9 Reasons Why Spain Is A Dead Economy Walking

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9 Reasons Why Spain Is A Dead Economy Walking

News Article Date: Tuesday 15th of June 2010

Barring an economic bailout of mammoth proportions, the economy of Spain is completely and totally doomed. The socialist government of Spain is drowning in debt, unemployment is running rampant and everywhere you turn there are major economic problems. So will Spain be the next Greece? No. When the economy of Spain implodes it is going to be a whole lot worse for the world economy. The economy of Spain is more than four times the size of the economy of Greece. Spain accounts for 11.5 percent of eurozone GDP while Greece only accounts for approximately 2.5 percent. Spain is the 4th largest economy in the 16 nation eurozone and it is the 10th largest economy in the world. If the economy of Spain fails it will cause a shockwave that will be felt in every corner of the globe. In fact, there are quite a few analysts that believe if Spain defaults it would ultimately lead to the breakup of the eurozone.
Click here for more information about mortgages in Spain So will the EU step up and bail out Spain? Well, there are rumors that EU officials have begun work on a bailout package for Spain which is likely to run into the hundreds of billions of dollars, but on Monday the European Commission, the Spanish government and the German government all denied that the European Union was preparing a bailout for the Spanish economy. Of course we all know that politicians don't always tell us the truth.
Click here for more information about mortgages in Spain So who knows what is going on over there right now. But the reality is that the economy of Spain is not going to make it much longer without serious help, and some EU officials are already using apocalyptic language to describe what an economic collapse in Spain would mean. For example, EU Commission President Jose Manuel Barroso recently warned that democracy could completely collapse in Greece, Spain and Portugal unless urgent action is taken to tackle the burgeoning European debt crisis. So could democracy actually fail in those nations? Well, considering the fact that Greece, Spain and Portugal only became democracies in the 1970s, and that all three of those countries have a history of military coups, such a scenario is not that far-fetched.
Click here for more information about mortgages in Spain Without a doubt there would be serious public unrest in those nations if public services collapsed because their governments ran out of money. So are there signs that the economy of Spain is about to collapse? Well, yes, there are quite a few of them. The following are 9 reasons why Spain is a dead economy walking.... #1) Even before this most recent crisis, unemployment in Spain was approaching Great Depression levels. Spain now has the highest unemployment rate in the entire European Union. More than 20 percent of working age Spaniards were unemployed during the first quarter of 2010. If people aren't working they can't pay taxes and they can't provide for their families. #2) In an effort to stimulate the economy, Spain's socialist government has been spending unprecedented amounts of money and that skyrocketed the government budget deficit to a stunning 11.4 percent of GDP in 2009. That is completely unsustainable by any definition.
Click here for more information about mortgages in Spain #3) The total of all public and private debt in Spain has now reached 270 percent of GDP. #4) The Spanish government has accumulated way more debt than it can possibly handle, and this has forced two international ratings agencies, Fitch and Standard & Poor’s, to lower Spain’s long-term sovereign credit rating. These downgrades are making it much more expensive for Spain to finance its debt at a time when they simply can't afford to pay more interest on their debt. #5) There are 1.6 million unsold properties in Spain. That is six times the level per capita in the United States. Considering how bad the U.S. real estate market is, that statistic is incredibly alarming. #6) The new "green economy" in Spain has been a total flop. Socialist leaders promised that implementing hardcore restrictions on carbon emissions and forcing the nation over to a "green economy" would result in a flood of "green jobs". But that simply did not happen. In fact, a leaked internal assessment produced by the government of Spain reveals that the "green economy" has been an absolute economic nightmare for that nation. Energy prices have skyrocketed in Spain and the new "green economy" in that nation has actually lost more than two jobs for every job that it has created. But Spain so far seems unwilling to undo all of the crazy regulations that they have implemented. #7) Spain's national debt is so onerous that they are now caught in a debt spiral where anything they do will harm the economy. If they cut government expenditures in an effort to get debt under control it will devastate economic growth and crush badly needed tax revenues. But if the Spanish government keeps borrowing money their credit rating will continue to decline and they will almost certainly default. The truth is that the Spanish government is caught in a "no win" situation. #8) But even now the IMF is projecting that the Spanish economy is going nowhere fast. The International Monetary Fund says there will be no positive GDP growth in Spain until 2011, at which point it will still be below one percent. As