Anya Schiffrin

The tide goes out in Spain

Anya Schiffrin
Dec 27, 2012 15:44 UTC

In his entertaining lectures at Columbia Business School, the economist Bruce Greenwald likes to employ cite the line often used by Warren Buffett: When the tide goes out, you can see who is not wearing a bathing suit. This is the feeling I have in Spain. In year five of the financial crisis, I can see which of my relatives and friends had no swimming trunks. The slow downward slide is horrendous for the people living it. Over and over we see the bewilderment of those who worked hard and paid taxes. They don’t understand why they are seeing their first-rate healthcare system being undermined, pensions and salaries cut, and their education system — still not up to par — being squeezed further, while being told they have to bail out the banks because that is what Germany insists on. The downturn is persistent enough that the country’s largest bookseller, Casa de Libro, had a shelf dedicated exclusively to books about the “crisi” (see picture).

Spain under Francisco Franco was often referred to “la vida en blanco y negro,” or life without color, because it was so grim and gray. Franco’s departure showed the pent-up energy and creativity of the Spanish people. It was but a short time before the economic disparity between Spain and the rest of Europe — large even before Franco but a yawning gap in the years of his dictatorship — dwindled. Barcelona, for instance, became a global center for design.

In this harsh new world, many people are now irrelevant to the daily functioning of the economy. Architects, graphic designers, book jacket designers–-these kinds of professions now seem like a quaint memory. No one needs them, and the fear is that, if and when the economy recovers, many won’t be needed then. The few friends who have jobs live with the threat of layoffs and repeated pay cuts.

In this new environment only the fittest survive. I’ve noticed that people writing about Spain tend to bring in their cousins as evidence for whatever point they want to make.  Well, two of my Madrid cousins didn’t go to college. They wound up in Amsterdam. One washed dishes in a hotel and the other sang on the street for change. Their mom was kicked out of a rent-controlled apartment in Madrid and now lives with a passel of other unemployed relatives in an old family house in a tiny town outside Seville. No heating or air conditioning, no car, and it’s a 20-minute bus ride to go get groceries. They would love to offload this white elephant, but no one is buying. Another friend inherited her mom’s apartment and before the crisis had the bright idea of buying a few fixer-upper apartments. She would spruce them up and resell them once the neighborhoods gentrified. We warned her not to buy more than one or two, but who listens to friends? Besides, in the days of the real estate booms in Spain and Ireland and the U.S., who could lose money investing in real estate? The naysayers were losing out on the opportunity of a lifetime!

She put down deposits on three or four apartments. Five years and multiple lawsuits later my friend (in her sixties) has lost everything. The good news is that after looking for a year she found a poorly paying office job.  “I don’t feel sorry for myself. I have food on the table every day, and that is more than many people in this country have now,” my friend said.

The end of the world in the heart of Mayan country

Anya Schiffrin
Dec 20, 2012 22:01 UTC

Although the Russians and the Chinese are reportedly fretting about the end of the world tomorrow  — according to an interpretation of the ancient Mayan calendar — down here in the Yucatan, which was part of the Mayan empire, the locals couldn’t care less. Nor does anyone in Mexico City seem to notice. They are too busy thinking about what the new government is going to get up to. With its candidate, Enrique Peña Nieto, sworn into as president on Dec. 1, the Institutional Revolutionary Party (PRI) is back in power after 12 years out of office.

The new president is known in Mexico for a) being married to a famous soap opera star and b) not being able to answer when he was asked at the Guadalajara International Book Fair to name three books that had influenced his life. After mentioning the Bible, he blanked out and apparently could not remember the details of anything else he had read. He has, however, brought in young talent from the party’s lower ranks, and we met some of these officials in Mexico City last week. As in the Egyptian revolution, many in this group are elites who have been educated overseas. But instead of protesting in the streets, they paid their dues, waited patiently for their turn. Now they are raring to introduce reforms. The major parties have already come together to agree on a list of priorities, taken on the teachers’ union and pushed to give private capital access to the massive, state-owned oil company Pemex, which has been faulted for a decline in production over the past eight years. Included on their to-do list is tax reform; a complete overhaul of Pemex; improving education; introducing new technology to speed up the export of goods to the U.S.; and increased cooperation with like-minded Latin American countries.

In short, the new government is in full-blown honeymoon mode (although no one we saw mentioned fighting poverty or drug trafficking). We’ll see what gets accomplished.