Wednesday, February 4, 2009
Spain's government fracturing
A deep economic downturn and very few options is causing political upheaval throughout Europe. Watch Spain, Greece and Italy, all members of the Eurozone and users of the single currency.
Feb. 4 (Bloomberg) -- The government that Spanish Prime Minister Jose Luis Rodriguez Zapatero put together with cash is coming unglued.
The Socialist’s parliamentary alliances are breaking down as the worst recession in half a century makes handouts to regional allies unaffordable. The Catalans have already bolted his coalition; the Basques are threatening to do the same.
Finance Minister Pedro Solbes, embroiled in talks with regions that want to increase their share of the budget, said Jan. 18 he can’t spare more cash after pledging 240 billion euros in stimulus measures to counter the recession.
Spain's budget deficit is 5.8% of GDP--far above the EU limit. (And well above the U.S. deficit, too!)
The economic deterioration in Europe and its impact on the euro may be THE story of 2009.
Read full story here.