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9 Reasons Why Spain Is A Dead Economy Walking

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Barring an economic bailout of mammoth proportions, the economy of Spain is completely and totally doomed.  The socialist government of Spain is drowning in debt, unemployment is running rampant and everywhere you turn there are major economic problems.  So will Spain be the next Greece?  No.  When the economy of Spain implodes it is going to be a whole lot worse for the world economy.  The economy of Spain is more than four times the size of the economy of Greece.  Spain accounts for 11.5 percent of eurozone GDP while Greece only accounts for approximately 2.5 percent.  Spain is the 4th largest economy in the 16 nation eurozone and it is the 10th largest economy in the world.  If the economy of Spain fails it will cause a shockwave that will be felt in every corner of the globe.  In fact, there are quite a few analysts that believe if Spain defaults it would ultimately lead to the breakup of the eurozone.

So will the EU step up and bail out Spain?  Well, there are rumors that EU officials have begun work on a bailout package for Spain which is likely to run into the hundreds of billions of dollars, but on Monday the European Commission, the Spanish government and the German government all denied that the European Union was preparing a bailout for the Spanish economy.

Of course we all know that politicians don’t always tell us the truth.

So who knows what is going on over there right now.

But the reality is that the economy of Spain is not going to make it much longer without serious help, and some EU officials are already using apocalyptic language to describe what an economic collapse in Spain would mean.

For example, EU Commission President Jose Manuel Barroso recently warned that democracy could completely collapse in Greece, Spain and Portugal unless urgent action is taken to tackle the burgeoning European debt crisis.

So could democracy actually fail in those nations?

Well, considering the fact that Greece, Spain and Portugal only became democracies in the 1970s, and that all three of those countries have a history of military coups, such a scenario is not that far-fetched.

Without a doubt there would be serious public unrest in those nations if public services collapsed because their governments ran out of money.

So are there signs that the economy of Spain is about to collapse?

Well, yes, there are quite a few of them.

The following are 9 reasons why Spain is a dead economy walking….

#1) Even before this most recent crisis, unemployment in Spain was approaching Great Depression levels.  Spain now has the highest unemployment rate in the entire European Union. More than 20 percent of working age Spaniards were unemployed during the first quarter of 2010.  If people aren’t working they can’t pay taxes and they can’t provide for their families.

#2) In an effort to stimulate the economy, Spain’s socialist government has been spending unprecedented amounts of money and that skyrocketed the government budget deficit to a stunning 11.4 percent of GDP in 2009.  That is completely unsustainable by any definition.

#3) The total of all public and private debt in Spain has now reached 270 percent of GDP.

#4) The Spanish government has accumulated way more debt than it can possibly handle, and this has forced two international ratings agencies, Fitch and Standard & Poor’s, to lower Spain’s long-term sovereign credit rating.  These downgrades are making it much more expensive for Spain to finance its debt at a time when they simply can’t afford to pay more interest on their debt.

#5) There are 1.6 million unsold properties in Spain.  That is six times the level per capita in the United States.  Considering how bad the U.S. real estate market is, that statistic is incredibly alarming.

#6) The new “green economy” in Spain has been a total flop.  Socialist leaders promised that implementing hardcore restrictions on carbon emissions and forcing the nation over to a “green economy” would result in a flood of “green jobs”.  But that simply did not happen.  In fact, a leaked internal assessment produced by the government of Spain reveals that the “green economy” has been an absolute economic nightmare for that nation.  Energy prices have skyrocketed in Spain and the new “green economy” in that nation has actually lost more than two jobs for every job that it has created.  But Spain so far seems unwilling to undo all of the crazy regulations that they have implemented.

#7) Spain’s national debt is so onerous that they are now caught in a debt spiral where anything they do will harm the economy.  If they cut government expenditures in an effort to get debt under control it will devastate economic growth and crush badly needed tax revenues.  But if the Spanish government keeps borrowing money their credit rating will continue to decline and they will almost certainly default.  The truth is that the Spanish government is caught in a “no win” situation.

#8) But even now the IMF is projecting that the Spanish economy is going nowhere fast.  The International Monetary Fund says there will be no positive GDP growth in Spain until 2011, at which point it will still be below one percent.  As bleak as that forecast is, many analysts believe that it is way too optimistic considering the fact that Spain’s economy declined by about 3.6 percent in 2009 and things are rapidly getting worse.

