MADRID | “Given that it took four years to complete the negotiations of the Treaty of the Union until it was signed in 1992, given the depth of the issues, it is conceivable that this time it won’t be a lot simpler,” says Carlos Díaz Güell.
Although the European Union has a consistency of its own, the Nobel Committee may well see risks in the drawn-out process of more and more austerity accompanied by less and less growth.
Economist Luis Arroyo describes the dimensions of the troubles the Spanish banking system faces and concludes that Chancellor Angela Merkel has, again, made the wrong moves during the last EU summit.
Germany isn’t just refusing to play the paymaster’s role, it effectively is barring the way towards a banking and a true economic union for the euro zone. The upcoming summit could be one more missed chance to fix the common currency area.
Past performance casts doubts over what European governments will achieve by implementing the Tobin Tax on financial transactions. Funding costs for banks and their clients, though, will surely increase.
Investors’ hoping that Madrid successfully implements the 2013 Budget were left wondering again after the IMF announced its gloomy expectations. For economist JP Marín Arrese, Spain’s euro partners will make a mistake if they keep pushing the country into the same line Greece, Ireland and Portugal have been forced to walk.
Don’t worry about the external deficit. The Spanish economy needs permanent capital inflows and that isn’t really a problem when the country can generate income to cover interests and dividends. Look at Australia, suggests economist Luis Arroyo.
Behind the latest good news about better external deficit figures in Spain and the US, nominal GDP records demonstrate that Brussels is wrong: it isn’t time for savings when income drops dramatically. Spain needs credit to grow and repay its debts.
Something common to all euro zone countries is the habitual use of tax avoidance strategies by the wealthy. Ever higher tax rates on large fortunes can now be popular among ordinary taxpayers, but could do more harm to the economy than good, believes Carlos Díaz Guell.
It will not look good for the political party in office in Madrid, analyst at Self Bank Victoria Torre told Julia Pastor, but requiring a rescue is only a matter of when. And the Spanish government wouldn’t be the only one to blame.