Garbage Piles Up in Spain as Unpaid Municipal Bills Mount; Green Shoot of the Day: Cement Consumption Falls 34%

As Spain attempts austerity by cutting back payments to regions, those regions run out of funds to pay bills.

For an interesting case-in-point, please consider (via Google translate from El Economista) Municipalities Owed €2,000 Million, Companies Refuse Collection and Cleaning

Defaults on local councils put back on the ropes to urban sanitation companies. No respite worth. If the final plan provider payment partially interrupted the problem, the situation again becomes serious. "Since the beginning of the year delinquencies has skyrocketed. In just eight months to August, the accumulated debt of the sessions with cleaning companies was around 1,680 million.

This rise is worrisome for a sector in Spain employs over 120,000 people, "said the president of Aselip (Association of Public Cleaning), Francisco Jardón.

The result is that today the municipalities pending bills with these companies together account for nearly 2,000 million euros.  As also in the pharmaceutical sector, the debt problem is that, far from disappearing, is regenerated by now.

"When the government launched the provider payment plan in April the problem was corrected by 90 percent. Then consistories debt with sanitation companies was nearly 3,000 million euros and around 300 million were left payable "adds Jardón. Why? "For the Royal Decree which implemented that plan did not, do not know why, consortia or associations, which also have hired urban sanitation".

Strike in Jerez

Urbaser stars in these days one of the main problems related to the debts. The ERE submitted by the company, which includes 125 layoffs and pay cuts, has meant that employees call for a strike in garbage collection that has lasted 19 days.

According to the City, more than 3,000 tons of garbage piled in the streets of the city of Cadiz, which last night had its second day of riots and burning container. Sources Provincial Fire Consortium reported traffic costs due to the garbage thrown by neighbors to the street as a barricade, and clashes with the police and firefighters who came to put out the flames.

That is quite a choppy translation but I believe you get the gist.

Green Shoot of the Day

While reflecting on garbage, also consider via Google translate The green shoot of the day. Cement consumption falls by 34% through October.

Cement consumption fell by 33.8% in the first ten months of the year, reaching 11.74 million tons, thus scoring one of the biggest percentage declines since the beginning of the crisis.

The association warns that if this fall in consumption is not stopped "using government" not ruled out further adjustments in business capacity of a sector that has already lost one third (33%) of their jobs since the onset of the crisis.

The Spanish cement industry currently employs 5,158 workers in Spain, compared to 7730 it had in 2007, pre-crisis period.

With these settings, the industry is adapting its production volumes to the current demand for cement, affected by the housing slowdown builder and civil works. According to his data, registered until October consumption accounts for less than 40% of the sector's production capacity.

Thus, in the first ten months of the year were made in Spain 13.84 million tons of cement, resulting in a decrease of 28.6%.

Regarding last October, production fell by 33% compared to the same month in 2011, after consumption fell by 24.7% to 1.14 million tonnes.

No Good Economic Outcome Possible

There is no possible economic outcome that Europe will be happy with. There is roughly a 10 percent chance the eurozone does not break up.

Moreover, should the eurozone not break apart, it will mean prolonged economic depression for Spain, Greece, and Portugal, and that depression in turn will hammer Germany and France.

Can-kicking exercises hoping to hold the eurozone intact are a huge part of the problem.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com