In the never-ending tragedy that is the Eurozone Crisis, Spain is now the next country to have the dubious honor of stepping into the world’s spotlight. As its ability to pay back its debts gets called into question, Spain is seeing its debt yields rise to almost 6% for a 10-year bond. In the past, countries have asked for a bailout at 7%.
It is surprising to see the reaction from those in the media and around the world. Clearly after Greece, Portugal and Ireland, Spain was could not be too far behind? Just a quick look at Spain reveals an unemployment rate of over 20%. This figure stands at almost 40% for youth aged from 16-24. With unemployment benefits fit for kings and a younger work force that has remained almost perpetually unemployed for a few years now, who would work?
Spain’s new government definitely has a lot of work to do. They have revealed a budget proposal that would utilize €27bn in spending cuts and tax increases to counter the projected contraction in Spain’s GDP. However, the ECB has said that there will be no bailout for Spain. Now that is by no means the final word, but how long will the ECB be able to keep their poker face on. This is a dangerous game they are playing and frankly, the outcomes do not seem to be in anyone’s favor. The Spain episode of the Eurozone Crisis is ramping up, so stay tuned!
On a more positive note, Spain has three teams in the UEFA Semi-finals. If only the economy could be solved by playing soccer.
Norman Bae
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