Untangling the Spanish bank rescue

With new complicated mechanisms being announced daily, here’s my take on what the real points of disagreement are:

• Can the Spanish government inject its own bonds directly into a bank that it already owns?

From my point of view, this is biggie. If Spain succeeds in doing this, the crisis is essentially solved. Eurozone countries creating money by borrowing from their own pet bank (which is financed by the governments own bonds) has been a flaw in the design of the Eurosystem from the beginning, and only a gentleman’s agreement has kept it from happening. As you can probably guess, the Germans are going ballistic at this idea, since there isn’t really any limit to the amount of money Spain could create via this route.

This is the reason the increasingly crazy and complicated proposals to have Spain borrow money from the European Stability mechanism. From the German’s perspective, this “sterilizes” the intervention, meaning that no net money has been created, but from the Spanish perspective has very little advantage of just injecting the money directly (other than not pissing of Germany and the ECB).

We’ll see what happens over the weekend.

Redenomination risk and investment in Spain

The president of Las Vegas Sands (owners of the Venetian in Las Vegas) recently announced that his Eurovegas project might not happen in Spain due to the risk of a Euro breakup.

This is a very tough situation for Spanish companies and banks, because no matter how financially sound you are, people are not going to sign a contract with you if there is the risk that the contract will magically be transformed from Euros to Pesetas.

Personally I think the Euro omelet is sufficiently scrambled enough to make any breakup highly unlikely, especially since there is a number of nefarious actions that the Spanish government could do to basically print as many Euros as they want.

However, for the outside world, when German government ministers start talking about a Greek exit of the Euro, it is viewed as perhaps a trail run for a large Euro breakup.

Men in Black not coming to Spain

The minister in charge of Hacienda (the Spanish IRS) made a fool of himself yesterday, saying that “We don’t need the Men in Black” to come and rescue Spain.

The commentators had a field day, my favorite was one guy who thought what the Spanish government really needed was the Men in Black to use their memory erasure device so people don’t remember all the election promises that they’ve already broken.

The quest for Spanish citizenship: Day 1

Since I am married to a Spanish citizen, and we’ve been living here for a couple years, I decided to see if I could get my Spanish citizenship. I think it’s generally a good idea to be a citizen of a country you intend to live in for the foreseeable future, and you never know how hard it will be to get all the documents together at some point in the future.
The main documents you will need are:

• Birth certificate. It needs to be with Apostille and translated by a legally certified Spanish translator. I used Ibidem Group (they were fast, but a bit expensive)
• Marriage certificate: if you were married outside of Spain, the best thing to do is to register the marriage at the Spanish consulate that corresponds to where you were married. That way, you get the same Spanish marriage certificate that a normal Spaniard would have and save yourself on legalization, and translation.
• Certificate of good conduct from your country of origin: this needs to be a certificate (also with Apostille) from the police from the country you were born, listing any crimes you may have commit. This also needs to be legally translated.
• Proof of being able to support yourself: social security statement, employment contract, that kind of thing.
• The usual other stuff that you probably already have (Spanish birth certificates for your kids, NIE card, passport, empadronamiento showing you living with your spouse)

First I went to the civil registry in Sant Cugat, but they told me that they don’t do nationalization, so I’d have to go to the civil registry in Rubi. Naive as I was, I collected my papers and drove over to Rubi.
Walking into the place I realized perhaps I had been a bit optimistic in paying for a full hour of parking. There were no tickets in the turn dispenser, and they don’t offer a “cita previa”, instead, I was told, you are expect to hang around the door at 8:45am and hope to get a spot for that day. Perhaps they want to make sure that only unemployed people are able to apply for citizenship.
I was told that once I secured a spot, they would tell me which documents I was missing, and then make an appointment for some day in the far future to see me. A couple sitting next to the turn dispenser piped up: “that was two years ago!” Shit.
Perhaps I should see if I can find a lawyer with enchufe…
Current score: Spain 1, Me: 0

Searching for a Spanish Silicon Valley

There was an article in Expansion today about efforts to create incubators for startups in Spain. There was a bit of handwringing about why there aren’t more high tech startups in Spain. If I had to come up with reasons, imagine (for the sake of the Spanish who only seem to understand excellence in football) that you wanted to make a football team that would be as good as Barca, but lived in a country that had no tradition of football.

1) Identifying and nurturing talent early. In the Spanish educational system, you can’t specialize in technology (unless you consider building a chair out of wood technology) until you reach university. Imagine that people only started playing football in university. In addition, you lose out on the filtering that happens throughout childhood, where kid who do well are constantly promoted and placed with peers of similar talent.

2) Specialized high-school education for the super motivated. It is clear to people in Spain that a regular school day is incompatible if you want to practice football for hours a day. In a similar way, having education that is customized to the needs of kids studying in high tech.

3) Money. Madrid decides they want a world class team to beat Barca, so they blow a couple hundred million on the best players they can find. Unnamed Spanish technology company wants a world class director of development, whom they are willing to pay up to 100,000 euros a year. Good luck with that.

Other reasons:

4) Consequences of failure. Not having an effective bankruptcy regime in Spain means that a mistake in a startup could put you on the hook to have your paychecks garnished for the rest of your life. In Spain, there is a presumption of fraud when you declare bankruptcy, and you actually have to prove that you are no longer a danger to society before you can incorporate again.

5) Specialized universities. Every autonomous community in Spain wants to be #1 in every field. This means that you have 17 badly funded effort in each area, instead of just dividing things up and having each university be excellent in a few areas.