WAY TOO EARLY to say the worst is over, but still it's good news on the labor front in Spain:

Spain's unemployment queues shrank by almost 100,000 in May in line with the positive predictions offered by Prime Minister Mariano Rajoy on Saturday.

There were 98.265 fewer people out of work in May than a month earlier, new figures from Spain's employment ministry show.

This comprised a drop in total unemployment of 1.97 percent on April's jobless figures.

At the same time, 134.660 more people started paying more into Spain's social security system.

The numbers show that there was "a continued trend towards slowing unemployment," said the Secretary of State for Employment Engracia Hidalgo in a statement.

May was the third month in a row that Spain's unemployment figures have fallen.

May and June are traditionally the best months for new employment in Spain but the month just gone saw the highest fall in unemployment since 1997.

The average drop in unemployment in May has been around 54,000 in the last 15 years, El País reported on Tuesday.

Plus this from Bloomberg: Spain’s Crisis Fades as Exports Transform Country

LAST JULY and August, the International Republican Institute (IRI) and the Independent Institute for Administrative and Civil Society Studies (IIACCS) conducted a poll on Iraq's public opinion. You know, the one that everyone seems to know by telepathic means, which conveniently allows anyone to say anything without bothering with minutiae like actually checking with real data.

I have hardly seen anything about this in the international media (and zero, zip, nada in Spain), and I can understand why; the results run against the totemic CW that "everything's going badly over there":

"Do you feel that Iraq is generally heading in the right direction or the wrong direction?" In July, 51 percent said right direction, 31 percent said wrong direction. An Annenburg survey from that same period in the United States did in fact show almost the opposite result (37 percent right track, 55 percent wrong track), as the president rightly observed. Thus, contrary to Lockhart's assertion, the president was well grounded in reality, very strongly hinged. Incidentally, of those who said Iraq is on the wrong track, only 5 percent said it is because of unemployment, which tends to undercut John Kerry's model of an insurgency being fuelled by the angry unemployed. He stated Monday that unemployment in Iraq is over 50 percent, and Al Jazeera reported in August that the rate was 70 percent. But polling over the summer showed unemployment typically in the teens. The nationwide figures were 14.1 percent in June, 13.8 percent in July, and just under 12 percent in August. There are of course regional variations; for example unemployment in the southern city of Umara was 35 percent in June (dropping to 25 percent in July) — but in Baghdad the unemployment rate was below the national average (12 percent in June and 9 percent in July). In Najaf the July rate was under 9 percent. Rates that high are nothing to crow about by our standards, but they make more sense than Kerry's inflated figures. Also worthy of note is the finding that average household monthly income increased 72 percent from October 2003 to June 2004, according to surveys conducted by Oxford Research International.

Levels of satisfaction in Iraq varied by region. Among the Kurds, 85 percent think life has improved since the fall of Saddam. In the Mid-Euphrates region and the south, 52 percent are more satisfied. In Baghdad there was a three-way split between better, worse, and don't know. And in the Sunni Triangle only 12 percent think things have gotten better, understandable given both the fact that they had enjoyed special privileges under Saddam, and those who are now denied those privileges are making life difficult for everybody. Naturally, the security situation is on people's minds. Around 70 percent of respondents either agreed or strongly agreed with the statements, "Life today is full of uncertainty" and "I am afraid for myself and my family." However, there were similar high scores agreeing to the statement "I am hopeful for the future," and the highest scoring statement of all was "I think things will slowly get better." Responses to these questions showed the same regional dynamics, with the Kurds being the most hopeful, but even in the Sunni areas a plurality (42.5 percent) believed things would get better, against only 29.2 percent thinking they would get worse. When Iraqis were asked what issues concerned them the most, crime ranked as the number one initial response, at 39 percent. The insurgency ranked fifth at only 6 percent. This focus on reducing crime ties in to a general result I noted citing polls in my last NRO piece, that the Iraqi police are the most respected group in the country. There is broad approval (in the 60-percent range across the board) for the government, judges, the police, the army, and national guard. Sixty-two percent rated the interim government as either very or somewhat effective, and sixty-six percent placed Prime Minister Allawi in the same category.

