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by Euro Reporter
2012-08-31 09:28:27
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Spain's Bad Summer

And the bleeding in Spain continues. The Spanish economy shrank 1.3% in the second quarter compared to a year earlier. Deposits totalling €74 billion left Spanish banks in July, bringing total deposit flight this year to €1.7 trillion. On Tuesday, the government of Catalonia requested a €5 billion lifeline from Madrid's €18 billion regional-bailout fund. Following Barcelona's lead, Valencia has raised its own aid request to €4.5 billion from the €3.5 billion previously announced. Prime Minister Mariano Rajoy, meanwhile, continues to insist that Spain can solve its own problems. The sentiment is commendable. The trouble is that his government is doing precious little to solve problems like a 24.8% unemployment rate and a shrinking economy. If Mr. Rajoy can't come up with a plan, he only increases the odds that one will be foisted on him by Brussels. Despite the bad news, August has seen some of the lowest yields on Spanish sovereign debt in months. But that would be the Draghi effect, rather than any resurgence of confidence in Madrid. Two-year yields have dipped on the expectation that the European Central Bank will start buying Spanish bills in bulk this autumn. A lot hangs on what precisely Bank President Mario Draghi will demand for his largesse. Yet even this month's kabuki about the size and nature of the central bank's big move has removed some of the pressure on Madrid to overhaul Spain's economy and repair its banks.

Clear away the smoke and at least one component of Mr. Draghi's plans is certain: Spain and Italy will still need to apply for a full sovereign bailout before the central bank will intervene. Mr. Draghi made clear weeks ago that bond-buying would supplement strict conditions on structural reforms and spending cuts, not supplant them.  Asking for a full bailout has never sat easily with Mr. Rajoy. The Prime Minister is said to consider avoiding a sovereign rescue a top priority. Fearing the humiliation for his centre-right People's Party, Mr. Rajoy has gone to heroic lengths to convince the world that Spain was doing fine, only to give in when circumstances demanded it. Economy Minister Luis de Guindos insisted again this week that Spain would meet its budget targets regardless of the ECB's interventions. Yet wounded pride isn't the best reason for Mr. Rajoy to resist the Brussels dole. After Thursday's working lunch with French President François Hollande, Mr. Rajoy promised that his government will not raise the VAT or income tax in its 2013 budget. If requesting sovereign aid means following Greece down the road of tax hikes designed to meet (or fail to meet) arbitrary deficit targets, then Madrid has every reason to keep economic policy from being decided in Brussels. So it's doubly unfortunate that the Rajoy government has shown little knack for acting on its own initiative. Consider the bank overhaul. After maintaining for months that Spain's financial system was solid, Mr. Rajoy agreed to a €100 billion bank bailout in June. At Madrid's request, EU finance ministers made a first, €30 billion tranche available at the end of July for emergency recapitalization.

That money still hasn't reached Spanish shores—because Madrid still hasn't formally requested it. And it probably won't before September's stress tests. Haggling over whether banks' preferred shareholders and junior bondholders should be forced to take losses has held up Madrid from complying with the July agreement. So much for the emergency.  This could change soon. The Rajoy government's final plan for overhauling the banks is due to go to Parliament imminently. Drafts of the new law give the Banco de España more powers to intervene in struggling banks, including the ability to wind down troubled lenders. Not a single Spanish bank has been liquidated since the 2008 real-estate crash. 

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Tomato battle in Spain draws the young

About 40,000 young people from all over the world Wednesday participated in a gigantic food fight with ripe tomatoes, the popular “Tomatina” festival, in the eastern Spanish town of Bunol. The yearly hour-long tomato war was begun 67 years ago as a game by local youths but it has steadily been gaining greater attention worldwide. European and Asian participants have long been regulars at the messy event, and this year people came to lob tomatoes at one another from Australia, Brazil, Argentina, Latvia, and many other countries. The preparation for the ritual, which is traditionally held on the last Wednesday in August, began Tuesday at sundown with a marathon of parties, dances and concerts that lasted until dawn. After a break for the revellers to sleep and gather their strength – which they did on the grass in local parks or in sleeping bags laid out right on the streets – the excitement among the thousands present started to build as they awaited the arrival of the trucks loaded with 120 tonnes of ripe, deep red tomatoes and the beginning of the tomato-schlacht that really put Bunol on the international tourism maps some 10 years ago.

In the hours before the arrival of the tomato trucks, those present braved the day’s increasing heat and bought food, drinks and clothing at the stands and kiosks that had sprung up along the streets of the Mediterranean coastal town. Many also bought diver’s goggles from opportunistic street vendors as protection against the acids in tomatoes, which would soon be smashed all over everything and everyone. The “uniform” worn by most people, at least by those who were familiar with the event, consisted of a white T-shirt and shorts or a bathing suit, all specially selected for later use as rags or to be discarded in the nearest wastebin. Some of those on hand even dared to complete their outfitting with a bit of peculiar cranial protection: watermelon rinds cut into the shape of helmets. Also, there were many people dressed in costumes of various kinds: pink rabbits, samurais, cooks, karate fighters and traditional Spanish outfits of one sort or another. As the hour drew near when the tomato battle was to begin, in the narrow street along which the tomato trucks would come, impatient and nervous smiles began to appear on the faces of the thousands in the crowd.

Right at 11 a.m., a rocket announced the official start of the event and the five trucks loaded with ripe tomatoes appeared and dumped their cargoes. People grabbed up the vegetables and began hurling them at one another and smashing them onto each other, quickly coating everything in sight and creating a red pulpy, juicy mess in the historic town center with its white houses and building fronts. This year, the tomato war became a cathartic event, given the uncertainty about the country’s prevailing economic crisis, as participants did everything they could to recover their spirits, which have been beaten down a good bit by so much negative news of late. Sixty minutes after the first tomato was thrown another blast of gunpowder signalled the end of the fight, and after things settled down one could see the true extent of the monumental mess. Nevertheless, from years of experience with this event, local municipal cleaning crews and residents had once again made the area amazingly spic and span within just a few hours. Meanwhile, the exhausted but exhilarated participants headed to the river and the portable showers set up for the occasion to rinse off the tomatoes that covered them and soaked their clothing.

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Spain's king Juan Carlos I hits driver

Spain’s King Juan Carlos I has shown before that he’s got a temper. The monarch, for example, once told Venezuelan President Hugo Chavez to shut up. Yet until now, he had never been seen physically lashing out. Now Don Juan Carlos is in hot water for hitting his driver.

Video footage shows the king sitting in the passenger seat of a car, motioning angrily at his chauffer. Apparently unhappy with the driver's choice of parking spot, the king makes a fist and hits him. The king then opens the door and with great effort –- he is still recovering from a recent fall -– manages to exit the vehicle.



       
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elene2012-09-04 20:05:56
It seems that at long last the ECB is doing something to actively engage Spain in an accelerated recovery, or rather protection of default (of which, some argue, it was never in fear of). The following is pretty much the latest of what’s out on the case (I read it just this morning) so I hope it may be of some interest to you as well - http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=5HY4PMBUVCN8&preview=article&linkid=221ae47b-5f2e-41fd-8681-2ce9f4010ba7&pdaffid=ZVFwBG5jk4Kvl9OaBJc5%2bg%3d%3d


Thanos2012-09-05 01:52:41
Thank you Elene


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