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Home Publications Blogs Beat the Press The Folks Who Couldn't See Spain's Housing Bubble Disapprove of Its Budget Policy

The Folks Who Couldn't See Spain's Housing Bubble Disapprove of Its Budget Policy

Monday, 03 May 2010 21:36

The NYT reports on the difficulties that Spain is facing in the wake of the collapse of its housing bubble. Its unemployment rate has crossed 20 percent and is likely to head higher. Its budget deficit exceeds 8 percent of GDP and its credit rating has recently been downgraded by Standard & Poor's.

It would have been worth noting that the credit rating agencies and the speculators who now believe that Spain is facing severe financial stress thought that Spain's economy was in solid shape as its housing bubble was growing ever more out of line with fundamentals. It is also would have been worth mentioning that Spain was running budget surpluses prior to the collapse of its housing bubble. At the time, it was often held up as a success story by the people now criticizing its institutional structure.

Comments (4)Add Comment
written by izzatzo, May 04, 2010 12:11
During the Bubble:

Look! A hundred dollar bill on the sidewalk!

Don't you read the news? It's probably two or three hundred dollars at least in present value terms after investment in the housing market. That's why it couldn't be there and someone already picked it up.

After the Bubble Collapse:

Look! A hundred dollar bill on the sidewalk!

Don't you read the news? With nothing ahead but staggering debt, expected inflation and falling currency value along with high unemployment, all caused by government spending, the reason a hundred dollar bill is still on the sidewalk is because it's not worth picking up.
written by bobbyp, May 04, 2010 1:02
Well, you're good, then you're not.
What's so hard to understand?
Don't cry for me, Argentina.
Move along folks, there's nothing to see here...
written by JoeK, May 04, 2010 8:16
That would be the same "experts" who for years touted Ireland and Iceland (among others) as examples of the economic benefits of liberal (as in FREE) capital controls and low corporate taxes.

That line of bull no longer works, so now it's back to the tried and true: Unions, teachers, entitlements, inflexible European social welfare states with their bloated Governments, immigrants and high taxes, particularly on the rich who as we know are the one's who provide jobs.

Throw in socialists, slacking poor people and the CRA, and you pretty much sum up the causes of problems this world faces.
written by Queen of Sheba, May 04, 2010 4:07
My, my - how quickly perspectives can change...especially when the original no longer comports with reality.

It would be interesting if the NYT could bring itself to address at least a few of these instances. Too much to hope for, I suppose, considering other papers don't spend much time on such recriminations either.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.