Sunday, June 20, 2010

Newsy: Spain Facing Economic Crisis

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After discussion at EU’s summit meeting Thursday, the global community is attempting to evaluate and shore-up what some are calling Spain’s economic debt crisis.
We’re analyzing coverage from CNBC, BBC, euronews, The New York Times, and TIME Magazine.
First, multiple perspectives on that crisis from some of the people who know it best, on the BBC, CNBC, and Euronews.
“There has been this increase in debt ratio. For some countries, this is really serious, like in the case of Greece, for instance. Some countries are in the middle, like Germany or France. Some countries are in a rather good situation compared to the debt ratio, and I’m thinking about Spain." (BBC)
“We’re not seeing anything yet that suggests that there is a risk that they will have to resort to European stroke IMF funding yet.” (CNBC)
“The European Commission categorically denied a report that the EU, IMF and U.S. Treasury were drawing up a liquidity plan for Spain.” (Euronews)
Although an IMF bailout is not necessary in the works now, the road to Europe’s economic recovery hinges on Spain. Unicredit Group Chief Economist Marco Annunziata describes Spain as “the Euro-zone’s linchpin...”: “…accounting for almost 12 percent of the area’s G.D.P. ... If Spain fails, the Euro-zone’s wheels will come off, derailing the continent’s recovery and its financial system.” (The New York Times)
TIME writer Michael Schuman agrees with the IMF, saying that overall Spanish PM Zapatero is “moving in the right direction.”: “His cabinet approved a labor reform bill to encourage hiring and make the labor market more flexible.”
But he also adds: “Much more needs to get done, like financial sector reform.”
An ING banking expert tells CNBC, financial sector reform must also be implemented throughout the European Union: “Let’s again be honest and say that if you want the Euro to survive, you need a credit union followed by some sort of partial fiscal union.”
So what do you think? Is Spain in economic trouble? Can it survive without a bailout? Does the Eurozone as a whole need fundamental reform? 
WRITER: Kelly Hagen


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