Spain is another candidate to be the first to exit the euro, the ill-fated experiment by out-of-touch European politicians. In ten years the folly of the euro will have become conventional wisdom in the economic history books. But for now citizens across Europe suffer as the politicians figure it all out.
Low euro interest rates created a massive real estate boom in Spain. Construction rose absrdly to 16% of GDP. Spanish companies borrowed from the euro capital markets in their droves. Foreign borrowing and the current account deficit reached 10% of GDP. Wages kept going up.
Spanish unemployment could soon reach reach 19%. If the cloth-eared politicians in Spain haven't realised what's going on yet the unemployed and the remaining workers will soon make sure they understand.Trade unions will march in Zaragoza on Sunday and more demonstrations will follow.
After a lot more damage has been inflicted on the Spanish economy the government will eventually withdraw from the euro. That will then generate even more chaos but the government will get back control of its own economy and start to rebuild confidence again.