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NEWS > BUSINESS > SPAIN AND PORTUGAL RACING TO BE THE NEXT FAILED ECONOMY
SPAIN AND PORTUGAL RACING TO BE THE NEXT FAILED ECONOMY
May 7 2010
Madrid, Spain – Debt is never a comfortable thing for anyone, despite the fact that most people suffer it in one form or another. Whether it’s paying down a mortgage or swimming in credit card debt, millions of people live in the red. While such living can
pose serious danger to economies, as witnessed by the most recent recession, it also helps to create generations of people bound by their past spending, restricting their future and that of their children.
Of course it isn’t just individuals who run up debt and run into serious financial issues as a result. Nations themselves are simply the macro version of individuals and susceptible to the same risks and pressure that ordinary people suffer. While many people in the United States understand all too well the dangers posed by a weakened economy, there are nations that in much greater peril than the greatest economy in the world. Bank failures and record unemployment in Iceland and a reduction to junk bond status in Greece has shown just how far an economy can fall. However unlike nations with endemic poverty those nations have the benefit of historical wealth meaning that bailouts, such as the massive one granted to Greece, are often waiting around the corner, a pie which both Spain and Portugal are both racing to get a piece.
“That is a very different situation - there is no doubt about the quality of the Spanish
fiscal statistics, for instance. However that doesn't mean that Spain hasn't been affected by the Greece developments. Certainly Spain has a debt problem and certainly Spain now is under scrutiny by financial markets over its ability to compete within the euro,” Fernando Fernandez Mendez de Andes, a professor of economics at the IE Business School told CNN. “This is an issue facing not only Spain but it is a problem for the entire union. We must realize that bailouts such as those that happened with Greece will not be available to everyone and so we must strike while we can to ensure that we get our fair share.”
Greece’s bailout, valued at €110 million, was primarily financed by Germany, the wealthiest nation in the EU.
“At this point it’s really a bettor’s game. The economies of both of those countries
have been declining steadily for the last few years and very shortly one or both will collapse. Spain obviously has a much larger workforce and more robust industry but it also holds a much higher debt package which about evens those things out,” said Scrape TV Business analyst Ken Green. “For many people the realization that Portugal still actually exists will come as a shock and that could push them further from the finish line. I would imagine that now that people realize the country is still around they will want to visit which will help boost their economy to levels that would negate bailout action.”
Portugal lays claim to the oldest nation-state in Europe, something which hasn’t helped much in recent years.
“All these countries we are talking about, except Iceland, were once great nations. They spread influence, conquered nations, and helped to create the modern world as we know it today yet here they are, having to struggle for their survival,” continued Green. “It’s really a shame that there isn’t more money to go around so both countries could get a chunk. Unfortunately the mints can only produce so much so once again, much as they did in the Americas, the two countries will have to battle it out for supremacy. Of course we all know who won that one.”
It’s widely believed that there will be no hope for the loser this time around.
William Ashford, Business Correspondent
NEWS > BUSINESS > SPAIN AND PORTUGAL RACING TO BE THE NEXT FAILED ECONOMY
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