Secretary of Defense Rumsfeld was quoted Thursday saying that if parts of Iraq are still too violent to hold elections, they should go forward anyway. The polls reveal why keeping to the timetable is so important. It is a matter of maintaining the legitimacy of the process. Seventy-eight percent rate fair elections as their most important political right, and eighty-seven percent plan to vote in the elections in January, a far greater participation rate than we can expect in this country. Three quarters view increased violence as either very or somewhat likely in the period leading up to the election, and a similar percentage sees that as an acceptable reason for a delay; but almost two-thirds would have a negative view of the elections if they were delayed for one month. Even if the U.N. said the elections were not fair, 53.6 percent see that as an unacceptable reason to delay voting. Most people believe that no current Iraqi political party represents their views, and most also believe that political parties are dividers not uniters. Forty-five percent would be less inclined to vote for a party that maintains its own militia, not surprising given the misbehavior of the Baath party. In the Metro/Retro race, 64 percent would prefer a traditional candidate, against 18 percent preferring one with more modern values.

By the way, note the unemployment figures, only a fraction of the "60% of Iraqis are out of work" mantra.

RECOVERY OR MIRAGE?

Spain's unemployment dole is gradually decreasing but the country is not out of the woods just yet.

The number of people filing claims for unemployment benefits in Spain fell for the second straight month, dropping by 55,250 in June, according to government figures published on Thursday. The Labor Ministry said the decline left the total of jobless people at 3,564,889 and marked the first time since mid-2007 that the figure has gone down two months in a row.

Too bad that these figures wear more makeup than the late Michael Jackson.

First of all, if you look at the seasonal effect the number of people filing for unemployment is still up. By only 107, true, but they're still up.

Second, because that number doesn't include some groups that may not be officially asking for unemployment benefits but are not working either: people looking for their first job, unemployed workers attending government-paid courses for career development, etc. That's about five hundred thousand more.

And finally because, also in June, the number of workers affiliated to Social Security went down by a whopping 182.000. This means they're 182.000 who are not working anymore. The only thing that could reconcile this with the 55.000 people not filing for unemployment benefits in the same month would be if the labor force was shrinking, but it's not the case.

VERY BAD JOB NUMBERS from the survey for the first quarter in Spain:

More than six million Spaniards were out of work in the first quarter of this year, raising the jobless rate in the euro zone's fourth biggest economy to 27.2 percent, the highest since records began in the 1970s.

The huge sums poured into the global financial system by major central banks have eased bond market pressure on Spain, but the cuts Madrid has made in spending to regain investors' confidence have left it deep in recession.

Unemployment - 6.2 million in the first quarter - has been rising for seven quarters and the latest numbers will fuel a growing debate on whether to ease off on the budget austerity which has dominated Europe's response to the debt crisis.

Not to deny the extreme seriousness of the problem, but it's important to state that this isn't a new phenomenon, it's only a little more exacerbated because the general situation is worse. But unemployment in Spain has consistently been higher that in similar countries, and that's basically because of the rigidity of the labor market. Most labor laws still stem from the paternalistic system instated by Franco, who bought social peace by making jobs extremely stable by decree. Amazingly, it's been more than three decades since he's gone but no government has changed that, not even the supposedly pro-market cabinets led by Aznar or Rajoy. You'll see a big dip in the early 2000s, but that's basically because it was the bubble era. Even then, with 9-10% unemployment, that was about twice other countries. It just "didn't matter" because the economic activity was frantic back then.

But it you take a look at this chart showing unemployment since 1976 until today, you'll see what I mean (click to enlarge)

NOT JUST THE PENTAGON: Census ‘faked’ 2012 election jobs report

In the home stretch of the 2012 presidential campaign, from August to September, the unemployment rate fell sharply — raising eyebrows from Wall Street to Washington.

The decline — from 8.1 percent in August to 7.8 percent in September — might not have been all it seemed. The numbers, according to a reliable source, were manipulated.

And the Census Bureau, which does the unemployment survey, knew it.

Just two years before the presidential election, the Census Bureau had caught an employee fabricating data that went into the unemployment report, which is one of the most closely watched measures of the economy.

And a knowledgeable source says the deception went beyond that one employee — that it escalated at the time President Obama was seeking reelection in 2012 and continues today.

