Those who ridiculed the trip of Pedro Sanchez to the United States in July because he did not meet with Biden or any member of his administration, they did not adequately assess his meetings with the top executives of investment funds and especially with the president and CEO de BlackRock Larry Fink.
Sánchez considered that meeting important enough to post a photo of both of them on Twitter, in front of a mural with floral lines along the Jackson Pollock, accompanied by a message: “We have talked about how to face global challenges. We share an optimistic vision of the recovery of the world economy after the pandemic, a recovery that must be sustainable and inclusive ”.
It was, of course, one of the key appointments you have kept since he is president of the Government. BlackRock is the largest investment fund manager in the world. Manage assets valued at $ 8.1 trillion. It is said soon: almost seven times the GDP of Spain, 20% more than the sum of the GDP of Germany and France. In Spain, it has very significant stakes in about twenty Ibex companies and other listed companies.
Fink, very identified with Democratic Party, has also distinguished itself by its belligerence in favor of the energy transition and corporate social responsibility. His annual start-up letter to the CEOs of the big companies he interacts with is something of the almanac of sustainable capitalism.
Sánchez left that meeting euphoric. There was chemistry between them and Fink spoke expressly of increase your bet for Spain.
If Sánchez intends to mobilize 500,000 million of additional euros of private equity, leveraging 140,000 from European funds, Fink will be the perfect touchstone. In other words, after that meeting looking into each other’s eyes, the assessment that BlackRock and the other large funds it visited make of their economic policy and the decisions they make or do not take as a result, will be the thermometer that will mark our future. .
We are not talking about “globalist” fantasies such as those that simultaneously disturb Vox and Podemos, but rather the inexorable reality of a Spain with a public debt of 123% of GDP whose financing depends on the purchase programs of the European Central Bank that, if inflation is perpetuated, they will have to be cut.
Fink himself recently predicted that the upward trend in prices will be long-lasting and we will soon hear the clamor of the frugal, remembering that the raison d’être of central banks is to fight inflation. Lagarde’s bad memories of the financial crisis fifteen years ago – then he ran the Monetary Fund, now the ECB – may make him drag his feet, but the shift toward a more restrictive policy is inevitably on the horizon.
In the environment of the European Commission itself there is already a demand to return to the course of fiscal consolidation and restore the deficit ceiling. It was very significant that both the Bank of Spain and the Independent Authority for Fiscal Responsibility (AIREF) recently urged the government to take that perspective into account. Although in view of the new Budgets, its success has been perfectly describable.
It is logical that, with the allocation of 27,000 million of investment from European funds, the Government has presented Budgets with the highest level of public spending in history
It is logical that, with the allocation of 27,000 million of investment from European funds, the Government has presented expansive budgets, with the highest level of public spending in history. What is not so logical is that, on the one hand, they include such clearly electoralist items such as rental vouchers and access to culture for young people; and on the other hand, they generate a structural deficit -or recurrent- of 5% of GDP due to the gap between income and expenses.
The risk of the propaganda irruption of the “cicada with asteroids” described yesterday by Daniel Lacalle, is that those same young people who are now courted with these subsidies that Podemos like so much, remain unemployed for a long time and when they finally raise their heads they find themselves with the burden of a huge debt and the prospect of having to work longer to collect lower pensions.
Just an unprecedented mobilization of private investment, just a massive attraction of that foreign capital The one who with such frivolity as ignorance is classified in the category of “vulture funds”, will be able to save Spain from the economic debacle two years from now. Sánchez needs European funds not to be the fruit that the smartest cut from the tree, but rather the seed that generates a new business ecosystem based on sustainable development.
The key is therefore in the sense of the reforms that will establish the new rules of the game and there Sánchez is with the tremendous handicap of the permanent opposition of its partners from Government to economic freedom. It’s like trying to climb the Himalayas with a string of obese climbers, vomiting from altitude sickness and hell-bent on charging the Sherpas a tax for every meter they advance.
