Memories of Spain, 2002: When We Suspected Something Was Up

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Unlike the Mediolana CSO Asad Yawar, most commentators – economic or otherwise – did not see the ongoing global financial crisis coming, and are as surprised as anyone to see affluent European countries such as Spain slide into what we have termed (and will soon flesh out in more detail) as a New Second World. But Mediolana’s CSO has long seen ominous signs in the Spanish economy since his first visit to the country in 2002.

Travelling to the Andalusian tourist triangle (Sevilla-Granada-Córdoba) during a blistering summer, our CSO noticed one or two things aside from the remarkably long queues at the entrance to the Alhambra Palace:

1. 1492-1992. Andalusia – one of the most dynamic places in the world during the Middle Ages – is a fixture towards the foot of modern Spain’s economic league table. Still, Yawar did not expect to find cities where between the expulsion of the Moors and the commencement of serious EU sweeteners, nothing much of note seemed to have happened. Particularly striking were the bus stations, ramshackle products of the pre-EU second and third quarters of the twentieth century which reminded our CSO of nothing so much as why Yugoslavs traditionally regarded their economy as superior.

2. Deep Structures. 2002 was a time when any half-sentient Briton could walk into a bank, lie about their income and have half a million pounds deposited in their account faster than the responsible teller could say ‘commission’. Rules about this sort of thing were tighter in Spain, but still: the good times rolled. Income was disposable and cash was flashed, yet a few enquiries in and around Granada revealed a real unemployment rate of around 40% in Andalusia – similar, ironically to that existing in much of the former Yugoslavia, except without the alibi of a recent war (and lavish EU members-only funds).

3. Euro-pa League? An impecunious Yawar (as well as his better-heeled travel partner) found the cost of the holiday eye-wateringly high, as everything from restaurant bills to accommodation tariffs – freshly priced in euros, with the peseta having been dumped at the end of 2001 – seemingly having at least one zero too many. When tourists are reduced to slumming it in Albaicín, one can be sure that the locals going to find the majority of stuff a tad price elastic – with both production and consumption cycles prone to the odd death spiral.

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2 Comments

Filed under Economics

2 responses to “Memories of Spain, 2002: When We Suspected Something Was Up

  1. The euro has an amazingly tight grip. Who would have thought that countries would have been prepared to pay such a high price to stay within it? Globalisation means that we don’t have ‘local’ crises any more, but the Eurozone economic and psychological prison walls are so much more powerful and ultimately ruthless. It’s a lesson in how much sovereignty has truly been lost, and with it confidence and an objectivity over what matters within a country. Are the democratic processes within European countries really so resistant to the suffering of their people?

    • Excellent point, but the PIIGS’ super-glued adhesion to the euro does make me wonder whether things would be that much better under their own currencies, which when faced with a crisis like this would have been devalued to hell and back (though the initial capital inflows may not have been as large).

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