bleak as that forecast is, many analysts believe that it is way too optimistic considering the fact that Spain's economy declined by about 3.6 percent in 2009 and things are rapidly getting worse. #9) The Spanish population has gotten used to socialist handouts and they are not going to accept public sector pay cuts, budget cuts to social programs and hefty tax increases easily. In fact, there is likely to be some very serious social unrest before all of this is said and done. On May 21st, thousands of public sector workers took to the streets of Spain to protest the government’s austerity plan. But that was only an appetizer. Spain's two main unions are calling for a major one day general strike to protest the government's planned reforms of the country's labor market. The truth is that financial shock therapy does not go down very well in highly socialized nations such as Greece and Spain. In fact, the austerity measures that Spain has been pressured to implement by the IMF have proven so unpopular that many are now projecting that Spain's socialist government will be forced to call early elections. So what is going to happen in Spain? The truth is that nobody can predict for sure how things are going to play out over the coming weeks and months. But what everyone can agree on is that the stakes are incredibly high. Speaking at the World Economic Forum in Davos, Switzerland, world famous economist Nouriel Roubini put it this way: "If Greece goes under, that’s a problem for the eurozone. If Spain goes under, it’s a disaster." But right now the entire population of Spain (along with much of the rest of the world) is completely distracted by the World Cup. As long as the Spanish team does well, that is likely to keep the Spanish population sedated. But if the Spanish team gets knocked out of the tournament early that will put the entire Spanish population in a really, really bad mood and that could mean a really chaotic summer for the nation of Spain. Bookmark/Search this post with: You are not watching this post, click to start watching Trading Ideas Cramer Sees Sprint (S) At $6 Calls Purchased on Biotech Names (XBI) Calls Purchased on Georgia Gulf Corp. (GGC) The Top Five Short Interest Leaders (CMC, FSYS, IRIDQ, MCOMQ, GAP) Puts Purchased on Novatel Wireless (NVTL) Calls Purchased on Discovery Communications (DISCA) Late Market Roundup Call Volume Grows on Radian Group (RDN) Puts Purchased on Fiserv (FISV) Downside Purchased on Fortune Brands (FO) Featured Large Block of Calls Trade in Aloca (AA) Care for Kenya Offers Day on the Set of Bloomberg News Rally Continues In Airline Stocks (CAL, UAUA, AMR, LCC) Best Buy Misses Estimates, Stock Down (BBY) Ralph Lauren's Big Sale (RL, JPM, GS) There are 2 comments Please note that comments may take up to one hour before they get published on the site. Please check back later to see your comments. Soy español y te escribo by Anonymous on 06/15/10 6:07am Soy español y te escribo desde Madrid. Tras leer tu post, pienso que muchas de las cosas que dices son ciertas y algunas no tanto. Pero en lo que no puedo estar más de acuerdo en en tu última aseveración. Has acertado de pleno: el fútbol, aquí, es lo único que parece preocupar a la gente de este país. No importa que todo se esté yendo a pique, mientras haya futbol. Como español no puedo sentirme más horrorizado y avergonzado. Así nos va y es la demostración de la ignorancia generalizada en la que vivimos. Un saludo y disculpa que no escriba en inglés. La indignación es tal, que mi vocabulario no alcanza a expresarla en tu idioma. Un saludo, D. reply What I see in your post is a by Fran Jimenez on 06/15/10 12:50pm What I see in your post is a clear attack to left positions instead of accurate data. - Unemployment is not at level of Great Depression but is at Spains ninetys level. 20 percent is very high but you have to know that there is a lot of people in Spain that works out of the tax system and it's not recorded anywhere. Also Spain is a latin country where familiar values are still maintained so families help each other much more in the rest of Europe. - Public debt level is still below most European Countries, Uk, USA... - Private Bank debt level is backup with money they have deposited as a mandatory from de Spanish Central Bank and this practice is to be adopted (hopefully) at a global level in Europe. Only two regional and very small saving banks have been rescued. - Deficit is very high (same level UK) but this is temporal due to the cuts approved by the Goverment. - Spain is one of the world leaders at "green economy", I know this issue upsets petrol and nuclear defenders but its true and the future is in that way (see BP disaster). Some cuts are going to be done but the policy is clearly pro green economy in Spain. - House stock is one million and down(Fitch data) - Public sector strike last week was followed by only 10% of the public workers. They realized it had no sense. What is really disappointing is how markets, neo-cons, and extreme right wing parties around the world are dealing the situation of Spain without taking into account that they are dealing with real life and real people.. Good night and good luck!! reply Post new comment Your name: * E-mail: * The content of this field is kept private and will not be shown publicly. Homepage: Comment: * Path: Disable rich-text Input format Filtered HTML Web page addresses and e-mail addresses turn into links automatically. Allowed HTML tags:
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