Spain's Economy Has Literally Collapsed And There Is No Sign Of A Bottom
Industrial production dropped an unheard of twenty percent last month and Spain's unemployment rate is double that of the U.S. What choices do policy makers have other than to leave the shackles of Euro-area monetary policy behind? A major contributor to this crisis is the ECB and now Trichet remains resolute.
Spain provides a stark contrast in monetary policy to the U.S. Were the U.S. Fed not to have taken aggressive policy stances, (A position of do-nothing was supported by many voices in the financial blogosphere and media.) the U.S. unemployment rate would likely be in line with Spain. We were one of the voices of reason to have supported the spirit of the Fed's actions on here from the beginning. Not as a matter of choice or even support for a broken system but as a matter of necessity. Were it a matter of choice, our economy never, ever, ever had to get to this point. And I surely don't support the whac-a-mole Fed policy implementation and the apparent cronyism with which it has been executed. But, all things being said, as I wrote in January the Fed still gets a C- in my book.
One does not support a dogmatic or ideological war on a broken financial system with the lives of the American people because we are all pawns. There is that dirty word again - ideology.
Even if a stabilization were to happen tomorrow, and it won't, it will likely take at least a decade for Spain to claw back to 2006 economic levels. This means while politicians and European bankers dither more unnecessary personal suffering for the people of Spain lies ahead.
Spain provides a stark contrast in monetary policy to the U.S. Were the U.S. Fed not to have taken aggressive policy stances, (A position of do-nothing was supported by many voices in the financial blogosphere and media.) the U.S. unemployment rate would likely be in line with Spain. We were one of the voices of reason to have supported the spirit of the Fed's actions on here from the beginning. Not as a matter of choice or even support for a broken system but as a matter of necessity. Were it a matter of choice, our economy never, ever, ever had to get to this point. And I surely don't support the whac-a-mole Fed policy implementation and the apparent cronyism with which it has been executed. But, all things being said, as I wrote in January the Fed still gets a C- in my book.
One does not support a dogmatic or ideological war on a broken financial system with the lives of the American people because we are all pawns. There is that dirty word again - ideology.
Even if a stabilization were to happen tomorrow, and it won't, it will likely take at least a decade for Spain to claw back to 2006 economic levels. This means while politicians and European bankers dither more unnecessary personal suffering for the people of Spain lies ahead.
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