No Solution On Spain

The OECD has released its economic report on Spain and the analysis is such that it suggests the country is in a bind it cannot get out of.

“Spain is slowly emerging from the deep recession that followed the global financial crisis, but must  now enact major reforms to improve government finances and create jobs.” The suggestion contradicts calls for Spain to sharply cut spending and raise taxes. It is impossible to see how Spain will add jobs without significant stimulus. Its jobless rate is among the highest of any developed nation–20%.

The agency also writes that “The OECD sees economic growth bouncing back from this year’s projected 0.2% contraction, with GDP forecast to jump by 0.9% in 2011 and 1.8% in 2012.” GDP recovery at such slow rates are hardly enough to help the country add jobs.

The OECD also calls for Spain to reject the results of collective bargaining when necessary to preserve capital. It also suggest Spain raise its retirement age. Each of these is certain to cause major work stoppages and protests, if not riots, in the streets

Douglas A. McIntyre