THE PEOPLE SUFFERING UNEMPLOYMENT the most in Spain are the underprivileged:

The fate of Spanish workers is a story of contrasts. Some have never had it so good; others have never had it so bad. Spain has the European Union’s highest unemployment and one of its less generous welfare systems. It has shed 1.2m jobs in a year. It will soon have as many jobless as Italy and France combined. Pay rises for some have led employers to cut the jobs of others. Two-thirds of workers have armour-clad permanent contracts. But the rest are on short-term deals. They are the people now on the dole.

This two-tier labour market divides workers into a privileged group cocooned from the reality of recession and the disadvantaged on temporary contracts, in unemployment or in illegal jobs. Employers do not invest in training short-term workers and are wary of hiring on permanent contracts. At any hint of a slowdown they shed the short-timers. “That the crisis has hit Spanish employment disproportionately is due to the catastrophic way the labour market works,” argues Luis Garicano of the London School of Economics.

Professor Garicano is one of a group of 100 economists who have called on the Socialist prime minister, José Luis Rodríguez Zapatero, to set about labour-market reforms. The calls have fallen on deaf ears.

The end is just brutal:

A two-tier labour market provides flexibility, but on the back of an underclass of temporary workers. This might strike most socialists as unjust. But Mr Zapatero seems happy to keep it that way.

UPDATE. Don't miss the comments; also, make sure you read this at Time: The Broken Hopes of a Spanish Generation. Sure, some of the frustration comes from too high expectations after a long boom. There's also some behaviour similar to spoiled children, used to getting what they want without any effort. For example, it's true that lots of thirty-somethings still live with their parents, but that's because they completely rule out something that is usual in other countries: sharing an appartment with two or three more people. They can only think instead of moving to a place they can actually buy, and this is becoming harder and harder every day (and of course, if you earn, say, €1000 per month, it's much more fun to stay at your parents and getting the food on the table, the place cleaned by mom, etc, and spending most of those thousand euros in having fun going out, partying or travelling, buying clothes or a relatively nice car).

What I mean is that some young people in Spain don't totally realize that growing up has its tradeoffs; you need to choose. But that doesn't mean that, particularly because of the labor regulations, they're having a really hard time while they see middle aged incompetent guys totally glued to their jobs by virtue of their iron-clad contracts. As the Economist piece says in the first link, something needs to change but PM Zapatero won't hear anyone telling this: he's too afraid of the unions taking the streets.

THE CHRISTIAN SCIENCE MONITOR looks in awe at how the unprecendented unemployment level in Spain is not giving way to social unrest:

As most of the world observes May Day amid the worst recession since the Great Depression, perhaps Spanish workers have the most to protest and worry about.

Unemployment here has nearly doubled over the past year to 17 percent – the highest in the European Union and double that of the United States. The economy is shrinking at its fastest rate in 50 years.

Conditions are expected to worsen, yet there's little indication that Spain will be plagued by the social unrest that's heating up elsewhere in Europe.

The governments of Hungary, Latvia, and Iceland have already collapsed after angry protests over the handling of the economy; France has thrice been disrupted as millions staged nationwide strikes. And demonstrations – sometimes turning to riots – in Greece, Ireland, Britain, and several Eastern European countries have reminded the continent of the violent class struggles of past century.

The Spanish government, however, remains strong. No national strikes or protests have taken place, and the mood in the street is somber, but not angry. Indeed, the 65,000 people who organizers say partook in the traditional May 1 demonstration in Madrid danced and cheered to a samba beat as they chanted slogans demanding more jobs.

Judging from the festive mood, it's tough to imagine that unemployment is the most pressing concern for three of every four Spaniards, according to the government's statistic agency. So, why has Spain remained so calm?

The reason is very simple, and it's not listed in the piece: Zapatero has 'bribed' the unions, increasing the subsidies by a whopping 50% since 2006 (link in Spanish). Not only the unions are much more keen to 'forgive' the sins of their ideological cousins, the Socialist party (Zapatero's). It's also because, to loosely paraphrase Anderson Cooper, it's difficult to open your mouth to complain when your mouth is full...

Want proof? Well, there has actually been union-backed demonstrations against the government. But not against Zapatero's -- against the regional governments that are in the hands of the conservative Popular Party, in the opposition nationwide. Never mind that regions (autonomous communities, as they're called in Spain) have hardly any role to play in the econoomic policies. Need to say more?

