Understanding Entrepreneurship - “A Start-up is Not Just a Small Company”
Irish Daily Mail - Spain´s Squeezed Middle
1. Page 34 Irish Daily Mail, Saturday, July 7, 2012
SPAIN’S SQUE Lidia is a 27-year-old Madril
I lawyer earning ¤500 a mont
T’S 12.30am on Monday, and victorious
Spanish youths are dancing in the fountains in
Puerta del Sol, a plaza in central Madrid.
Scores of young men, some naked to the
Crushed by the crisis, she an
waist, all soaked to the bone, chant ‘Y Viva
España’, as thousands of advancing fans join
in, streaming through the square from the cobble-
stoned side-streets.
her friends live in squats and
Spain have just thrashed Italy to win Euro 2012, and become
the first team in history to successively win three major
soccer competitions.
by Brian
As the plaza fills, the crowds spill up
Calle de La Montera, a pedestrianised
boulevard of café bars, restaurants,
have even raided supermark
casinos , l e g a l i s e d p r o s t i t u t i o n
and strip clubs, before turning right
on to Gran Via, Madrid’s main thor-
oughfare, and down the long-winding
Carroll
road to Plaza de Cibeles, now the
bins for food. Now, after year
traditional destination point for in Madrid
victorious Spanish teams.
Cibeles is the Goddess of Bounty, string, the bank got all the family,’
and, in sport, Spain’s many cups says Lidia. ‘The number of homeless
runneth over. has increased and social services
The sound of bullhorns fill the air, as don’t cover it. The Church is helping
of denial about the depth of
fireworks illuminate the moonlit and there is a net of mutual help, but
night. Young men use their Spanish it’s not enough.’
flags to play matador with any cars C a r i t a s , a group which uses
foolish enough to try and make it Church funds to help the poor, said
down Gran Via. demand increased 100 per cent last
their difficulties, Spain is slo
Street vendors sell beer, whiskey, year. Some 50,000 were evicted in
chocolate-dipped doughnuts and 2011, double the figure for 2008.
almonds, as hundreds of thousands Tatiana Koleva, who has a 16-year-
of supporters and visitors dance old daughter, was the first person
until well after 3am, when Madrid’s whose eviction was successfully
clubs only really start to get going. prevented by PAH in Madrid. She
facing up to a brutal reality...
It’s hard to believe that, statistically, lost her job as a confectioner and
one in two of these young men and couldn’t meet the payments on her
women is unemployed, or that 300,000 €€200,000 mortgage with the Spanish
people in Madrid alone are facing banking giant BBVA.
eviction. Like the Spanish banks, At a meeting in the Plaza del Carmen
which, by some estimates, are hiding on Thursday night, she explained
more than €€250billion in undeclared how, on June 15, 2011, dozens of
losses, what lies beneath is somewhat people flocked to her apartment on
different to the spectacle. Calle Naranjo and prevented bailiffs
It was in Puerto del Sol — the ‘gateway from entering the house. She then got
of the sun’ — that the first overt signs a six-month stay in the courts.
of civil unrest regarding Spain’s As the deadline approached, PAH
economy emerged on May 15, 2011. A organised a campaign to harass the
gathering of 20,000 protesters there bank with telephone calls, and
sparked the occupation of public
spaces in 60 Spanish locations.
‘Suicides have
Lidia Posada Garcia — a 27-year-old
junior lawyer who works for €€500
a month and squats in a bank-
repossessed apartment — was one
of the original May 15 group, dubbed
the Indignados. Now, almost 14
risen 20 per cent
months later, the Indignados have
split into various groups, including
the Plataforma de Afectados por la
since this began’
Hipoteca (PAH) — the platform to
help those facing eviction. arranged for hundreds of people to
Many have young families and some physically block the eviction. At mid-
have resorted to raiding the rubbish night the day before the scheduled
bins of supermarkets at closing time, eviction in January this year, the bank
when they discard food that’s about agreed to negotiate.
