The writer commited a serious error in yesterday's post. The sentence which read, '36% of students in 3º de ESO (approximately grade 10 in Canada or the U.S.) are in the year that "corresponds to their age"' lacked the word 'not'. The result, still mighty discouraging, is the opposite - 36%, and not 64%, have failed at least one year.
Our apologies.
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One of the nonsense bits of regional self-promotion that one - previously identified as being not from here, but from that magical place known as por ahí which extends from the Sierra Morena to approximately Antarctica - must regularly endure is the eternal claim that los andaluces live better than anyone else on earth. This usually shows up as sort of an extra tapa with the fifth or sixth round of beer with the locals on a hot summer evening and is, of course, a request that one vociferously confirm that Andalucía is, in fact, the promised land.
But who is this writer to shit on his host's parade? Instead, we'll merely point out the annoying possibility that the policy decisions made in an earthly paradise will probably not be, ummm, as good as they could be. This Saturday's Andalucía edition of El País lays it on the line. After 30 years of modernizing the region's educational system through the unremitting application of catch phrases, slogans and stated good intentions, a recent study shows that:
1). 36% of students in 3º de ESO (approximately grade 10 in Canada or the U.S.) are not in the year that 'corresponds to their age';
2). The average result from testing 82,961 students at this level on their ability to communicate using their native language was a 3.28 - 0.22 points below what is considered a passing grade in the context and 0.53 less than in 2008. Various versions of exactly the same apply to the mathematics and other surveys.
The problem might be that, if you live in a place that is predeterminedly perfect - as is Andalucía (and probably much of Spain if a zap through the endless reassuring tripe that is the daily fare of the regional television channels is any indication) - there is neither reward for achieving good outcomes nor punishment for rolling craps with one's bright idea, let alone any indication from either parents or students that the result is anything but just hunky dory. Simply, no matter what one does or doesn't do, one remains precisely in the same best place possible. The task is equivalent to trying to calculate the optimal fiscal stimulus in an infinitely large economy.
That perhaps the only incentive to improve, as implied by the insecurity before people from por ahí betrayed by the opening anecdote, is that others might not see it so is confirmed by Andalucía's education minister, Mar Moreno's, instant adaptive policy adjustment to the bad news - the tests will, rather than continue to be conducted in the first trimester in the future, henceforth be held in the third to bring them in line with those in other regions.
We suppose that it's arguable that the engine on the slowest train in Europe pulls into the station ahead of the caboose.
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To a degree echoing some of the above, we offer our English paraphrase of a joke that appeared in the comments to an entry in La Vanguardia Desde Fuera:
A group comprised of various EU leaders, whilst touring the Louvre, stop in front of a painting of the Garden of Eden.
Angela Merkel is the first to opine: 'Look at the perfection of their bodies. Eve so svelt and slender. Adam so athletic and muscular. They must be Germans'.
Sarkozy, however, is having none of that. 'The sheer eroticism of the two figures tells us that they are surely on the verge of falling into temptation. They must be French'.
Next up is Gordon Brown who remarks on the certain Englishness of their delicate poses, serene faces and serious gesture.
Lastly, and following a brief pause, José Luís Rodríguez Zapatero calls them all to order.'No way! Just look at the thing! They have neither clothes nor shoes. They're homeless and have nothing to eat but an apple. Worse yet, they don't complain and they believe they're living in Paradise. Spanish beyond a doubt!'
(Hat tip - Clover)
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Bernard Hinault seems to like Andy Schleck's chances in this year's Tour de France. Having watched pre-race favourite, Alberto Contador, take 22 seconds out of the second place finisher in the short uphill TT in the Vuelta al País Vasco in April, and look just as fresh at the finish line as he did leaving, we don't buy Hinault's take.
At the halfway point of today's prologue, Contador leads by 5 seconds.
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We have to admit that the hyperinflation argument, if nothing else, has tremendous mediatic appeal. After all, has anyone ever seen a headline that reads:
Bread Prices Drop - Rioting Reported
And we never will.
Apocalypsists*, faced with the inevitable monotony of deflationary recession, find themselves reduced to citing evidence such as this in order to maintain their blog readership. Touting the hyperinflation thesis, the piece was penned on behalf of a mutual fund manager that exclusively sells currency diversification to U.S. investors. Thank you. Next witness please take the stand.
Gold is starting to be a mightily appealing short at $930. Target? Somewhere south of 700, say.
*Among the other seeds of discord sown recently by Tyler Durden to keep that comment box rocking stands out the tantalizingly June 23rd "Morning News Recap" headline: 'Greece vehemently denies rumors it may drop EURO'. No attribution and no link to any source. As unsurprising as the fact that no Google news search that we can think up can find mention of it anywhere is the consequent 15 bps tightening of the Greek 10-year yield to that of the bund.
