Tuesday, May 25, 2010

IMF SAYING that Spain is not doing enough:
The International Monetary Fund on Monday urged Spain to push forward with a major restructuring of its economy, including an overhaul of union-dominated labor markets and progress on cutting government budget deficits.

[...] Spanish labor markets are "dysfunctional," the IMF said, using a set of collective bargaining agreements that "hamstrings" companies' ability to hire and fire and set wages.

The situation "is ill-suited to membership of a currency union," the IMF said, because it allows other nations in the eurozone with more flexible wage and work arrangements, such as Germany, to produce more cheaply and attract more investment.

Although Spain's still-stagnant economy should begin growing again, the country's recovery will be "weak and fragile" without efforts to restructure, the fund said.

The IMF also demanded a clearer accounting of the Spanish banks that are at risk of failure. Banks are still plagued by the collapse of a real estate bubble and uncertainty about the real value of assets they hold, the IMF said. The country's banks overall have "robust" levels of capital, it said, but "the risks remain elevated and unevenly distributed" in different institutions.