The unemployment rate in Spain at the end of the first quarter rose to 17.4%. That’s up from 13.9% at the end of the year.
The country is on the verge of uncontrollable downward spiral as they appear to be running out of the financial capacity to stimulate the economy. The deficit is expected to reach 8.3% this year and the ratio of debt to GDP should close in on 50%.
Given the flawed nature of the EU, the nation may face the ignominy of being bailed out by the IMF. That would be a blow not only to its pride but will surely leave some lasting scars on relationships among the members of the EU.
Frankly, it rankles me a bit. Assuming that the IMF is forced to come to the aid of Spain, U.S. taxpayers will be on the hook for part of the rescue. I’ve little problem with the IMF helping out nations that have no where else to turn and generally support their efforts though I’m a little suspicious of their current plans. Assisting a country like Spain that is a member of an economic union that likes to brag that it is the largest economic bloc on the planet yet can’t put aside political bickering to help its members is beyond comprehension.
I truly hope that Spain makes it through OK and sometime in the future gets the chance to remind the Germans what they didn’t do for Spain in its time of need.