Scathing Attack on Rajoy in Spanish Press; Spain on Brink of Deflation, CPI Goes Negative

ScathingAttackonRajoyinSpanishPress; SpainonBrinkofDeflation, CPIGoesNegative

Spain’s CPI has declined for four consecutive months and eight out of the last twelve. A decline of .4 percentage points in October pushed the CPI negative for the first time since 2009.

Via translation from El Economista

The Consumer Price Index (CPI) fell four tenths of a percent in October to -0.1% due to falling prices of food and non-alcoholic beverages and the lower rise in university education, according to the leading indicator of the evolution of prices in Spain released Wednesday by the National Statistics Institute (INE).

Deflation requires a fall in prices over an extended period of time, but with the decline in October, the annual chained CPI shows four consecutive months of declines.

"It’s not the first time that consumer prices fall in annual figure in Spain during the crisis. But it is striking that they do when the optimism about the recovery takes hold among economic agents and authorities," said Jose Luis Martinez, a strategist Citi in Spain.

Scathing Attack on Rajoy

Rarely does one see a scathing attack of government officials in mainstream media, but this attack by El Confidencial (mainstream to Spain) qualifies.

Via translation please consider Recession Continues and Spain on Brink of Deflation

Liars, irresponsible and heartless have brought misery to the poor and middle class crushed with confiscatory taxes. These are the qualifications of prime minister Rajoy and his henchmen who hypocritically celebrate deception to a people. They have not taken Spain out of the recession, but they have brought us to the brink of deflation that will bring more poverty, pain and tears.

The reported GDP and employment figures for the third quarter of 2013 are clearly incompatible. A job loss of 70,000 people in seasonally adjusted terms is not compatible with a rise of GDP (albeit marginal) given the fall of 98% of its components. It’s an impossible metaphysical.

As Jean Claude Trichet, former ECB president said "Spanish statistics are hard to believe." Since then Spain’s official GDP figure exceeds actual around 30%.

Nonetheless, Rajoy has started marketing the same lies as Zapatero regarding green shoots of 2009, that have not yet arrived.

Even though taxes have risen to a confiscatory level, they have cut wages, pensions, unemployment and imposed all kinds of misery on more than 3 million people.

Job losses continue at an unaffordable rate: 500,000 people through September and more than a million since Rajoy became prime minister. Social Security contributors are down 1.1 million workers. And if we go into the fine print, the issue is even worse: The number of permanent contracts in the third quarter fell by 146,300 while that of temporary workers increased by 169,500.

How can the stock market go up when the results of the Ibex are the worst in the Western world? The reason is simple: the entry of speculative money, by the enormous amount of liquidity but not moving the debt market.

Yet, Rajoy and his minions tell us that "the recession is over, we grow at 0.1%.

We’re not coming out of recession. It’s impossible. No country can get out of a recession with annual wastage of 10% of GDP by corrupt state officials and a financial system that has already cost us over 40 billion euros with guarantees of another 280 billion of which a good portion is not viable.

It’s impossible with interest rates of 12 to 16% solvent customers.

Many analysts applaud the Government’s actions more taxes, lower wages and drastic cuts to the weakest. These pseudo-experts overlook that confiscatory tax policy, the government deficit, and the lack of credit.

The crisis is not only unseemly, it is also vile.

Mike "Mish" Shedlock

Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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