Experts: Economic Fall of Spain Could Doom Euro

Thursday, 04 Mar 2010 03:48 PM

By Dan Weil

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
The financial turmoil afflicting Europe began in Greece, and now it’s spreading to Spain.

That could spell doom for Europe’s common currency, experts say.

"Spain is the real test case for the euro," Desmond Lachman of the American Enterprise Institute told The Wall Street Journal.

"If Spain is in deep trouble, it will be difficult to hold the euro together . . . and my own view is that Spain is in deep trouble."

Spain is the fourth biggest economy among the 16 nations that use the euro. And it’s suffering big time.

The economy shrank 3.6 percent last year and will likely contract again in 2010. That would mean Spain is suffering its worst recession in 50 years.

Unemployment has surged to 19 percent. A housing bubble is bursting, and the budget deficit and debt burden are soaring, just like in the United States.

Thanks to its euro membership, Spain’s options to buoy the economy are limited. It can’t loosen monetary policy, because that’s controlled by the European Central Bank.

And with a budget deficit that totals 11.4 percent of GDP, it’s difficult for Spain to increase spending or cut taxes. Bond traders already are pushing up the government’s interest rates.

Many experts say the euro will continue to drop.

“It’s become the world’s most hated currency over the last few weeks and is likely to stay that way,” Kit Juckes, chief economist at ECU Group, told Bloomberg.

© 2014 Moneynews. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Obama Executive Order Gives Pay Raise to Federal Workers

Friday, 19 Dec 2014 22:36 PM

Federal workers and uniformed military service members are getting a 1 percent pay boost. . . .

Mental Illness History Ruled on Appeal to Not Bar Gun Ownership

Friday, 19 Dec 2014 22:14 PM

A federal appeals court concluded that a history of mental illness shouldn't bar citizens from owning a weapon in a firs . . .

China Arrests US Aid Worker on North Korean Border

Friday, 19 Dec 2014 21:56 PM

China has arrested an American Christian aid worker based near its border with North Korea, his lawyer said Saturday, as . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved