And so another one bites the dust – or at least edges closer to doing so. Spain, the fourth largest economy in the Eurozone is on the brink of writing another sorry chapter in the European debt saga and the pundits are opining that it was only a matter of time. The first quarter of 2012 is filled with wretched numbers for any concerned Spaniard or an economist who has been working on the fiscal drawing boards to conjure up a long lasting solution for the European debt crisis.
The unemployment rate in Spain is increasing at the rate of knots; and as things stand, almost one in every four Spaniard – 22.9 percent to be exact – is unemployed. Oh and it gets worse; the unemployment beast has its claw firmly around the youth’s neck with half of the future of the country hankering after non-existing jobs.
Historically, construction and housing was the go-to play for Spanish economy, when in a fix, and it is pretty evident that it has not managed to stand up on its feet ever since the sector took a nosedive in 2007. Exports have never been Spain’s forte and hence, any amount of tourist money or local consumption is a false dawn for lasting growth. Another dagger in Spain’s emptying wallet has surfaced courtesy the rising deficit of the autonomous regions. It’s almost as if the Spanish government is paying no heed to the menace, which if one were to be honest is the logical corollary of its frivolous spending. In a fit of desperation the central government is now vying to conjure up a law that would enhance its control over the regions, citing the towering debts and the plunging deficits of the aforementioned regions.
The numbers for Spain are not has desolate as those of Greece – which doesn’t say much really – but the Spanish banks are indebted up to their nose, and are running out of breathing space with escalating pace. Cue the clamour of default. Europe has for long been playing for time. Instead of vying to root out the problem, however impossible it might’ve had been, the Europeans have just satisfied themselves by extending the inevitable. The officials have held the currency and the block together for a while now, owing mostly to the European Central Bank (ECB) buying both bank bonds and government bonds.
The crux of the matter, as expounded by economic connoisseurs is that Europe as a whole isn’t exactly as desolate as some of its individual units are. This undoubtedly brings the unity of the Eurozone under scrutiny, for the simple fact that if a particular American state were to hypothetically be in a Greece-esque quagmire, there wouldn’t exactly be a white flag anywhere in the US. This puts the whole “United States of Europe” clamour peddled by the Eurozone under scrutiny.
Now this spring and undoubtedly the coming summer, Spain would be at the forefront of this soap opera. The ECB could both be the protagonist or indeed the antagonist of this drama and only time will tell which end the European bank ends up hogging.