WHY IT'S A PROBLEM FOR SPAIN to have such a rigid labor system, with too much labor protection and expensive layoffs:

The airport café was typical of my entire journey in Spain. Only one person often staffed hotel front desks. I spent two days at a small hotel in Seville and never saw anyone at reception. Unable to check out, I had to leave without paying. (Thus that hotel comes highly recommended.) I learned to ask for a check at a restaurant at least 20 minutes ahead of when I needed to depart. With one waiter often responsible for 15 or more tables, getting his attention felt like winning the lottery. And at rush hour on a busy Friday evening in Madrid, the high-speed rail line had a mere handful of ticket windows open, creating endless lines and more delays. So much for the benefits of high speed.

Everywhere I went in Spain, I seemed to be wasting 10 minutes here and 20 minutes there due entirely to understaffing. That may not sound like much, but add that up over the course of a week and I lost tons of time that I would rather have applied elsewhere, to writing my articles, or enjoying my time in Spain, or spending more money. The dearth of staff also lowered the quality of the services provided throughout the country, something I found surprising for an economy so dependent on tourism. People in Spain don't seem to mind the delays and bottlenecks. They consider them just an inevitable part of daily life. But there is an economic cost to all of this inefficiency. If I didn't have to wait to pay for my chicken sandwich at the airport, maybe I would have gone off to buy a magazine or something else. But no time for that.

It's not that there aren't enough available workers in Spain. With an unemployment rate at a staggering 20%, there's no shortage of people who hotels, restaurants and other companies could hire. But they don't. And that isn't just a factor of the current economic downturn. Unemployment in Spain is traditionally higher than in the U.S. Even during the so-called boom years of the mid-2000s, the unemployment rate never sank below 8%.

The reason is that employers don't want to create jobs. It's simply too costly. Blame the country's overly strict labor laws. Mandated severance payments – of as much as 45 days per year of service – make laying off employees prohibitively expensive, and that makes firms reluctant to hire them in the first place. Managers do have the option of taking on temporary staff on fixed-term contracts. If those workers get dismissed, they don't receive the same giant severance payments as permanent employees, allowing companies to downsize at reduced cost. But that choice has its own downside. With workers around for only a short time, they have little commitment to their jobs, and employers have even less reason to train them properly. That affects company performance and competitiveness.

BAD ECONOMIC NEWS:

The number of people out of work in Spain has passed the two million mark making it unlikely the unemployment rate will fall below 10 percent this year.

In August the number of registered unemployed rose by 29,693 compared with the month before.

This took the total number of jobless to 2,019,110 and made the overall unemployment rate still more than ten percent.

July saw similar figures; approximately 30,000 people increasing the ranks of unemployed. This is extremely worrisome, since traditionally it's the two months were employment has always rocketed basically for temporary work in the tourist industry. The fact that this year, for the first time on two decades (last time it happened was in the midst of a brutal recession) the registeres unemployment has risen sharply could be linked to the immigrant amnesty early this year: one of the requirements for being a legal immigrant was to be employed, but the contracts usually were very short term. So we could be seeing simply the effect of this contracts expiring.

Then again, this could mark a disturbing underlying trend to add up to almost all economic indicators (except GDP growth), which are all deteriorating fast.


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THIS IS RICH:

Candido Méndez and Fernando Toxo, the heads of the two largest trades unions in Spain - the CCOO and the UGT - stated yesterday that they were against a general strike against the socialist government due to rising unemployment.

The two leaders were in Valencia taking part in a demonstration that ended in front of the regional Employment ministry to protest against the disproportionate rise in unemployment levels in the conservative-governed Community.

So they demonstrate against a regional government, which has a limited hand in economic policies, and they don't lift a finger over the central government that is responsible of an unprecedented surge in unemployment?

Ah, of course: the Valencian regional government is conservative; the central government in Madrid is Zapatero's Socialists. Can't touch that.

IT'S NOT ONLY the real-estate, it's an employment crisis in Spain too:

Tensions mounting between native job-seekers and immigrants competing for a declining pool of work in Spain will intensify in 2009 as generous benefits for those laid off reach the end of their fixed terms.

Unemployment at 12.8 percent in November, a 12-year high and by far the highest rate in the European Union, could reach 20 percent of the workforce in 2010 as a slump in construction spreads into the wider economy, economists say.

That is a level not seen since the 1990s and as Spain heads for its deepest recession in 50 years it may trigger social unrest like that of the 1980s, when high unemployment and low wages led to country-wide demonstrations and violent strikes.

