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View Diary: New: concern trolling the euro (241 comments)

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  •  Nah (9+ / 0-)

    that's been the traditional argument against the euro - all the way back to the early 90s.

    Spain is playing catch up, for a long time with money from the core European countries, and has been investing (not spending, investing) in its infrastructure massively in the past 20 years: roads, high speed trains, networks, wind power, etc... and it has enjoyedrecord growth.

    So: the bubble is there, but to some extent reflects fast growth; the deficit is there, but reflects smart investment, and European solidarity exists and will continue. That's what reading the English-language press will never convey to you: Europe is fundamentally a political project, not an economic one.

    The euro will not fail and the eurozone will not break up.

    •  Have to disagree (1+ / 0-)
      Recommended by:

      the deficit is there, but reflects smart investment,

      By every measure, Spain has built more residential houses than it needs, and prices have gone up many times faster than incomes have.
         If you think that Spain doesn't have a housing bubble then you are unaware of the facts of the matter.

       But beyond that, Spain's current account deficit is even larger than America's as a percentage of GDP. It's the current account deficit that is the main reason for the fall in the dollar.

       Spain might bounce back despite the malinvest. But then the dollar might bounce back as well.
       I've haven't seen a good reason for either to happen.

      The 2nd Red String Conspiracy

      by gjohnsit on Tue Nov 27, 2007 at 02:29:23 PM PST

      [ Parent ]

      •  Oh, I'll take one of those (3+ / 0-)
        Recommended by:
        wu ming, leolabeth, bigchin

        Spanish houses.  If they've got too many of them. :-)

      •  yes and no (2+ / 0-)
        Recommended by:
        corvo, bigchin

        Prices have gone up a lot more than incomes, indeed, and things do look bubbly.

        But on the other hand, you've had quite brutal social changes (smaller households) and massive immigration recently.

        While the Spanish current account deficit is heavy, it is partly compensated by tourism inflows, and it remains relatively small compared to the eurozone's overall balance. Is it sustainable within the eurozone? Everything suggests that it is, notwithstanding all the fantaisies generated in London.

      •  Spain just announced a 28 billion euro budget... (2+ / 0-)
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        Jeffersonian Democrat, bigchin

        surplus today superávit del Estado-El Pais-. It seems like they are doing O.K. at managing their finances. Also a lot of those properties you mention are being bought by other Europeans that seem to like to spend time in Spain, therefore part of the bubble.

        •  The old saw (0+ / 0-)

          I don't believe in the "greater fool" theory working for long.
            People talked have been talking about immigrants coming to America and buying our over-priced houses so the Baby Boomers can retire in comfort.
            Like Spain, you eventually run out of fools that are even bigger than you.

          The 2nd Red String Conspiracy

          by gjohnsit on Wed Nov 28, 2007 at 01:13:13 PM PST

          [ Parent ]

      •  Spain may have more houses than IT needs (0+ / 0-)

        But there are plenty of Europeans who will be happy to retire in Spain.  

        Don't like XOM and OPEC? What have YOU done to reduce your oil consumption? Hot air does NOT constitute a renewable resource!

        by Asak on Wed Nov 28, 2007 at 12:02:25 AM PST

        [ Parent ]

        •  They said this about California too (1+ / 0-)
          Recommended by:

          And yet California home prices are dropping through the floor.
            The "greater fool" theory doesn't work.

          The 2nd Red String Conspiracy

          by gjohnsit on Wed Nov 28, 2007 at 01:14:15 PM PST

          [ Parent ]

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