Portugal won't leave the EU. That'd be silly for several reasons. I mean they have their economic problems but they are also working on reforms. Also the commission in the end decided against sanctions, for more or less agreeable reasons. Also there's been like 666 cockzillion tourists to Mallorca this year, maybe all the German, Dutch and British binge drinkers can save Spain from the icy claws of Schäuble & Co..



What do you mean? Going by the numbers 10bn. is almost bigger than 11.5bn. €! Only like 1.5+ bn. difference! Not so big.... Simple math!



Spain is not a country in ruins or some Eastern-European country requiring extensive funding on infrastructure and construction projects. A lot of the funding they receive is quite selectively used. I mean I've been there this summer and there's been a lot of signs and plaques denoting funding from the EU.

Errr what? Spain and Portugal don't need reforms. They need to leave the Euro. The issue is the currency nothing else. All this talk of reforms is garbage and will change nothing. Its simply an attempt to deflect blame so they don't have to tackle the real issue which is a currency system set up for Germany's benefit. Since Germany won't change that leaves only one viable option to rescue their economies from permanent depression (we are in what, year 8 now?), and that is to leave the currency zone.

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I am not sure whether leaving the Euro fixing the economical problems is that clear-cut solution for them. The problem is that growth slowed down and so they missed their deficit target. It's not that Spain is in terrible shape, who knows in 2-3 years they could be back to where they were in 2007. It's more that the commission has realized that recovery at moderate pace paired with demands is a more acceptable option than adding more cracks to the glass.

The reason for the low growth is the Euro. The system has been set for a deflationary bias. Deflation = slow/no growth.

[Deleted]

Well then. Let's see if Portugal and Spain will be the first to taste the sourness left from GB leaving.

[Rend Blackhand]

If this is the way the EU treats member states, maybe every country should leave

[Theodarzna]

The sweet smell of "European Solidarity."

[Wikiy]

Don't see how the EU is going to avoid another financial crisis by increasing the debt of a nation, as punishment for not suitably reducing their debt. Sounds more like how a credit card company would keep you in debt, than a debt-resolution.

This is the exact same thing I was thinking. This kind of action doesn't really do anything but hurt the countries' economies, and that's what everyone, even the EU is trying to avoid. What they should've done instead of direct fines is reduce the regional development funds or something of the sort. I.e., it's a fine which wont immediately affect the country.

[Ravenblade]

Errr what? Spain and Portugal don't need reforms. They need to leave the Euro. The issue is the currency nothing else. All this talk of reforms is garbage and will change nothing. Its simply an attempt to deflect blame so they don't have to tackle the real issue which is a currency system set up for Germany's benefit. Since Germany won't change that leaves only one viable option to rescue their economies from permanent depression (we are in what, year 8 now?), and that is to leave the currency zone.

Err, Germany didn't first want to give up their currency. It was a concession made to France in order to get their agreement for the reunification project and all the treaty work surrounding it. That it ended up benefiting Germany most was because Germany's economy post-reunification was in a terrible shape to the point of being called the sick man of Europe.

Since the conservative govt. was busy not fixing things a socialdemocratic successor govt. eventually had to make all the necessary reforms after 2000. It looked like only Germany was needed to fix its issues and everyone else was fine. Not all reforms I agreed with though and the side effects of wage freezes over the place had their own effects. A lot non-Germans think that Germans in general want to rule Europe hence they agreed to the effects of domestic stagnancy and comparably lower wages. The truth is that a lot resentment which made a lot of them say: "Now it's your turn too!" after the financial crisis broke out and several countries including Spain got hit by it is rooted in those times. I don't think all reforms were unnecessary, Germany had a lot of structural problems and leaving the Euro again wouldn't have made them go away either. So why should it be different everywhere else?

A lot German politicians especially on the left spectrum agree on a more relaxed stance towards countries like Spain, Portugal, Italy and Greece in terms of their economic recovery, by the way, seeing that economic recovery can't go without social programmes as well. A lot on the conservative side do not - they want textbook behaviour, strong recovery and are a-okay with said countries having the Chinese flag waving over their former state assets.