SEVERAL MONTHS LATER than he should, but at least he eventually did:

Spain's once-booming economy is in worse shape than expected and could slip to zero growth, the finance minister says.

That's after sternly denying until a couple of months ago, himself as well as Zapatero and other cabinet members and Socialist politicians, that there was any problem with the economy whatsoever. Not only denying, but accusing whoever said that the economy isn't going well of being... anti-patriots, no less (yes, the same guys who say that one of Bush's worst, almost Fascist traits, is that he warps around the flag to shield from criticism).

Of course, coming from someone who thinks that to be optimistic "is something more than a rational act, it is a moral requirement, an act of decency and, if I may say so, elegance" it could very well be that they knew about the problems but thought that by ignoring them they would simply go away (or at least they'd buy some time and win March's election). That, or they didn't have a clue even as the signs were clear.

In other words: they lied or they're incompetent. Which I'm not sure what's worst.

The worst thing is how they're trying to spin the news, which is almost
an insult to the intelligence of the populace. In the interview in El
País yesterday (you can read in full in Spanish here), the one that AP/CNN makes reference to, Solber had this
gem as an answer:

Q. And promising full employment during this term wasn't a bit of a chimera?

A. Well, it was possibly an extrapolation: if in four years we were able to increase the employment rate substantially, why not having the ambition of going further? I always saw that promise as an ambition rather than as a technical analysis.

Words fail.

UPDATE. There you go:

The number of registered jobless in Spain hit a 10-year high in July as consumer confidence fell to a record low, prompting Spain's economy minister to say he could not rule out a recession.

New jobless claims normally fall in Spain during July but this year rose 36,492 to a total 2.43 million, with nearly two of every three layoffs from Spain's construction sector where house-building has collapsed after a decade-long boom.

The rise in unemployment to its highest level since April 1998 sent Spanish consumer confidence to a record low 46.3, heralding a sharp fall in household spending in the next few months, Spain's official credit institute reported.

In less than a year, Spain has gone from creating around a third of all new euro zone jobs to having the European Union's second highest level of unemployment after Slovakia.

WHILE AMERICA WAS SLEEPING I fixed a 'news breakfast' for you -- ready each weekday morning at 6am Eastern to satisfy your media craving [feature permalink here]. These must-reads will help you kick start the day:

U.S.

Will John Boehner Control the Tea Party Congress? "Boehner seemed an unlikely clarion for an anti-establishment revolt. He had been in Congress since 1991, during the Bush-Quayle Administration—long enough to have twice climbed from the back bench to a leadership position. He was a friend of Ted Kennedy’s, and a champion of George W. Bush’s expansive No Child Left Behind legislation. After the economic collapse of 2008, he had reluctantly advocated for the Troubled Asset Relief Program (“a crap sandwich,” he called it), the Tea Partiers’ litmus test of political villainy. But Boehner was among the first Beltway Republicans to recognize that the rise of the Tea Party represented, for Republicans, a near-miracle of good luck." (Peter Boyer @ New Yorker)

Tax Deal Within Reach: "White House officials and congressional Republicans are closing in on a deal that would extend current income-tax rates for all Americans as well as a benefits program for the long-term unemployed." (LA Times)

After Cablegate, US Forced to  Shake Diplomacy: "The Obama administration was yesterday facing a crisis in its diplomatic service, amid growing evidence that the ongoing publication of a tranche of supposedly-confidential communiqués will make normal work difficult, if not dangerous, for important State Department employees across the world." (The Independent)

New Ethics Charges Against Rangel? "The Federal Election Commission is investigating a complaint that Rep. Charles Rangel improperly used his National Leadership PAC to fund his legal defense on ethics charges for which he was censured Thursday, The Post has learned. The FEC is acting on a complaint by the National Legal and Policy Center filed after The Post reported last month that Rangel paid nearly $400,000 from his PAC. Lawmakers are only allowed to use money in their individual campaign funds for legal fees, or they can set up legal defense funds for such costs." (NY Post)

Priebus Quits: "Reince Priebus, the Republican National Committee's top legal counsel, resigned his position early Sunday morning, The Hotline has learned, a move that will be widely interpreted as a major step toward running for chairman of the organization and a big blow to current chairman Michael Steele." (Hotline On Call)

