[/caption]You know the story about the chicken complaining to his friend, the pig, about having to lay eggs for breakfast? The pig responds by saying that at least in laying eggs, the chicken is able to live to see the next morning's breakfast. I felt like the chicken when I read the economic problems plaguing Spain.
America might be going through a difficult time, but Spain is on verge of collapse. The Wall Street Journal reported that Moody’s Investor Service warned Wednesday that because of Spain’s rapid deterioration of its' economy and public finances, the country’s maximum credit rating will be drastically downgraded.
Moody’s, although offering only a preliminary prognosis, is the last of the major credit rating agency to apparently come to the same dire consensus about Spain’s problem.
There are sobering issues affecting Spain’s economy; after a booming housing industry that has now crashed, the banks, which hold all these worthless mortgages, are left, and in dire straits.
The unemployment rate is a whopping 20%, coupled with a double digit budget deficit. Since nothing happens in a vacuum, investors are dumping the euro financial assets, thinking that Spain is going the way of Greece.
The European Union has pressured Spain to act, but the labor unions are digging in and are owed pensions, which will further tax the finances.
Spanish officials have promised that they are willing to make the changes needed to be out of the red, and Moody’s official diagnosis will be completed in three months.
I supposed Spain’s 20% unemployment makes me want to count my blessings for our 9.5%. I say to the pig mentioned above and Spain: touché.
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