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Macro Economics
The Greening of Spain

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By notehound
July 1, 2009

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"Green jobs" are net negatives; Spain spent $800k in tax dollars per green job created, and saw 2.2 jobs eliminated for every one of them."

I just returned from a 16 day 3-country bus tour with stays in Madrid, Barcelona, Aix-en-Provence, Cannes, Montecatini and Rome. We spent a couple of days in Paris to "recuperate" from the bus tour.

As I noted in a previous post, Spain is in real economic pain. 18.1% unemployment, with more layoffs looming and real estate development basically on hold. A good bit of commercial space is available in Madrid, and newly-constructed condos in Barcelona are being offered at discounted prices.

Several of the beautiful mountain ranges between Madrid and Barcelona are littered with massive wind turbines, most of which stand motionless like giant sculpture installations. Nary a human being was in sight around these "modern marvels." The young people I spoke with in Spain said the job market there is awful. Very few "green jobs" seem to have trickled down to the recent college graduates in Spain's two largest cities. The upper classes seem to be doing OK, but there are insufficient wealthy people to float the entire economy.

The local workers in the Cote d'Azur (French Riviera) say that unemployment is a concern there, as well. Tourism is down about 15%, and even those with money for a French vacation tend to be spending more conservatively than normal. Resident populations are pinching pennies, as well, according to workers. Hotels were understaffed, as owners are unwilling to add to headcount in the present economic climate. Those with jobs are evidently glad to be employed - with front desk staff in some 4-star hotels doubling up as bartenders and wait staff.

The only substantial construction I saw in Spain or France were government infrastructure projects. The sole exception was Monaco, where its tax-haven status makes it worth spending a substantial fortune for a studio apartment with a Monaco address. Cranes were busy building on the few inches of hillside that are not already developed.

The bus driver on our tour said that the tour company's European bookings are down by as much as 50% from previous years. Our own group consisted of only 33 passengers, down from the 42-48 that usually travel on each coach. He said that some groups have been as small as 25 persons - not even breaking even for the company's efforts.

That said, Rome, Florence and Paris were absolutely FULL of American tourists, pennypinchers as well as affluent travelers. Students will always be drawn to these cities - and there are hotel bargains available with a little effort.

Real estate in Rome seems to be basically on hold (similar to Barcelona), but there were fewer vacant spaces in Rome. The commercial development there seems to be at a standstill - with some recent developments less than fully finished, but no apparent effort to complete the unfinished work.

Paris was an absolute enigma. The Champs Elysees was absolutely packed with window shoppers and mobs of teenagers, as was every major tourist site. There were huge discount sales at many of the fancy shoppes, with a good number of customers, some of whom were buying.

However, shops in the lovely little side streets leading away from the Champs Elysees were absolutely deserted, with many advertised as "going out of business" or already vacant. I have never seen so many vacant neighborhood shops in Paris - in over 20 years of periodic visits to this fantastic city.

It looks to me as if Europeans and European tourists must be sticking to only the most popular destinations and the most popular shopping areas - and staying away from the local "discretionary" or "independent luxury" shops one usually sees flourishing in the larger European cities. Some of the small brasseries and bistros were closed, as well.

Regardless of what anyone says about "green shoots," by and large, I expect that we are going through an extended shakeout period where only the strongest businesses and organizations will survive.

As for the European Union, I am not too worried about whether it will come out OK. I am, however, concerned about Portugal, Spain and Greece, in particular. They are hurting worst of all. Italy and Ireland should come out OK, but I have personally seen the situation in Greece (last Summer) and Spain (this Summer).

There is a sort of smoldering resentment not far beneath the surface in Greece and Spain, with high unemployment and high taxes making the population very unhappy, to say the least.

If the US ends up with 18% unemployment (like Spain), I have little doubt there would be civil unrest in this country. I expect that the US will be a lot more like Europe in the future, with Cap-n-Trade legislation likely to increase energy costs of all types. There are some really cute tiny little cars over there.

Nonetheless, the food was great everywhere we went. It was a beautiful 25th Wedding Anniversary trip and we received better personal service than we have in previous years.