Gay Marriage Ruling to Appeals Court: "Attorneys on both sides of the same-sex marriage debate will face off in a California appeals court Monday, as a panel of judges hears arguments in a case over Proposition 8. In August, a federal judge ruled that the voter-approved measure, which defined marriage as a union between a man and a woman, violated the U.S. Constitution. The Ninth U.S. Circuit Court of Appeals will consider an appeal of that judge's ruling Monday." (CNN)

ICE Breaks Deportation Record Thanks to Unusual Methods: "In culminating a record number of deportations, the agency included more than 19,000 immigrants who exited the previous fiscal year." (WaPo)

Al Gore's Climate Group Shrinking: "One of Al Gore's campaigns to save the planet has scaled back its field operations since climate legislation failed earlier this year in Congress. The Alliance for Climate Protection was operating in about 25 states at its peak, including Florida, Michigan, Missouri, New Hampshire, Ohio and Pennsylvania. But the group now has field offices in just seven states." (Politico)

Money

More Fed Bond Buys Possible: "The Federal Reserve could end up buying more than the $600 billion in U.S. government bonds it has committed to purchase if the economy fails to respond or unemployment stays too high, Fed Chairman Ben Bernanke said. The Fed will regularly review the policy and could adjust the amount of buying up or down depending on the economy's path, he added." (Reuters)

Unemployment Rate Rises Among Educated: "The jobless rate for Americans with at least a bachelor's degree is at its highest level since 1970." (USA Today)

A Good Time to Make Money Off EU's Misfortune: " One of the best, but rarely followed, rules of investing is to buy when things look bleak. Blue chip stocks in the euro zone are down 5.5 percent since it became clear in mid-April that Greece needed help to prevent it from defaulting on its debt. Some economists speculate that the bailouts of Greece and Ireland mean that the euro won't last much longer. Investors are waiting to see whether the European Central Bank takes additional steps this week to prevent Europe's financial crisis from spreading to Spain and Italy. That uncertainty has created stock bargains." (AP)

IMF to EU -- Increase Rescue Fund Already: " The International Monetary Fund has called on the EU authorities to boost their rescue fund and step up bond purchases to insure against a fresh financial crisis in the eurozone periphery." (Daily Telegraph)

Common Eurozone Bond Considered: "Eurozone finance ministers may consider creating a common government bond to help reduce borrowing costs. The idea may be on the agenda at Monday evening's meeting of the ministers, called discuss Europe's debt crisis. Supporters of 'E-bonds' argue they would help protect eurozone countries from speculation and attract new capital flows into the region. But Germany is thought to be sceptical of idea, which it believes could only work with closer European integration." (BBC)

World

Continental Guilty on Concorde Crash: "A French court has found Continental Airlines, Inc. and one of its mechanics guilty of criminal wrongdoing in the crash of a supersonic Concorde jet outside Paris a decade ago that killed 113 people."

Dozens Killed by Suicide Bomber in NW Pakistan: "A suicide bomb attack in north-west Pakistan has left at least 28 people dead, local officials have said. The attack took place at a government compound in the Mohmand Agency as officials met anti-Taliban allies." (BBC)

Al Jazeera Rejects Cablegate Claims of Being a Tool: "Al Jazeera has dismissed claims based on leaked US diplomatic cables that Qatar, the network's home, uses the news channel as a bargaining chip in foreign policy negotiations." (Al Jazeera)

He's a Human Being, Y'Know: "Australia would give consular help to WikiLeaks' founder if he is arrested abroad, the government said Monday. However, the administration again condemned WikiLeaks' publication of secret U.S. diplomatic documents, saying doing so threatens the security of the United States and its allies. Attorney General Robert McClelland said WikiLeaks was grossly irresponsible for publishing the documents because they could identify informants." (AP)

Petraeus Denies Resignation Threat, Backs Karzai: "In his first interview since the latest WikiLeaks document dump, General David Petraeus brushed aside reports that Afghanistan's former Vice President left the country with $52 million in cash. And he denied rumors that he threatened to resign after Afghan President Karzai criticized his battle tactics in a Washington Post interview." (George Stephanopoulos @ ABC)

