Friday, June 22, 2012
And now we turn to Spain
After months of denying that Spain can get along fine without aid, the Spanish government had to swallow its pride and asked for a European funded bailout of more than 100 billion Euros. As if Greece was not enough for the European union to tackle and now the Spaniards needed help from the supremely wealthy and industrious Germans to bail them out. So this money will be added to the Spanish debt and then the vicious cycle will start again. This euro experiment is looking more and more like a huge mistake since all this debt will have to pay in the form of higher taxes and lower benefits for decades to come and the citizens of each bail out country will suffer immensely. The European union in order to save their collective currency are trying their best to lend money right and left to any country in the Union without going to the core of the problem, that is why the economies are slowing down and why and how it can rescue the decline in the economies. It is that the labor market is too rigid and the economies are too much uncompetitive against the emerging markets. Other is the reluctance of the citizens to embrace cuts in their benefits and lower living standards. I know it is hard but things are not going to look up by maintaining the status quo and that is what is happening right now.