By Luis Arroyo, in Madrid | Here you are, Spain’s updated accrued passive account with Target2 or intra-system operations pending compensation. Its sheer volume and the scale by which it increases clearly expose that we are in for our troubles. How can the euro zone authorities postpone solutions until September? The scenario does not look good.
The chart registers data from the Bank of Spain until June. The debt goes ever higher and is already over the €400 billion mark. Shockingly, everyone is on summer holidays, though, and the so-talked-about loan that the Spanish government would use to finally re-float its banking industry remains in limbo. No one understands a thing.
Economist Richard Koo recently warned that democracy in Europe is in danger. I would go further and say it is so in most of the western world, and there is no conspiracy behind this dire situation: the reason is the disastrous introduction of the euro and its even more disastrous governance. It amounts to a tsunami of accidents, from which the US and other non-euro economies will have a hard time trying to escape.
Behind the great catastrophes in history, there has always been natural explanations. But most people see them as unfair and seek the scheme that will confirm their suspicions, their fanatical faiths or their extreme ideologies. Europe can fail because of simple lack of political prudence.