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Thanks for the ongoing education DE
Very informative, thanks for the article.
DE, not sure if you have seen this article I linked to a while back http://blogs.ft.com/gavyndavies/2012/04/01/spain-in-the-austerity-trap/#axzz1qvekI1z7
It is a good article that clearly highlights the risk of using fiscal tightening alone to address the imbalances in the EuroZone.
Yup. He also seems to be hinting that the long list of other things that need to happen is likely to be ignored, so Spain will be stuck in the austerity trap.
Would leaving the Euro and devaluing really be worse than 10 years of sporadic recessions and 50% youth unemployment?
For the average spanish punter, no.
For the French and German banks that would get wiped out when their loans to the Spanish were redenominated to pesos, YES!
Ummm…am I being naive here, or does the description of the run-up to crisis in Spain given above not fit the Australian economy with an eerie and terrifying exactness?
Some of it. There are significant differences – Australia has its own currency and a resources boom in progress. The labour market here is more flexible.
PS, note that GDP growth in Spain doesn’t exceed 1.5% at any point on the chart. GDP growth at 1.5% in Australia would be seen as a dismal policy failure.
I remember reading somewhere that Spain has as many unsold houses as the US with 1/6 th of the population, or something similar
This is one from CNBC which will give you a laugh…it did me as this guy just realised Spain is a bigger problem than Greece.
lol. He hasn’t been reading DE!
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