Buying Spanish and Italian bonds will stop Spain defaulting in October when €20bn needs to be refinanced, but it will do nothing to stop the continuing decline of the Spanish economy Greek style. So yes they have kicked the can further down the road, but for how long? It is like sticking a plaster on a patients grazed arm, when they are bleeding to death internally.
In Greece there are now 4.9m unemployed or economically inactive people against 3 million odd in employment, and her economic output and GDP were last at this level in the 1990's. So Spain has still got a lot of catching up to do. Capital flight and the shrinking of Spain's economy have been accelerating, so how will these measures correct that?
It also doesn't solve the €300bn+ of bad debts the banks will ultimately need to write off or the even more fundamental problem that the Eurozone is the equivalent of the 1930's Gold Standard, where the standard is German industry's productivity and cost base. Spain wages have increased by about 4% over the last year, so they are still diverging from the German cost standard.
If this global depression has taught us anything, it is that can kicking may push the problems into the future, but the next time the can need kicking the situation is much worse and even more money and drastic measures are required.
Something somewhere will have to give, there will be a trigger point, when the a big enough percentage of the lower 99% of the people decide they have had enough and nothing to lose in taking direct action to escape the ever increasing grinding poverty.
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Topic: Eurozone crisis, Spain, BBC2 tonight 10.30 (Read 1550 times)