Damned If You Stay, Damned If You Leave: "While the political and security consequences of the American withdrawal have yet to be fully resolved, its economic effects have already taken a sharp toll on the tens of thousands of Iraqis who earned their livelihoods, sometimes at great risk, working for the military and the legions of American civilian and defense contractors. They are now stranded between worlds, struggling to find new jobs in a country where about one in four people is unemployed, and scorned by those who view working for Westerners as treachery. Dozens have been killed, and few have been able to take advantage of American programs to relocate endangered Iraqi allies, discouraged by long waiting lists and tangled rules for applying." (NY Times)

Strong Rhetoric, Low Expectations: "Iran and six world powers headed into negotiations about the country's nuclear program Monday with low expectations, at odds on what to talk about and with tensions high over the assassination of one of Teheran's most prominent scientists. The talks in Geneva — the first in over a year — are meant to ease concerns over Iran's nuclear agenda. Teheran said it does not want atomic arms, but as it builds on its capacity to make such weapons, neither Israel nor the US have ruled out military action if Teheran fails to heed UN Security Council demands to freeze key nuclear programs." (AP)

More Afghan Election Employees Arrested: "Four Afghan election commission employees have been arrested, an official said Monday in a sign that the political intrigue over September's fraud-tainted parliamentary election is not over.  (WaPo)

Obama Calls China's Hu to Discuss North Korea: "Obama called Chinese President Hu Jintao on Sunday night to discuss North Korea, the White House says. The leaders talked about their common interest in peace and stability in Asia and the importance of keeping the Korean peninsula free of nuclear weapons. The White House says Obama and Hu agreed to work together toward those goals." (AP)

South Korea Reportedly Begins Naval Firing Drills: "Brushing aside North Korean warnings of war, South Korea reportedly began live fire artillery drills on Monday, less than two weeks after the North’s shelling of a South Korean island sharply escalated tensions between them." (NY Times)

Israel Wildfire Under Control: "The "major sources" of a deadly Israeli wildfire have been extinguished, police said Sunday, as the Israeli cabinet approved a plan to speed aid to those affected. . . . The fire, which broke out Thursday, has killed at least 41 people and injured at least 17 others." (CNN)

Tech, Science

AOL to Break Up, Then Merge With Yahoo? "The plans are still in the exploratory stage and Yahoo has not been contacted, the sources said. The plans are also fraught with complications involving myriad moving pieces. In many respects, the latest discussions are derivative of plans contemplated in 2008 and 2009 before Time Warner spun off AOL to Time Warner shareholders." (Reuters)

Another Facebook Facelift, Another User Revolt: "This new layout is just confusing and makes us more like a set of numbers and links than an actual human with that 'profile' feel. Can you please stop 'updating' the aesthetics of Facebook as we once knew it to make it into a social media nightmare?" (SF Chronicle)

A GLOOMY CHRISTMAS for Spanish retailers:

Spanish holiday spending will drop 9.1 percent this season, according to Deloitte, more than the 6.3 percent decline forecast for western Europe. El Corte Ingles SA, the nation’s biggest department store operator, is advertising 70 percent discounts to lure shoppers.

The credit crunch exacerbated the collapse of Spain’s housing boom last year, leaving people struggling to pay household debt that is among the highest in the euro region. The protracted crisis means more than half the jobless, including Serrano’s husband, have been out of work too long to get full benefits. Spain’s unemployment rate is 19 percent.

The outlook for next year doesn’t give consumers much reason for holiday cheer. The economy is forecast to contract 0.8 percent in 2010, lagging behind the European Commission’s estimate for European expansion of 0.7 percent. Spanish unemployment is expected to rise to 20 percent.

THERE'S A GREEN SHOT in Spain's employment numbers for April. Or is there? On the one hand, "Jobless claims in Spain registered a 0.6% fall in April, or 24,188 less than the prior month, leaving the total number of unemployed at 4,142,425, the Employment Ministry said on Tuesday. It was the first fall in jobless claims in eight months."

On the other, this number comes without seasonal adjustment. Buried in the government report itself is the fact that with that adjustment -- it's the start of the tourism season --, jobless claims would have risen by almost 62,800 (pdf, page 7, in Spanish). There's also almost half a million (link in Spanish) who are not listed as jobless because they're taking a course, or who are listed by the Labor department as "unemployed with limited availability" or as people who are currently working but enroll at the unemployment agency because they want to find a better job (of course, the notion that anyone would try to get a promotion via the unemployment office is difficult to believe).

