Spain’s jobless rate was above 25% in Q-3. Based on this number alone, it is hard to believe that Spain does not need a very large bailout.
Economists have made the point before that Greece, and Spain, have begun to descend into a period much like the Great Depression.
The most obvious difference is that the United States had no bailout mechanism to which it could turn. If it had, the Depression might have been shortened by years. It would not have taken World War II to revive economic growth. Spain will not have a major war to help trigger a recovery.
The posturing of the government about the need for aid is as useless as it is careless. The longer Spain embraces illusion, the deeper its economic problems become, and the harder they will be to solve.
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The European Central Bank (ECB) and International Monetary Fund (IMF) have not forcefully made the case that a bailout must happen right now.
Spain’s austerity measures will not help bring its deficit in line at a level that would make aid possible because the austerity will make the employment situation worse.
Many economists believe otherwise, particularly those who represent Germany’s interests, but is it really possible to believe that Spain can cut its way to prosperity?
The notion is “nuts”, based on any examination of the recent history of national financial disasters.
It is possible that if Spain’s bailout fails that Italy falls next.
That argument has proponents and opponents alike. Italy has a more diverse economy that is thriving enough to hold off the need for outside money. That cannot possibly be said for Spain under any set of assumptions.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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