For some reason, there is a school of thought that Spain’s financial problems will go away if it adopts austerity programs to bring down its deficit. The theory neglects that fact that Spain is in the cusp of what could be a major recession, and a need to bail out several of its states and largest banks.
Spain’s unemployment rate, already over 22%, grew again in January, making the question of whether government austerity should be replaced with government stimulus. The problems is the capital markets investors and eurzone officials want no part of a rise in Spain’s expenditures.
Spanish job losses accelerated again in January, as the number of unemployed residents soared 4% to 4.59 million, a sign that the euro zone’s fourth-largest economy is still shedding jobs at a record rate.
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