- This topic has 4 replies, 3 voices, and was last updated 12 years, 4 months ago by
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The Spanish economy has more in common with Ireland than Greece.
And as things stand I’d say that Spain will end up going the same route as Ireland: bailing out its banks and then getting bailed out by the EU. I see this happening before the end of the year. This would entail yet more austerity as Spain tries to meet the bailout conditions, and it will carry on for at least another 3 years. However during those 3 years Germany will come under too much pressure and will have to allow the ECB to QE. There will be a new “growth and stability” agreement that removes the ridiculous 3% deficit targets and the euro will stagger on. Eventually there will be a transfer union. Nothing will be done about the trade imbalances between the north and south of the eurozone because, with the same currency, nothing can be done.
A messy Greek exit from the euro could change everything though.
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The Spanish economy has more in common with Ireland than Greece.
And as things stand I’d say that Spain will end up going the same route as Ireland: bailing out its banks and then getting bailed out by the EU. I see this happening before the end of the year. This would entail yet more austerity as Spain tries to meet the bailout conditions, and it will carry on for at least another 3 years. However during those 3 years Germany will come under too much pressure and will have to allow the ECB to QE. There will be a new “growth and stability” agreement that removes the ridiculous 3% deficit targets and the euro will stagger on. Eventually there will be a transfer union. Nothing will be done about the trade imbalances between the north and south of the eurozone because, with the same currency, nothing can be done.
A messy Greek exit from the euro could change everything though.
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