#9) The Spanish population has gotten used to socialist handouts and they are not going to accept public sector pay cuts, budget cuts to social programs and hefty tax increases easily.  In fact, there is likely to be some very serious social unrest before all of this is said and done.  On May 21st, thousands of public sector workers took to the streets of Spain to protest the government’s austerity plan.  But that was only an appetizer.  Spain’s two main unions are calling for a major one day general strike to protest the government’s planned reforms of the country’s labor market.  The truth is that financial shock therapy does not go down very well in highly socialized nations such as Greece and Spain.  In fact, the austerity measures that Spain has been pressured to implement by the IMF have proven so unpopular that many are now projecting that Spain’s socialist government will be forced to call early elections.

So what is going to happen in Spain?

The truth is that nobody can predict for sure how things are going to play out over the coming weeks and months.

But what everyone can agree on is that the stakes are incredibly high.

Speaking at the World Economic Forum in Davos, Switzerland, world famous economist Nouriel Roubini put it this way: “If Greece goes under, that’s a problem for the eurozone. If Spain goes under, it’s a disaster.”

But right now the entire population of Spain (along with much of the rest of the world) is completely distracted by the World Cup.  As long as the Spanish team does well, that is likely to keep the Spanish population sedated.  But if the Spanish team gets knocked out of the tournament early that will put the entire Spanish population in a really, really bad mood and that could mean a really chaotic summer for the nation of Spain.

  • Marc

    I think we all need to start building communities that can be self-sustaining. Make friends with your neighbors and local farmers. Not because I think it will be needed, but because it would be good either way.

    I think that anarcho-capitalism on a community scale will prevail, as long as some new leader doesn’t convince people that they can deliver change… again… and not, of course…

    Also, educate your children of history, because this has happened before (on a different scale of course), and will again if we forget the steps that lead us here.

  • roadrunner

    It’s a shame when the population of a state in major trouble, who should be having riots and revolution right now, are “sedated” because of a ballgame.

  • sharonsj

    You say the population has become used to socialistic handouts. Is that another way of saying that government money has kept people from being homeless and starving? I’d like to know what you propose instead.

    We have similar problems in America. More people are on food stamps, cannot pay their mortgage, can’t find jobs. They need help to survive. If there is no more help to be had, because the governments are going broke, then of course you will see social unrest.

    I have no expectations that our own corporate-controlled Congress will be able to solve these problems either.

    • spincontrol

      Well the hand outs only results in others paying the price when infact the politicians have ripped off the tax payers for years , so for America or any other Nation to bill the tax payer for the failures of the Gov is not an answer as the unrest will cost more than one knows.

      Once the youth is joined with the middle age in the streets the game is over as security will fail .

      It has to be a Global answer to this debt thing , not a singal nation thing . The strikes that have yet to come will be a clear signal that printing coin is not an answer as the rich will become richer and the poor decline further into dispair .

  • bowssen

    The measure of a country’s debt is a measure of its class struggle. People of different classes have different expectations of the government and its spending; lower class people want the government to spend money on protecting their living standards and livelihoods, while upper class people want the government to use its money to make business growth easy, and this includes taxing business as little as possible. Governments hitherto have been able to placate their populations and put off addressing class struggle itself by accumulating national debts, but now debts are out of control and leaders are out of options. They must choose how to address this crisis–by protecting the living standards and livelihoods of people, or by protecting the growth of business. The EU has attempted to facilitate both, but as we are now seeing, nation states cannot cope with this political-economic dichotomy. Democracy could very well collapse, but the real threat lies in the subordination of people to profits. Austerity measures are an example of a direct attack on the living standards of people in the interest of protecting business profits. Social unrest is not the end of democracy, it is the beginning.

  • JoJo

    Democracy? You can’t handle democracy.

  • JLouise

    Probably we are looking at going back to a pre-WWII era where people gardened, had less medical care, far less elder care, and didn’t monetize every facet of their lifestyle. That’s a big adjustment for the U.S. and many other countries.

  • Stud Muffin

    This so called Green Economy that failed miserably is exactly what Obama wants to force on us. It’s not about being green of the economy – It’s about control.

    I pray the people of this country come to their senses this November.

    And I hope the low information voters who bought the warm and fuzzy taglines of hope ‘n change stay home.

  • Agree 100%. Spain may very well be the ‘domino’ that gets them all falling. As to timing for the rest of the Eurozone and the US, it’s just a matter of how long these countries can prop up things before eventually crashing. Scary times.

  • Connie

    There is no easy fix . We can in our own lives pay down debt , pay cash , focus on what we need not what we want and help those that are unemployed. Also we need to store food and have cash for emergencies . We can’t fix the world but we can work better and smarter in our own lives.

  • tyler

    I know spain going down is usually mentioned with other countries but to me it seems the media created way more hype over greece. Between the us, spain and greece, greece is the least of the worlds worries but on nightly news they were hyping up greece going down. No mention of spain or the usa. This is sick its almost like the media is in on a bigger plan and are being told not to say anything. Either that or they are just dumb as rocks which is probably the case.

