What do you think the US to Euro exchange rate will be in 18 months

[Zoetstofzoetje]

how do you mean, a failure of Europe?

Spain is what it is, thanks to Europe. 20 years ago this coutry was a putrid stinkfest, coming fresh out of the clutches of a dictator. European money has built infrastructure in all respects.

All that has been taken for granted by the Spanish. Now that they have to stand on their own feet, the European moneyfaucet is considered a European obligation rather than a temporary right. Instead of changing things around for the better, the established people sit on acquired ´rights´ so that they can ride out the storm and let the next generation take the bad beat. Meanwhile, youth unemployment is officially 50%, of which a large part collect government unemployment checks while doing work on the side. The other half does not accept work that they are offered - below their level. Because the country has been pumping out Masters degrees.

No, this country wholly deserves what it is going to get.

[giblets]

They suffered a massive economic downturn from a housing bubble while stuck in a currency union that prevents them from exercising monetary stimulus at their own discretion. An enormous number of Spaniards are unemployed for no good reason and the fiscal transfers that are necessary to make a currency area workable are not forthcoming. The Eurozone is obviously a failure for Spain. They should have never joined a common currency and they should go ahead and leave. I don't know how you expect them to recover. From your post it looks as though you think they should shut down their universities and have everyone take low-paying jobs.

[Zoetstofzoetje]

if you take an uneducated population, educate them, and the amount of knowledge-work jobs stays roughly the same, yes, you´re creating a big problem.

[giblets]

Your assumption that the number of knowledge-work jobs is somehow fixed doesn't make sense considering that there are plenty of countries with higher college graduation rates than Spain and they don't have massive unemployment. If these jobs aren't being created it's because Spain is in a depression.

[DaShi]

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[Dinner]

Greece is a world apart from Spain. In many respects, Spain works. Greece doesn't even have the institutions necessary to maintain a first-world economy -- e.g., it was impossible to know how much it was spending, even as minister of finance.

That said, Spain is being pushed into the same corner that Greece put itself in. Greece is a failure of Greece, but I view Spain as a failure of Europe.

Theoretically Spain did everything economic conservatives wanted them to do and should have been a success story. It's budget was balanced, its public debt to GDP was one of the lowest in Europe, wages and pension obligations were low compared to the rest of Europe, and by and large public spending was well targeted dispite a few white elephant projects (I can recall Business Week pointing out one new airport which is practically empty but even that was part of a military base decommissioning effort and wasn't typical of wider government spending issues). Their big problem is that private banks way over lent, created a bubble, and that bubble has now popped bring down asset prices so that the banks owe more than they have as colateral. A liberal would say they needed more regulation to prevent such speculative bubbles from forming in the first place but American conservatives always push for such deregulation so once again Spain did what the right wing wanted them to do.

The government of Spain was actually pretty responsible (other than listening to American conservatives and not properly regulating banks) and the problem was all in the private sector running a muck.

[Dinner]

I have been forced to buy gold because the gov of Argentina does not let me buy dollars, and I need contacts in order to buy U$D in the illegal market, which are already like 20% more expensive anyway.

I am no expert, but I think a flight to the dollar has already begun, people selling gold and buying dollars, and changing their euros for dollars. I would very much prefer to get dollars right now.

The dollar is helped not only because of the problems in europe but also because America seems to be growing, some

Can't you go on vacation to Chile, Paraguay, or Uruguay? It seems like you could buy all the dollars you want while on vacation and just bring them back home in your car trunk.

[C0ckney]

Can't you go on vacation to Chile, Paraguay, or Uruguay? It seems like you could buy all the dollars you want while on vacation and just bring them back home in your car trunk.

they have dogs at the borders trained to sniff for dollars (i'm not making this up). besides, people want to take dollars out of argentina, not the other way round.

[Barnabas]

yes, they have dogs that detect dollar in the fronteer



People want to take out dollars and put them in Uruguay which is something like the Switzerland of south america.
In the neighbour countries they accept pesos with a 30% devaluation

[DanS]

Zoe: I stand by my "failure of Europe" statement. Because of its structure, Europe is finding itself unable to give Spain what it needs. These needs are pretty basic -- the kind of support that the Federal Reserve Board has been providing to the American financial system the last few years.

Investors have recognized this fact and are punishing Europe. I think that Germany should look toward its own interests in a broader sense than they have been doing.

Further, Spain is not Greece. It's not even Italy, from what I've seen.

[Barnabas]

Spain does not have the industrial base Italy has in the north.

[Dinner]

Alright. The dog thing I find hilarious. I don't know why but the whole criminalizing of the moving of money things seems so backwards to me.

[C0ckney]

Zoe: I stand by my "failure of Europe" statement. Because of its structure, Europe is finding itself unable to give Spain what it needs. These needs are pretty basic -- the kind of support that the Federal Reserve Board has been providing to the American financial system the last few years.

Investors have recognized this fact and are punishing Europe. I think that Germany should look toward its own interests in a broader sense than they have been doing.

what are germany's interests? the failed 'rescues' of greece will cost german taxpayers a fortune. the soon to fail 'rescue' of portugal likewise. with spain teetering on the brink and italy not far behind, keeping southern european countries in the euro is starting to look like a bottomless pit. and it isn't just germany, many northern european countries (spurred on by their electorates) are hardening their attitudes. people are asking the question, is the euro, in its current form, worth all the costs and more and more are concluding no.

there are two things that would work to regain market confidence in the euro.

1) eurobonds.
2) full fiscal and political union.

however both of these appear to be politically unacceptable. the first to german and other northern european voters, the second to french and assorted other voters.

[DanS]

I just don't think that Spain has been extraordinarily profligate recently -- no more profligate than the US, for instance. The story line doesn't fit with regard to Spain or Ireland. It does fit with Greece, Italy, and Portugal.

It's not my opinion that Spain has done things correctly, of course. Just that normal ways of doing business that could serve Spain well in this situation don't exist. Compare to the support that the BoE and the Fed provided. Unavailable to Spain.

There are more solutions than you list.

[Hauldren Collider]

yes, they have dogs that detect dollar in the fronteer
People want to take out dollars and put them in Uruguay which is something like the Switzerland of south america.
In the neighbour countries they accept pesos with a 30% devaluation

That's incredibly ridiculous.