26 May 2012 2:25 PM:
from micheal pettis the top economist of europe.and finance profesor at peking university and a senior associte at carnehie endowment.he is certain spain will leave the euro soon.he writs there are two reasons i believe spain will leave the euro he grew up in spain and knows the country the best.however the peripheral countries in the eurozone like spain are uncompetit ive, have high debt levels ,and suffer from low savings rates that had been forced down in the past decade to dangerous levels,spain has a stronger fiscal position and healthier bank balance sheets than many of its peers when the crises began.so any argument that applies to spain id likely to apply more forcefulli to its peers..the first of which is to do with logic of spain's balance of payments postion and the second with the internal dynamics that drive the process of financial crisis,to address the second ,i think spain will leave the euro because it seems to me that the country has already started on the self-reinforcing downward spiral that leads to a crisis,and there is no one big enough to reverse the spiral.when a countries interest .on there loans rise they have to pay back more and most of them cannot.so the debt rises more.and the shortening of maturities double the impact.,as this probility rises spain will leave the the euro.and thebank deposits will be frozen.and redenominated in the weaker currancy before any abanonment of the euro is anouced when the spiral starts slowing thois behavour is not enough.it must be reversed ,but how no one is big enough credibly to guarantee the credit worthiness of all the afflicted countries.,and without a credible guarntee the download spiral will occur until it is clearly unstoppable.
Thread:
spanish workers going to the uk for work
--------------------------------------