  • This is what happens when you give the vote to women! They are the ones who vote all these socials goverments. They are always looking for family securities. now the chickens have come to roost.

  • Daniel

    Sharon, I suggest we start abandoning the welfare state. Your own words suggest that you believe the US government is too corrupt to solve the problem. Why would you propose continuing to allow the gov’t to take money from the populace to distribute corruptly? If it happens quickly, the results are riots. (i.e. Greece, Spain) If anything close to a soft landing can be figured out, it has to be better than anarchy. But the welfare state WILL come to end. History shows that with complete accuracy.


  • Joe in JT

    I’ve heard this doom and gloom talk before. Hank Paulson in September of 2008. If you don’t pass the bailout package the U.S. will collapse and martial law will be declared.

    Guess what happened? Congress passed the bill and now we are in debt over 13 trillion dollars. The money was stolen and secretly given to foriegn banks and other crooks and Americans were sent the bill.

    My advice to Spain is don’t except bailouts and austerity measures because it would be a sell out of your country. Simply regroup, remember what’s important. Your family, a roof over your head, and grow a nice garden and share the food with a neighbor. Tell those banksters to whom you owe money…you are getting nothing, go pound tar.

  • ian

    Well said Sharon! We should help our weaker and unluckier brethren. In Spain, in the USA, in the UK there are many people who are very comfortable. They could stand being just a little less so to help the rest. Otherwise, they won’t have nice civilised places to be comfortable in…

  • No question Spain is the walking dead. They did it to themselves though.

    We have tons of listings from Spain – nothing is moving.

    Spain today, Greece yesterday, whose tomorrow?

  • Mr Monks, now head of the European TUC, said: ‘I had a discussion with Barroso last Friday about what can be done for Greece, Spain, Portugal and the rest and his message was blunt: “Look, if they do not carry out these austerity packages, these countries could virtually disappear in the way that we know them as democracies. They’ve got no choice, this is it.

  • Godofredo

    Spain was a much better country in the ways that matter most, and much safer, too, when El Caudillo, Generalisimo Francisco Franco, was the head of state.

    His control grid apparatus was merely replaced by one that is even worse, across the board, which masquerades as something better. Now, the nation is headed toward rack and ruin and is bankrupt in a lot more ways than economically.

    “Ser Espanol es ser algo especial in este mundo todavia” – Franco – 1974

  • Where did all the money go when the euro dollar kept increrasing. All the that money had to go some where an buy something. They should be rich.

  • skip

    Stud muffin,you don’t get it.It was chains you can beleive in

  • There are two further reasons why Spain is ‘a dead state walking’.
    The inefficiencies and massive waste of the autonomous governments (coupled with a lively sense of corruption) and the divisive politics towards the northern European homesteaders here.

  • Dabooda

    Spain’s government is its problem, not the solution to its problem. There only three ways to get something you want from someone else: you can trade, you can beg, or you can steal. “Government” is not a fourth way. All the theft-based games that government plays can ruin prosperity, but cannot create it. The Spanish economy will not recover as long as the proposed “solutions” are all theft-based. Fire the bureaucrats, end the socialism, cut the taxes, and free the markets.

  • jox

    I realise that a lot of people enjoy shooting against latin countries (a lot of anglosaxon people, that is). But the situation here is not as bad as you paint it. We’ll see UK and probably USA fall before and deeper than Spain.

  • Well, guess who’s waist deep in Spain debt?

    Yep, US banks. So now you know why the US Treasury was eager to get into swap agreements with the ECB: bail American banks out, yet again!

  • Joe

    the main problem is that the house price bubble is not deflating fast enough.
    Only when the ridiculous overinflated house prices drop way below the y2k level Spain can restart the housing jobs. But with 1.6 mio not sold units in the line that will take a long time. In the moment the Banks would have to put the real worth of the houses in their books Spain would collaps instantly.

  • Gerro

    Well since the whole world is in debt on corporate governmental and personal levels and debt forces almost all of us to keep working in ecologically destructive professions/jobs so that we don’t have time to produce what we need on a local level we are forced to consume from the corporations and the destruction continues. perhaps we could right off all debts on mass. this could be done from the roots up simply by everyone defaulting. we could have an international day of default where everyone cancels their direct debits and standing orders mortgage payments. and suppliers and providers default banks everyone and we all stop and take stock of what we actually have left to cherish in life and on this earth… perhaps we could redistribute corporate wealth so that we pass the power and wealth up to the people and operate in a new free market based on sustainable practices that incorporate the need we as people have for eco systems and land we can grow food in. we can change but only if we give up compliance with the notion of debt. debt is like guilt it keeps us down and it drags on us from the past and ties us down into the future. actually what we owe ourselves is a bright conscious present moment and that requires everyone to have the means to self support and sustain themselves in an educated modern society with everyone invited to take part in the government of this world. i suspect that our addiction to the drug of borrowing and owing and destroying will carry us down into madness and despair before we can then climb out of the wreckage of this drunk driving society, perhaps the carnage will wake us up!

