Spain's National Statistics Institute said Friday that first-quarter unemployment rose to 20.05% from 18.83% in the fourth quarter of last year.
This is part of the problem that makes Spain the Big Daddy in the PIIGS crisis. Not only do they have huge debts coming due in July, but the economic wreck that Spain is means that there is nowhere to squeeze to help bring future deficits down.
The Greeks may not like it, and it certainly isn't right, but the government has room to squeeze and raise taxes , but how are you going to raise taxes on a country with 20% unemployment, and in the middle of a housing price collapse?
"...nowhere to squeeze..."? IN the 1920 recession/depression in the US, unemployment jumped to 12%. The federal government cut spending and taxes by an estimated 50%. In 18 months unemployment dropped to 6%.
ReplyDeleteThe Europeans even have their own story in Germany after WWII. While the allies dithered over economic controls, the German leader grabbed the bull by the horns and implemented free market reforms. The resulting economic recovery was so strong it is remembered as a "miracle".
If Spain was to unilateraly implement Wenzel's proposal to break up the Euro-Zone by being the first to secede and then implemented appropriate budget cuts for its government it could become the new economic powerhouse of Europe. This has the potential to become a very exciting time! Who has contacts in Spain? How about Prof. Ebeling?