'€40 roscones' and 12-month cards: the bill that lands in March
A forum thread links €40 roscones, interest-free 12-month cards and buy-now-pay-later deals with two months' grace: some argue the first payment...
English · Original discussion in Spanish · Published
El Corte Inglés on 12 months: the prosperity you pay for in March
Full trolleys, €40 roscones (traditional Spanish Christmas cakes), reserve hams and wines. The Christmas scene in the department stores repeats itself, and some read it as definitive proof that the economy is going like a rocket. The awkward detail appears in the small print: interest-free 12-month cards and purchases you don't start paying for until the end of February. Two months' grace. The party is financed, not paid for.
What gets bought and with what money
The menu at this time of year is familiar: €40 roscones, wines, hams and treats that wouldn't appear in a normal supermarket trolley. The thesis going around is that this consumption doesn't come out of savings but out of the department store's soft credit. Some sum it up wryly: spend as if there were no tomorrow from the 25th to the 5th, live like rats from the 6th on.
The two-month grace period is the key to the matter. Whoever signs in December doesn't feel the first payment until March, by which time the January squeeze has already become the spring squeeze. The phrase "the January squeeze isn't called that by chance" reappears every year, and this one is no different.
The NEP: handouts, the minimum wage and the velocity of money
The macro framework used in the conversation has a name of its own: the NEP, the new popular economy attributed to the Government. A rise in the SMI (Spain's minimum wage), non-contributory pensions, subsidies and a mass of money circulating quickly through consumer channels. The argument is that this monetary velocity sustains bars, supermarkets and shopping centres in the short term, even if the long-term effect is another matter.
It is argued that a family with two minimum wages plus side businesses can end up earning as much as a group A civil servant. The problem, they say, comes when the tap is turned off and the politician of the day announces on television that the shoots have withered. Then social violence could be the real headline.
Owners, tenants and the new proletariat
The other axis of the matter is housing. The arrival of population in Madrid shows up in rents: flats that rented for €600 go to €1,200 if the tenant has a payslip or pension. Those who aren't owners end up sharing a flat. The conclusion repeated again and again: you can't grow just by expanding population and debt, because slowing down hurts today and speeding up hurts later.
Underneath it all, an uncomfortable suspicion: indices, metals, property and even bitcoin have been rising since the pandemic because the currency they are priced in is worth less. The Cantillon effect does the rest. Whatever assets rise by is roughly what the middle and lower classes are impoverished by. Not the upper classes, because they have their money invested.
The dog in the aisle and the involution of consumption
There are scenes that repeat in the department stores: a dog defecating in the central aisle of the first floor, overflowing trolleys, last-minute queues. The complaint isn't just aesthetic. People talk of involution towards the simian and of a return to the shopping centre as a weekend theme park.
The counterpoint comes from the other side: those who argue that all this is just excuses from someone who has been announcing the collapse for twenty years and it never arrives. Prosperity, they say, is visible on the terraces and at the checkouts. The reply is as old as the forum itself: full terraces are financed too.
Returns, credit and the figure that throws you off
One indicator almost nobody looks at remains: January returns. That's where it will show whether the sales were real or whether the Christmas trolley goes back on the shelf. And there's the small print of pre-approved loans: interest rates moving between 18% and 22%, presented as a commercial advantage. A bargain, in short.
At those rates, the December party is paid for handsomely in spring. The prosperity shown by full trolleys has an expiry date and an interest rate. The figure that throws you off isn't how much is bought, but when you start paying.
Full trolleys, €40 roscones (traditional Spanish Christmas cakes), reserve hams and wines. The Christmas scene in the department stores repeats itself, and some read it as definitive proof that the economy is going like a rocket. The awkward detail appears in the small print: interest-free 12-month cards and purchases you don't start paying for until the end of February. Two months' grace. The party is financed, not paid for.
What gets bought and with what money
The menu at this time of year is familiar: €40 roscones, wines, hams and treats that wouldn't appear in a normal supermarket trolley. The thesis going around is that this consumption doesn't come out of savings but out of the department store's soft credit. Some sum it up wryly: spend as if there were no tomorrow from the 25th to the 5th, live like rats from the 6th on.
The two-month grace period is the key to the matter. Whoever signs in December doesn't feel the first payment until March, by which time the January squeeze has already become the spring squeeze. The phrase "the January squeeze isn't called that by chance" reappears every year, and this one is no different.
The NEP: handouts, the minimum wage and the velocity of money
The macro framework used in the conversation has a name of its own: the NEP, the new popular economy attributed to the Government. A rise in the SMI (Spain's minimum wage), non-contributory pensions, subsidies and a mass of money circulating quickly through consumer channels. The argument is that this monetary velocity sustains bars, supermarkets and shopping centres in the short term, even if the long-term effect is another matter.
It is argued that a family with two minimum wages plus side businesses can end up earning as much as a group A civil servant. The problem, they say, comes when the tap is turned off and the politician of the day announces on television that the shoots have withered. Then social violence could be the real headline.
Owners, tenants and the new proletariat
The other axis of the matter is housing. The arrival of population in Madrid shows up in rents: flats that rented for €600 go to €1,200 if the tenant has a payslip or pension. Those who aren't owners end up sharing a flat. The conclusion repeated again and again: you can't grow just by expanding population and debt, because slowing down hurts today and speeding up hurts later.
Underneath it all, an uncomfortable suspicion: indices, metals, property and even bitcoin have been rising since the pandemic because the currency they are priced in is worth less. The Cantillon effect does the rest. Whatever assets rise by is roughly what the middle and lower classes are impoverished by. Not the upper classes, because they have their money invested.
The dog in the aisle and the involution of consumption
There are scenes that repeat in the department stores: a dog defecating in the central aisle of the first floor, overflowing trolleys, last-minute queues. The complaint isn't just aesthetic. People talk of involution towards the simian and of a return to the shopping centre as a weekend theme park.
The counterpoint comes from the other side: those who argue that all this is just excuses from someone who has been announcing the collapse for twenty years and it never arrives. Prosperity, they say, is visible on the terraces and at the checkouts. The reply is as old as the forum itself: full terraces are financed too.
Returns, credit and the figure that throws you off
One indicator almost nobody looks at remains: January returns. That's where it will show whether the sales were real or whether the Christmas trolley goes back on the shelf. And there's the small print of pre-approved loans: interest rates moving between 18% and 22%, presented as a commercial advantage. A bargain, in short.
At those rates, the December party is paid for handsomely in spring. The prosperity shown by full trolleys has an expiry date and an interest rate. The figure that throws you off isn't how much is bought, but when you start paying.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (103 replies).
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