Baexecutive
Topic Author
Posts: 608
Joined: Fri Jul 01, 2005 9:29 pm

More Woes For Spain

Mon May 31, 2010 6:02 pm

A second agency has downgraded Spain's credit rating, citing the countries poor growth prospects. Fitch joins Standard & Poor's in the downgrade to AA+.

This adds to the countries regional banking problem with 6 savings banks seeking alliances to avoid insolvency following on from Cajasur being taken over by Spanish authorities earlier this month.

With an unemployment rate of currently 20% (twice the eurozone average) it isn't looking too good for Spain.
 
Marcus
Posts: 1665
Joined: Fri Apr 20, 2001 5:08 am

RE: More Woes For Spain

Mon May 31, 2010 6:18 pm

I guess it's time to buy that beach apartment in the "costa" or the studio in MAD then.......
Kids!....we are going to the happiest place on earth...TIJUANA! signed: Krusty the Clown
 
Klaus
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Joined: Wed Jul 11, 2001 7:41 am

RE: More Woes For Spain

Mon May 31, 2010 6:21 pm

If the rating agencies hadn't demonstrated their complete and utter incompetence as a major contributing cause of the financial crisis, this could be called a plausible step.

As things stand, among many other things to be cleaned up, the current rating agencies need to be totally revamped or completely replaced outright. They are in much, much worse shape themselves than either Spain or even Greece.
 
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DocLightning
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Joined: Wed Nov 16, 2005 8:51 am

RE: More Woes For Spain

Tue Jun 01, 2010 9:20 am

This is an interesting test for the Euro. Spain is the 4th largest economy and, until recently, was the fastest growing in Europe.

In most countries, an event like this would drive the value of the currency up a bit. Nobody has any money to spend, so everything gets cheaper. With the Euro, that effect is much smaller. But while the Euro holds steady, other things in Spain get very cheap, like labor and land. A building boom in the costal towns could be the correcting factor, but that alone isn't going to employ 15% of Spaniards so as to get unemployment down to a reasonable level again.

The Euro may not help here.
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
-Carl Sagan
 
Klaus
Posts: 20700
Joined: Wed Jul 11, 2001 7:41 am

RE: More Woes For Spain

Tue Jun 01, 2010 9:27 am

Quoting DocLightning (Reply 4):
In most countries, an event like this would drive the value of the currency up a bit. Nobody has any money to spend, so everything gets cheaper.

How would that produce any upwards momentum? I see only downwards pressure there.

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