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The economic news on Spain continues to get worse. The economy contracted a further 0.7% in the final quarter of 2012.
http://www.guardian.co.uk/business/2013/jan/30/eurozone-crisis-spanish-recession-euro-markets
I like this quote from a comment contributor. Sums the situation up very well.
Spain is trapped in a downward spiral of continuing wage cuts, redundancies and falling housing prices while an upward spiral of inflation, regressive tax hikes and never-ending corruption completes the pincer movement.
Beyond a few well placed business entities such as Banco Santander, Inditex and Gamesa, Spain simply does not offer a perspective for future growth based on finance and manufacturing which leaves a service sector heavily reliant on tourism and internal consumer demand and overburdened with public employees at far too many levels of government.
Spain does not even enjoy the cushion of some North Sea oil and for those who advocate an infrastructure and house building spree in the U.K., take careful note of the Spanish experience where the best high speed rail network outside of China lies mainly idle, an airport infrastructure twice the size of that of Germany involves a large number of airports remaining empty and 1,000,000 unsold properties continue to undermine any chance of a house price recovery. And their number is growing with the daily evictions around the country.
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Spain’s current plight highlights perfectly the idiocy of the Eurozone. The country plainly needs a lower currency and 0% interest rates to compete in the global market. Yet the ECB will do nothing to weaken the Euro or reduce it’s rates. As a consequence the countries credit rating will further decline and their bond yields inevitably rise exasperating it’s position.
Financial markets continue to believe the worse is over for the Euro simply because of what Mario Dragi quite deliberately said at press conference some months ago. He has in fact actually done nothing just made promises that if the Germans have anything to do with it will block.
If unemployment reaches 30% of the working population serious civil unrest must surely follow. It’s difficult to see the end game but in my view it’s a very dangerous situation for democracy in Spain.
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