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The Instituto Nacional de Estadística has released its quarterly report on Spain's national accounts. Outstanding was the rise in the country's personal savings rate - at 7.9% compared to 4.8% in the year earlier period. In absolute terms, household savings have increased from 8 billion to 13 billion euros.
Further on in the press release, the section on the public administration sector notes their disposable income has decreased some 19% over the same period. Behind this is a 12% decrease in tax receipts. This is divided into a 15% drop in value-added, and a 7% diminution of income, taxes collected.
Adding to these two the 18% increment in government social expenditures and we come up with none other than the feared liquidity trap - money thrown at the economy to prevent disaster resulting in a more than 50% increase in the rate of savings, and little else.
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Tracing back through a comment left by a local reader, we have found a Spanish website offering a number of good photographs of our town and its surroundings.
For readers desperate to assign ultimate responsibility for the babble that appears in IBEX Salad, image number 45 from Abraham's excellent slideshow of old photos of Cazorla features the writer's mother, Elena Mackay Moreno, c. 1915. Taken in the town park she is second from the left - the one sucking her thumb.
Abraham - los mas probable es que esté en Almería este fin de semana. Gracias de todos modos.
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Pretty much coinciding with our June 2nd observation that the returns from most investment options were a touch too correlated, the well-subscribed curve steepener went upside down*. Betting the long schatz/short bund spread (naive margin requirement equalizing ratio of 4:1) had netted, from early March through the end of May, 496 basis points. Since then, it has given back about 30% of those gains.
The relatively good news here is that this reversal appears to have not resulted in any contagion to other markets - implying that deleveraging and cascading margin calls and the like might no longer be as serious a risk as it was last autumn.
With the usual caveats about doing one's own homework, we suspect that the British pound (pictured on the left) might be the next to abandon the bull cartel. The, in the end inconsequential, 9-cent shakedown of a couple of weeks ago looked ominous to this farmer.
*As if our own, typically auto-contrarian, timing were not sufficient indication of where the probabilities lay, what are we to make of Bloomberg picking up on the theme, ummm, yesterday?
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On Friday, the BBC's news website published a short piece on the Spanish bank bailout fund - the FROB. For those who take an interest in this kind of thing, the piece is a touch inadequate.
1). The 9 billion euros of bailout money referred to is the initial funding for the program. In extremis, this amount could be levered to 90 billion.
2). The FROB will, in fact, begin with 36 billion to be dedicated primarily to the salvation of various cajas de ahorros. This figure is what the BBC should have reported.
The money will be dished out as a purchase of non-voting participaciones preferentes on the part of the Banco de España, with the condition that they be redeemed by the issuer within seven years. That not being achieved, they convert to voting shares - a circumstance never before faced by the non-profit, non-public and highly region-affiliated cajas.
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Coinciding nicely with the recent death of Mr. Jackson, ABC News has run a story on a 16 year old girl in Maryland who remains stuck, physically and mentally, at an age at which she has yet to master walking - still with baby teeth and all.
Similarly, our buddy Chris - who dedicates some of his time to promoting concerts - will be bringing to stages throughout Spain over the course of the summer Burt Bacharach, John Fogerty, Jerry Lee Lewis and the New York Dolls. In a slightly more modern vein, Depeche Mode will be making a reappearance and Seal will do right to all of our Stax-Volt favourites.
One could be forgiven for seeing Brooke as the triumph of the Lamarckian hypothesis.
An Aside
Readers will note that this week's eurospreads chart (on the right) shows an abrupt widening of the Irish ten-year yield. This coincides with the apparent bringing to market of a new issue of this duration. Seeing as we get this information from the Irish Times, whereas the rest come from the Financial Times, we're not exactly sure that there might not be some sort of misunderstanding here.
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As the caja de ahorros at which the writer does most of his banking continues to insist that he should be investing in their participaciones preferentes, he has made up a list of the pros and cons of moving himself further out on the branch of the tree of risk in search of those tender green shoots of yield.
Against...
1). The perpetual term;
2). The clause that says that if they lose money in a given year, they don't have to pay the dividend for that year, ever;
3). That they are only showing profits at the indulgence (or insistence) of the governor of the Bank of Spain;
4). That if the above governor gets bored with the reluctance of the cajas to merge with others, he may suddenly not accept their book keeping fictions at some point in time;
5). That rating agencies are generally classifying these securities as 'junk', implying that a fair yield would be upwards of double what is usually being offered.
For...
1). The 7.5% coupon for the first two years, if compared with the 3-ish that government guaranteed term deposits are currently paying;
2). The free chainsaw with every subscription.
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Click image to enlarge
To be updated weekly.
