The Trader has written extensively on the Spanish Economy and the difficulties the country faces. Unemployment is sky rocketing, the property sector is in a hung over mood, the balance sheets of the banks still valuing properties at fantasy prices etc. We still argue, after the Greek Drama gets “resolved”, focus should be shifting towards Spain. Some further insight from Macrobusiness.
Although a default in Greece is likely to be disruptive, with direct contagion into Cyprus and market contagion in Portugal, the event is well known. Portugal itself is also a problem, but again this event it known and bond yields are reflective of the situation. In the scheme of things Portugal and Greece are relatively small and, although I think the market is underestimating the fallout, Europe is working on mechanisms that could potentially deal with the two countries along with Ireland. Italy is also a problem, but as I have explained previously Italy’s issue is growth more than debt so the country already has the potential to right itself.