The flight from Spain

The Economist:

Spain can be shored up for a while; but its woes contain an alarming lesson for the entire euro zone

Jul 28th 2012 | from the print edition


THE worst nightmares are the ones you cannot wake up from. Just ask Spain. A year ago the cost of Spanish government borrowing soared as euro contagion spread from Greece, Ireland and Portugal. Panic seemed to subside with central-bank intervention and the promise of a new reforming government in Madrid. Since then Spain has, broadly, been as good as its word and Mariano Rajoy’s government has cut budgets, freed its labour market, played its part in countless “make-or-break” summits in Brussels and secured up to €100 billion ($121 billion) to prop up its banks. Yet despite all its efforts and pain, Spain cannot shake off that sense of doom. On July 25th the yield on ten-year bonds touched a euro-era record of 7.75%. Two-year bonds have climbed above 7%: investors fear that Spain must soon ask for a bail-out—or default.

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About Eeyore

Canadian artist and counter-jihad and freedom of speech activist as well as devout Schrödinger's catholic

One Reply to “The flight from Spain”

  1. The author is recommending the wrong actions, the austerity programs are the only chance the world has to avoid a major collapse, the big problem is that government spending is out of control in most of the world. Obama refuses to stop spending, the people in Europe riot to stop their governments from cutting spending and all nations are raising taxes. The private sector is what should pull the world out of this mess, the problem is that the governments refuse to cut taxes, instead they raise taxes and continue to borrow money for deficit spending. This removes more money from the private sector, money they could use to pull us out of this mess, and what money they have they refuse to invest because the governments keep changing the rules, when the businessmen don’t know that they have a fair chance of making a profit they won’t invest.

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