  • Jim McClarin

    How do you prepare to survive global economic collapse? That’s what’s coming thanks to universal adoption of fiat currencies.

    If the 10th largest economy in the world (Spain) fails, it will tear the EU apart. If the 7th largest economy in the world (California) collapses, it will wreck America. But challenging California for first to default are New York and Michigan, with a dozen other states very close on their heels.

    My personal solution has been to buy property in a country with a high level of subsistence farming, where a large percentage of the population is accustomed to taking charge of their own sustenance. Cities will be death traps because they are so dependent on infrastructure and the infrastructure is so vulnerable to disruption.

  • Wil

    There is in fact a solution to all this mess in the US. We have STATES, and each state is (or should be) a self-reliant entity. This is accomplished by chartering state banks and issuing credit OUTSIDE of the corrupt regional and federal reserve banking system (and the FDIC) as North Dakota did shortly after (1919) the Federal Reserve system was created in 1913.

    You don’t have only two choices (austerity or stimulus). You have a third choice, and that is a state by state constitutional credit system which RESPONSIBLY lends to advance infrastructure maintenance. You don’t extend unemployment, you enable jobs. Everyone collecting unemployment–here’s a bus ticket to the gulf coast–you’re on the cleanup crew.

    Beyond that, the states can revitalize this copuntry’s economy and state banks have assets–buildings, land, people, upon which to capitalize and lend.

    It’s so simple. It’s been the solution a dozen times in the past. It’s working in North Dakota today – why doesn’t anuyone listen?

  • Rick

    Left unchecked, parasites kill the host. The unions and welfare mobs have sucked the life out of Spain and it’s now time for both parasite and host to die.

  • Consider this:
    Drug money if funneled back into our lives instead of OUT of our lives would have lifted the world economies to not even BE in debts.

    Drugs are so pervasive in every country they have to take a major portion of the blame. Next time you drive down your city streets just remember no matter how nice you “think” it looks, wwhere’s the covered walkways? Where’s the streetlights every couple of homes? Where’s the absence of chugholes? Where’s the city service we don’t have because 75% of city funds goes tto police departments who turnaround and don’t stop crime anyway? Where’s the many things we blindly accept to do without that we don’t have because the one big reason that such a tremendous amount of our city, state and national net worth is going into the hands of drug dealers south and NORTH of the border, and thats no way to stimulate an economy or pay off debts or increase standards of living@!!!

  • I think that the trio ( Greece, Portugal and Spain can come out of the crisis by organising foot ball World cup Boys and an olympic for below 18 age to activate and fill enthiasm in the younger generation to fight for the nation and build it again.

  • spaniardfedup

    Spain is a country of barbarian people. I will not cry for spain. Stupid country.

    • ces

      your tears are not needed. save them, you might need someday. Stupid!

  • Soumya

    Spain’s economy debacle will most probably pull down other EU nations and I guess that day is not that far. So Other EU nations should have their contingency plans ready, lest tough times are on the horizon. Spanish media’s has another huge problem. They tried to concentrate on the Euro Cup and other social issues when the country is neck-deep in damage control.
    Albeit the certain austerity means that the govt has taken recently can be a huge uplift in the Spain’s economic status, but they should have been a more Pragmatic.
    the money lent to spain might pull them out of this debacle but they should be more aware of such conditions as this is not the first time this has happened to The EU.
    Spain needs a Evolution rather than a Revolution.

  • spainisdifferent

    im spanish i was born here and im lucky because since i finish university 5 years ago…when the ” war ” begins,i ve been working.
    i have to say that i studied tourism and i work in hotels so is easy to find a work…but even this industry is under the shadow of this crisis.
    is impossible to have a long stay at the same work because is cheaper for enterprises to have new people every year or two maximum i can understand this if your company is loosing money but they are not on that situation…well another thing are the salaries… i think every body here is earing around 1000-1500 and it doesnt mather what do you boss the hotel manager speaks 4 languages..earns 1800€ me1200€ ridiculous
    please help spain…move out all the political class and put a new goverment of french german and british people we need a change on the industry and i know we are good people for working

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