to perish or reach its sell-by date. Tatiana’s debt was written off, but
Lidia too has taken discarded food she lost the house, and now lives with
from supermarkets. friends. Her daughter has moved to
‘I have food because we know where the US. The courts have since become
to get it in that period before the food much stricter — the eviction notice
is bad and the markets get rid of it. period now ranges from 15 days to
We call it recycling. one month, and injunctions are
‘People are mortified, but that’s routinely used to stop PAH from
when you see how it [the euro crisis] physically blocking evictions.
is affecting people — those people Tatiana now works with PAH and
[taking discarded food] are not evicted Psychologists Without Borders, coun- Dissent: A protestor calls o
yet but they are doing whatever they selling people facing evictions. Activism: More than 20,000 people protested in Madrid in May Mariano Rajoy to step dow
can to pay to keep their houses.’ ‘Most suffer depression and a great
With 24.3 per cent unemployment — feeling of guilt from the bank calling press as a victory for prime minister help Spain. Yet, despite all this, the can get more because your unemploy-
4.6million in a population of 47million and pushing 24 hours,’ says Tatiana. Mariano Rajoy giving Spain’s banks Spanish are dancing in the streets of ment benefit is linked to how much
— Spain has the EU’s worst jobless ‘We have already recorded several access to €€100billion, and a defeat for Madrid — and not just last Sunday. you previously earned. It’s possible, if
record and its social safety net is cases of suicide. Suicides have risen Angela Merkel’s Germany. Luis Rivera Gurrea-Nozaleda, 32, is you were previously well-paid, to
being eroded. With insufficient social 20 per cent since the beginning of the But the reality is Spain has another an entrepreneur, helping to hothouse receive up to €€2,000 a month on the
housing, evictees either go home to economic crisis.’ €€250billion in hidden bank debt; it start-up mobile and internet compa-
their parents or on to the streets. And yet there are no obvious signs currently spends €€64billion more nies in Madrid.
However, many parents were co- of financial distress. The tapas bars, every year than it takes in; and it has ‘We are zombies. We are in complete
guarantors of those mortgages, so
now two generations are trapped.
jazz clubs, theatres and restaurants
are full with tourists and Madrilenos,
maturing debt of €€27.5billion, which
has to be repaid by October.
denial. I guess we can afford to be
in denial because two-thirds of the ‘We’re proud,
but in denial of
In recent years, people were whose post-midnight zest for life only The summit deal allowed money population can’t read a newspaper
encouraged to take out mortgages underscores Ernest Hemingway’s from the European Stability Mecha- from outside Spain.
for more than 100 per cent of the value conclusion that, in Madrid, ‘nobody nism (ESM) to go directly to Spanish ‘The politicians, the banks, the old
of the property, as Spanish banks
were bundling up mortgage debt and
selling it on to investment houses in
sleeps until they kill the night’.
But, there’s a sense among the busi-
ness community, journalists and
banks, rather than to the government
— unlike Ireland, where the debt was
passed directly to the taxpayers.
establishment control the media. It’s
a bit like living in China. I don’t mean
to conclude this in a demeaning way,
what’s going on’
the secondary market. economists that Spain is still But the ESM will only have a total but a lot of the Spanish are lazy or
The average wage is just €€26,000, sleep-walking through the euro crisis, fund of €€500billion for all the distressed don’t have the culture to understand
but the average price of a two-bed still in denial, still attempting to states. Spain’s bill is likely to be north how bad it is.’ dole. In a country where the average
apartment in Madrid was €€250,000. In spin the ignominy of a €€100billion of that amount. There simply won’t Unemployment benefits are good in wage is €€26,000, and only a remarkable
many cases, people were loaned ten bailout into another Spanish victory be enough money, unless the other Spain but they run out after two 4.6 per cent earn more than €€60,000
times their annual salary. on the world stage. eurozone members contribute more. years. Until then you will get an aver- a year, being on the dole can be an
‘Most got extra warranties from The critical EU Summit deal of June In such a scenario Ireland would have age of €€1,000 a month — compared to attractive time-out. Luis believes
their families, so when you pull the 29 was largely spun in the Spanish to contribute a further €€11billion to about €€800 in Ireland. But often you that, for many, there will be no future
2. Irish Daily Mail, Saturday, July 7, 2012 Page 47
EEZED MIDDLE
leno
Struggling:
Junior
lawyer
Lidia Posada
th.