UPDATE. I mistakenly wrote that the jobless claims number announced by the government this morning was with seasonal adjustment and that without it the figures look much worse. It's the opposite; I fixed it. Sorry for the mistake.

UPDATE II. Uh-oh:

Spanish prime minister José Luis Rodríguez Zapatero was forced to deny market rumours his country would ask for €280bn from the European Union, something he described as "complete madness".

But Spain's stock market has lost nearly 5% today, while Germany's DAX is down more than 2% and France's CAC is around 3% lower. Portugal's PSI 20 is also down around 4%, while the cost of protecting the debt of a number of European countries has also jumped."

THIS ISN'T GOOD:

Spain's unemployment rate remained practically unchanged at an EU-high of 17.9 percent in the third quarter after rising for eight consecutive quarters. Officials warned the rate will probably rise again.
The number of jobless now stands at 4,123,300, the National Statistics Institute said.

That figure is down slightly from the second quarter, by 14,100, but this had a negligible impact on the unemployment rate because the workforce also decreased.

THE FIESTA is over.

UPDATE. 75% jobless in a Spanish town:

LA LANTEJUELA - ON THE outskirts of this town of white-washed houses, dozens of warehouses where building materials were once produced have been idle since an economic boom came to an abrupt end last year.

During the height of the country's credit-fuelled property boom the dozens of small and medium sized building firms which sprang up in La Lantejuela employed up to 80 per cent of the south-eastern town's workers as local residents abandoned farm work for more lucrative jobs in construction.

Spain's jobless rate at 14.8%
Spain's unemployment rate hit 14.8 per cent in January after the impact of the collapse in the building sector spread to other areas, and many economists predict it will continue to rise to hit 20 per cent next year.

To draw attention to the plight of La Lantejuela, the mayor of the town locked himself in his office for 24 hours in February - and got national media coverage.
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But those jobs began to quickly disappear last year as the global credit crunch exacerbated a slowdown that was already underway in Spain's real estate sector.

Today nearly 75 per cent of the town's economically active population is jobless, one of the highest unemployment rates in Spain, which in turn is the nation with the highest jobless rate in the 27-nation European Union.

FROM THE STUPID HEADLINE DEPARTMENT: "Thirty-one Spaniards find work in August". Registered unemployment is a result of people who got jobs minus people who lost jobs, you morons. It doesn't mean that only 31 people found work during the month.

By the way, the data is not bad at all: August unemployment hadn't gone down for years, for example last year it went up 38.179. Plus, it actually went down 13,700 people if you use seasonally-adjusted data. 

WHY 2008 is nothing like 1929:

Instead of workers with 5 o'clock shadows asking, "Brother, can you spare a dime?" we have clean-shaven financial-services executives asking congressmen if they can spare $100 billion. More substantively, the economic trauma the nation suffered in the 1930s makes today's woes look like a flesh wound.

"By the afternoon of March 3, scarcely a bank in the country was open to do business," FDR said in his March 12, 1933, fireside chat (now available on a very cool podcast at the Federal Deposit Insurance Corp.'s Web site). In 1933, some 4,000 commercial banks failed, causing depositors to take huge losses. (There was no FDIC back then.) The recession that started in August 1929 lasted for a grinding 43 months, during which unemployment soared to 25 percent and national income was cut in half. By contrast, through mid-November 2008, only 19 banks had failed. The Federal Reserve last week said it expects unemployment to top out at 7.6 percent in 2009. Economists surveyed by the Philadelphia Federal Reserve Bank believe the recession, which started in April 2008, will be over by next summer. (Of course, back in January the same guys forecast that the economy would grow nicely in 2008 and 2009.) But don't take it from me. Take it from this year's Nobel laureate in economics. "The world economy is not in depression," Paul Krugman writes in his just-reissued book The Return of Depression Economics. "It probably won't fall into depression, despite the magnitude of the current crisis (although I wish I was completely sure about that)."

So what's with all the speakeasy-era speak?

Keep reading.

NO BRIGHT SIDE on Spanish jobs data:

In a world where every piece of economic data is open to different interpretations, Spanish unemployment numbers are refreshingly easy to analyze — they are just awful.

There's also a good explainer on why unemployment has skyrocketed much more than in other countries, and why the labor market is so dysfunctional. Read it all.