Saturday, April 04, 2009

Spain’s economic crisis will deepen over the coming months and unemployment will top 19 percent next year as global demand remains weak and companies invest much less in capital goods, the Bank of Spain said Friday.

The central bank predicted that the Spanish economy would shrink by 3 percent this year, nearly double the drop of 1.6 percent forecast by the government. The bank said the economy would contract another 1 percent next year.

“The Spanish economy is immersed in a period of deep contraction, where the unemployment rate, unless measures are taken, will rise to a very worrying level,” the Bank of Spain’s governor, Miguel Ángel Fernández Ordóñez, said Friday, according to Reuters.
Maybe "clueless" is not the best word: it's also quite possible that he's fully aware of the situation but thinks that by repeating positive words over and over again, saying that the country will overcome the crisis, all will be fine, etc, (like the attitude in a lame soap opera: "don't worry, darling, you got paralized in a car crash on your way to chemotherapy for your Stage 4 cancer, but everything will be fine") the situation will magically solve itself, including the 'freeriding' of the economic situation of other countries. This is not only stupid, it's also dangerous. It means that while other countries are adopting real measures in making market more flexible, promote economic activity, etc, Spain won't and, therefore, will not ride the stream up when the bad moment passes.