Spain's economic woes

[Peter1469]

Spain is damned if it leaves, but damned for eternity if it stays. Eurozone policy as it stands offers no plausible way back to prosperity.

http://investmentwatchblog.com/impending-catastrophe-spain-has-entered-a-full-scale-collapse-and-created-a-tremendous-amount-of-instability-which-could-trigger-an-imminent-lehman-like-event-and-a-rerun-of-the-great-panic-of-2008/#E8zymCWtj3qGaAsL.99

[Shoot the Goose]

Spain is damned if it leaves, but damned for eternity if it stays. Eurozone policy as it stands offers no plausible way back to prosperity.

http://investmentwatchblog.com/impending-catastrophe-spain-has-entered-a-full-scale-collapse-and-created-a-tremendous-amount-of-instability-which-could-trigger-an-imminent-lehman-like-event-and-a-rerun-of-the-great-panic-of-2008/#E8zymCWtj3qGaAsL.99

I would not draw that same conclusion. Spain screwed itself, as did Greece, propping itself up with OPiuM (Other People's Money), as it became less and less competitive. There is no plausable long-term solution short of Spain having to sacrifice until it becomes competititve again. What are they going to do otherwise ? Quit the EU and print pallets of pesetas ? Head for Zimbabwe status ?

We have states that are headed for the same cliffs, with Illinois and Callifornia at the top of the list, unless they get a continuous bailout from the Fed, as neither CA or IL can print their own money. As we can assume, a Democrat administration will never let them self-correct, and we can look forward to money from taxpayers in such as Texas and the Dakotas and Florida paying for the hubris of CA and IL, if Dems are calling the shots.

We are so screwed.

[Peter1469]

I don't think that what you say about Spain disagrees with the article.

[Shoot the Goose]

I don't think that what you say about Spain disagrees with the article.

I think that I was differentiating that the problem is not the EU, or inclusion in such. Spain, and Greece, have a decade of tough love ahead.

Meanwhile, France goes to a 75% top marginal rate. They are screwed too. I imagine the Germans are very much "whose idea was this anyway" ?

[Peter1469]

I think that I was differentiating that the problem is not the EU, or inclusion in such. Spain, and Greece, have a decade of tough love ahead.

Meanwhile, France goes to a 75% top marginal rate. They are screwed too. I imagine the Germans are very much "whose idea was this anyway" ?

You are correct with the root of the problem for Spain and Greece.

The larger problem is that being members of the Eurozone (not the European Union) is that they have no control over their monetary policy. If they had their own currency, they would do exactly what we are doing: printing more money to devalue their currency so that it is cheaper to pay off current debt. They can't do that.

So you are essentially correct. The problem is just deeper.

[Carygrant]

It's amazing that they have all conspired this long to drag it out .
The ECB has no money left over and nor has anybody else . When the Bond markets force back public attention onto Italy , the finality of the total situation will begin to percolate through .
Then , we are nearly at the stage where the US can wriggle no longer .
For those with any money that they can invest , it will be the greatest bonanza period since money was created .
For the rest --- hell on earth .

[Peter1469]

It's amazing that they have all conspired this long to drag it out .
The ECB has no money left over and nor has anybody else . When the Bond markets force back public attention onto Italy , the finality of the total situation will begin to percolate through .
Then , we are nearly at the stage where the US can wriggle no longer .
For those with any money that they can invest , it will be the greatest bonanza period since money was created .
For the rest --- hell on earth .

It is ironic that a lot of money is fleeing Europe for the American markets....

Our economy is screwed, just not as bad as Europe's.... I think from a fiscal perspective Europe can fix its problems easier than the US- break up the EZ, go back to local currencies, and employ the full range of solutions that are not available under the EZ. But, as European nations default on each others debt the dangers of another European war emerge....

[Chris]

What's needed is a real austerity policy. I say real because back a couple months there was all that nonsense coming out of "economists" like Krugman about how Europe had tried austerity, and it made things worse. Facts is European nations talked austerity but never implemented it. That's what failed, and is failing now. Time to cut spending!

[Peter1469]

So far as I know, most measures taken in Europe simply cut projected budget growth, not spending. Of course much of those cuts were to trim down bloated public sector salaries and pensions.

[Chris]

True, they cut projected increases in spending, not spending, and they raised taxes. Like Obama and the Dems want to do.

Fiscal Austerity in Europe Doesn't Mean Large Spending Cuts (http://mercatus.org/publication/fiscal-austerity-europe-doesnt-mean-large-spending-cuts): "This so-called balanced approach—some spending cuts for large tax increases—has been proven to be a recipe for disaster by economists. It fails to stabilize the debt, and it is more likely to cause economic contractions."

[Peter1469]

True, they cut projected increases in spending, not spending, and they raised taxes. Like Obama and the Dems want to do.

Fiscal Austerity in Europe Doesn't Mean Large Spending Cuts (http://mercatus.org/publication/fiscal-austerity-europe-doesnt-mean-large-spending-cuts): "This so-called balanced approach—some spending cuts for large tax increases—has been proven to be a recipe for disaster by economists. It fails to stabilize the debt, and it is more likely to cause economic contractions."

And the funny thing is that economist Paul ("political hack") Krugman, agrees with the second paragraph, but ignores the first paragraph above.