Experts: Economic Fall of Spain Could Doom Euro

Thursday, 04 Mar 2010 03:48 PM

By Dan Weil

Share:
  Comment  |
   Contact Us  |
  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.

Share:
  Comment  |
   Contact Us  |
  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:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

US Plans to Arm, Train Ukraine National Guard

Friday, 01 Aug 2014 23:20 PM

The Obama administration has notified Congress of its plans to train and arm the Ukrainian national guard next year, the . . .

House GOP Lauds Passage of 'Responsible' Border Bill

Friday, 01 Aug 2014 23:02 PM

House Republicans praised the passing of legislation that would give President Barack Obama $694 million to address the  . . .

Congress Approves $225 Million for Israeli 'Iron Dome' System

Friday, 01 Aug 2014 22:54 PM

Congress approved $225 million in emergency funding for Israel's Iron Dome missile defense system on Friday, sending t . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

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