Paradise Lost: Mallorca and economic pain

So the IMF has issued another warning about Spain's economy. And called for reforms to the country's labour laws, making it, among other things, easier to fire workers.

That it has taken so long.

The chickens are coming home to roost. In all manner of ways. The problems of the bankrupt Spanish economy are mirrored - several-fold - in Mallorca. Easy money of different sorts - that from grants, the banks and, oh, the tourists - has become very much more difficult. Complacency of this easy money has given way to a panic. It all used to just fall into people's laps. Just like the Spanish Government, over years and in different political guises, sat back and trousered Europe's benefaction and careered headlong into growth on the back of the always-likely-to-shift sand of credit, so the local tourism industry (in its different manifestations) sat back and trousered the contents of the tourist purse while barely having to lift a finger or a fat arse off a bar stool while puffing on a grand Havana and slurping on a fine brandy.

The IMF, and the government (though it will try and avoid the issue), know full well what is needed. One thing is employment law. Making it easier to sack freeloading employees is one aspect. They should, but of course won't, slash the burden of social security payments. It is these, more than tax, that are a baulk where it comes to employment and to badly-needed entrepreneurship. They'll probably do the reverse, and increase them, just like they're increasing IVA (VAT). It's the economics of the mad house, but the mad are desperate, and so is the government, though you might hope that the government is about to grow up and join the real world. Likewise, many businesses in Mallorca who are having to appreciate that the days of the playground are over and are having to join the real world.

So much of what passes for the local economy is untenable, and has been for years. It is what gives rise to the obscenity of the dole queues in November. If Mallorca were a business, one with a plan for six months' trade (if it's lucky), then any half-decent consultant, or anyone with an ounce of sense, would say that it's not much of a business model. And it isn't. That it has been allowed to persist for so long is all down to that complacency.

Let's itemise some of the problems and responses: tourism down by 20% in April (admittedly the volcano didn't help); unemployment at 20%; banks starting to come under strain because of their bad debts, despite the provision for these that the Bank of Spain imposes; town halls told they can't have any credit; public works slashed. You could go on. The problems may not be unique to Mallorca and Spain, but they are exacerbated because of the fundamental flaws in the economy, especially the local one and because of that awful complacency.

Sad I am to say that I feel vindicated. I have said much of the foregoing for years on this blog. B.C. Before Crisis. I feel angry because it was all too easy to predict. The crisis just hastened the problems. The centre was never going to be able to hold when it was built on such shaky foundations.

I feel angry, but I want to relax. I have just heard The Fleet Foxes "Mykonos" on the radio. It has mellowed me. For a moment. And I remember Mykonos in 1973. When I wasn't in the real world. I wish to hell I was back there, in Mykonos 1973, on Paradise beach. A place where Paradise actually existed, rather than being monikered thus by fatuous tourism authorities and companies and their parrots in brochures and everywhere else. The Paradise Island, what they insist on calling Mallorca, is crumbling into the sea.

But relax. Fleet Foxes:




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