Garcia in
Madrid giant Spanish mortgage lender, Bankia. is similar to Ireland,’ Luis tells me
Bankia falsified its accounts — in his über-cool start-up offices on
claiming profits of €€390million, Bravo Murillo in northern Madrid.
when it had actually made losses of ‘You guys also had a housing bubble
€€3billion — in order to sell shares in but there were things built with the
nd
the bank and keep it afloat. benefit of that bubble.
Savers were encouraged to swap ‘You started attracting a lot of
their savings for shares, and were European technologies, started
wiped out as a result as the shares are having a tax scheme that was benefi-
now worthless. Bankia is a Spanish cial to big business, reversed a very
d
Anglo Irish Bank in every sense, and long trend of your brightest guys
responsible for 80 per cent of the going out of the country, and started
evictions in Madrid. Many other banks getting in bright guys from all other
— such as Novacaixagalicia, Banco countries. We didn’t do any of that.
de Valencia and CatalunyaCaixa — are ‘We just sat back and said: “Oh it’s
also being sued by investors. amazing, we can buy a house and
ket
Luis, who through Start Up sell it three years later making more
Spain helps new tech companies to money than I would make with
access venture capital, said: ‘I my professional career.” I don’t really
have heard some reports of up to know where the growth is going to
€€400billion losses hidden in the come from here.’
rs
banks — I think it’s a reasonable Joe Haslam agrees, pointing out
number. I don’t believe in [the Wyman/ that there is no limited liability
Berger figures]. Bankia alone is going for companies in Spain, and it can
to be north of €€100billion. take up to 100 days to get a company
‘In the extreme, I see a scenario formed and secure a VAT number.
where we start really integrating from None of Spain’s 73 universities is in
a fiscal standpoint and become the the world’s top 400.
United States of Europe and that’s ‘Spain had reached the eighth rich-
going to hurt a lot.’ est country in the world. Now there is
Irishman Joe Haslam is a professor a realisation that Brazil, Korea, all
in the Department of Entrepreneurship these countries are growing,’ he says.
owly
at Madrid’s IE Business School, ‘The Spanish used to think, “How
ranked number seven in the world for can we get from eighth in the world
its MBA programme. to sixth?” But now they are looking
From Limerick, the 39-year-old at “how do we stop going to 15th?”
father-of-two is married to Lara, a You can’t have 50 per cent of young
Spaniard working for Vodafone, and people unemployed — it’s just not
..
has lived in Madrid for eight years. He sustainable under any evaluation.’
believes the Spanish are refusing to The Spanish government, which has
face up to the crisis. to reduce its budget deficits from 8.9
‘If Madrid was a country, on many per cent of gross domestic product
levels, it would actually be performing in 2011 to 5.9 per cent this year, is
better than Germany. But in the rest of considering increasing taxes on energy,
Spain, there are places like Andalucia property and consumer items.
Cuts have been introduced in
education and health, and the VAT
rate has been increased to 18 per cent
‘I don’t know for certain items.
The next move is to reclassify many
where growth
bars and restaurants — which pay
from four to eight per cent VAT,
depending on their size — so that they
will come from’ pay the highest rate of 18 per cent.
