Market Beat: Economic recovery in the PIIGS
May 27, 2013
The term PIIGS is an acronym for the countries in the Euro Zone with the worst economies. PIIGS stands for Portugal, Italy, Ireland, Greece and Spain.
Over spring break I had an opportunity to travel to Spain and witness their economy firsthand. My son Ryan, a recent graduate of Truckee High School, attended college last semester in San Sebastian, Spain. San Sebastian is in the Basque region in the north of Spain and is well known for its surfing. Ryan completed a surf class while he was over there getting immersed in the Spanish language and culture.
This wasn't my first trip to Spain; I had the good fortune to live there for three years in the late 1960s. My dad was an Air Force pilot and was stationed at Torrejon Air Base just outside Madrid.
At Torrejon, he used to co-pilot with Colonel James B. Swindal. Swindal's claim to fame was that he had been Kennedy's pilot on Air Force One when JFK went to Dallas. He flew the casket back to Washington and was involved in some controversy about who had the authority to give flight orders.
Apparently, LBJ was on board and no one was aware of it. The story I heard is that Swindal pretty much told LBJ what he thought of him and ended flying in Europe over the next few years instead of continuing to command Air Force One.
Anyway, the trip to Spain was wonderful. The food was excellent, the sightseeing wonderful and it was full of so many great memories. When we left Spain in 1969, it was still fairly primitive, especially in the rural areas. Roads were old and rough, some still had cobblestones.
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Today, Spain's infrastructure is state of the art. The roads are in superb condition, a high speed rail system is in place and there are numerous wind farms. Spain is the world's fourth largest producer of wind power.
Unemployment is very high, more than 25 percent, but part of that high number is due to recent immigration, people came from other countries for construction jobs and they had a population surge.
What Spain really needs right now to bolster their economy is exports. Exports will provide jobs and GDP growth. Last year Spain's exports surged to a record $222.6 billion Euros. Continued export growth will be the key to their economic future.
Food products are one of their main exports and being a martini aficionado, I can assure you that Spanish olives are the best in the world.
Kenneth Roberts is a Truckee based Registered Investment Advisor. Information on his money management service can be found at his blog at http://www.sellacalloption.com or by calling 775-657-8065. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.