Spain- the fourth-largest economy in the eurozone after Germany, France, and Italy – now seems dangerously close to drowning under what Edward Hugh, a Barcelona-based economist, calls the “cascade effect”, where problems in one sector or market overflow into difficulties and bad news in another.
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José Manuel García-Margallo, Spain’s foreign minister, was already known as one of the more outspoken members of the government, but he excelled himself on Friday in likening Europe to the Titanic and Spain to a seriously ill patient undergoing critical surgery.
Behind his apparent pessimism lay two main arguments. First, it was essential for European Union nations, if they wanted salvation, to work together to solve a eurozone crisis that hit Spain like an iceberg with particular severity this week. “This is like the Titanic,” he told state radio. “If there’s a sinking here, even the first-class passengers drown.” In Spain, the Germans are considered the wealthiest passengers aboard the eurozone ship.
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Second, Mr García-Margallo said, investors needed to understand that the Popular party government was applying a brutal cure to the economy in the form of policies that made the patient look weak at first but were essential for long-term recovery. That was his comment on “terrible” new unemployment figures showing that nearly one in four Spaniards was without a job and confirming that Spain was suffering an “enormous” crisis.
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