Visitors to Barcelona will be hit with
a tourist accommodation tax, with
Catalonian authorities charging
between 75c and €€2.50 per night,
that are basket cases — nobody works, depending on the quality of the hotel.
it’s seasonal employment only. I go For some, the answer is emigration.
out in Madrid when supermarkets are Limited by language — only about
closing and see people rummaging ten per cent of Spaniards speak Eng-
in the bins. lish — most are heading for Brazil,
‘There is a pride element though seeking construction work in the boom
— it’s like that Oscar Wilde quote: ahead of the 2014 World Cup and the
“These cigars are so expensive I can Olympics in 2016. About 1.5million
only afford them when I’m in debt.” of Spain’s unemployed worked in
The more debt someone has, the more construction prior to the crash.
important it is for them to demon- There are no official figures on
strate that everything is okay. emigration, but it’s estimated that
‘Only 4.6 per cent of Spanish between 100,000 and 200,000 have left
households earn more than €€60,000. in the past two years, along with many
In Spain, €€60,000 is considered immigrants who returned home. In
space-age money.’ 2011, Spain had negative migration
He sees a lost generation of Spaniards for the first time since the Eighties.
under 35, living with their parents. Pablo Rodriguez Suanzes is interna-
Spain has reportedly the highest tional economics reporter for El
internet piracy rates in the world. Mundo, Madrid’s second best-selling
‘The kids just stay in the house all daily newspaper, which recently let
on prime minister day and download films. They pick 150 staff go. Pablo agrees that Spain
wn up pocket-money jobs on the black is in denial about the crisis but ex-
economy. It’s almost for some people plains that, for many people, life has
in Spain. ‘There is a generation who Oliver Wyman and German firm bank, special instructors had to be that this is great — no pressure, stay actually become easier since 2010.
live at home and will get to be 35 Roland Berger estimated the total brought in because the board, which at home, mum washes my clothes, ‘For the 75 per cent of the people
without having done anything. If you amount of Spanish debt to be in the included politician’s wives, didn’t out with my friends at the weekend, who have a job, there is no crisis —
haven’t worked a single day in your region of €€62billion. know how to read balance sheets. sleep all morning, then do a few hours prices are low or, at least, not higher
life by 35, forget it. Very few, however, believe this The banking sector claims house handing out leaflets. than they used to be. Mortgages
‘It’s hard to say that to someone assessment to be accurate. Up to two prices have only fallen 20 to 25 per ‘You ask them about ambition, or have been halved in two years as most
who is out of a job a year-and-a-half, is years ago, 80 per cent of Spain’s banks cent, but no one believes them. On what are you looking to do with your have their mortgages tracked (to the
about to run out of his unemployment were controlled by politicians or trade Wednesday, a Spanish national judge life, and they look at you like: “What ECB rate which is now 0.75 per cent,
but is blissfully unaware of how bad unions, with the boards littered with ordered Rodrigo Rato, a political ally are you talking about?”’ its lowest ever). My girlfriend used
the situation is, of how much the political appointees. In Valencia for of Spain’s prime minister, to appear in For others with ambition, like Luis to pay €€1,300 per month in 2008, now
politicians are lying to him and how example, a ballet dancer was on the court to face criminal fraud charges the entrepreneur, they face huge she’s paying just over €€700. Her real
much the bankers are lying to him. board of one bank, while in another over his recent role as head of the obstacles to starting a business. ‘Spain income is €€600 better, even though we
‘You guys [the Irish] call bulls**t have suffered a 15 per cent wage cut.’
MONDAY DEBT AND TAXES: THE
when it’s bulls**t, in the same way The financial pain is starting to
that the British do. The Spaniards as spread though. Spanish savings
a culture are extremely proud and rates have plummeted.
that makes us very successful. ‘Today was the first time since 2005
‘It’s part of the recipe of success in that savings of Spanish families went
ECONOMIC MORASS EXPOSED
football, tennis, golf — we are proud negative,’ says Pablo. ‘In 2008, people
and competitive. But the opposite started saving for the crisis. But, step
side, is we can be very hyper-critical by step, they spend this money and
and live in absolute denial of what now it’s negative, because they have
is going on.’ An independent assess- broken the piggy bank and they say,
ment of Spanish banking by US firm “Whoah, what’s next?”’