How to Ruin a Country in Three Steps: The Spanish Case.

The Spanish citizens woke up today with the new that the official unemployment
rate is 20% making of this a global record as the worst managed Economy in this
Crisis. It means 4.5 million people out of work and 1 million families with all its members
unemployed. How is it possible? Let see the reasons:

- Ignore the Real State Bubble Bust. That bubble was perfectly known by the
current government in 2004 and did nothing; it was similar to the ones of Ireland
and the USA that have acted with some success and their unemployment rates are
half the Spanish ones.

- Make Credit Crunch Permanent and combine it a Mad Fiscal Policy. Credit
Crunch continues and will get worst making Spain a Subprime Country. The
invention of the ECB with its absurd monetary policy and the inaction of the Bank of
Spain have left Spain in a Monetary Supply Trap (click here for details); meanwhile
the Spanish government rises taxes to the poor and wastes money foolishly
crowding out the private sector.

- Avoid Restructuring the Financial Sector. The Spanish Financial and Political
Establishment is only interested in getting a piece of the cake than in the health of
the Spanish Economy. As a result, Spain will lose its clear Competitive Advantage
in retail banking leaving the country with 30% of unemployment and the
Government at the door of Default.

Meanwhile, and after manufacturing this perfect downgrading spiral, sharks like Morgan
Stanley or Bank of America swim around in search for a good price.

Luis Riestra

04-15-2010