the pain in spain
Spain is basking in football glory after winning the European Championship on June 29. But now that the euphoria is over, Spaniards are waking up to discover that their economy is in a free-fall without a parachute. Indeed, the country is being buried daily by an avalanche of depressing economic news, with jobless numbers spiraling upwards, and growth projections being revised downwards, faster than most Spaniards can say ¡Viva España!.
Spain has been reeling from the collapse of a housing bubble that for the last 15 years has enabled the notoriously uncompetitive economy to post some of the highest growth rates in the European Union. The Spanish Banking Association says that Spanish growth will probably be negative in 2008. By comparison, the Spanish economy grew by 3.8 percent in 2007.
Spaniards are suddenly realizing that Socialist Prime Minister José Luis Rodríguez Zapatero has spent the better part of the last four years peddling economic snake oil. Economists both at home and abroad have warned for many years that Spanish prosperity was based on the shaky foundations of a highly speculative construction sector, and that Spain was especially exposed to global financial turbulence due to its high level of private sector debt, poor competitiveness and dependence on foreign financing. But Zapatero convinced a willingly gullible electorate that they could defy economic reality through the power of positive thinking.