The key is in the sense of the reforms that establish the new rules of the game and there Sánchez is with the tremendous handicap of the opposition of its partners from Government to economic freedom
So far Sánchez has tried to satisfy them with treats like the Vital Income or the rises of the Minimum salary that, although they generate effects contrary to those intended, they also alleviate extreme situations and have affordable costs. The extreme situation is coming with the outcome of major issues such as the Housing Law, the Labor Reform or the Sustainability of Pensions.
In the first case we have just witnessed what can be seen as an elaborate attempt to fool everyone at the same time or as an ingenious maze that only serves so that, after many turns, everyone can find a way out that return them to the starting point.
At first glance, what was announced by the Government makes the Housing Law in an attack against private property, in a boomerang that will make the rental market even more expensive due to the retraction of the offer, in an area of angry political debate and in the flesh of an adverse ruling in the Constitutional Court. But as the fine print is filtered, the perception varies.
In the first place, because there are a year and a half ahead of parliamentary proceedings – in which Sánchez himself has encouraged the opposition to introduce amendments – and another year and a half more to establish the Reference Price Indices. That means that the law could be repealed if the PP won the elections and achieved the investiture before it had produced any effect.
Secondly, because its economic effects must pass the filter of the autonomies, in the case of freezing or lowering of rents, and of the municipalities, in the case of raising taxes on empty homes. And even the fact that the regional or local authorities are from the PSOE or one of its partners guarantees that the proposal to declare an area as “stressed”, for the rule to be applied, will come out ahead because the last word will always be of the central government.
And thirdly, because the apparently draconian provision that all real estate development must allocate 30% of land to social housing, will be accompanied by the surreptitious compensation of being able to build free housing through another agreement on an equivalent land.
The harsher the reaction of the opposition and the bosses, the more legitimated Podemos is going to feel to take our chest out and settle for almost whatever
Three years are going to give a lot of themselves to talk about all this and, deep down, the harsher the reaction of the opposition and the bosses, the more legitimated they will feel. We can to get chest out and settle for almost anything. We are talking about a human group that on the one hand clings to power to preserve their salaries and on the other, it is immersed in a process of political spin, relentlessly led by Yolanda Diaz. It is a group very willing to be fooled by Sánchez, as long as he can hide it thanks to the cannonade from the right.
Those who have no margin to deceive the president is Larry Fink and his emuli. At the meetings of New York These three key issues emerged: rents, labor reform, pensions. It is possible that, with all the subterfuges described, the president will be able to sidestep the issue of rents, since he has control of the legislative process in his hands. But Sánchez knows that Brussels will not accept either the labor reform or the pension reform if they are not previously agreed upon by the social agents. And the positions of CEOE and unions are currently irreconcilable because the left has made these two issues its great battering ram against market freedom.
We have not yet come out of the pandemic, we have not yet gotten over the frustration at the way we had to flee Afghanistan, the eruption of the volcano is not yet extinguished, and already a new plague from Egypt in the form of energy crisis. The cartelization of the gas supply, the geostrategic games of Russia or Algeria and the high cost of the energy transition are creating a new perfect storm that for the moment has triggered inflation, but could well lead to the drama of shortages.
A winter with extremely low temperatures would, in that case, bring a real humanitarian catastrophe. An important Spanish leader even invoked this Thursday the ghost of an “energy Armageddon” and explained to me that “it is much more difficult to fight the cold than hunger, an epidemic or any natural catastrophe”.
A winter with extremely low temperatures would, in that case, bring about a real humanitarian catastrophe
In this scenario, resorting to the criminalization of electricity companies and abruptly expropriating a significant part of their income from them is the worst way. BlackRock and other mutual funds are among their benchmark shareholders and, after their market value plummeted, they cannot help but perceive the extreme risk of legal uncertainty.
Sánchez is determined, in tandem with Draghi, to change the European pricing systemHowever, in the meantime, it must resort to reducing tax burdens, contributing to the electricity system what it collects from CO2 emissions or extending the life cycle of nuclear power plants, perfectly compatible with sustainable development.
Let’s talk about housing, the labor market or energy, only the public-private synapse will be able to keep our organism alive. It depends on Sánchez whether it is, to use neurological terms, a productive excitatory synapse or a paralyzing inhibitory synapse.