Posts Tagged ‘spanish economic crisis’

Spain Jobs Crisis Worsens: Record Unemployment

April 25th, 2013 Comments off

The unemployment rate in the Eurozone’s  4th largest economy continues to soar, and has now reached 27.2 percent. After 5 years of unrelenting economic crisis, Spain’s deep depression shows no sign of ending. The IMF projects further contraction in the Spanish economy for 2013, with the unemployment rate expected to continue to rise.

The beleaguered Spanish Prime Minister,  Mariano Rajoy, has nothing to offer the six million plus unemployed Spaniards, except for more austerity measures, masquerading as “economic reforms.”  With the worst jobs crisis since the end of the Franco dictatorship, the political leadership in Spain is impotent, and unrest among the unemployed and disaffected is increasing, with calls for mass demonstrations opposing Madrid’s economic policies proliferating on social media.

With Spain’s economy in tatters, can democracy survive, or will the economic crisis  lead to calls for a “strong man” to rescue the millions of unemployed from the utter hopelessness now raging on the Iberian peninsula?


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Spain’s Economic And Banking Crisis Worsens

May 31st, 2012 Comments off

The Spanish banking giant, Bankia, has a balance sheet  full of toxic real estate assets, all hemorrhaging red ink. To survive, and prevent a further erosion in Spain’s crisis torn banking sector, Bankia needs a bailout from Spain’s already beleaguered taxpayers. But with Spain itself a sovereign debt risk, with an economy in recession and catastrophic levels of unemployment, there is increasing talk in the Eurozone that the bullet needs to be bitten if the euro will be saved. In other words, a bailout for the entire Spanish economy.

A bailout of Spain would be a far bigger problem than Greece, Ireland or Portugal. It would ultimately mean that the German taxpayers will have to bailout Madrid. The talk is now of Eurobonds, a formulation that in theory holds all the Eurozone members as being collateral for debt risk. This would compel the unwilling Germans to be the lender of last resort-through the backdoor of a Eurobond- if Spain is to be bailed out of its fiscal woes.

So this is what the European monetary union has come to; forcing the German taxpayer- democracy be dammed-to pay for all the catastrophic mistakes made by the Eurozone politicians. And this is supposed to end the Global Economic Crisis? I rather doubt it.



Spain’s Crippled Economy Is Again In Recession

March 28th, 2012 Comments off

Spain’s central bank, The Bank of Spain, has officially stated that for the second time since the onset of the global economic crisis in 2008, Madrid’s economy is in recession. The news that the Spanish economy has entered a double-dip recession is no surprise for the Spanish people, currently experiencing the misery of an official unemployment rate of 20 percent.

In the words of the Bank of Spain, “The most recent information for the start of 2012 confirms the prolongation of the contraction in output.” This all happens as the Spanish government reins in spending, with a current deficit to GDP ratio of 8.5 percent. With the fiscal drag imposed by a retrenchment in government spending, there will be no Keynesian solution to Spain’s current recession. Furthermore, Spain is not alone; other vulnerable Eurozone economies are in recession-or about to double dip into one. The economists keep telling us that economic growth is the only solution to the Eurozone’s debt crisis. With many of its struggling economies in negative or stagnant growth, it is hard to see a solution to the Eurozone’s debt crisis, other than bank-destroying sovereign defaults and inflation-creating loose monetary policies by the European Central Bank.







Spain’s Economic Crisis Another Indicator of Worsening European Sovereign Debt Crisis

May 31st, 2010 Comments off

The decision by Fitch, one  of the three leading ratings agencies, to downgrade Spain’s government debt to below AAA status is another manifestation of the deadly sovereign debt contagion that has becoming increasingly virulent since Greece’s public finances imploded. What was once a Greek debt crisis that Eurozone politicians were confident could be contained has now contaminated the entire fiscal edifice of the European Union.

As a further  sign of the deteriorating economic and financial situation in Spain, a growing number of Spanish banks are facing insolvency. There is an attempt by the government and central bank to arrange a shotgun marriage that will consolidate dozens of regional banks that are in fragile condition. This comes on the heels of a major austerity package  enacted by the Spanish government headed by Prime Minister José Luis Rodríguez Zapatero, which was approved by the national parliament by a single vote. This illustrates the fragility of the Zapatero government, at a times when further economic and financial shocks are likely, on top of a labor revolt against the austerity measures, similar to what is occurring in Greece.

The worsening news emerging from Greece, Portugal and now Spain are mere markers on a path leading to a profound sovereign debt crisis that will afflict not only the Eurozone and UK economies, but eventually Japan and the United States.

Spanish Economy Facing Systemic Economic Meltdown

February 6th, 2009 Comments off
Spain may be following Iceland as the next country facing systemic economic collapse due to the global financial and economic crisis. Recently released macroeconomic data is illustrative of a national economy in free fall. Not even the United Kingdom, with its insolvent banks and a collapsing currency, is in as decrepit economic shape as is Spain.
Among the eurozone economies, it clearly has the worst performance. Not that the other eurozone countries should gloat, for the Spanish economic contraction is a roadmap for the destination in store for the European Union as a whole. Official tabulations reveal that in the month of December, Spain’s industrial output declined by 19.6%. In just one month, nearly a fifth of Spanish output eliminated! This is not merely a recession, but wholesale economic collapse. Other figures elaborate on the depths of the disaster. Spain’s National Statistics Institute disclosed that in the last quarter of 2008, 1,082 companies filed for bankruptcy. To put this number in perspective, the last quarter of 2007 had a bankruptcy rate barely more than a quarter of that grim statistic.
Without question, the Spanish economy is grinding to a halt, significantly increasing the unemployment rate, which currently stands at 14.4%. The European Commission is forecasting that Spain’s unemployment rate may reach close to 19% by 2010, reflective of an economy that has not reached bottom, despite wishful thinking by some financial analysts.
As with the United States, the perception of prosperity in Spain was largely fabricated on the basis of a housing boom and highly leveraged real estate speculation. Again matching the American experience, the housing asset bubble in Spain was punctured, in the process crippling financial institutions and curtailing access to credit by Spanish enterprises. The ripple effect brought on by the collapse in housing and the banking crisis has crippled the broader economy to such an extent, cascading business and personal bankruptcy rates and massively rising levels of unemployment seem irreversible.
There exists another parallel with the United States. As the Global Economic Crisis evolved, the Socialist government in Madrid led by Prime Minister Zapatero, as with the Bush administration in the U.S., at first denied the nation was in the throes of a virulent economic recession. Only when the dire facts overwhelmed political spin did both governments begin to face reality. By then, in both Washington and Madrid, it was too late. As with many other panic-stricken leaders across the globe, Zapatero will seek massive deficit spending as a means to stimulate the failing economy. Being a member of the eurozone with its own central bank, monetary policy falls outside the immediate purview of options available to the Spanish government. So fiscal stimulus, inevitably hampered by an inability for a left-leaning government to talk soberly to labor unions, will be the feeble response to the worsening disaster.
Spain will likely experience a level of economic decline unprecedented in the last half-century of her history. However, in this journey of gloom and doom, she will be far from alone. 
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